The Economic System of
Corporatism
In the last half of the 19th century people of the
working class in Europe were beginning to show interest in the
ideas of socialism and syndicalism. Some members of the
intelligentsia, particularly the Catholic intelligentsia, decided
to formulate an alternative to socialism which would emphasize
social justice without the radical solution of the abolition of
private property. The result was called Corporatism. The
name had nothing to do with the notion of a business
corporation except that both words are derived from the
Latin word for body, corpus.
The basic idea of corporatism is that the society and
economy of a country should be organized into major interest groups
(sometimes called corporations) and representatives of
those interest groups settle any problems through negotiation and
joint agreement. In contrast to a market economy which operates
through competition a corporate economic works through collective
bargaining. The American president Lyndon Johnson had a favorite
phrase that reflected the spirit of corporatism. He would gather
the parties to some dispute and say, "Let us reason
together."
Under corporatism the labor force and management in an
industry belong to an industrial organization. The representatives
of labor and management settle wage issues through collective
negotiation. While this was the theory in practice the corporatist
states were largely ruled according to the dictates of the supreme
leader.
One early and important theorist of corporatism was Adam
Müller, an advisor to Prince Metternich in what is now eastern
Germany and Austria. Müller propounded his views as an antidote to
the twin dangers of the egalitarianism of the French Revolution and
the laissez faire economics of Adam Smith. In Germany and
elsewhere there was a distinct aversion among rulers to allow
markets to function without direction or control by the state. The
general culture heritage of Europe from the medieval era was
opposed to individual self-interest and the free operation of
markets. Markets and private property were acceptable only as long
as social regulation took precedence over such sinfull motivations
as greed.
Coupled with the anti-market sentiments of the medieval
culture there was the notion that the rulers of the state had a
vital role in promoting social justice. Thus corporatism
was formulated as a system that emphasized the postive role of the
state in guaranteeing social justice and suppressing the moral and
social chaos of the population pursuing their own individual
self-interests. And above all else, as a political economic
philosophy corporatism was flexible. It could tolerate private
enterprise within limits and justify major projects of the state.
Corporatism has sometimes been labeled as a Third Way or a
mixed economy, a synthesis of capitalism and socialism,
but it is in fact a separate, distinctive political economic
system.
Although rulers have probably operated according to the
principles of corporatism from time immemorial it was only in the
early twentieth century that regimes began to identify themselves
as corporatist. The table below gives some of those explicitly
corporatist regimes.
Corporatist Regimes of
the Early Twentieth Century System Name Country Period Leader
National Corporatism Italy 1922-1945 Benito Mussolini Country,
Religion, Monarchy Spain 1923-1930 Miguel Primo de Rivera National
Socialism Germany 1933-1945 Adolph Hitler National Syndicalism
Spain 1936-1973 Francisco Franco New State Portugal 1932-1968
Antonio Salazar New State Brazil 1933-1945 Getulio Vargas New Deal
United States 1933-1945 Franklin Roosevelt Third
Hellenic
Civilization Greece 1936-1941 Ioannis Metaxas Justice Party
Argentina 1943-1955 Juan Peron
In the above table several of the regimes were brutal,
totalitarian dictatorships, usually labeled fascist, but
not all the regimes that had a corporatist foundation were fascist.
In particular, the Roosevelt New Deal despite its many faults could
not be described as fascist. But definitely the New Deal was
corporatist. The architect for the initial New Deal program was
General Hugh Johnson. Johnson had been the administrator of the
military mobilization program for the U.S. under Woodrow Wilson
during World War I. It was felt that he did a good job of managing
the economy during that period and that is why he was given major
responsibility for formulating an economic program to deal with the
severe problems of the Depression. But between the end of World War
I and 1933 Hugh Johnson had become an admirer of Mussolini's
National Corporatist system in Italy and he drew upon the Italian
experience in formulating the New Deal. It should be noted that
many elements of the early New Deal were later declared
unconstitutional and abandoned, but some elements such as the
National Labor Relations Act which promoted unionization of the
American labor force are still in effect. One part of the New Deal
was the development of the Tennessee River Valley under the public
corporation called the Tennessee Valley Authority (TVA). Some of
the New Dealer saw TVA as more than a public power enterprise. They
hoped to make TVA a model for the creation of regional political
units which would replace state governments. Their goal was not
realized. The model for TVA was the river development schemes
carried out in Spain in the 1920's under the government of Miguel
Primo de Rivera. Jose Antonio Primo de Rivera, the son of Miguel
Primo de Rivera, was the founder of Franco's National
Syndicalism.
Corporatist regime typically promote large governmental
projects such as TVA on the basis that they are too large to be
funded by private enterprise. In Brazil the Vargas regime created
many public enterprises such as in iron and steel production which
it felt were needed but private enterprise declined to create. It
also created an organized labor movement that came to control those
public enterprises and turned them into overstaffed, inefficient
drains on the public budget.
Although the above locates the origin of corporatism in
19th century France it roots can be traced much further back in
time. Sylvia Ann Hewlett in her book, The Cruel Dilemmas of
Development: Twentieth Century Brazil, says,
Corporatism is based on a body of ideas that can be
traced through Aristotle, Roman law, medieval social and legal
structures, and into contemporary Catholic social philosophy. These
ideas are based on the premise that man's nature can only be
fulfilled within a political community.
..........
The central core of the corporatist vision is thus not the
individual but the political community whose perfection allows the
individual members to fulfill themselves and find happiness.
...............
The state in the corporatist tradition is thus clearly
interventionist and powerful.
Corporatism is collectivist; it is a different version
of collectivism than socialism but it is definitely collectivist.
It places some importance on the fact that private property is not
nationalized, but the control through regulation is just as real.
It is de facto nationalization without being de
jure nationalization.
Although Corporatism is not a familiar concept
to the general public, most of the economies of the world are
corporatist in nature. The categories of socialist and pure market
economy are virtually empty. There are only corporatist economies
of various flavors.
These flavors of corporatism include the social
democratic regimes of Europe and the Americas, but also the East
Asian and Islamic fundamentalist regimes such as Taiwan, Singapore
and Iran. The Islamic socialist states such as Syria, Libya and
Algeria are more corporatist than socialist, as was Iraq under
Saddam Hussain. The formerly communist regimes such as Russia and
China are now clearly corporatist in economic philosphy although
not in name.
http://www.sjsu.edu/faculty/watkins/corporatism.htm
