When I first discovered corporatism, about 1966, it was not exactly a household word. The term was known only to specialists, who mostly looked for it in the recent (pre–1945) past. Between about 1960 and the early 1970s, a few New Left and libertarian scholars stirred up greater (but still quite small) interest in this arcane term. My original source was Michael Derrick’s book The Portugal of Salazar, arguing as of 1939 that Dr. António de Oliveira Salazar (effectively dictator of Portugal from 1928 to 1968) was working to realize an ideal form of corporatism. Whatever Salazar’s merits, Derrick’s book did sketch out corporatism as a concept.
These days corporatism gets more attention — for example, on certain left-wing blogs that rose in wrath a while back to smite George W. Bush, as well as in libertarian circles. Attention, yes; precision, no, since many current writers fling the word about wildly as meaning little more than “political-economic outcomes I don’t like.” Conceptual sharpness falls by the wayside and people mistake etymological relations between “corporate,” “corporation,” and “corporatism” for explanation. But corporatism and corporations as such are not yet the same subject matter, and we must review the ground.
Ideal corporatism arose when 19th-century conservatives and Romantics, reacting against capitalism and industrialization, raised “medieval” banners of organic social theory, paternal kings, and craftsmen’s guilds. These corporatist thinkers saw society as an organic whole morally bound to direct its divergent classes toward the common good through corporative economic bodies mediated by the state. The state would foster the unity of professions and industries organized into parallel federations of workers and employers (and managers) ultimately combined as national “corporations” merging in organic, national totality. Corporatist society would thus avoid the ills of laissez-faire capitalism, with its accidental (“atomistic”) agglomerations of unconnected individuals. Corporatism recognized private initiative and private property (within limits) and defended religion, all gravely threatened by communism. By the late 19th and early 20th centuries, corporatism had a definite Catholic coloration and counted Popes Leo XIII and Pius XI among its theorists. Among early 20th-century secular corporatists, the Romanian economist Mihaïl Manoïlesco was perhaps the most important.
Similar organizational concepts came from the Left. Connecting Pierre-Joseph Proudhon’s federalism with socialism and industrial and trade unionism, syndicalism proposed to organize society through local and partly autonomous workers’ collectives federated into national associations realizing the unity of each industry or occupation. Having sidelined the capitalists, those units would eventually replace the state.
A kind of middle-ground ideology arose in Britain, associated with John Ruskin, A.J. Penty, A.R. Orage, R.H. Tawney, and partly overlapping with G.K. Chesterton’s and Hilaire Belloc’s Distributism. Here renovated guilds would unite labor with capital goods outside the logic of capitalism. “Pluralism,” an Anglo-American social theory related to Guild Socialism, flourished between the world wars and centered on group autonomy while downplaying the state.
Corporatism as practical cartel-building
In more practical nations things were sometimes simpler. In Germany big businesses (usually allied with National Liberal politicians) worked closely with the state and left the manufacture of ideologies to intellectual enthusiasts. German industry was well subsidized and thoroughly cartelized very early. No one denied the compulsory, coercive, and political nature of those arrangements. If that was corporatism, it was not a very idealistic variety.
Left/Right fusionism in Italy
The great social disaster of 1914–1918 — World War I — destabilized European societies and unleashed the furies. Parliamentary politics gave way to politicized art movements, “myth” (in Georges Sorel’s sense), slogans, street theater, and murderous home-front violence. In Italy many syndicalists, aflame with nationalism and militarism, abandoned their prewar anarchism for “national syndicalism” (prefigured by Sorel) and flocked into the Fascist movement. In 1919 Gabriele D’Annunzio — radical artist, Futurist poet, and war veteran — proclaimed a “corporative state” at Fiume in Croatia. Coming to power in Italy in 1922 and establishing outright dictatorship in 1925, Benito Mussolini’s Fascist Party had a fully corporative state in place by the mid 1930s.
Wedded to high theory, a few Fascists continued to espouse a kind of anarcho-corporatism, in which the state would “wither away” into the new economic order. C.M. Ady and A.J. Whyte write,
Giuseppe Bottai, Minister of Education in the 1930’s and one of the purer theorists of Fascism, was continually reminding Mussolini of the original “corporative philosophy” of the regime. The Duce listened to him with the amused tolerance usually given to small children.…
(Oddly, Bottai’s position resembled somewhat the views of Garet Garrett and Herbert Hoover in the 1920s.) Despite the famous “Charter of Labor” (1927), Italian corporatism amounted in practice to suppression of independent labor unions, protected profits for selected big businessmen and landowners, and the rise of business cartels within the official corporative structures.
Pope Pius XI, a corporative idealist, distanced himself from the Fascists, noting fears “that the state … is substituting itself for free activity; that the new syndical and corporative order savors too much of an involved and political system of administration….” Italian “corporatism” — top-down and authoritarian — directly denied subsidiarity (local initiative), which the Church held essential to a functioning society.
