Norman S. B. Gras, Isidor Straus Professor of Business History, indicted the New Deal as an example of "national capitalism" similar to that in Fascist Italy and Nazi Germany in an article published today in the Harvard Business Review.
The newest phase of business development, national capitalism is "a system of business based upon private enterprise publicly controlled." Representing an entirely new alignment of business groups, it "keeps business at a low state of performance" through increasing the rigidities of the economic system. "Although rigidity is sometimes favorable to the purposes of business," he said, "on the whole it is distinctly unfavorable.
"The new system creates a condition of high costs arising out of high wage rates in America and public works everywhere. The resulting high taxes constitute a major element in private business administration."
Professor Gras traced the history of mercantile capitalism from the days when it superseded the extremely rigid, relatively unprogressive petty capitalist who flourished in the Middle Ages to the present time.
Elasticity of business, which is favorable for the development of an economic system, lasted up until the time of the Industrial Revolution. At that time economic conditions stiffened, and the resulting rigidity produced problems which were not solved even by 1914.
After the World War the economic picture of the world in general was greatly altered. "In 1922 Fascism was born in Italy and in 1933 Nazism in Germany and the New Deal in the United States. All were based on private business and all provided work for the working class."
National capitalism is inextricably bound up with the recent histories of these three nations. It grew up only recently in the United States along with the rise of the New Deal, although Professor Gras described it as "a new rival system made up of old elements." And as such it should prove a controversial topic in the future.
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