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Thread ID: 7093 | Posts: 9 | Started: 2003-06-03
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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.
Corporatism From Wikipedia, the free encyclopedia. Historically, corporatism or corporativism (Italian corporativismo) is a political system in which legislative representation is given to industries and workers' societies. Under Fascism in Italy, workers and employers were organized into syndicates known as "corporations" according to their industries, and these groups were given representation in a legislative body known as the Camera dei Fasci e delle Corporazioni. This use of the term "corporation" is not exactly equivalent to the restricted modern sense of the word. Compare corporate state and militarism. Some elements of corporatism can be found still existing today, for example in the ILO Conference or in the Economic and Social Committee of the European Union.
Today, the word corporatism is most often used to refer to tendencies in politics for legislators and administrations to be influenced or dominated by the interests of corporations rather than citizens. In this view, government decisions are seen as being influenced strongly by which sorts of policies will lead to greater profits for favored companies. In this sense of the word, corporatism is also termed corporatocracy. If there is substantial military-corporate collaboration it is often called militarism.
Economic Fascism by Thomas J. DiLorenzo
When most people hear the word "fascism" they naturally think of its ugly racism and anti-Semitism as practiced by the totalitarian regimes of Mussolini and Hitler. But there was also an economic policy component of fascism, known in Europe during the 1920s and '30s as "corporatism," that was an essential ingredient of economic totalitarianism as practiced by Mussolini and Hitler. So- called corporatism was adopted in Italy and Germany during the 1930s and was held up as a "model" by quite a few intellectuals and policy makers in the United States and Europe. A version of economic fascism was in fact adopted in the United States in the 1930s and survives to this day. In the United States these policies were not called "fascism" but "planned capitalism." The word fascism may no longer be politically acceptable, but its synonym "industrial policy" is as popular as ever. The Free World Flirts With Fascism Few Americans are aware of or can recall how so many Americans and Europeans viewed economic fascism as the wave of the future during the 1930s. The American Ambassador to Italy, Richard Washburn Child, was so impressed with "corporatism" that he wrote in the preface to Mussolini's 1928 autobiography that "it may be shrewdly forecast that no man will exhibit dimensions of permanent greatness equal to Mussolini. . . . The Duce is now the greatest figure of this sphere and time." Winston Churchill wrote in 1927 that "If I had been an Italian I am sure I would have been entirely with you" and "don the Fascist black shirt." As late as 1940, Churchill was still describing Mussolini as "a great man." U.S. Congressman Sol Bloom, Chairman of the House Foreign Relations Committee, said in 1926 that Mussolini "will be a great thing not only for Italy but for all of us if he succeeds. It is his inspiration, his determination, his constant toil that has literally rejuvenated Italy . . ." One of the most outspoken American fascists was economist Lawrence Dennis. In his 1936 book, The Coming American Fascism, Dennis declared that defenders of "18th-century Americanism" were sure to become "the laughing stock of their own countrymen" and that the adoption of economic fascism would intensify "national spirit" and put it behind "the enterprises of public welfare and social control." The big stumbling block to the development of economic fascism, Dennis bemoaned, was "liberal norms of law or constitutional guarantees of private rights." Certain British intellectuals were perhaps the most smitten of anyone by fascism. George Bernard Shaw announced in 1927 that his fellow "socialists should be delighted to find at last a socialist [Mussolini] who speaks and thinks as responsible rulers do." He helped form the British Union of Fascists whose "Outline of the Corporate State," according to the organization's founder, Sir Oswald Mosley, was "on the Italian Model." While visiting England, the American author Ezra Pound declared that Mussolini was "continuing the task of Thomas Jefferson." Thus, it is important to recognize that, as an economic system, fascism was widely accepted in the 1920s and '30s. The evil deeds of individual fascists were later condemned, but the practice of economic fascism never was. To this day, the historically uninformed continue to repeat the hoary slogan that, despite all his faults, Mussolini at least "made the trains run on time," insinuating that his interventionist industrial policies were a success. The Italian "Corporatist" System So-called "corporatism" as practiced by Mussolini and revered by so many intellectuals and policy makers had several key elements: The state comes before the individual. Webster's New Collegiate Dictionary defines fascism as "a political philosophy, movement, or regime that exalts nation and often race above the individual and that stands for a centralized, autocratic government." This stands in stark contrast to the classical liberal idea that individuals have natural rights that pre-exist government; that government derives its "just powers" only through the