Laski moved from democratic and constitutional pluralism to Marxism after the experience of the Great Depression which revealed to him the inherent inability of capitalist society to work for the common good. In no way was he a revolutionary communist calling for the violent overthrow of established governmemt.
In his foreword to Brady's book on Hitler's regime, he stated that in his view, the motive behind the the Nazi system was to extend and enforce upon the whole nation:
The rules, the behaviour patterns, and the points of view of the ordinary autocratically governed business enterprise
And
Fascism is nothing other than monopoly capitalism imposing its will on the masses whom it as deliberately transformed onto its slaves.
Moreover, the fascist philosopher Giovanni Gentile in 1928 described the relationship between freedom and the state as:
Freedom can only exist within the State, and the State means authority. But the State is not some entity hovering in the air above the heads of its citizens. It is one with the personality of the citizen.
And:
the need of the Party, and all the instruments of propaganda and education with which Fascism seeks to make the thought and will of the Duce the thought and will of the masses.
Moreover:
the need of the Party, and all the instruments of propaganda and education with which Fascism seeks to make the thought and will of the Duce the thought and will of the masses.
It's most likely this notion of control of the population he is referring to through the instruments of propaganda including those of what looks like direct democracy but actually disguises the control of the fascist hierarchy.
It's worth recalling here that Hitler and the Nazi party took power by democratic means.
Laski is not discussing here the classic notion of direct democracy practised in the ancient greek city-state given that European states are of such a size that makes direct democracy a practical impossibility but how democracy itself can be suborned into a fascistic policy whilst all the time fascist propaganda is saying it is making a more 'direct' and purer democracy possible.