As hundreds of prophets in academe and the media trumpeted the promise of uninterrupted prosperity to the masses, the owners of capital and their highly skilled attendants were surreptitiously shaping a political agenda that guaranteed nothing would change their hold on wealth and power—and their growing influence over society.
In the mix of all these proponents of the so-called capitalist revolution of the New Era, or what some called the New Capitalism, are the roots of a national form of fascist ideology. Within its genesis were two main currents that differed profoundly, to the point of being contradictory. One loudly promoted greater democratization of American capitalism; the other, a quiet but more powerful force, aimed to curtail democracy itself. The former represented the aspirations of the growing middle classes; the latter strengthened the political power of anti-democratic forces among business elites who made up America’s ruling class. If we concur with those in the 1930s who defined fascism as the power of finance capital, the merger of the two currents—the failed dreams of the aspiring middle classes from below and the cynicism of the ruling-class modernizers from above—generated a particular, national form of fascist ideology in the United States in the 1920s.
We see this clearly in a close reading of three key texts that help us to grasp the similarities and differences between the two currents, but both generating a capitalist ideology that is inherently fascist.
THE CAPITALIST REVOLUTION IN AMERICA AND THE PROMISE OF EVERLASTING PROSPERITY
In his campaign for the presidency, Warren Harding had promised to put America first. Five years later, Thomas Nixon Carver declared that the United States was already leading the rest of the world. Carver, a Harvard economics professor and author of The Present Economic Revolution in the United States, contended that America was unique in the world because a capitalist revolution was turning its laborers into capitalists:
The only economic revolution now under way is going on in the United States. It is a revolution that is to wipe out the distinction between laborers and capitalists by making laborers their own capitalists and by compelling most capitalists to become laborers of one kind or another, because not many of them will be able to live on the returns from capital alone. This is something new in the history of the world.1
Admonishing capitalists to avoid absentee ownership and European luxuries and even assume some tasks normally done by laborers, Carver gave most of the credit for the economic revolution to the power of the laborers—never calling them workers. He applauded the labor movement for abandoning the “antiquated methods” of its European counterparts, which were still guided “by a psychology … built up in a primitive and fighting stage of social development.” Instead, labor leaders in the United States were “beginning to think in constructive terms” by formulating a “higher strategy of labor.” Instead of fighting capital, they were now attuned to the “permanent economic forces” that could be used “as an implement for their own improvement.”2
Carver was certain the future looked even better. As more laborers earned higher wages, saved prudently, and acted responsibly in all their endeavors, they were putting themselves on the path to capitalist ownership. Of course, there would always be some conflict between employers and employees. But in his homespun approach to complex economic questions, Carver said the conflict was like that between husband and wife. In both cases, each needed the other and whatever differences existed between the two there were also “many elements of harmony” not to be forgotten. Carver reduced it all to a simple matter of choice:
Whether they live in peace and harmony or in a state of antagonisms depends upon which aspect of their relationship they permit themselves to think about most frequently. If they permit themselves to forget their need of one another and the many questions on which their interests harmonize, and to think only of the questions on which there is a conflict of interest, they are not likely to live a very harmonious life. But if, on the other hand, those questions on which there is a unity of interests occupy their minds, they may expect nothing but peace and harmony.3
For the first time in its long history, capitalism in its distinctively American form had proved why boom/bust cycles were a thing of the past. As more workers became capitalists, so would prosperity continue and the promise of progress under capitalism finally realized:
Wealth is not only increasing at a rapid rate, but the wages of those we formerly pitied are rising, laborers are becoming capitalists, and prosperity is being more and more widely diffused. We are approaching equality of prosperity more rapidly than most people realize. What is equally important, we are working out this diffusion of prosperity for all classes without surrendering the principle of liberty which is embodied in modern democratic institutions.4
Carver regarded the coming of universal wealth and uninterrupted progress as the fulfillment of capitalist utopia. And it would be utterly democratic! Regardless of where one stood on the class ladder, the economic revolution was leveling the pyramid of capitalist wealth. Labor leaders were playing a key role in this process by staying clear of an antiquated European radicalism based on class warfare. Fortunately, American labor leaders understood that the solution to the labor problem was higher wages, which would quell any discontent that might fuel class consciousness. Thanks to their efforts, America could look ahead to a future “when we shall no longer speak of the laboring ‘classes.’”5 With more laborers becoming capitalists, Carver claimed, the latter were finding it more difficult to hire workers and were thus having to do more of the work themselves. This was a sure sign that the “actual blending of the two so-called classes means that there will be no more classes in this country. Fraternity has never been very clearly defined,” Carver added, “but this condition, when there is no class consciousness, comes as near being fraternity as we are ever likely to get, if it be not fraternity itself.”6
Carver devoted a chapter of his book to the growing financial power of laborers, basing his claim on statistics cherry-picked from savings deposits, assets of building and loan associations, and the premiums paid to insurance companies by laborers. He also considered “incomplete but rather striking figures regarding the investment of laboring people in the stocks and bonds of corporations.” He brought attention as well to what he called “the new phenomenon of the labor bank.” According to figures from the American Bankers Association, Carver said that total savings deposits had more than doubled between 1914 and 1924, and the total number of depositors “had increased more than three-fold.” Moreover, a study of life insurance policies in 1924 showed that more than two-thirds were held by wage workers. He also provided statistics that he used to argue that more laborers were investing in the stock market.7 As for the rise of labor banks, his entire case was made on the basis of the Brotherhood of Locomotive Engineers, which opened its bank in 1920. This case alone, he claimed, proved that the capitalist revolution developing in America was another great example of the prospect of universal wealth and prosperity now in the making.8 The inequalities that had always been present in capitalism were being eliminated, proving that they “were not essential to the capitalistic system.” Instead, the revolutionary advance of American capitalism was proving that free enterprise worked. “In fact,” Carver said, “where capitalism is given a chance to develop freely, unhampered by social and political obstacles, it tends to eliminate its own inequalities and secure … great abundance for everybody,” more than any other system has ever achieved.9
On this basis, the economic revolution presented the greatest opportunity ever to achieve what Carver believed was “the most revolutionary idea” in all economic discussion, “that of a balanced economic system … in which all factors of production are combined in such proportions as will yield the most satisfactory results, and yield them automatically.” Again reducing complex matters to the simplest terms, Carver served up a case for the dietician who can recommend a balanced diet to an individual simply by knowing “all the elements.” Businessmen did this as a matter of course. They always had to know when to apply basic principles on a routine basis; they