consent of the governed; and that the principal function of government is to protect the lives, liberties, and properties of its citizens, not to aggrandize the state. Mussolini viewed these liberal ideas (in the European sense of the word "liberal") as the antithesis of fascism: "The Fascist conception of life," Mussolini wrote, "stresses the importance of the State and accepts the individual only in so far as his interests coincide with the State. It is opposed to classical liberalism [which] denied the State in the name of the individual; Fascism reasserts the rights of the State as expressing the real essence of the individual." Mussolini thought it was unnatural for a government to protect individual rights: "The maxim that society exists only for the well-being and freedom of the individuals composing it does not seem to be in conformity with nature's plans." "If classical liberalism spells individualism," Mussolini continued, "Fascism spells government." The essence of fascism, therefore, is that government should be the master, not the servant, of the people. Think about this. Does anyone in America really believe that this is not what we have now? Are Internal Revenue Service agents really our "servants"? Is compulsory "national service" for young people, which now exists in numerous states and is part of a federally funded program, not a classic example of coercing individuals to serve the state? Isn't the whole idea behind the massive regulation and regimentation of American industry and society the notion that individuals should be forced to behave in ways defined by a small governmental elite? When the nation's premier health-care reformer recently declared that heart bypass surgery on a 92-year-old man was "a waste of resources," wasn't that the epitome of the fascist ideal-that the state, not individuals, should decide whose life is worthwhile, and whose is a "waste"? The U.S. Constitution was written by individuals who believed in the classical liberal philosophy of individual rights and sought to protect those rights from governmental encroachment. But since the fascist/collectivist philosophy has been so influential, policy reforms over the past half century have all but abolished many of these rights by simply ignoring many of the provisions in the Constitution that were designed to protect them. As legal scholar Richard Epstein has observed: "[T]he eminent domain . . . and parallel clauses in the Constitution render . . . suspect many of the heralded reforms and institutions of the twentieth century: zoning, rent control, workers' compensation laws, transfer payments, progressive taxation." It is important to note that most of these reforms were initially adopted during the '30s, when the fascist/collectivist philosophy was in its heyday. Planned industrial "harmony." Another keystone of Italian corporatism was the idea that the government's interventions in the economy should not be conducted on an ad hoc basis, but should be "coordinated" by some kind of central planning board. Government intervention in Italy was "too diverse, varied, contrasting. There has been disorganic . . . intervention, case by case, as the need arises," Mussolini complained in 1935. Fascism would correct this by directing the economy toward "certain fixed objectives" and would "introduce order in the economic field." Corporatist planning, according to Mussolini adviser Fausto Pitigliani, would give government intervention in the Italian economy a certain "unity of aim," as defined by the government planners. These exact sentiments were expressed by Robert Reich (current U.S. Secretary of Labor) and Ira Magaziner (current federal government's health care reform "Czar") in their book Minding America's Business. In order to counteract the "untidy marketplace," an interventionist industrial policy "must strive to integrate the full range of targeted government policies-procurement, research and development, trade, antitrust, tax credits, and subsidies-into a coherent strategy . . . ." Current industrial policy interventions, Reich and Magaziner bemoaned, are "the product of fragmented and uncoordinated decisions made by [many different] executive agencies, the Congress, and independent regulatory agencies . . . There is no integrated strategy to use these programs to improve the . . . U.S. economy." In his 1989 book, The Silent War, Magaziner reiterated this theme by advocating "a coordinating group like the national Security Council to take a strategic national industrial view." The White House has in fact established a "National Economic Security Council." Every other advocate of an interventionist "industrial policy" has made a similar "unity of aim" argument, as first described by Pitigliani more than half a century ago. Government-business partnerships. A third defining characteristic of economic fascism is that private property and business ownership are permitted, but are in reality controlled by government through a business-government "partnership." As Ayn Rand often noted, however, in such a partnership government is always the senior or dominating "partner." In Mussolini's Italy, businesses were grouped by the government into legally recognized "syndicates" such as the "National Fascist Confederation of Commerce," the "National Fascist Confederation of Credit and Insurance," and so on. All of these "fascist confederations" were "coordinated" by a network of government planning agencies called "corporations," one for each industry. One large "National Council of Corporations" served as a national overseer of