Chapter VII. The Empire of riches

In parallel with the establishment of the corporate system, the fascist state helped the big oligarchs get even bigger. For example, in the spring of 1926, a ban was announced on the creation of new companies with an authorized capital of more than 5 million lira. Expansion beyond this amount of existing companies was also prohibited. Getting around this limitation required government approval. It is obvious that such measures were used to protect the largest concerns of the country from unwanted competition.

Then the fascists undertook to facilitate the formation of large companies from several smaller ones. For this, in the summer of 1927, tax breaks were introduced for the merger of commercial enterprises. In cases where a lack of money hindered a merger, the government intervened, not only to help get the loans it needed, but sometimes by lending itself to the business. This was the case, for example, in 1929 with three chemical plants. Then subsidies were received from the state for the formation of the chemical concern ASNA, which in two years would have passed into the hands of the Italian MontecatIni, the largest chemical company in Italy, and into the hands of the German I.G. Farben.

 

Further. In 1928, the Bank of Italy received the unique right to regulate the direction of foreign investment. This gave it the opportunity to stimulate the development of a particular industry at it`s discretion. With the help of such manipulations, capital was directed not where foreign investors want, but where Italy's financial capital wants. And he wants to transfer funds to those with whom he is already friends - the largest concerns of the country.

Since the global economic crisis of 1929, the corporate system has also permeated relations between business groups. Confindustria, Confagricoltura and others received the right to conclude economic agreements between various groups of industrialists, agrarians, merchants, and so on. A little later, these functions will be transferred to the corporate system. However, any interference in the affairs of entrepreneurs will be possible only if the Confederations themselves ask and only with the personal order of Mussolini. At the same time, Duce considered it necessary to once again emphasize the sacredness and inviolability of private property:

However, while socialist syndicalism follows the path of the class struggle, setting the ultimate political goal of the destruction of private property and the suppression of freedom of personal initiative, fascist syndicalism, thanks to class cooperation, leads to corporatism, designed to make this cooperation systematized and harmonious. Protecting the right to private property, but within the interests of the whole society. Respecting private initiative, but within the framework of the life and economy of the whole Nation...

The most important step towards the enrichment of the Italian oligarchs was the law on the forced cartelization of enterprises in one industry, adopted in 1932. The decision on cartelization was taken by a majority of the entrepreneurs in this area, in other words, by the decision of Confindustria, Confagricoltura, and so on. The state was an instrument of coercion if someone refuses to obey the decision of the majority of entrepreneurs.

Unlike the previous period, when a similar trend took place among monopoly groups and cartels were of a private nature, they have now become mandatory and acquired state prerogatives. This means that if earlier cartelization took place on a voluntary basis and individual enterprises were free to join or not join the cartel (in the latter case, they were under the threat of a trade war from the cartel enterprises), now

a new situation arose in which a separate enterprise was obliged in accordance with state law, join the cartel and submit to its discipline, which was dictated by the largest industrialists leading the cartel. On the other hand, what was new, was the fact that the functions and powers of the cartels were expanded, and some state functions were assigned to them (for example, granting licenses for the import of raw materials, setting prices, etc.).

All these meant the obeyance of small and medium-sized businesses to the interests of the country's largest concerns. The oligarchs at the top of the cartels told other entrepreneurs how many orders and raw materials they could receive, how much and at what price to sell, and so on. And if anybody had a problem with that, the oligarchs could always refer to the government and ask help to resolve the conflict. It is clear what the outcome was like.

The fascists called such state intervention in the economy a part of corporate policy, which, allegedly, meets the national interests of the entire Italian nation. In other words, according to the fascists, the enrichment of the country's largest entrepreneurs is the main, national, state interest of whole Italy population.

If corporatism in the relationship between labor and capital completely compelled workers to the interests of entrepreneurs, then corporatism in Italian business completely compelled tens and hundreds of thousands of small and medium-sized enterprises to a small group of financial oligarchy.

Exactly the same policy would be adopted by German’s oligarchs and their Nazis.

It is especially interesting how the corporate state acted with the onset of the world economic crisis in 1929. If before that, according to the fascists, the national interests of Italy were in the policy of classical liberalism and the enrichment of the oligarchs through large-scale privatization, then with the onset of the crisis it became clear that now national interests lie in large-scale subsidizing of enterprises facing bankruptcy. First of all, the waste of the budget in the interests of entrepreneurs was explained by the national interest in preserving jobs.

