Underargued claims, installment #1437

From Tim Wu, in a recent NYT Op-Ed, he presents a polemic against “monopoly”:

Postwar observers like Senator Harley M. Kilgore of West Virginia argued that the German economic structure, which was dominated by monopolies and cartels, was essential to Hitler’s consolidation of power. Germany at the time, Mr. Kilgore explained, “built up a great series of industrial monopolies in steel, rubber, coal and other materials. The monopolies soon got control of Germany, brought Hitler to power and forced virtually the whole world into war.”

To suggest that any one cause accounted for the rise of fascism goes too far, for the Great Depression, anti-Semitism, the fear of communism and weak political institutions were also to blame. But as writers like Diarmuid Jeffreys and Daniel Crane have detailed, extreme economic concentration does create conditions ripe for dictatorship.

The first ten words are already a give-away, as is the beginning of the second cited paragraph.  For contrast, this is from Thomas Childers, well-known historian of Nazi Germany:

In his biography of Henry Kissinger, historian Niall Ferguson notes that “old man Thyssen” — that is, German steel magnate Fritz Thyssen — “bankrolled Hitler.” Businessmen such as Thyssen using their financial assets to assist the Nazis was “the mechanism by which Hitler was funded to come to power,” according to John Loftus, a former U.S. attorney who prosecuted Nazi war criminals.

But the Nazis were neither “financed” nor “bankrolled” by big corporate donors. During its rise to power, the Nazi Party did receive some money from corporate sources — including Thyssen and, briefly, industrialist Ernst von Borsig — but business leaders mostly remained at arm’s length. After all, Nazi economic policy was slippery: pro-business ideas swathed in socialist language. The party’s program, the Twenty-Five Points, called for the nationalization of corporations and trusts, revenue sharing, and the end of “interest slavery.”

And Wu’s two other cited sources?  Both focus mainly on IG Farben.  Diarmuid Jeffreys is “an award-winning journalist and television producer with thirty years’ experience in the media industry.”  He does have a book on IG Farben and the making of the German war machine, but it does not demonstrate how economic concentration brings totalitarian regimes to power, instead focusing on how IG Farben profited from Nazi war aims and helped build the Holocaust.  Earlier in the 1930s, IG Farben had in fact resisted Nazification. though the company did jump on board once it saw Nazification as inevitable.

Here is the Daniel Crane essay on antitrust and democracy.  Try this excerpt: “… it does not necessarily follow that Farben’s monopolistic position in the German chemical industry is causally related to the rise of fascism—or that monopoly enabled Nazism. Two matters should give us pause before making such an inference.”  Read p.14 to see what follows, but here is one tiny bit: “Though gigantic, Farben remained smaller than three American industrial concerns—General Motors, U.S. Steel, and Standard Oil. Nor was Farben’s wartime market power exceptional.”  On the other side of the ledger, Crane does note that fascistic governments, once in power, find it easier to take over and co-opt more highly concentrated industries, Farben being an example of that.  So there is an argument here, but mainly one data point and also some very serious qualifiers.

Does that all justify the sentence “But as writers like Diarmuid Jeffreys and Daniel Crane have detailed, extreme economic concentration does create conditions ripe for dictatorship.”?  “Ripe” is such a tricky, non-causal word.

I would instead stress that war, civil war, scapegoating, and deflation create the conditions “ripe for dictatorship.”  You might want to toss Russia and China into the regression equation, or how about Cuba and North Korea and Albania and Pol Pot’s Cambodia?  How would the coefficient on industrial concentration end up looking?  I’d like to know.

When big business is the target, and tech in particular, the standards of proof for Op-Eds seem to decline.  Somehow, because we all know that the big tech companies are bad, or jeopardizing democracy, it is OK to make weakly argued claims.


I couldn't follow how monopoly promotes Trump, in that famous quasi-monopolists like Jeff Bezos, who has gotten incredibly richer since Trump's election, owns the vociferously anti-Trump Washington Post.

In the ultimate conspiracy world, Bezos and Trump meet in secret, coordinating tweets aimed at making a frenzy of condemnations, and feeble minded responses from the WaPo, and likewise, Trump and Carlos Slim (major NYT shareholder) conspire as well!

Today it is "old mad Soros" who is bankrolling the radical left. There is indeed a serious problem of a rise of fascism but it is on the left.