the individual "corporations" and had the power to "issue regulations of a compulsory character." The purpose of this byzantine regulatory arrangement was so that the government could "secure collaboration . . . between the various categories of producers in each particular trade or branch of productive activity." Government-orchestrated "collaboration" was necessary because "the principle of private initiative" could only be useful "in the service of the national interest" as defined by government bureaucrats. This idea of government-mandated and -dominated "collaboration" is also at the heart of all interventionist industrial policy schemes. A successful industrial policy, write Reich and Magaziner, would "require careful co-ordination between public and private sectors. Government and the private sector must work in tandem. Economic success now depends to a high degree on coordination, collaboration, and careful strategic choice," guided by government. The AFL-CIO has echoed this theme, advocating a "tripartite National Reindustrialization Board-including representatives of labor, business, and government" that would supposedly "plan" the economy. The Washington, D.C.-based Center for National Policy has also published a report authored by businessmen from Lazard Freres, du Pont, Burroughs, Chrysler, Electronic Data Systems, and other corporations promoting an allegedly "new" policy based on "cooperation of government with business and labor." Another report, by the organization "Rebuild America," co-authored in 1986 by Robert Reich and economists Robert Solow, Lester Thurow, Laura Tyson, Paul Krugman, Pat Choate, and Lawrence Chimerine urges "more teamwork" through "public-private partnerships among government, business and academia." This report calls for "national goals and targets" set by government planners who will devise a "comprehensive investment strategy" that will only permit "productive" investment, as defined by government, to take place. Mercantilism and protectionism. Whenever politicians start talking about "collaboration" with business, it is time to hold on to your wallet. Despite the fascist rhetoric about "national collaboration" and working for the national, rather than private, interests, the truth is that mercantilist and protectionist practices riddled the system. Italian social critic Gaetano Salvemini wrote in 1936 that under corporatism, "it is the state, i.e., the taxpayer, who has become responsible to private enterprise. In Fascist Italy the state pays for the blunders of private enterprise." As long as business was good, Salvemini wrote, "profit remained to private initiative." But when the depression came, "the government added the loss to the taxpayer's burden. Profit is private and individual. Loss is public and social." The Italian corporative state, The Economist editorialized on July 27, 1935, "only amounts to the establishment of a new and costly bureaucracy from which those industrialists who can spend the necessary amount, can obtain almost anything they want, and put into practice the worst kind of monopolistic practices at the expense of the little fellow who is squeezed out in the process." Corporatism, in other words, was a massive system of corporate welfare. "Three-quarters of the Italian economic system," Mussolini boasted in 1934, "had been subsidized by government." If this sounds familiar, it is because it is exactly the result of agricultural subsidies, the Export-Import Bank, guaranteed loans to "preferred" business borrowers, protectionism, the Chrysler bailout, monopoly franchising, and myriad other forms of corporate welfare paid for directly or indirectly by the American taxpayer. Another result of the close "collaboration" between business and government in Italy was "a continual interchange of personnel between the. . . civil service and private business." Because of this "revolving door" between business and government, Mussolini had "created a state within the state to serve private interests which are not always in harmony with the general interests of the nation." Mussolini's "revolving door" swung far and wide. Signor Caiano, one of Mussolini's most trusted advisers, was an officer in the Royal Navy before and during the war. When the war was over, he joined the Orlando Shipbuilding Company. In October 1922, he entered Mussolini's cabinet, and the subsidies for naval construction and the merchant marine came under the control of his department. General Cavallero, at the close of the war, left the army and entered the Pirelli Rubber Company. In 1925 he became undersecretary at the Ministry of War. In 1930 he left the Ministry of War, and entered the service of the Ansaldo armament firm. Among the directors of the big companies in Italy, retired generals and generals on active service became very numerous after the advent of Fascism. Such practices are now so common in the United States-especially in the defense industries-that it hardly needs further comment. From an economic perspective, fascism meant (and means) an interventionist industrial policy, mercantilism, protectionism, and an ideology that makes the individual subservient to the state. "Ask not what the State can do for you, but what you can do for the State" is an apt description of the economic philosophy of fascism. The whole idea behind collectivism in general and fascism in particular is to make citizens subservient to the state and to place power over resource allocation in the hands of a small elite. As stated eloquently by the American fascist economist Lawrence Dennis, fascism "does not accept the liberal dogmas as to the sovereignty of the consumer or trader in the free market.... Least of all does it consider that market freedom, and the opportunity to make competitive profits, are rights of the individual." Such decisions should be made by a "dominant class" he labeled "the elite." German Economic Fascism Economic fascism in Germany followed a virtually identical path. One of the intellectual fathers of German fascism was Paul Lensch, who declared in his book Three Years of World Revolution that "Socialism must present a conscious and determined opposition to individualism." The philosophy of German fascism was expressed in the slogan, Gemeinnutz geht vor Eigennutz, which means "the common good comes before the private good." "The Aryan is not greatest in his mental qualities," Hitler stated in Mein Kampf, but in his noblest form he "willingly subordinates his own ego to the community and, if the hour demands, even sacrifices it." The individual has "not rights but only duties." Armed with this philosophy, Germany's National Socialists pursued economic policies very similar to Italy's: government-mandated "partnerships" between business, government, and unions organized by a system of regional "economic chambers," all overseen by a Federal Ministry of Economics. A 25-point "Programme of the Party" was adopt-ed in 1925 with a number of economic policy "demands," all prefaced by the general statement that "the activities of the individual must not clash with the interests of the whole. . .but must be for the general good." This philosophy fueled a regulatory assault on the private sector. "We demand ruthless war upon all those whose activities are injurious to the common interest," the Nazis warned. And who are these on whom "war" is to be waged? "Common criminals," such as "usurers," i.e., bankers, and other "profiteers," i.e., ordinary businessmen in general. Among the other policies the Nazis demanded were abolition of interest; a government-operated social security system; the ability of government to confiscate land without compensation; a government monopoly in education; and a general assault on private-sector entrepreneurship (which was denounced as the "Jewish materialist spirit"). Once this "spirit" is eradicated, "The Party . . . is convinced that our nation can achieve permanent health from within only on the principle: the common interest before self-interest." Conclusions Virtually all of the specific economic policies advocated by the Italian and German fascists of the 1930s have also been adopted in the United States in some form, and continue to be adopted to this day. Sixty years ago, those who adopted these interventionist policies in Italy and Germany did so because they wanted to destroy economic liberty, free enterprise, and individualism. Only if these institutions were abolished could they hope to achieve the kind of totalitarian state they had in mind. Many American politicians who have advocated more or less total government control over economic activity have been more devious in their approach. They have advocated and adopted many of the same policies, but they have always recognized that direct attacks on private property, free enterprise, self-government, and individual freedom are not politically palatable to the majority of the American electorate. Thus, they have enacted a great many tax, regulatory, and income-transfer policies that achieve the ends of economic fascism, but which are sugar-coated with deceptive rhetoric about their alleged desire only to "save" capitalism. American politicians have long taken their cue in this regard from Franklin D. Roosevelt, who sold his National Recovery Administration (which was eventually ruled unconstitutional) on the grounds that "government restrictions henceforth must be accepted not to hamper individualism but to protect it." In a classic example of Orwellian doublespeak, Roosevelt thus argued that individualism must be destroyed in order to save it. Now that socialism has collapsed and survives nowhere but in Cuba, China, Vietnam, and on American university campuses, the biggest threat to economic liberty and individual freedom lies in the new economic fascism. While the former Communist countries are trying to privatize as many industries as possible as fast as they can, they are still plagued by governmental controls, leaving them with essentially fascist economies: private property and private enterprise are permitted, but are heavily controlled and regulated by government. As most of the rest of the world struggles to privatize industry and encourage free enterprise, we in the United States are seriously debating whether or not we should adopt 1930s-era economic fascism as the organizational principle of our entire health care system, which comprises 14 percent of the GNP. We are also contemplating business-government "partnerships" in the automobile, airlines, and communications industries, among others, and are adopting government-managed trade policies, also in the spirit of the European corporatist schemes of the 1930s. The state and its academic apologists are so skilled at generating propaganda in support of such schemes that Americans are mostly unaware of the dire threat they pose for the future of freedom. The road to serfdom is littered with road signs pointing toward "the information superhighway, health security, national service, managed trade," and "industrial policy." Dr. DiLorenzo is Professor of Economics at Loyola College, Baltimore, Maryland, and guest editor for The Freeman.