To carry out the good old policy of losses nazionalisation, the state provided generous loans to entrepreneurs. As collateral, companies provided the state with a portion of their shares. Naturally, even if these shares were traded on the stock exchange

 

 

for mere pennies, the state assessed them strictly at their face value. However, all this did not mean that the loans received were aimed at saving businesses and jobs. Often, entrepreneurs used these loans to ditch unprofitable businesses and redirect funds to more profitable industries. Accordingly, the mortgaged enterprise went bankrupt and became the property of the state as a dead weight. Thus, with the help of budgetary funds, large tycoons did not save jobs, but bought up their smaller competitors who could not wait for the end of the crisis and were forced to sell their promising enterprises.

Such "encouragement of private initiative" strictly according to The Charter of Labor has turned into an ordinary embezzlement of budgetary funds. At the beginning of 1933, the fascist commission on the state budget writes:

We are very embarrassed that private joint-stock companies distribute dividends to private shareholders at the expense of the broad support provided to these companies by the state... The tasks of the fascist state by no means include the nationalization of industry, banks, agriculture, and trade. Despite this, bunch of bankers, industrialists, landowners, and merchants are pushing the state, for the sake of its temporary benefits, to the most diverse forms of participation in business or to direct management of their various undertakings.

Among the most important mechanisms for cutting the budget was the already well-known Consortium for subsidizing industrial enterprises. It should be recalled that a few years before, this semi-state Consortium paid off the private debts of the Italian Discount Bank, and also brought back the Ansaldo concern and the Bank of Rome from the dead.

In 1933, on the basis of the Consortium, the IIR - the Institute of Industrial Reconstruction was created. Initially, IIR was created to rescue the country's largest private banks, which were on the verge of bankruptcy due to the global economic crisis:

- Banca Commerciale Italiana;

- Credito Italiano;

- Banco di Roma, again.

 

 

To understand the scale of the problem, industrial concerns, which were associated with these banks should be listed:

- Enormous chemical concern Montecatini, Italian version of IG Farben;

- Resin giant Pirelli;

- Automobile concern Fiat;

- The biggest Europe electrical company Eddison

- Concrete monster Italcementi;

- Metallurgical combine Acciaierie di Terni, Italian version of Krupp;

- Not so lucky manufacturing giant Ansaldo, which again was at the edge of bankruptcy;

- And so on.

As a result of the operations carried out by IIR, it became the holder of 94% of the shares of the Italian Commercial Bank, 78% - Credito Italiano and 94% - Bank of Rome. Thus, by 1934, with the help of financial institutions, the state controlled almost half of the share capital of Italy.

Looking at the whole affair, Mussolini stated:

When an enterprise appeals to the capital of all, its private character ceases, becomes a public matter or, if you prefer it, a social one... We proceed from the premise that property should be considered a social function.

In other words, if an entrepreneur is doing badly and he is experiencing a lack of capital, then the people have to get down on their knees in front of him and from their own expenses compensate him for all his private failures, so to speak "encourage private initiative." The golden rule of capitalism is that the problems of the entrepreneurs are the problems of the workers, but the problems of the workers are not the problems of the entrepreneurs.

However, it is important to note that corporatism itself did not imply the nationalization of the economy. The fascists only talked about bringing order to the economy with the help of the state. But neither the nationalizations of any branches of industry, nor the creation of their own industrial concerns were carried out. The fascist policy in this area followed the path of financial regulation of the economy in the spirit of the Institute for Industrial Reconstruction.

Private companies were able to pay off their debts. As a result, in the second half of the 1930s, many of the enterprises, rehabilitated at the expense of a single nation,

 

returned, instead of nations hands, to the private ones. However, the state, represented by IIR, retained control over the country's leading credit institutions, as well as over a number of military enterprises. In other words, IIR tried to control, but not to liquidate, private ownership of the means of production.

When considering even in the most general terms the activities of the IIR, we have to admit that, striving to serve as a link between the state and private enterprises, it directed its activities exclusively towards rendering assistance to enterprises dependent on it and their financing. The IIR's activities were actually limited, on the one hand, to providing assistance mostly through financing, and on the other, it was reduced exclusively to accounting and administrative control, expressed in the appointment of auditors and administrators, without the slightest interference in drawing up a technical and economic plan on a large scale...

We get back to this organization little bit latter again.

Finally, in 1934, there was a turning point in the organization of the corporate system - the long-awaited corporations were created. It was planned to create them 8 years before, when the law on the organization of labor relations was adopted. However, for all these years nothing has been done except for the ministry of corporations and the nationalization of trade unions.

So, a total of 22 corporations appeared, representing 22 economic sectors. Each corporation consisted of the same number of representatives of the fascist trade unions and the employers' unions, plus three from the fascist party. The chairman of each corporation was personally Mussolini.

Let us explain the meaning of corporations once again: the state creates a platform for negotiations between workers and employers, and itself acts as an arbiter who makes the final decision, supposedly taking into account the interests of both parties. The interests of the workers are protected by the state. Entrepreneurs protect the interests of entrepreneurs on their own. In principle, corporations could deal not only with issues of labor and capital, but also with issues of relations between various groups of entrepreneurs. But only if they themselves ask for it and only with the personal order of Mussolini.