There are lots of trump supporters with regular columns in the Washington Post. I do not see the Washington Post as "vociferously anti-Trump"

It's a lot different from Fox News.

Can you name those "trump supporters with regular columns in the Washington Post" ?


Hugh Hewitt comes instantly to mind, as does Mark Thiessen.

I think the point is that we do not have fascism currently. There is not yet a mechanism for a strongman to consolidate control through the diffuse, bureaucratic power structure of US government, despite their best efforts. On the other hand, there is little argument to be made that a massive amount of *economic* power is held by a minute fraction of US society. So the question is, what happens if something changes and a strongman does consolidate government power? Can you think of many such examples in other countries, following which the primary holders of economic power happily give up that power to the dictatorship? As opposed to joining with it? Not sure how Russia or China argue against that case...the folks with the money are indeed also the folks, or closely affiliated with the folks, who have consolidated all the political power.

If I include China and Russia/USSR in the regression, I have a regression analysis of one point, with a small correction for Russia, if the communist regimes/dictatorships are weighed with respect to the number of subjects/victims.

Strange how the actual birthplace of fascism was not included when Prof. Cowen stressed that 'war, civil war, scapegoating, and deflation create the conditions “ripe for dictatorship.”' But then, dictatorship is such a slippery word, isn't it? As is nationalism, which seems to have been a primary well spring of Italian fascism.

'Postwar observers like Senator Harley M. Kilgore of West Virginia' is a give-away? Of what? https://en.wikipedia.org/wiki/Harley_M._Kilgore

'but business leaders mostly remained at arm’s length'

Except when the Nazis were useful to counterbalance Soviet efforts to influence German politics - Germany was in turmoil as the rise of totalitarianism was played out within the wreckage of German society after WWI.

'“Ripe” is such a tricky, non-causal word.'

Well, mainly because ripe describes a condition, and not its cause.

'You might want to toss Russia and China into the regression equation'

Or not, considering how neither nation came close to have an industrial society before the rise of their totalitarian regimes.

'how about Cuba and North Korea and Albania and Pol Pot’s Cambodia'

See above.

'the standards of proof for Op-Eds'

Isn't the whole point of 'O-Eds' that they are opinions, and thus standards of proof are not exactly a requirement? Much like declaring a cherry is ripe for the picking, even if different cherry pickers may have different opinions.

Russia was industrializing rapidly before 1914. I thought the primitive Communist propaganda about backwards Tsarist Russia had been laid to rest years ago.

Russia is kind of complicated. but essentially, the Tsarist system was one with a monarch and landed gentry in charge, with any industrialists having considerably less power than in other nations with industrial capacity.

As one can see by how the entire Russian Revolution(s - 1905 and 1917) worked out, where industrialists played pretty much zero role. In large part because industrialization was to a major extent controlled by the Tsarist government itself, creating conflicts between those in charge of government and workers, without industrialists of the Western variety playing much political role.

Russia enacted an agrarian reform in 1861 which transferred allodial rights over rustical lands to the peasantry. Further payments on the bond issues which were to compensate the seigneurs for their loss of any rights over those properties and loss of compulsory labor services were discontinued in 1906. The Stolypin ministry was also working on reforms sorting out land titles on newly settled Siberian territory. The process was about 25% complete before the war. N.B., Russia's agrarian reform legislation post-dated the Hapsburg legislation by only 13 years. It was also a much better deal for the peasantry than the early 19th century Prussian legislation, because it transferred land tenures to the peasantry rather than just abolishing hereditary subjection and compulsory labor services.

Again, Russia was not in 1914 an autocracy. Elected conciliar bodies in local government had been the order of the day for about 50 years and the imperial legislature had been revived in 1905.

The Maddison project's latest release indicates Tsarist Russia's per capita output in 1913 was about 35% that of the United States, about 45% that of Britain, about 55% that of Germany and France, about 75% of that of Spain and German Austria, on a par with Italy taken as a whole. and leading both Portugal and Japan.

"Isn't the whole point of 'O-Eds' that they are opinions, and thus standards of proof are not exactly a requirement?"

I can have a opinion substantiated by good arguments or I can have an opinion based on hate. Just wondering what is controversial on noticing that the standards of any public discourse is declining when we move from the first to the second...