We are probably heading into some economic heavy weather which will spur needed debate on what's right and wrong with our economy. This will require our being clear about what kind of economy we really have. I have mentioned before that we increasingly live not in a capitalist society but in a corporatist one, and I would like to flesh out this notion. What is corporatism? In a (somewhat inaccurate) phrase, socialism for the bourgeois. It has the outward form of capitalism in that it preserves private ownership and private management, but with a crucial difference: as under socialism, government guarantees the flow of material goods, which under true capitalism it does not. In classical capitalism, what has been called the "night-watchman" state, government's role in the economy is simply to prevent force or fraud from disrupting the autonomous operation of the free market. The market is trusted to provide. Under corporatism, it is not, instead being systematically manipulated to deliver goods to political constituencies. This now includes basically everyone from the economic elite to ordinary consumers. Unlike socialism, corporatism understands that direct government ownership of the means of production does not work, except in the limiting case of infrastructure.1 But it does not represent a half-way condition between capitalism and socialism. This is what the West European nations, with their mixed economies in which government owned whole industries, tried to create until Thatcherism. Corporatism blends socialism and capitalism not by giving each control of different parts of the economy, but by combining socialism's promise of a government-guaranteed flow of material goods with capitalism's private ownership and management. What makes corporatism so politically irresistible is that it is attractive not just to the mass electorate, but to the economic elite as well. Big business, whatever its casuists at the Wall Street Journal editorial page may pretend, likes big government, except when big government gets greedy and tries to renegotiate the division of spoils. Although big business was an historic adversary of the introduction of the corporatist state, it eventually found common ground with it. The first thing big business has in common with big government is managerialism. The technocratic manager, who deals in impersonal mass aggregates, organizes through bureaucracy, and rules through expertise without assuming personal responsibility, is common to both. The second thing big business likes about big government is that it has a competitive advantage over small business in doing business with it and negotiating favors. Big government, in turn, likes big business because it is manageable; it does what it is told. It is much easier to impose affirmative action or racial sensitivity training on AT&T than on 50,000 corner stores. This is why big business has become a key enforcer of political correctness. The final thing big business likes about big government is that, unlike small government, it is powerful enough to socialize costs in exchange for a share of the profits. The key historical moments in the development of American corporatism can be easily traced. It got its start from the realization, during the Progressive period around 1900, that the night-watchman state was too weak to make the large corporate actors of the economy play fair. The crucial premise that enters here is that the capitalist economy cannot be trusted to be self-regulating, as it previously had been. This collapse of trust was also implicit in the 1913 creation of the Federal Reserve system. What the Great Depression did was destroy a second kind of trust: that the economy would reliably deliver material goods without government intervention. With these two different kinds of trust gone, corporatism becomes not only worthwhile, but necessary. Crucially, it becomes psychologically necessary, independently of whether government can deliver on its promises, because people instinctively turn to government as their protector. Anyone who is serious about getting rid of corporatism must explain how they are going to restore these two kinds of trust or persuade people to live without them. In particular, it is almost certainly useless, as verified by the fact that government has grown under every postwar Republican administration, to try to nibble away at big government without renegotiating the social contract that underlies it. If we don't have a plan to renegotiate this social contract, we must face the fact that the electorate will demand that it be respected. Newt Gingrich, who thought that the failure of Clinton's health plan signified the electorate's rejection of "socialism," learned this the hard way. Clearly, the New Deal was the biggest jump forward into corporatism, though this was not fully understood at the time. Many people, both pro and con, misunderstood it as a move towards socialism.2 As is well known, Roosevelt was an empiricist, not a systematic thinker, and many elements of the New Deal that were tried, such as the notorious National Recovery Administration, were rightly discarded. But the fundamental proposition, that government should take responsibility for ensuring the flow of material goods to the people, was rapidly embraced by the American people, which continues to embrace it today whether it admits it or not. When people demand that the government "do something" about a falling stock market, they are playing at capitalism while practicing corporatism. The fundamental essence of corporatism is not technocratic but moral: what does government have the responsibility to do? What do people have the right to demand be done for them? The economic Left likes corporatism for three reasons: 1. It satisfies its lust for power. 2. It makes possible attempts to redistribute income. 3. It enables them to practice #2 while remaining personally affluent. The economic Right likes corporatism for three different reasons: 1. It enables them to realize capitalist profits while unloading some of the costs and risks onto the state. 2. The ability to intertwine government and business enables them to shape government policy to their liking. 3. They believe the corporatist state can deliver social peace and minimize costly disruptions. This process has been described as "socializing the losses, privatizing the profits" by its leftist critics, who also call parts of it corporate welfare. What they don't get is that in a society which grants the fundamental premise that government should take care of everybody, government will, and big business is part of "everybody." Most economic arguments today are not between a socialistic ideal and a capitalistic one, as many seem to believe, but are arguments within the corporatist consensus. This consensus is incapable of gelling into a unitary consensus because it is supported by the two sides for different reasons. There is also no public, coherent ideology of corporatism because almost no-one is willing to admit they believe in it. Let's look at some specific examples of corporatism: 1. The Export-Import Bank. This government agency helps finance exports of American products. The aim, laudable enough, is to create jobs in the US. But there is still the problem that doing this requires the government to consume capital, which might have created more jobs, (or just more wealth) if it had been allocated elsewhere. So this is classic corporatism: government allocating capital to private industry on the basis of political favoritism. 