Other interwar corporatist regimes
Salazar’s Portugal, Francisco Franco’s Spain, and Austria (under Engelbert Dollfuss) — and later Vichy France — were overtly corporatist in rhetoric and practice. Cooperation of business and state in Japan followed a similar pattern. A cynic might think that all officially corporate states were something of a sham. (National Socialist Germany strictly subordinated productive organization to the state, party, and allied corporations. Any vestigial corporative structures were quite meaningless.) Officially or not, corporatism characterized Sweden and the Netherlands, among other nations, and Robert A. Brady (Business as a System of Power, 1943) added Britain and the United States to the list.
Political scientists Philippe C. Schmitter and Howard J. Wiarda distinguish between “societal corporatism” and “state corporatism” (Michael Derrick’s corporatisme d’association and corporatisme d’état) — the former “socially” derived (= interest-based) and the latter entirely dominated by state priorities. Corporatism was widespread — and survived World War II — but the balance of forces in a given country determined which type prevailed there. In any case, ideal-corporatist rhetoric served mainly to give ideological cover to straightforward projects of political-economic domination. Thenceforward the future rode more with corporatism as a structure or system involving compulsory cooperation, entry restrictions, and other coercions, than with corporatism as an ethical project. Brady’s evidence alone would force the discussion to take that turn.
Corporatism sighted in North America
We now visit the great nation of practicality. Early advocates of corporatism in the United States were a mixed lot: big businessmen; their lawyers and spokesmen, including George W. Perkins, Edward Hurley, John D. Rockefeller Jr.; and rising politicians such as Theodore Roosevelt. On airier ground were New Republic editors Herbert Croly (who promised “Jeffersonian” ends achieved through “Hamiltonian” means), Walter Lippmann, and Walter Weyl. Those Progressive or New Liberal intellectuals (terms vary) differed from big-business corporatists in hoping for popular input and a bit of welfare; while business “liberals” focused on practical machinery to iron out labor-management differences, raise prices, and create stability through cartelization. World War I permitted American corporatists to undertake wide-ranging experiments involving industrywide tripartite corporative coordination and decision making. Corporatists of Left, Right, and Center took wartime innovations as precedents for future action.
The New Era: 1921–1929
The New Era’s slogan of “self-government in industry” called for national product standards and prices set by rapidly multiplying trade associations, encouraged by “laissez-faire” Republican administrations. Pleading “overproduction” and other problems in the market, New Era activists hoped to put legal sanctions behind their cartelizing efforts. New Era theorists included Bruno Burn (a German), Benjamin A. Javits, Herbert Hoover, and most spokesmen for big business. (Here indeed were Albert Jay Nock’s “Rotarian socialists”!) Mussolini’s corporatism was in fashion, and the New Republic’s Herbert Croly praised the Italian system.
The New Deal
The Great Depression gave the New Deal room to try full-scale, formal corporatism. The National Recovery Act (NRA) (1933) recognized existing trade associations as corporative bodies legally empowered to enforce restrictive practices. Business spokesmen Owen D. Young (G.E., RCA) and Gerard Swope (G.E.) had already endorsed the general idea in a collection of essays (America Faces the Future,1932) edited by historian Charles A. Beard (a left-corporatist). After the Supreme Court undid the NRA, political initiative shifted to corporatism by other means: an informal patchwork of regulatory corporatism and “virtual cartels.” Congress established agency after agency, soon “captured” by the (regulated) industry; some were probably meant to be captured. The war economy of 1941–1945 and the Cold War, including the military-industrial complex, locked this somewhat unsystematic new order into place. The Wagner Act (1935), modified by Taft-Hartley (1947), established a sector of tripartite corporatist bargaining (involving management, labor leaders, and government) in key industries.
Pluralistic (?) American corporatism
The corporative advance had many opponents. Socialists such as William Ghent, Robert A. Brady, and C. Wright Mills often agreed on details with “Old Rightists” such as Nock, John Chamberlain, ex-Progressive John T. Flynn, and ex-New Dealer Willis J. Ballinger. Dismissing idealist corporatism, those critics stressed interest-based motives, price-raising, and cartelization. Given the ad hoc, opportunist character and institutional lightness of American corporatism, it was easy for post-1945 American liberals to see nothing but democratic pluralism in the U.S. economy.
In fact, what prevailed was a rather “pluralistic” corporatism. In a huge geographical domain disguised as a federation, apparent decentralization helped to obscure corporatist practices. (Local interest groups had so much control — “self-administration” — over corporatist farm programs, that they hardly seemed federal.) For political scientist Theodore Lowi, the “creative federalism” of the 1960s, which used state governments and local interest groups to administer federal programs, was thoroughly corporatist. Starting in 1920, legislation increasingly ordered regulatory agencies to fix abstract problems (“competition”) by imposing abstract standards (“just and reasonable”). That left bureaucrats to sort things out through “case-by-case bargaining,” and the resulting “unregulated regulation” was a forcing-house for “interest-group liberalism,” or corporatism. American corporatism existed in differing degrees in different sectors: real tripartite corporatism in key industries (steel, automobiles), societal (interest-based) corporatism in agriculture and elsewhere, and heavily statist corporatism in defense and atomic energy.