I can have an opinion motivated by love and substantiated by good arguments or an opinion motivated by hatRED and substantiated by good arguments or an opinion motivated by love and substantiated by bad arguments or an opinion motivated by hatred and substantiated by bad arguments ...

Right, an opinion is not an argument; there might or might not be an argument offered in support of an opinion.

If you say, "my favorite color is orange," you are making a claim about what your favorite color is -- a claim that might or might not be true. You might be lying about what your favorite color is. Your claim conveys your opinion (=belief) about your preference. It's hard to see how you could be deceived about what your favorite color is, though, so it seems that your opinions about your color-preferences are necessarily true.

Young people today almost universally take "opinion" to be synonymous with "preference" -- isn't that strange? One has opinions ABOUT one's preferences, and if these are opinions about presently, powerfully felt preferences (as opposed to long-term, fairly obscure preferences) these are always true -- but one's claims about one's preferences may be true or false; people can lie about their preferences.

"I can have an opinion motivated by love and substantiated by good arguments"

Or I can have an unmotivated opinion substantiated by good arguments. And if I don't have good arguments, I won't opine, or be very pronounced that I'm more unsure than sure. Isn't that the point that writing an OpEd obviously motivated is quite a low standard - and yet considered OK these days?

Fascinating to see what is and what is not allowed here - such at using favorite food as a way to show that opinion is not an argument.

Colors are out of bounds too, apparently.

So.... do you associate business interests and economic concerns with fascism?

Hitler might have been helped, at the beginning, by business afraid of the social democratic threat. But by the late ‘30s Germany, the political side was absolutely dominating the business side of the corporativist State, with even the patriarchs of the great family enterprises reduced to yes-mes of the Party. “The vampire economy” of Gunther Reimann is a good contemporary account: https://mises.org/library/vampire-economy.

There are other cases, of course, where the business interests are dominating. Central America at the start of last century, with Standad Fruit making fake revolutions in the banana Republics is a good example. However, even in those cases, once in a while a particularly gifted and ambitious politician can suddenly change the equation. It happened in Honduras in the ‘30s, in Guatemala in the ‘50s. A more recent example might be Putin’s Russia. And usually, when politicians have the upper hand, they do not give up the power, and businessmen become the junior partner of the coalition. For even money is powerless in front of the rifles of the thugs of the State backed by the raw violence of the mob and its collectivistic ballot box.

The only real constraint to politicians becomes therefore the economy. It might take 5 or 30 years, but autocratic regimes always breed corruption, nepotism and dysfunction, and after enough time they exhaust themselves. Even Nazi Germany might have ended like that if the war had not start. Soviet Russia did.

'by business afraid of the social democratic threat'

No, German businesses had no problem with the 'social democratic threat.' They were worried about the communist threat, well financed by the Soviet Union. Rosa Luxemburg being an exemplar of the sort of person German business saw as a threat. A woman who founded what became the KPD after the social democrats decided to support the German war effort in 1915.

Socialists, particularly of the far left Luxemburg variety, despise social democrats, and it is sad to see how people are apparently unaware of this. Of course, part of this may be due to whatever current confusion the American 'democratic socialists' create with whatever incoherent political beliefs they espouse.

My father's parents called themselves "socialists" (voting for Norman Thomas) and were democratic socialists who saw communists as enemies and were seen by communists as enemies. My grandmother said that a communist acquaintance of hers had told her, "You socialists ought to all be shot" or something like that. My no-doubt erroneous impression growing up was that the NYC Jews of that generation were divided between the opposing camps of (democratic) socialism and communism with maybe 2/3 of them socialists and 1/3 communists. David Horowitz of Frontpagemag seems to be unaware of the existence of any (democratic) socialists at that time, though, which seems strange. (My father is proud of the role that my grandfather played in ridding some NYC school board of communists.)

'(democratic) socialism'

Social democracy is a 150 year old political ideology.

Though I have been aware of Sanders since his election to Congress as an independent in 1990, something that had not happened for decades previously. He was generally politically described as 'independent,' but also as a socialist, without any 'democratic' attached.

However, the term 'democratic socialism' was something that seems to have bubbled out of the 2016 election, certainly to my awareness. Nonetheless, I'm sure that some people use the term, though they may not agree on what it actually means. Unlike the case of social democrats, who have had 150 years to make their political positions relatively understandable and consistent.