2. Agricultural price-supports. Contrary to myth, most of the money goes to agribusiness, not small farmers. 3. Industrial bailouts, like the recent one of the airlines. People do not trust the market to provide the airline service they think they "need." The truth is this country has more carriers than the market can support and a few should be allowed to die. No-one who really believes in free-market economics accepts the argument that jobs can be saved in the long run in this fashion. 4. Corporate bankruptcy law. This law assigns an artificial value, not supported by economics, to keeping dying companies alive, rather than letting the carcasses of competition's losers nourish the winners. It is responsible, for example, for preventing a needed cull of the airline business by letting Continental Airlines pass through its protections not once but twice. 5. Tariffs, quotas, and other trade restrictions. These transfer wealth from consumers to producers in the affected industries, whatever their other possible merits. 6. Affirmative action is generally viewed as a social-policy question rather than an economic-policy one, but it fits neatly into the corporatist model: government forces private industry to distribute jobs to a favored political constituency. If people really believed in markets, they would realize that irrational discrimination imposes a cost on employers, who therefore already have an incentive not to engage in it. 7. Fannie Mae, the government agency which raises money for mortgage loans in the private capital markets. This agency has deliberately been spinning out loans to sub-par borrowers who are doomed to default on them. It has become a major prop holding up real-estate prices, and is thus a key culprit in the ongoing mortgage bubble. Conservatives accept it on the grounds that home ownership makes people more conservative. But this may not be true forever if private ownership of housing becomes a public entitlement. This is part of an ongoing phenomenon that corporatism helps to drive: the erosion of the determination of political preferences by the ownership of property.3 8. Sallie Mae, the government agency which supervises student loans. The government has a system of directly-financed public universities, but is has also in effect annexed private universities. Cleverly, it uses a relatively small amount of public money to package the flow of a much larger amount of private capital to tuition. The principal problem with this is that it has become a subsidy machine for the spiraling cost of higher education. There is also the problem that any institution receiving federal funds becomes susceptible to regulations that otherwise wouldn't be legal. Bribes-if-you-do are a much less disruptive means of manipulating behavior than sanctions-if-you-don't, and corporatism hates disruption and loves business as usual.4 One way to interpret corporatism is as a systematic way for government to distribute bribes for submission to its authority. 9. In local government, corporatism is principally a matter of real estate. Let's take New York as an example, just because I know it best and the pattern is clearest here, though similar dynamics work in other locales to a greater or lesser degree. Basically, real estate development here has become so over-regulated and over-taxed that it is virtually impossible to do profitably without government help. Government is aware that it has strangled development, but still wants it to occur because voters want jobs, campaign contributors want their projects, and projects create patronage opportunities for politicians. Therefore, government selectively lifts the burden of taxation and regulation on certain projects to push them into the black. It does this with tax abatements, loan guarantees, zoning changes, condemnations, outright subsidies, tax-exempt bond issues, exemption from regulations, and selective public infrastructure investments. As a result, only projects with political support can happen, and every skyscraper is a monument to the political deals that enabled it to get built. The result is capitalist in the sense of being privately owned, but it is not a free market. Government is expected by developers to keep a steady flow of profits going (while keeping politically-unconnected competitors out of the game.) It is expected by construction unions to keep a steady flow of construction jobs. It is expected by the public to deliver shiny new skyscrapers full of jobs. 10. In science and technology, corporatism principally takes the form of federal government financing of research expenditures whose value is difficult for the private sector to capture on its own. Government pays for universities to provide industry with the raw feedstock of new discoveries that can be commercialized. State governments have entered this game on a lesser scale. Tax credits for research and development may also be interpreted as a public subsidy. 11. In the capital markets, the quintessential corporatist institution is the Federal Reserve Bank. Legally, it is not technically a government agency at all but a cartel of private banks. Prior to 1913, the maintenance of a viable capital market in the U.S. was not a government responsibility.5 From the 30's to the 70's, the Fed tried to institute the grand corporatist project of Keynesianism, but abandoned it when inflation proved it unworkable. Nevertheless, the responsibilities of the Fed have tended to grow as people expect it, for example, to bail out a falling stock market with cheap credit, as I have mentioned before. 12. Bankers are quite well aware that they can make speculative loans to financially weak nations and count on being bailed out by the government if anything goes wrong. Naturally, this creates a moral hazard, not to mention a misallocation of capital. But given that the Left wants to see capital allocated to the Third World, the Right wants banks to be profitable, and the public fears a crash, the bankers can always count on a bailout. One can see how corporatism is likely to expand in the future. The privatization of Social Security is off for now, but remains inevitable, simply because there is no sustainable way to provide for a future income stream other than saving money now. But the stock market decline of the past few years has destroyed public trust that this market will always provide a reliable store of value, meaning that people will inevitably turn to government to make it provide one. What form this will take, cannot be predicted, but any privatization of Social Security will be accompanied by some governmental mechanism to stabilize investments. At