For the creation of such a corporate system, the oligarchs literally sang the praises of their leader. In the same year, the next meeting of Confindustria was held. The rubber king Alberto Pirelli ended his talk like this:

 

Especially during this period, I felt more than ever how great a blessing it is for all of us to have such a Leader who will kindly listen to everyone and at the same time know how to make decisions in a timewise manner; such a leader simplifies the most difficult tasks and builds trust; even the thought of his presence and the atmosphere of zeal that he creates around him makes people perform difficult tasks and believe in themselves when there is no longer faith in their hearts.

Duce, your unstoppable fortitude finds an exciting response in the hearts of Italian industrialists, who understand their important mission of producing the necessary products in an atmosphere of social justice and feel the trust that you place in them. All the aspirations of industrialists will be aimed at making our Motherland greater and more respected in the world. We will be worthy of your trust, we will justify your recognition, loyalty and respect.

Comrades industrialists, long live the Duce!

For the public, however, all this was portrayed as a supra-class structure designed to implement social justice and eliminate class divisions:

The current crisis marks the end of liberal capitalism, an economic system that emphasizes individual profit motives, and heralds the beginning of a new economy that emphasizes collective interests. These collective interests will be realized... through a corporate system based on self-regulation of production under the auspices of producers... When I talk about producers, I mean not only employers, but I also mean workers... Addressing the people of Bari, I said that the economic goal of the fascist regime is greater social justice for the Italian people. What do I mean by greater social justice? I mean the guarantee of a job, a fair wage, a decent house, I mean the possibility of development and improvement... If modern science has solved the problem of increasing wealth, then science, spurred by the state, must now solve another great problem, the problem of distributing wealth, so that the illogical, paradoxical, and cruel phenomenon of need in the midst of abundance does not repeat itself.

In fact, everything turned out to be exactly the opposite. The class world, i.e., when the workers no longer go on strike was achieved by street terror and repressive police apparatus. As for the cooperation of labor and capital within the corporate system, it came down to the obeyance of workers interests to the interests of private capital. The principle of equality in corporate bodies was a complete fiction: entrepreneurs defended their interests themselves, directly or with the help of expensive lawyers,

 

 

corruption and connections in the highest echelons of power, and the interests of workers were defended by a trade union official appointed by the government.

This solidarity between workers and entrepreneurs was incredibly beneficial for the latter: it left them wide scope for evading decisions, opened up numerous opportunities for machinations against their partners in class cooperation.

When the actions of entrepreneurs too harshly contradicted the law or a fascist official decided to play in the interests of the workers, then it was always possible to directly contact the Ministry of Corporations, the National Council, the fascist party or personally to Duce with a request to put pressure on the official or even replace him for the good of national production and a unified Italian nation, of course.

All this against the backdrop of the absolute insecurity of the people from unemployment. No mass layoffs have been banned; no guaranteed job is implied by class cooperation. When the economic crisis of 1929 struck, it became clear that it was in the interests of the Italian nation to transfer as much money as possible to entrepreneurs, if possible, only to oligarchs, and throw Italians, taken by the collar, into the street. In 1929 there were 300 thousand unemployed in the country, and in 1933 - more than a million!

At the same time, fascism was declared a regime that "for the first time in the history of mankind destroyed the unilateral power of capital." The corporate system was presented as a special, non-socialist, but at the same time non-capitalist system, “harmoniously reconciling the interests of labor and capital”, “combining private initiative with state control” and canceling the agenda of the socialist revolution. "Corporatism" was declared synonymous with "social justice", and the corporate machine was declared the most effective instrument of "social progress."

In their propaganda, the fascists tried to use even the socialist past of Mussolini. This scoundrel, traitor and murderer was portrayed as a friend of the Italian people, essentially remaining true to his past.

The "popularizers" of corporatism, especially its "left" variants, tried to convince the workers and petty bourgeois masses that Mussolini's corporate cooperation with the bourgeoisie was only a maneuver on the part of the Duce, that he was secretly seeking to overthrow the power of the financial sharks. Therefore, the more unconditionally the masses

obey Mussolini and his henchmen, the sooner and more painlessly that desired "social justice" will be established, which Mussolini allegedly strives together with the people.

These monstrously false, in their absurdity similar to nonsense, fairy tales for a number of years were repeated in every way by the fascists, their corrupt journalists and hangers-on. And I must say that this disgusting in its shamelessness and cynicism, demagoguery and self-promotion enjoyed a certain success not only then, but today it delights all kinds of propagandists and the entrepreneurs and politicians behind them.