The SPD was the party of Rosa Luxembourg, at least until a few months before her murder. Still at the Congress of Heidelberg, in 1925, the platform was fully Marxist. It is only in 1959 that the SPD started to adopt a platform similar to what is today. The Italian Communist party did it in 1975 with Berlinguer speech about NATO, and about that time the French Socialists. In the first quarter of the XX century, there was little difference between “communism”, “socialism” or “social democracy” in all Europe. In many case the Communist party did not even exist, the extreme left party was either the socialist or the socialdemocratic.

I was using the term with its historical meaning, not referring to Sanders.

Well, easy come, easy go when talking about the Spartacist uprising, or how the Soviets consolidated their own brand of socialist orthodoxy, or how the ambitions of politicians can lead to new parties arising.

Massimo, even if you were right, we are not talking of 1925, when Hitler was a poor loser in jail and the Nazi party very small, but of 1933, or the period 1930-1933, when the quick rise and accession to power of the Nazi party happens.

But actually, Clockwork_prior is right that the German social-democratic party was, as soon of 1915 and even before, deeply divided between a revolutionary tendency (later called Spartacist and then communist) and a reformist tendency, who will keep the name of "social-democrats". There were similar divisions, at different level of ripeness, in most of the social-democrat party of Europe. In 1919-1921, almost all these parties split into two hostile parts, one "socialist" or "social-democrats", the other "communist". And there was an obvious and major difference between them, from the beginning: that the second supported Soviet Union and took orders from it, while the first did not.

I do not dispute anything you or clockwork says. The split between a Soviet backed insurrectionist wing and a tamer social democratic main component was indeed ripe almost everywhere in Europe.
It was not even the main point of the discussion, but I just stated that when Hitler rose to power, the leftist threat was the SPD, not the spartacists, that were annihilated in 1919.
The SPD of the ‘30s was Marxist in its aims, although not in its method, and as such, it was an obvious threat for corporativist or classical liberal elements.
I think we are disputing on a semantic difference that has its roots in history: “Social Democratic” today means simply a society with significant wealth redistribution, but still based on a market economy. Before the war it meant a fully Marxist society, with complete nationalization of the means of production. Of course large companies like Krupp or Mannesmann had to do whatever they could to avoid a government dominated by the SPD.
Words change meaning in a century. Sanders or today SPD is not the SPD of 1933 (although what they propose, if really implemented, would bring along the same results in the long term).

The KPD during Weimar is extremely underrated as a contributory factor in the rise to power of the Nazis. Not only was the Party's leader, Ernst Thalmann, a Soviet stooge who turned the German communists into a Leninist-Stalinist party (the horrors of this system were widely known by the mid 1920s) complete with street thugs along the lines of Lenin's favored "truly hard people", but he also made every effort to alienate anyone who was not a communist or at least a socialist ideologue, warning of the threat presented by the "social fascism" of the SPD, refusing to work with them, and stating that the goal of the KPD, once in power, was to overthrow the bourgeios state and initiate a dictatorship of the proletariat on the model of the Bolsheviks in Russia.

It's little surprise the German middle class, fearful of falling to the same fate as the kulaks in Russia, voted for the fascist party that promised to deal with the communists the way Mussolini had dealt with them in Italy.

Fascism is a response to a rising challenge by the left to take power coupled with a center-right lacking credibility. The wealthy monopolists would rather have center-right government in power but when the center suffers a loss of legitimacy the business interests are left (perhaps reluctantly but willingly non-the-less) to throw their support behind the fascists. That’s basically the mechanism every time. The businesses are not the core supporters but they end up coming around later. Tyler will be up here “reluctantly” supporting the fascist candidate here too if it ever comes.

Left and right have weak meaning in this context, as does "Fascism", which is most concisely a term for a particular kind of totalitarian ideology that emerged once (or twice) in Nazi Germany and Fascist Italy.

> a rising challenge by the left to take power

Social progressives? Economic progressives or economic authoritarians, like socialists and communists? Because one central facet, in my view, of Nazi Germany was a high degree of control over economic concerns, using (iirc) price controls, quotas, and installing political operatives within business with the aim of ensuring both that a given concern operates to serve socialist (here meaning "socially desirable" i.e. nationalistic) aims and that the concern produces output to support the war effort (really a consequence of total war).

