As I discussed before, the theory of liberal fascism is nonsense, but one might make at least a semi-coherent theory of Keynesian fascism. In theory, there is nothing fascistic about Keynesianism. It simply means that if the private sector is not investing enough -- resulting in people being unemployed, resulting in people buying less, resulting in less investment -- then government can break the vicious cycle by taking up the slack by investing in public works until the economy gets going again. In theory, there is no reason why Keynes should not be compatible with liberal democracy.
But we all know the saying about a beautiful theory being slain by an ugly fact. And the ugly fact is that Keynesian, whether in the 1930's or now, has not proven politically feasible because it violates people's intuitions. Elite and popular intuition alike assume that when the economy shrinks, everyone -- including, indeed, especially government -- should cut back. After all, if households have to balance their budgets, so should government. To be told that government can print its own money and therefore has different rules seems unfair and deeply offensive. Unfortunately, everyone's intuition here is dead wrong. When everyone cuts back at the same time, the economy shrinks. And responding by cutting back further simply makes the economy shrink further. Besides, such downturns tend to follow the bursting of a bubble and elite and popular intuition alike tend to see some hardship as an appropriate punishment for former excesses. So austerity is popular for a time, despite the hardship it causes.
But when austerity fails to deliver recovery, the push grows to do something -- anything -- to make the depression go away. At the same time, Keynesian economics still violates people's intuitions. So what do you do about it? The easiest way out is for a country to let its currency fall and export its way out. But that works only if there is somewhere with a strong enough economy to do the requisite importing. It does not work if the downturn is worldwide. A few politicians can persuade people to set aside their intuitions and at least give Keynes a try. But that requires high levels of social trust, and particularly high levels of trust in politicians and government. Only Scandinavian countries seem able to achieve it.
And, conservatives are often gleeful to point out, the requisite levels of social trust and trust in government only seem to happen in highly ethnically uniform countries. The US is not sufficiently ethnically uniform, so we can't do it.* As a practical matter, conservatives may argue, forced ethnic uniformity will necessarily precede any actual attempt at Keynesian economics. Forced ethnic uniformity does not mean gas chambers (which did not begin until after the war and well after military Keynesianism had revived the world economy). It need not even mean physical exclusion. But it does mean exclusion from the body politic and from any state-sponsored economic benefits. Hence Hitler's scapegoating of the Jews, right wing populist anti-immigration policies in present-day Europe, Roosevelt's heavy reliance on liberal Southern racists and careful calibration of the New Deal to exclude black people as much as possible, can all be seen as inherent in the nature of Keynesian economics, a sort of necessary prelude to achieve the necessary ethnic uniformity to allow sufficient trust for people to set aside their intuitions and give Keynes a chance. Alternately, one can argue that military Keynesianism, i.e., an arms race, is the only kind that has proven politically acceptable, and that Keynesianism is therefore inseparable from nationalism, militarism, and (ultimately) warmongering.
These are serious accusations, backed by at least some empirical evidence. However, this is an argument that right wingers are unlikely to make for an obvious reason. It assumes that Keynesian economics works. If you make the underlying assumption that Keynesian economics does not work, that what as called for in the 1930's was to do nothing at all, or that austerity and scraping of the social safety net really are the appropriate policies today, then you might indeed agree that ethnic scapegoating and Keynesian economics are inextricably linked. But you would not agree that they are the inherent fruit of failed austerity policies. And that would put you in the awkward position of explaining why embracing austerity seems to do such a poor job of reviving economies and so often leads to ugly political movements.
Again, I have not ready Goldberg's Liberal Fascism, but simply looking at the table of contents suggests that this is not the argument he is making. He famously does talk at length about the racism of early 20th century Progressives including Woodrow Wilson, but continues his liberal fascist argument well after liberals had endorsed racial equality. And he does not seem to emphasize Keynes.
But it is fair to ask, since I do believe that Keynesian economics works, how I respond to the basic facts that it appears politically unfeasible, and that it is often associated with some truly vile demagogues? I suppose I would argue that it ain't necessarily so. Political alliances are strange and shifting. Keynesian economics and ethnic scapegoating do, indeed, appear to go together in non-Scandinavian Europe both in the 1930's and today. But they did not go together in the Scandinavian countries, then or now. They made only a partial fit in the US in the 1930's. Roosevelt's administration contained both Southern racists and advocates of racial equality. Huey Long endorsed the New Deal without appealing to racism. Meanwhile center-left parties in Europe typically did not embrace Keynes, either in the 1930's or today. And in the US today Keynesian economics (1) have been more successful (both in being implemented and in reviving the economy) than in Europe and (2) are not paired with ethnic scapegoating. And the party that rejects Keynes is also the one more prone the anti-immigrant demagoguery.** This may make the US the exception and not the rule, but it does prove that any equation between Keynesianism and ethnic scapegoating is simply a general correlation, not an inexorable political law.
In short, in both the US and Scandinavia, both in the 1930's and today, mainstream parties did reject self-destructive austerity and (Roosevelt's unpleasant alliance with Southern racists notwithstanding) spared the country the need for really nasty parties. In non-Scandinavian Europe, in the 1930's and today, all respectable mainstream parties, center-left parties included, embraced self-destructive austerity. The result was that only fringe parties, including many that engaged in ethnic scapegoating, were left to oppose it. In short, to me the frequent alliance of some very nasty political groups with Keynesian economics simply shows the mean for a mainstream party to fill that much-needed niche.
*Conservatives use this as an argument against both economic interventionist policies and ethnic variety, i.e., immigration.
**Although it is only fair to recognize Donald Trump as sort of the US equivalent of Marine LePen. He is the worst ethnic scapegoater of them all, and also the only Republican to reject senseless austerity.