Quote of the Day: Economic Fascism

It is again worth noting that this is merely the most extreme manifestation of the economic effects of interventionism in the mixed economy. Since fascism is, in essence, a system of hyperinterventionism, the economic effects of the fascist system are merely the logical extremes of smaller "pragmatic" interventionist programs. Each intervention in a mixed economy distorts prices, misallocates resources to unproductive endeavors, and results in a net loss of production. At the same time intervention increases the value of political influence and thereby shifts effort from production to political lobbying.

With enough political intervention in the economy, this culminates in economic stagnation, then net capital consumption, and, finally, economic collapse, occurring when capital supplies become insufficient to sustain basic services. As this process occurs, parasitic groups in the system suck as much as possible from the dying economy, with their parasitic activities becoming increasingly frantic as the economy collapses and the resources available for capture become scarcer.

The problems with the fascist economic system become more and more clear, but there is no incentive for those in control of the state apparatus to avoid the approaching disaster. Since the only antidote to the problem is liberalization of the economy from state control, the cure for the economic decline threatens the personal livelihoods of the state bureaucrats and the ideological program of the higher-level members of the ruling regime.

Of course, it is true that sustained economic decline will eventually threaten the position of the ruling elite, particularly since they must make some appeals to the "public good" in their efforts to maintain their own power. However, their situation is threatened far more directly and far more immediately by the cure for economic decline than from the decline itself.

That’s from a brilliant article by Ben O’Neill at the Mises Institute on the Vampire Economy/authoritarian capitalism/state capitalism/ economic fascism. These conditions resonate or evinces signs of relevance to current developments here and abroad. Also, these represents the main cause why black markets or informal or shadow economies exists.