> The wealthy monopolists

Which wealthy monopolists? Monopolies are difficult to spot in the wild. Not relevant.

> business interests throw their support behind the fascists

Is it fair to insinuate that this support is voluntary, given a context in which business may be and are constrained by the state, both explicitly, through installation of political operatives, and implicitly, by the exercise of prerogative in allocating raw material across business concerns?

> "that's the mechanism every time"

"every time"? Please point to clear examples of extant fascism outside of Nazi Germany or Italy, It's not clear what you're thinking of, and I don't think you're making any sort of true, fair, or honest generalizations.

'Fascism is a response to a rising challenge by the left to take power coupled with a center-right lacking credibility.'

Mussolini is laughing theatrically, but then, Il Duce was always noted for being theatrical.

But these days, we apparently ever so conveniently ignore that fascism in Italy was firmly rooted in nationalism.

What do you think of Israeli or Tibetan nationalism?

What do you think of Cherokee Nationalism?

I think every people should have their nation to be nationalist about. Practically though, the Cherokee nation doesn't exist in much of a meaningful sense, similar to the Palestinian ation.

Regardless of whether it is a bad argument, it is obviously the wrong argument for our times.

It is much simpler to look at China and see what a social media that works hand in glove with government looks like.

Could that happen here? Not immediately, because forces are misaligned, but certainly it is something to be wary of long-term.

(Obviously this is a strange time in American politics, when a president commands vote counting cease, and everybody just ignores that because they know he's a dotard, afraid of the rain.)

Without social media, the general public would be largely unaware of Broward County's long history of election "irregularities," destroyed ballots, and violations of court orders. I get that it's inconvenient for his opponents that Trump is trying to interfere with the theft of an election, but bringing sunlight to corrupt government is the furthest thing from fascism.

'the general public would be largely unaware of Broward County's long history of election "irregularities,"'

You mean like in 2000?

I guess there's someone to go along with anything, for instance the idea that you can presume without evidence that a county's votes are tainted, and so not count them!

Fortunately judges and rule of law will prevail.

And Peter, if you are listening, it was probably the worst possible week to declare for 2020.

Of course Cowen defends monopoly, as he often does in his blog posts; indeed, the intellectual movement that is responsible for the Mercatus Center, the Mises Institute, and similar organizations was motivated in large part by opposition to anti-trust enforcement. Cowen's friend Peter Thiel advises his followers that monopoly is the key to business success. Big is good, bigger is better, biggest is best. Have a nice day.

Last week Cowen linked to a short talk by him in which he made the point that the demand curve slopes downward. What does that have to do with monopoly? A whole lot according to defenders of monopoly.

Just listen to the supporters of democracy themselves: "I no longer believe that freedom and democracy are compatible". That was your patron, Mr Thiel.

Two wolves and a sheep voting what's for lunch. Democracy and freedom are often in conflict.

So you're not a supporter of democracy either. Not surprising in the least.

The statement "Democracy and freedom are often in conflict" is neither an expression of support nor opposition to either democracy or freedom. It's an observation.

Can you find a historical example of your libertarian order supervised by a despot? Augusto Pinochet presided over a salutary economic liberalization, but in no way could you call Chilean public life free.

In China, one could argue that lack of economic concentration caused communist rule; World War II and the post-war hyperinflation essentially destroyed any semblance of a commercial class that could have provided a meaningful political base for a non-communist movement. This argument doesn’t really even work for Nazi Germany itself; their political base was in the rural eastern part of Germany, not the industrialized western part. Just like in the US today, industrialists supported many parties to hedge their bets, but it was not the industrialists who voted the Nazis into power.

I thought that there was huge inflation, not deflation, in Weimar Germany ...?

Both, basically separated by a decade.

However, it was a deflationary crisis that brought the Nazis to power.

There was hyperinflation in 1921-1923 and deflation since 1930, I think

The deflation is what boosted the Nazis. Hyper inflation was over long before Hitler was anybody.

The injury to production levels was more severe during the hyper-inflation. What I'd wager is that the loss of the war and the hyperinflation weakened the prestige of the German establishment and the economic implosion after 1929 was another blow which finally brought the edifice down.

It's also worth noting that most large corporations donate to all major political parties. I haven't checked but would be very unsurprised if IG Farben, Thyssen, et. al. donated to basically everyone.

