Popular Government and Market Economy [ 243 ]
While the actual content of property rights might undergo redefini-
tion at the hands of legislation, assurance of formal continuity is es-
sential to the functioning of the market system.
Since the Great War two changes have taken place which affect the
position of socialism. First, the market system proved unreliable to the
point of almost total collapse, a deficiency that had not been expected
even by its critics; second, a socialist economy was established in Rus-
sia, representing an altogether new departure. Though the conditions
under which this venture took place made it inapplicable to Western
countries, the very existence of Soviet Russia proved an incisive influ-
ence. True, she had turned to socialism in the absence of developed
industries, general literacy, and democratic traditions—all three of
which according to Western ideas, were preconditions of socialism.
This made her special methods and solutions inapplicable elsewhere,
but did not prevent socialism from becoming an inspiration. On the
Continent workers' parties had always been socialist in outlook and
any reform they wished to achieve was, as a matter of course, suspect of
serving socialist aims. In quiet times such a suspicion would have been
unjustified; socialist working-class parties were, on the whole, com-
mitted to the reform of capitalism, not to its revolutionary overthrow.
But the position was different in an emergency. If normal methods
were insufficient, abnormal ones would then be tried, and with a
workers' party such methods might involve a disregard of property
rights. Under the stress of imminent danger workers' parties might
strike out for measures which were socialistic or at least appeared as
such to the militant adherents of private enterprise. And the very hint
would suffice to throw markets into confusion and start a universal
panic.
Under conditions such as these the routine conflict of interest be-
tween employers and employees took on an ominous character. While
a divergence of economic interests would normally end in compro-
mise, the separation of the economic and the political spheres in soci-
ety tended to invest such clashes with grave consequences to the com-
munity. The employers were the owners of the factories and mines and
thus directly responsible for carrying on production in society (quite
apart from their personal interest in profits). In principle, they would
have the backing of all in their endeavor to keep industry going. On
the other hand the employees represented a large section of society;
their interests also were to an important degree coincident with those
[ 244 ] The Great Transformation
of the community as a whole. They were the only available class for the
protection of the interests of the consumers, of the citizens, of human
beings as such, and, under universal suffrage, their numbers would
give them a preponderance in the political sphere. However, the legis-
lature, like industry, had its formal functions to perform in society. Its
members were entrusted with the forming of the communal will, the
direction of public policy, the enactment of long-term programs at
home and abroad. No complex society could do without functioning
legislative and executive bodies of a political kind. A clash of group in-
terests that resulted in paralysing the organs of industry or state—
either of them, or both—formed an immediate peril to society.
Yet precisely this was the case in the 1920s. Labor entrenched itself
in parliament where its numbers gave it weight, capitalists built indus-
try into a fortress from which to lord the country. Popular bodies an-
swered by ruthlessly intervening in business, disregarding the needs of
the given form of industry. The captains of industry were subverting
the population from allegiance to their own freely elected rulers, while
democratic bodies carried on warfare against the industrial system
on which everybody's livelihood depended. Eventually, the moment
would come when both the economic and the political systems were
threatened by complete paralysis. Fear would grip the people, and
leadership would be thrust upon those who offered an easy way out at
whatever ultimate price. The time was ripe for the fascist solution.
C H A P T E R T W E N T Y
History in the Gear of Social Change
CTf ever there was a political movement that responded to the needs
A. of an objective situation and was not a result of fortuitous causes,
it was fascism. At the same time, the degenerative character of the fas-
cist solution was evident. It offered an escape from an institutional
deadlock which was essentially alike in a large number of countries,
and yet, if the remedy were tried, it would everywhere produce sick-
ness unto death. That is the manner in which civilizations perish.
The fascist solution of the impasse reached by liberal capitalism
can be described as a reform of market economy achieved at the price
of the extirpation of all democratic institutions, both in the industrial
and in the political realm. The economic system which was in peril of
disruption would thus be revitalized, while the people themselves
were subjected to a reeducation designed to denaturalize the individ-
ual and make him unable to function as the responsible unit of the
body politic* This reeducation, comprising the tenets of a political re-
ligion that denied the idea of the brotherhood of man in all its forms,
was achieved through an act of mass conversion enforced against re-
calcitrants by scientific methods of torture.
The appearance of such a movement in the industrial countries of
the globe, and even in a number of only slightly industrialized ones,
should never have been ascribed to local causes, national mentalities,
or historical backgrounds as was so consistently done by contempo-
raries. Fascism had as little to do with the Great War as with the Ver-
sailles Treaty, with Junker militarism as with the Italian temperament.
The movement appeared in defeated countries like Bulgaria and in
victorious ones like Jugoslavia, in countries of Northern tempera-
ment like Finland and Norway and of Southern temperament like
* Polanyi, K., "The Essence of Fascism," in Christianity and the Social Revolution,
1935-
[245]
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