best, this may mean diversification requirements. At worst, it may mean some horrible politicization of the capital markets. The concept of corporatism provides a good way to analyze the failure of HillaryCare. With its attempt to involve private insurance companies, this plan clearly made a (clumsy) attempt to conform to the corporatist model. It was supported by big companies like GM, which saw it as a way to offload its huge health-care costs. Fundamentally, I think it would have worked if it hadn't been such an arrogant, secretive, heavy-handed, all-at-once undertaking. We are gradually getting the corporatist equivalent of socialized medicine in this country anyway. Corporatized medicine will mean nominally private health plans for the employed that are so heavily regulated in what they can charge and what they must provide that they might as well be run by government. It will mean requirements for all businesses to give their employees health coverage (something big business will love because it will destroy a lot of their small-business competitors.) It will mean regulation of drug prices, which will eventually make drug companies wards of the state. Lastly, Medicare and Medicaid will expand, with the help of state plans, to cover whomever is left, with a tacit subsidy to emergency rooms to cover the last dregs. As I said, all these can be viewed as ways in which the corporatist state buys people's cooperation. But one cannot play this game without becoming susceptible to it, so that people buy the state's cooperation, too. Naturally, this produces the partly-valid complaint that we have a government for sale to the highest bidder. But in a society where people, institutions, and social groups are politically for sale to the highest bidder, what else could one possibly expect? Both Right and Left like corporatism in practice and are very cozy with it. But they are also ambivalent about it in theory, because it contradicts many of their cherished ideological beliefs.6 At the level of ideological self-characterization, neither side has fully grasped what corporatism is nor can quite bring itself to admit that it endorses it. Thus in its utterances, the intellectual Left is still reflexively anti-corporate and the Right anti-government. Part of the twisted genius of Bill Clinton was that he came closer to admitting we live in a corporatist society than any previous president. Bush, who made his personal fortune off a public-private deal concerning a stadium, is just as good at playing the game in practice, but on the ideological plane he mistakenly thinks that what the corporatist synthesis takes from socialism is "compassion." Hence his painfully sincere efforts to be politically correct and nice about everybody, since he intuitively grasps that Americans will not accept the rhetoric of pure capitalism. Realizing that our society is corporatist is the key to undoing many conservative misunderstandings. For example, we tend to be puzzled when the rich support the Left, which under classical capitalism they generally didn't. But in a society where government takes care of business, they often have a lot to gain from big government. Not to mention the fact that whole classes of the wealthy, i.e. lawyers, doctors, lobbyists, environmental consultants, defense contractors and others, make their money either helping people deal with government or are indirectly funded by government. Ownership of property used to make people conservative because they intuitively grasped that the means of the conservation of property were bound up with the means of the conservation of everything else: religious orthodoxy to social mores to cultural tradition to the Constitution. But now that corporatism has co-opted threats to property ownership, they don't feel the need for these things anymore. I consider it highly unlikely that corporatism can be overthrown, though objectionable parts of it can certainly be fought. I will discuss what it means to be conservative in a corporatist environment in a future article. The key thing for us to understand is that many of our assumptions about what furthers our cause and what doesn't were derived under the conditions of a more capitalist society and increasingly no longer hold.
1 This is not to say that government is necessarily the most efficient owner of infrastructure; I am well aware of the arguments for private toll roads and investor-owned utilities. It's just that, compared with the state-owned steel mills and supermarkets of pre-Thatcher Europe or the Soviet Union, they are not obvious failures. The quality, cost and productivity of publicly-owned utilities compares acceptably to privately-owned ones. And privatization of natural monopolies has problems of its own, as we saw in the California electricity crisis, even if these problems are caused by politics and do not refute the free-market ideal itself. 2 The final irony of corporatism is that it represents the triumph of the one 20th-Century ideology that is considered so utterly discredited that most educated people don't even bother to learn what it believed about economics: fascism. The exact means by which the end was carried out were very different in Mussolini's Italy, Franco's Spain, Hitler's Germany, or Tojo's Japan, and the manner was occluded by a lot of violence caused by other things, but the fundamental dynamic is the same as here: government assumed responsibility for guaranteeing the flow of material goods by private means after public confidence in the market's ability to do this collapsed. The fascists did it to avert communism. We did it for less desperate reasons, but the idea is similar. (The German and Japanese Nazis were not fascists, strictly speaking, but the core of their economics, separate from their use of plunder, was similar. See my article on what the Nazis were really about.) 3 See my review of BoBos in Paradise. The Republican share of the rich vote is declining. 4 The political class loves corporatism because it enables them to establish themselves in stable, profitable brokerage-relationships in which they manage the exchange of favors between government and the public in exchange for political support. This is a much easier way to stay in office than focusing their efforts on contentious issues and the public's fickle opinions about them. 5 This responsibility devolved in practice onto the Morgan Bank on Wall Street, which organized ad-hoc groups of banks to stabilize markets and enforce standards when needed. See the fascinating account in Ron Chernow's The House of Morgan. 6 The recently faddish book Empire is an attempt to understand global corporatism from a neo-Marxist point of view. Although rich in hit-or-miss insights, its Marxist assumptions prevent it from getting it right. Marxists have been observing the emergence of corporatism, and desperately trying to update Marxism to accommodate it, for a long time now, the most philosophically interesting attempt being that of Jürgen Habermas in Legitimation Crisis. Such attempts can only be accurate insofar as they pass out of Marxism entirely.