Funds from big businesses like Krupp and Thyssen helped pay the wages of SA thugs, so in that sense, they did help bankroll the Nazi's ascension. It's worth noting that many of them did so because they were rattled by the gains the communists made in the elections in 1932, not because they were committed to Nazi ideology. Several of them had initially favored other right wing candidates like Franz von Papen, but threw their support behind Hitler once his star began to rise. Source: William Manchester's The Arms of Krupp.

The Communists openly advocated killing the Industrialists and their families. Thus they grasped at any counterbalance they could find.

True. True. Gustav Krupp became the party's biggest fundraiser after 1932, though, and benefited enormously from weapons supply contracts from the re-arming Reichswehr or whatever it was called in those days. There was in fact a kind of ugly partnership between German industry and the NSDAP, with government funds flowing to industry, and the schlotbarons taking a cut of the profits and passing on to the SS, the Hitler Youth, senior party officials, etc.

Nevertheless, you have to squint pretty hard at all this to avoid noticing that the Nazis were the prime movers here, not the Krupps or IG Farben or whoever.

I thought Henry Ashby Turner's Big Business and the Rise of Hitler (1985) was the last word on this. One event in his book says it well. A few days before the Reichstag gave Hitler dictatorial powers, some Nazi sympathizers among the employees of the Reichsverband der Deutschen Industrie (the national industrial league or Spitzenverband for German industrialists) hoisted a swastika banner above the organization's headquarters. The leadership of the Reichsverband had it removed, whereupon Nazi Storm Troopers forced their way into the building and raised the swastika banner again "in order to teach the Reichsverband respect for the new flag." Hitler and his thugs were fully in control of Germany and had no need for enablers in big business.

Tim Wu had a duty to do his homework before he leapt into print.

This is right. And it is also notable that the Nazi Party already won the 1932 election, not only in the sense that they were the bigger party, but more crucially in the sense that they had obtained a little more than 37% of the member of the Reichstag, and the communist party a little more 14%, and since the communist party had made clear it would be
in no coalition with anyone (not even with the social-democrats), and 37 + 14 > 50, any coalition with a majority at Reichstag would mathematically have to include the Nazi party. What kept them out of power for six more months was the president Hindenburg claiming exceptional powers to govern without a majority. But the point is that it is quite a stretch to say that the industrialists helped the Nazis to gain power. Actually, they began supporting massively the Nazi only when they have almost already taken power.

Cuba and Russia were already dictatorships when the communists took over. Korea was a Japanese vassal state, not sure what you'd call that but you could argue for dictatorship as well.

The interesting case is slipping from an established democracy to a dictatorship.

If I'm not mistaken, the Cuban political order from 1908 to 1926 and again from 1936 to 1952 was fairly pluralistic and relied a great deal on electoral contests. It also featured higher levels of public mobilization than was common in other Latin American countries. I think about 1/2 the adult male population cast a ballot in the 1920 general election, to take a case in point.

Russia in 1917 was in flux. The Tsarist regime began experimenting with electoral institutions around 1860 and conceded an elected general legislature in 1905. The Bolsheviks did not prevent the previously schedule constituent assembly elections from taking place in November 1918, though they dispersed the assembly after one day because it was dominated by radical agrarians rather than reds.

Given that Batista led not one but two successful coups, I think the fragility of the Cuban democratic system was more notable than its breadth. When Castro took over it was from a dictator with a secret police that was basically a band of roving murder squads.

I think it's fair to call most (all?) of the societies that Tyler mentions "in flux". That's why the ones that are more settled, like Weimar Germany, stand out, and are better comparisons to current settled democracies that are showing signs of moving toward fascism.

It is a shame that MIses' Omnipotent Government is not more widely read, as it contains what I view to be the most credible account of how and why the nazis rose to power.

" extreme economic concentration does create conditions ripe for dictatorship."

This seems to be a bullshit statement. I don't see any fundamental correlation between economic concentrations and dictatorships. High value economic concentrations create an economy capable of supporting a large scale war machine. This makes Hitler and the Nazi's exceptional in their war making capability. It doesn't seem to have uniquely contributed to a dictatorship.

There were no high value economic concentration in Spain, and yet Franco ruled for far longer than Hitler did. He just didn't have the military power to take over a continent. Nor did Cuba have any, and yet Castro was far more successful than Hitler. Ditto, any of the South American dictatorships.

