Any well-read individual would have to agree that the early U.S. was basically a Classically Liberal state with a nearly laissez-faire outlook on the market. Please note the qualifiers in that sentence, I am well aware that the founders were not perfect and that the early U.S. system was certainly not perfect either. It was, however, practically a heaven compared to today’s U.S. Empire if you desire a laissez-faire market approach.
So when did the U.S. go wrong? There are so many points in history where the people allowed the state to grab more power that picking one is almost a fool’s errand. But there is one point in history that seems to be the birthing point of the corporatist system that we have now. I mean “corporatist” just as Benito Mussolini mean it — as a synonym for fascism. When did the U.S. make a great leap towards the fascist system that we have now?
More than any other single period, World War I was the critical watershed for the American business system. It was a “war collectivism,” a totally planned economy run largely by big-business interests through the instrumentality of the central government, which served as the model, the precedent, and the inspiration for state corporate capitalism for the remainder of the twentieth century.
The large business interests who were at the “top of the heap” naturally wanted to stay there, but there are always many who want to out-compete and take their place. Large industry and business leaders found that the cartels that the government enforced by legislation and regulation during World War 1 practically insured their place in their respective industries and that was a certainly a desirable thing to them. It is often an eye-opener for most people to discover that large business enjoys its symbiotic relationship with government in spite of its public denunciations of various regulations.
Throughout the western world the war showed the big business leaders that it was possible to move to a system that offered stability (for them), subsidies, privileges, control, and power. Extensive governmental intervention and planning became the means by which the wealthy would stay wealthy and reap even more profits as governments guaranteed their place in the hierarchy. War collectivism offered the advantages of monopoly, government contracts for the favored, guaranteed profits, restricted production for higher prices, and all the rest of the classical pattern of monopoly privilege. Even labor costs could be more controlled as the state would back the producer against the union in the interest of “the war effort”. Intelligent union leaders joined in and became partners in the fixed game which was, in many ways, a reversion to a form of mercantilism.
In America the new mercantilism was more industrial and manufacturing based than the old form since the industrial revolution had come about since the days of the old mercantilism, and just as importantly, the new system had to appear to be more “democratic” and less class-based in America in contrast to the old English system. There was need to provide the appearance of promoting the overall good of the country and all her people rather than just the wealthy elite and their business interests. And so American “liberalism” was pressed into service to provide the ideology and cover. The so-called liberals proclaimed that the new system was not mercantilism at all but rather it was radically different than the old exploitative system and that its aim was for the betterment of all the people. This was seen to be democracy in action. It was claimed that the government would protect everyone from the business leaders and control those evil rich men — in spite of the fact that the business elites were the senior partners in this whole enterprise.
The new “liberals” gained prestige, income and power as many became the government planners who were needed to plan out the vast details and regulations of the new collectivist system. The liberal intellectuals helped develop this new system of government intervention that they saw as superior to the two major alternatives available to them: laissez-faire capitalism or Marxian socialism. These “liberal” or progressive intellectuals saw this new order as the path to the future where government planning (done by themselves of course) would bring a heaven on earth — or as close to it as man can come. The state became their religion.
In various western countries the new system of collectivism was called by different names, but the system was similar at its heart. Benito Mussolini called the system “fascism” while some in England called it “the third way”. Americans never gave the system a name other than call it “progressivism” or “liberalism”. Regardless of the name or the various differences due to local culture, the system was war-collectivism. And so, it should not have surprised anyone that another war would be needed to bolster this war collective system, and soon enough along came World War 2 with all its destruction. Following the hot war of WW2 came the “cold war” and all the small proxy conflicts around the world. In fact, the U.S. Empire has been at war almost continually since adopting war collectivism in the 1920s.
America’s participation in World War One was a disaster for the limited government, laissez-faire system the country had enjoyed, and it was a disaster for her people. The evil legacy of Woodrow Wilson, the country’s first “progressive president”, who lied the country into war lives on to this day. Much evil is born during wars, and the side that looks to be the “victor” never escapes without its own woes. Wilson and WW1 brought America the final end of its Classical Liberal period.