I often see conservatives argue about whether fascism is left or right, and just how horrible socialism is. I think a great deal of conceptual confusion exists about these matters, most importantly that we miss our real Holy Grail -- freedom -- and I hope the following thoughts will offer some alternative perspective.
First, a few definitions.
Capitalism, a term coined by Karl Marx, is the system driven by accumulated capital (hence the name). Its defining feature is the separation of workers from the means of production.
Free market is a system described by Adam Smith, characterized by relatively unhindered competition between free market agents. There is a bunch of technical conditions that have to be fulfilled before the market can be efficient, but the gist of it is free and fair competition.
Now note the difference between the two. A capitalism system can be free-market-based, but not necessarily so. An economy driven entirely by monopolistic corporations, for example, is capitalist but not free-market.
Now, to fascism. Mussolini (a fascist himself, note) had defined fascism as a merger between the state and corporation -- as corporatism (yes, that was his term, 'corporativismo'). Curiouser and curiouser...
The reason I bring this up is that people tend to think of capitalism and free market as being identical, and of both of those being diametrically opposed to socialism. Nothing could be farther from the truth.
Socialism is defined as the absence of separation of workers from the means of production -- meaning, it's opposite to capitalism but not free market. However, in a certain degenerate state, socialism and capitalism can be identical, i.e. in a socioeconomic order known as 'state capitalism' (kinda like positive and negative numbers meet up at 0). See, if 'everyone' (as represented by the government) owns everything, then this de-jure lack of separation of workers from means of production is nonetheless just such a separation de-facto. Note that state capitalism is antithetical to free market.
Conversely, there can be an order that is socialist and free-market, but not capitalist -- it's called syndicalism, where the entire economy consists of worker cooperatives which are free market agents. This way the workers are not separated from means of production (as per socialism) yet also participate in a market economy. Let us leave aside the question of syndicalism's practicality, and move on. I will touch upon the practicality issue later.
Now, finally, the purpose of this exercise.
What we want is not capitalism, what we want is free market -- because we want freedom. The specific mechanics by which we attain freedom are secondary to the fact that freedom is actualized. As such, instead of treating socialism as the bogeyman, we should be treating absence of freedom as the enemy. The enemy is totalitarianism -- whether is takes the form of fascism (approaching the perfect lack of freedom from the capitalist side) or soviet socialism (approaching the perfect lack of freedom from socialist side). Both socialism and capitalism are just tools for attaining freedom, and so arguing about whether Nazis were capitalist or socialist misses the point. Neither capitalism nor socialism is inherently anti-freedom, those are just specific forms which freedom, or lack thereof, can take.
One could of course say that since no free-market socialism has ever been implemented, the only known variety of socialism is the totalitarian one. While this is not quite true (think Prague Spring), it's a sound enough argument -- but it still misses the point. If the enemy is socialism then we must naturally stand for capitalism, and as I have already shown, we can be capitalists all the way to fascism.
The question is not whether Hitler was socialist or capitalist. He was a corporatist tyrant, and Stalin was a socialist tyrant -- but what matters is that they were both tyrants. Both socialism and capitalism can be totalitarian, so stop placing so much import on concepts which miss the point, and start focusing on what matters -- freedom. We want freedom, and free market, and the means of implementing free market are secondary to the fact that it is free.
To forget this, and to focus on capitalism instead of freedom, is a recipe for going down the totalitarian road. After all, we could slide all the way down to fascism and still be a thoroughly capitalist society, but that in no way would ensure that freedom is preserved! Similarly, syndicalism (free-market socialism) may or may not be impractical, but as long as we keep in mind that our goal is freedom, its impracticality will merely result any social order to fail to evolve into syndicalism.
As long as we keep our priorities straight, we should be fine. Just remember -- it's not about capitalism, and it's not about socialism, it's about freedom.
So, to sum it up:
If the freedom/totalitarianism and capitalism/socialism axes are orthogonal, then we have four possible arrangements:
- Totalitarian capitalism is fascism
- Totalitarian socialism is the Soviet order
- Free capitalism is a typical western democracy
- Free socialism is syndicalism (of which no known specimen have ever existed, so thus far it's a purely theoretical state)
From my blog.