Frankly this statement is silly and it's trivially wrong.

What I'm saying is maybe there was a time when industrial might translated into political power but that day is obviously gone. So why even?

We aren't interested in whether the board of US Steel is tight with the President, we worry about a world where the President of Facebook is *also* the President of the United States.

Maybe don't vote for him, then.

Sometimes the bad guy wins!

That has nothing to do with Facebook, though.

Ultimately, it comes down to the strength of the underlying institutions and the country's commitment to democratic government. Britain consolidated enormous industrial power into the hands of the government after WWII, but when enough people grew tired of the impoverishment that that produced, they voted to reverse the nationalization process -- i.e., to strip power away from the government -- and the government complied.

CNTRL + F + "patents" shows no hits in this comment, and, I bet even the polemicist Tim Wu doesn't mention patents as "patent monopoly", the traditional way to dis a patent. Shows how ignorant people are. Like taking about the weather and failing to mention chaos theory.

Bonus trivia: you would get your knuckles rapped back in the 1980s if you mentioned the term "patent monopoly" before the US Federal Circuit, which hears patent appeals from all Federal courts, as they expressly said not to use that term. Not sure now, but it's probably still good dicta.

As a matter of historical fact, labor leaders and social democrats were jailed or worse by the Nazis. The Thyssens and their like kept their assets and prospered.

Also seen today:

"Amazon’s decision to take #HQ2 to D.C. and NY is about enveloping government and media, the two primary checks on concentrated power in a democracy. "


Quoting the Institute for Local Self Reliance again are we?


I would instead stress that war, civil war, scapegoating, and deflation create the conditions “ripe for dictatorship.”

Can you give an historical example for "deflation?" My impression is inflation leads to the social unrest that leads to dictatorial rule. Weimar and Hitler, Ottoman Empire and Ataturk.

A milder variant might be Bolsonaro in Brazil but I don't know if Brazil has experienced acute inflation in addition to rising criminality pissing a lot of people off.

Also, "scapegoating" is kind of extruded. Something is going on up the causal chain that caused the scapegoating.

Germany had bouts of inflation, hyperinflation, and deflation during the period running from 1914 to 1933, co-incident with declines in production levels. Electoral support for revanchist, volkisch, and Communist organizations was circumscribed prior to 1930. The deflation Germany suffered during the period running from 1929 to 1933 cut 26% off the GNP deflator, 23% off the consumer price index, and 32% off the wholesale price index.



I think the Daniel Crane essay provided better evidence in support of Tim Wu's claim than you let on. From page 15:

Moreover, the historical record suggests that the presence of a highly
concentrated industrial sector facilitated Hitler’s rapid consolidation of political control in Germany during the mid-1930s. During the years of his march from a failed putsch leader of a fringe party to totalitarian dictator, Hitler needed the material support of dominant institutions with organizational structures permeating German society. He could not rely initially on the Government, which was politically fractured and unstable, nor the Catholic Church, which was externally controlled and largely ideologically opposed. Even the army had to be gradually courted, then radically reorganized into the Wehrmacht, in order to consolidate Nazi control. By contrast, monopoly business firms were ideally positioned to facilitate the rapid consolidation of political power. Once Farben’s senior managers had made a bet that alliance with Hitler was critical to the firm’s long-run profitability (particularly given the immense commercial benefits that would come to a chemical monopoly from a program of rearmament and industrial-military independence), they effectively put the firm and its resources
at Hitler’s disposal—with the understanding, of course, that the firm would be allowed to cash in financially by serving as a military-economic arm of the state. Thus developed a co-dependent relationship between the firm and the regime.

"You let on" in that comment meaning Tyler Cowen. So I think it is fair to say that economic concentration can lead to the rise of dictatorship, based on the Crane essay. However, the conclusion of the paper prescribes very different anti-trust policies than what Tim Wu suggests:

The particulars of the Farben story also have potential implications for the formulation of democracy reinforcing antitrust law. At least as to the German chemical industry, application of consumer-welfare -oriented antitrust principles would have interdicted the steps leading to the Farben monopoly and hence its role as Hitler’s industrial facilitator. If the Farben story can be generalized—an important caveat since this is just the beginning of an inquiry—that would suggest that antitrust law need not be reformulated to safeguard political liberalism, that what is good for consumers is good for democracy.

