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The Road to Euro-Fascism

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As Europe's depression continues six years after the financial collapse of 2007-2008, watch for far-right parties to make big gains in this week's elections to the EU's European Parliament. And why not? The establishment parties of Europe's center-right and center-left have put austerity policies and the interests of banks ahead of a real economic recovery for regular people.

More than 20 years ago, when the European Union created its constitution in the form of the Treaty of Maastricht, the hope was that Europe stood for a social compact that put citizens first. Europe, especially northern Europe, was a model of decent earnings, universal social benefits and regulation that prevented wealth from swamping citizenship.

Today, however, centrist or center-right governments, which either sponsor austerity or approve of it, govern in every major European capital but France, and France is too weak to go its own way. The economic crisis with its high unemployment only stimulates more migration, which puts pressure on local labor markets and pushes the local working class further into the arms of the nationalist far-right.

In Europe, proto-fascist parties that are anti-immigrant, anti-Islam, anti-Semitic and anti-European Union are now the second or third largest party in a belt of formerly liberal societies that runs from Norway and Finland to the Netherlands and France. In Hungary, where the anti-democratic nationalist Fidesz Party already governs, the more extremist Jobbik Party is making even bigger gains.

We have been here before, of course. European fascism was nourished in a climate of high unemployment and economic orthodoxy. After World War I, the elites of that era were more concerned with propping up currency values and collecting war debts than with the real condition of the economy.

Democracies lost legitimacy with their people. When the stagnation of the 1920s worsened into the deep depression of the 1930s, people gave up on democracy.

Big banks and corporations, in places like Nazi Germany and fascist Italy, liked the collapse of democracy just fine. Classic fascism was an alliance of an autocratic state, financial elites, and fearful ordinary people who traded ultra-nationalism for the vagaries of democracy that wasn't delivering for them.

If this sounds familiar, it is being repeated today. The European Central Bank and Europe's political leadership, under German Chancellor Angela Merkel, put the needs of the banks first and the people last. We don't have full-blown fascism yet, but we have the preconditions.

A poll from the group Open Europe projects that anti-system parties could win 218 out of 751 seats, or 29 percent, in this week's European Parliamentary elections. That's up from 21 percent in the current Parliament.

An odd twist today is that austerity works for Germany, where the Euro is in effect an undervalued currency. There isn't much far-right activity in Germany this time because the Germans are prospering. Germany is able to export its unemployment. But hardly anyone else can.

Germany, the land that gave us the revealing word schadenfreude (joy at someone else's suffering) is profiting from the pain of the rest of Europe. Despite plenty of experience with fascism, Germany seems willfully blind to what occurs when people are pushed to the breaking point.

As economic oligarchs run roughshod over the livelihoods of working people, despairing people give up on democratic government as a counterweight and turn to ultra-nationalism and the far right. There is a bizarre alliance between plutocrats and the downwardly mobile. The elites laugh all the way to the bank.

The great prophet of this danger was not Karl Marx, but a 20th century political philosopher named Karl Polanyi. As Polanyi wrote, describing the destructive tendencies of market elites in the 19th century and the slide to fascism after World War I, "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."

As I recently observed in an essay in the American Prospect, this month is the 70th anniversary of the publication of Karl Polanyi's classic, The Great Transformation, which was published in May 1944. We also mark the 50th anniversary of Polanyi's death in May 1964.

Polanyi's point is that if we want democracy to survive, we need to beware of financial overlords and their ideological allies peddling free-market utopias.

The European Union was a project of farsighted statesmen who understood Polanyi's warning and who wanted to avoid a repeat of World War II. The idea was to contain Germany within a larger democratic whole, and to create a socially bearable balance between market economics and democratic citizenship.

The founders of the postwar European project learned from history: If people were to reject totalitarianism of the right or of the left, governments needed not to destroy livelihoods and liberties in the name of any abstraction, whether the ideal of a master-race, the dictatorship of the proletariat, or the god of laissez faire. But in the run-up to the crash of 2008 and in its aftermath, the EU has come to represent austerity for the common people and social protections for the banks.

The tragedy of the present moment is that half a century of statecraft is being wrecked in the pursuit of a conception of economics that serves only bankers and bondholders. Nor surprisingly, the people are having none of it.

The mordant German playwright Berthold Brecht, on hearing that a bureaucrat had reported the government had lost the confidence of the people, suggested that perhaps the government should dissolve the people and get another one. This, of course, is what dictators do, as they trade citizens for sycophants. The EU is in grave danger of collapsing into a project of elites who have lost the confidence of the people.

Here at home, we are not quite in a depression, but we see the same bizarre alliance between the very rich and the economically fearful. We see the same know-nothing lashing out against government, and the same destruction of democracy--by partisan blockades, rule by plutocrats and corrupted courts. And we see a center-left government too compromised and enfeebled to lead.

As Thomas Piketty wrote in his celebrated book, Capitalism in the 21st Century, the mid-20th century was an exceptional period in a more than 200-year history of ever more concentrated wealth. One of the exceptional things about the postwar era was that robust democracy not only gave working people a larger share of the system's total economic product, but made working people stakeholders in the democratic project.

Today, we are at risk of losing both a socially fair allocation of economic output and democracy itself. We should not be surprised when desperate people turn to nationalism and worse.

Robert Kuttner's new book is Debtors' Prison: The Politics of Austerity Versus Possibility. He is co-editor of The American Prospect and a senior Fellow at Demos, and teaches at Brandeis University's Heller School.

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