2003-06-03 05:46 | User Profile
You seem to be taking basically a traditional libertarian-hostile view toward corporatism. I think actually one of most the prominent men associated with corporatism was the Austrian economist Othmar Spann. I think his ideas deserve a more thorough hearing and understanding.
**Oh, I forgot to mention that a Swiss comrade translated an excellent article by Othmar Spann that I posted on Polinco. com It is something I think everyone should read and give serious thought to. Also, that article is the only thing he wrote that was translated into English and you won't find it any where else.[url=http://www.polinco.com/forum/showthread.php?threadid=1494&highlight=Othmar+Spann]Polinco - Othmar Spann[/url]
(from OD thread [url=http://forum.originaldissent.com/index.php?act=ST&f=26&t=7589&hl=spann]Triskelion Speaks![/url]**
2003-06-03 05:54 | User Profile
I am pro-corporatism, I was just posting different articles relating to it to get a reaction. The last article is from FrontPageRag, I forgot to mention.
2003-06-03 06:50 | User Profile
Originally posted by Eisenfaust@Jun 3 2003, 05:54 I am pro-corporatism,ÃÂ I was just posting different articles relating to it to get a reaction.ÃÂ The last article is from FrontPageRag, I forgot to mention.
OK, a link is always helpful, but the larger part of the post appears to be your own comments summarized > I consider it highly unlikely that corporatism can be overthrown, though objectionable parts of it can certainly be fought. I will discuss what it means to be conservative in a corporatist environment in a future article.
The word corporatism actually in a vulgar sense has quite a negative connotation of course, equally among right and left, so your opinion of the more general theories of a genuine "corporatist" economy (actually society), Spann puts forth is what generaly interests me.
2003-06-03 09:36 | User Profile
The various [url=http://www.adapt.leargas.ie/scripts/spintro.php3]ââ¬â¢Social Partnershipââ¬â¢[/url] agreements in Ireland over the last couple of decades are a form of corporatism in action. These programs are widely credited with digging us out of the depression of the eighties.
2003-06-03 14:49 | User Profile
The various ââ¬â¢Social Partnershipââ¬â¢ agreements in Ireland over the last couple of decades are a form of corporatism in action. These programs are widely credited with [u]digging us out[/u] of the depression of the eighties.
Now, your lovely country is getting [u]buried [/u] by [url=http://www.rte.ie/news/2002/0717/immigrants.html]immigration[/url].
2003-06-03 16:02 | User Profile
Originally posted by Kurt@Jun 3 2003, 08:49 Now, your lovely country is getting [u]buried [/u] by [url=http://www.rte.ie/news/2002/0717/immigrants.html]immigration[/url].
We borrowed economic policy from the fascists and immigration policy from the Marxists :crybaby:
2003-06-04 06:14 | User Profile
Originally posted by na Gaeil is gile@Jun 3 2003, 16:02 ** > Originally posted by Kurt@Jun 3 2003, 08:49 Now, your lovely country is getting [u]buried [/u] by [url=http://www.rte.ie/news/2002/0717/immigrants.html]immigration[/url].
We borrowed economic policy from the fascists and immigration policy from the Marxists :crybaby: **
Well the economic policy does seem to have worked better than the immigration policy. Overall, although in reality corporatism seems to have been nothing at all in common with "rule by corporations" of course, as the english phrase suggests.
2003-06-04 23:29 | User Profile
AntiYuppie wrote> **The Reagan "economic miracle" was probably due more to extensive Federal subsidies and R&D funding than to tax cuts (indeed, one could argue that the flow of R&D money and subsidies would have continued had the accompanying tax cuts not have been implemented). **
I suggest the economic boom from Reagan through Clinton relied on foreigners, mostly Japanese and Chinese, buying and keeping our increasingly worthless dollars. We shall soon see if the Euro supplants the dollar.