← Autodidact Archive · Original Dissent · Paleocon
Thread ID: 5058 | Posts: 1 | Started: 2003-02-17
2003-02-17 11:26 | User Profile
Corporatism is an economic system where corporations are the main actors in all spheres of socio-economic life ââ¬â financial investment, R&D and production activities, employee welfare and social security, and so on. Most decisions are taken at the corporate level, unlike the alternative systems socialism and capitalism, where decisions are in the hands of society as a whole (the state) and the individual, respectively. As a result, the freedom of market choice of individuals involved in production activities is somewhat restricted, but it is compensated with greater freedom in actual working processes inside the organization.
The industrial structure is characterized by the penetration of principles of organization and community into the concept of the free market. Emphasis is put on developing a high degree of cooperation within a limited number of stable long-term relationships, mainly in the form of intermarket corporate alliances (ICA). These relationships transform the business environment surrounding corporate managers by ensuring that the companies' shareholders, through long-term positions, are its major customers, suppliers, and financial institutions rather than an anonymous body of stock market traders. This leads to creating a financial system overwhelmingly dominated by indirect finance, which is effective and with a certain rationality of its own. The members of these networks do not view their portfolios as passive investments, but as a means to enhance business relations as well as to prevent unwanted takeover bids. The constraints such companies face, therefore, are primarily those arising from their ongoing business interests rather than those of independent capital markets.
Rather than encouraging intense competition among individuals, with each being wholly responsible for his actions, a corporatist economy relies on collegial groups that are based on various relationships created within and between companies, and also with the government. Competition becomes long-term, multi-dimensional, collective, with clearly visible competitors. The companies rely on the principle anthropocentrism (employees first) aimed at creating a system of democracy and participation inside them, and leading to egalitarian income distribution and high social mobility.
The corporatist economic system can be discussed at three different levels: intercorporate, firm, and national.
Intercorporate relations are basically organized in the form of intermarket corporate alliances (ICAs). ICA is characterized by interlocking ownership and intensive flows of goods, information and human resources among firms from different industries. ICA is assumed to qualitatively change the nature of share ownership, turning it into intercorporate ownership as: first, ownership and control are realigned; second, the objectives of firm ownership are changed; and, third, the monitoring and control mechanisms are modified. Managers become agents of the entire coalition of stakeholders rather than the shareholders or any other single group.
As regards organization and relations inside the corporate body, the firm is characterized by the integration of management and labor meaning that: 1) the goals of management are concerned with pursuing the interests of the group of employees; and 2) labor takes on management functions. Employees have the right to make the decisions of basic importance to the firm, and enjoy priority rights in the distribution of the economic products of the firmââ¬â¢s activities. Decentralization of information and analysis functioning in a ââ¬Åbottom-upââ¬Â decision-making process strengthens flexible on-the-scene response, and encourages a sense of unity within the organization.
Finally, the role of Government in guiding the system along perceived lines of national advantage consists in collecting and disseminating information and using barriers to suppress excessive competition. Any influence the Government wield over private companies is by and large indirect and based on a ââ¬Åmutual understandingââ¬Â that is the product of a long-term process. Public sector activities primarily revolve around public works and financial operations.