A recent reader of my book, “The Scourge of Neoliberalism: US Economic Policy from Reagan to Trump”, Clarity Press, January 2020, recently asked why I argued in the book–i.e. on the topic of the contradictions and crisis of Neoliberal policy–that even a future fiscal stimulus may not prove sufficient to generate recovery from the next recession around the corner. A theme in the book is that Neoliberal policies are facing greater contradictions, Trump is failing to restore the momentum of Neoliberalism that was in effect from 1978 to 2008-09. Thus something different, a new policy mix and regime that is not Neoliberal will likely follow in the 2020s. One possible form could be a US specific version of fascist economic policies. The second question asked me is what might that look like?
The following is my reply, shared here with readers, as to why traditional fiscal policies likely won’t prove sufficient to generate recovery from the next recession, even if not Neoliberal; and my preliminary comments on what US-specific fascist economic programs might look like.
1. Why fiscal policies won’t have much stimulus effect in a 2020s Post-Crisis Recovery
The multiplier effect for tax cuts is always less than for direct government spending. Even more so for business-investor tax cuts. For 20 yrs now the main stimulus approach for fiscal policy has been business-investor tax cuts. They’ll likely do that again, whoever wins the election and faces the recession in 2021. But there are even further depressing effects of such tax cut stimulus occurring now. One is globalization. Much of the result of the tax cuts for business is redirected overseas to emerging markets. So it has little effect on the US economy. Even more so is the other diversion: into financial markets. (Global stock market values surged from $35T to $85T from 2010-18, a 200% increase). Non-stock financial markets (called capital markets) surged by 600% as well. So financialization is negating the multiplier effect of tax policy. What about cuts to household consumer taxes? Here the problem for the multiplier is that the tax cuts get diverted in part to pay for the principal and interest on the massive $15Tin US household debt. It doesn’t get spent on new consumption.
What about government spending programs as fiscal stimulus? Multipliers are usually higher. But government spending on infrastructure, for example, is longer term. It’s initial impact in a recession is weak and delayed. Besides, the neoliberal corporate parties (both wings of the corporate party of America) are resistant to spending on infrastructure and have shown they are both willing to reduce social program spending. What about other non-infrastructure government spending? It could have a stimulus effect, but it is viewed as the way to reduce the US deficit (created by tax cuts and war spending hikes). So what about war spending by government? Is that stimulating growth? Not so much any more. War goods production is not labor intensive as it used to be. Costs of aircraft, missiles, etc. are very high per item. Production processes don’t require as much labor any more. And much of the production is offshored to US allies (reducing labor content and thus wages and thus the multiplier effect even further). So in toto, multipliers are weaker today even for war spending.
2. What might US-specific fascist economic policies Look Like
Fascist economics is closely associated with what’s called ‘corporatism’. It is a very close alliance between capitalists and the state. The two meld even more than under ‘normal’ capitalism. The State plays a greater, more aggressive managerial role in determining what’s produced and by which companies, distribution, and in general guarantees the profits of business by various means. When the state wants to expand geographically (as did Germany and Italy for example), the state directed production takes on a military character. I don’t think US corporatism will assume that character. It is already, pre-fascist, highly developed in that military economic sense. The future US fascist state will find new ways to subsidize US capital. It will play a bigger role in financing technology development, controlling labor markets and thus unions and wages, and defending the US global economic empire by asymmetrical military spending and space form spending (to check Russia and China). It’s hard to see how US corporatism and fascism will assume form. It will become clearer once the next crisis erupts and the State has to bail out the capitalists again. But we’ll see its early outlines in 2-3 years I believe. Fascism is bigger than just the experience of Germany-Italy-Iberia last century. The US form will be different. But no less fascist in the broader sense of State-Corporate integration.
Dr. Jack Rasmus
copyright 2020
Dr. Jack Rasmus @drjackrasmus
Jack Rasmus 
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