New Left historians
From the late 1950s well into the 1970s, New Left historians, including William Appleman Williams, Gabriel Kolko, James Weinstein, Martin Sklar, Thomas J. McCormick, and Walter LaFeber, brought corporatism into the main narrative of 20th-century American history. A number of libertarian scholars — Murray Rothbard, Leonard Liggio, Walter Grinder, John Hagel III, Roy Childs, Roger Alexander, and I — adopted and used some of the insights of the New Left historians. By the late 1970s political scientists such as Lowi, Schmitter, Wiarda, and J.T. Winkler (in Britain) were investigating corporatism. In Paris, “Regulation School” Marxists contributed another viewpoint.
The Thatcher-Reagan program of “free markets” and strong state falsified J.T. Winkler’s 1976 pre-diction of increasingly state-dominated, formal corporatism for Britain. Dutch scholar Henk Overbeek sees in Thatcherism the triumph of export-oriented financial interests. In any case, the Tories’ new order cut labor unions out of the corporatist bargaining circle as much as possible.
The neoliberal blitzkrieg from the 1980s onward leaves Left Corporatism (and not “socialism”) as a fading alternative. (Derided as “socialist” by right-wingers, the current U.S. administration offers very centrist corporatism along with moralizing imperialism abroad.) The elimination of labor’s role in corporatism raises an interesting question: Can a bipartite (business and state) system be properly corporatist? Scholars working on European and Latin American corporatism tend to say no. Here we must differ.
The most liberal of American liberal-corporatist business magnates (e.g., John D. Rockefeller Jr.) submitted to union participation only in the interest of stability and order. It is hardly surprising that similarly placed men would, under new conditions and pressures, remove their junior partner and simplify corporative relations among themselves and with the state. (The Democratic Party’s decision to write off the white working class may be a factor here.) American corporatism was not as much about tripartite arrangements made with labor as it was about sustaining a particular economic order in the face of recurrent competition. (The economy undergoing rescue was built on “Hamiltonian” and “mercantilist” foundations by a Republican developmental coalition from the 1860s forward.) This project required compulsory relations between political and economic actors organized in particular ways that are the heart of corporatism.
American corporatism abroad
As of 1945, American policymakers wished to rebuild world trade under U.S. domination. Their “embedded liberalism” (embedded corporatism) deployed top-down international institutions — the World Bank, the Bretton Woods monetary regime, and other institutions — as substitutes for (literal) free trade, the gold standard, et cetera. The program aimed at protecting America’s domestic corporatist arrangements from foreign competition, while pursuing the old dream of an Open Door into everyone else’s markets for American trade and investment. It would grudgingly tolerate allied nations’ domestic corporatism in the short run. There was no shortage of state involvement in capitalist projects overseas; if anything, the relationship was more blatant than at home.
Corporations and corporatism reunited
Corporatism and corporations are not yet the same subject. The key word is “yet.” If there is a relationship, it is historical. Very briefly, corporations — legally privileged from birth, pampered by courts, subsidized by Congress, with a social “in” with the most important state personnel — were likely, as ideal engines for accumulating capital, to produce unbalanced economic outcomes, mass discontent, and political unrest. Combine those engines with inherited dysfunctional institutions such as fractional-reserve banking, eminent domain, primitive military accumulation (e.g., the Indian wars), governmental distribution of resources, a venal party system, and a mighty executive, and you have a recipe for crisis. American elites recognized the danger fairly early. By trial and error they put together “corporate syndicalism” (Williams), “political capitalism” (Kolko), corporatism (varii), or “interest-group liberalism” (Lowi). It remained to be seen who (business or state?) would dominate the partnership. Hoover himself reflected in 1922 on the danger of “a syndicalist nation on a gigantic scale.”
Since roughly 1938 the military-industrial sector has done much to frame American corporatism, as C. Wright Mills, Seymour Melman, Kolko, Gregory Hooks, and Robert Higgs have taught us. Lucky us: a corporative order intimately connected to armed violence. Add rampant securitarianism, total surveillance, dronology, secret arrests and secret “courts,” et cetera, and Oswald Spengler’s descent into formless power — pure will unmediated through formal structures — becomes something to contemplate. American corporatism — never a finished system — may give way to more direct and arbitrary relations of power. Descent into nihilistic decisionism looks a lot worse than positive law (bad enough in its day) ever was.
This article was originally published in the February 2014 edition of Future of Freedom.