The problem is that there are two (or even three) different things argued in the paper.

1) that the monopolies helped "Hitler's consolidation of power", that is when he was already in power.

2) that "the monopolies soon got control of Germany, brought Hitler to power..."

Point 1) is uncontroversial. Point 2) is controversial, and I think essentially false. Point 1) of course does not imply point 2).

Regarding point 1), there is also the generalization:
1') when the industry is monopolist, conditions are "ripe" for dictatorship.

Of course, 1') does not follow from 1), which is just one isolated data point. As Tyler and many commenters convincingly argued, 1' is very vague but if you try to give it any meaning, many counter-examples come immediately to mind. In other words, 1'), which is argued by the op-ed under discussion, is BS.

The horror of Naziism is not merely that it was authoritarian, for many authoritarian regimes have come and gone without descending into the horrors of Naziism.

An obvious thought experiment remains, "What if Hitler had been killed in WWI"? For "If no Hitler then no Holocaust" hypothesis remains viable, as the Holocaust did not really become inevitable until the Wannnsee Conference in January of 1942.

Which is just to say, in hindsight everything that happened seems as though it had to happen: chaos in post-WWI Germany plus Versailles leads to unstable Weimar Republic leads to National Socialism. Yet human history may be among the most chaotic of chaotic systems, such that small changes could result in wildly different outcomes (what if Gavrilo Princip's gun had jammed, etc.). Yet no one really wants to believe that; better to believe that your vote really counts, informed economic policies can prevent another great depression, the coming of fascism can be predicted (and thus prevented).

In any case, the root problem of Nazi Germany isn't so much that it was authoritarian, but that it was an authoritarian regime that engaged in mass murder on a fantastic scale.


Reading the never-ending fascism/communism debate - who's "left", who's "right" - (spoiler: utopia comes in all flavors!) - well, see Germany, but then see Russia - no, Russia doesn't count! It must never count! - and then there's mostly agrarian Italy and master shape-shifter Mussolini, and ultra-traditionalist Franco ... so many interesting points get made by all the brainiacs, with their excellent memories for dates and names and parties ... I always really enjoy the history lesson.

But one country stands out, for being unusually resistant to bullshit. One might almost think it was desirable that it be preserved as a sort of control? And if borders are our only remaining problem - it's conveniently an island. Why the hurry, then?

Does anybody other than Canadians and Germans actually believe the State is the pre-eminent institution in human affairs any more?

I find this stereotyping of the Nazis as "the pure evil" and random connections that tends to be made quite irritating. In the sense that if they want to argue "monopoly is bad" they would use a couple of anedoctes from 1930's Germany. Of course, "monopolies" has nothing to do with WW2.

WW2 was a consequence (or more accurately a continuation) of WW1 which was itself caused by the multipolarity of the geopolitical system in 1914 combined with the economic development over the previous century which allowed for the realization of the concept of total war.

But will Tim Wu get a Conversation with Tyler?

I agree. Tyler should talk with Tim. It would be a fascinating conversation and a lot better than just taking shots at him on this website.

Tim Wuy says

"There are many differences between the situation in 1930s and our predicament today. But given what we know, it is hard to avoid the conclusion that we are conducting a dangerous economic and political experiment: We have chosen to weaken the laws — the antitrust laws — that are meant to resist the concentration of economic power in the United States and around the world."

Just look at the recent Amazon headquarters deployment or look at the disaster of the Wisconsin payout to Foxconn on the order of 3 billion.

So does Tim Wu argue that monopolies lead to fascism? I do not know. I have not read his book yet. But do large, powerful companies actions lead to results that benefit them and not the ordinary citizen?

No question about that.

Why Tyler focuses on fascism rather than oligarchy puzzles me.

Doesn't he see what's going on?

"Doesn't he see what's going on?"

He's an expert on framing.

Way to bury the lede, Ty!

It's easy to demonstrate logically and historically that government power is a necessary precursor to fascism, communism, pretty much all the governments which killed millions in the name of something or other.

So let's just skip to the chase and get rid of as much monopoly government power as possible, how's that sound? Then it matters a lot less who takes over the government.

Good to see a struggling business like Amazon get all of those government subsidies.


What about labor monopolies?

Read Henry Simons.

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