Corporatism

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Historically, corporatism or corporativism (Italian corporativismo) is a political system in which legislative power is given to civic assemblies that represent economic, industrial, agrarian, and professional groups. Unlike pluralism, in which many groups must compete for control of the state, in corporatism, certain unelected bodies take a critical role in the decision-making process. These corporatist assemblies are not the same as contemporary business corporations or incorporated groups.

According to Rodrigues, a corporatist state:

... does not simply license the existence of organised interest groups but incorporates them into its own centralised hierarchical system of regulation. In doing so, the state simultaneously recognises its dependence upon these associations and seeks to use them as an instrument in the pursuit and legitimation of its policies.[1]

The word "corporatism" is derived from the Latin word for body, corpus. This original meaning was not connected with the specific notion of a business corporation, but rather a general reference to any incorporated body. Its usage reflects medieval European concepts of a whole society in which the various components each play a part in the life of the society, just as the various parts of the body serve specific roles in the life of a body. According to various theorists, corporatism was an attempt to create a "modern" version of feudalism by merging the "corporate" interests with those of the state. (Also see neofeudalism.)

Political scientists may also use the term corporatism to describe a practice whereby an authoritarian state, through the process of licensing and regulating officially-incorporated social, religious, economic, or popular organizations, effectively co-opts their leadership or circumscribes their ability to challenge state authority by establishing the state as the source of their legitimacy. This usage is particularly common in the area of East Asia studies, and is sometimes also referred to as state corporatism.

Contemporary popular usage of the term is more pejorative, emphasizing the role of business corporations in government decision-making at the expense of the public. The power of business to affect government legislation through lobbying and other avenues of influence in order to promote their interests is usually seen as detrimental to those of the public. In this respect, corporatism may be characterized as an extreme form of regulatory capture, and is also termed corporatocracy. If there is substantial military-corporate collaboration it is often called militarism or the military-industrial complex.

Some contemporary political scientists and sociologists use the term neo-corporatism to describe a process of bargaining between labor, capital, and government identified as occurring in some small, open economies (particularly in Europe) as a means of distinguishing their observations from popular pejorative usage and to highlight ties to classical theories.

Classical theoretical origins

Corporatism is a form of class collaboration put forward as an alternative to class conflict, and was first proposed in Pope Leo XIII's 1891 encyclical Rerum Novarum, which influenced Catholic trade unions that organised in the early twentieth century to counter the influence of trade unions founded on a socialist ideology. Theoretical underpinnings came from the medieval traditions of guilds and craft-based economics; and later, syndicalism. Corporatism was encouraged by Pope Pius XI in his 1931 encyclical Quadragesimo Anno.

Gabriele D'Annunzio and anarcho-syndicalist Alceste de Ambris incorporated principles of corporative philosophy in their Constitution of Fiume.

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 unrestricted capitalism, owing to the feudalist and aristocratic tradition of giving state privileges to the wealthy and powerful.

Under fascism in Italy, business owners, employees, trades-people, professionals, and other economic classes were organized into 22 guilds, or associations, 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.

Similar ideas were also ventilated in other European countries at the time. For instance, Austria under the Dollfuß dictatorship had a constitution modelled on that of Italy; but there were also conservative philosophers and/or economists advocating the corporate state, for example Othmar Spann. In Portugal, a similar ideal, but based on bottom-up individual moral renewal, inspired Salazar to work towards corporatism. He wrote the Portuguese Constitution of 1933, which is credited as the first corporatist constitution in the world.

Neo-corporatism

In the recent literature of political science and sociology, corporatism (or neo-corporatism) lacks negative connotation. In the writings of Philippe Schmitter, Gerhard Lehmbruch and their followers, "neo-corporatism" refers to social arrangements dominated by tri-partite bargaining between unions, the private sector (capital), and government. Such bargaining is oriented toward (a) dividing the productivity gains created in the economy "fairly" among the social partners and (b) gaining wage restraint in recessionary or inflationary periods.

Most political economists believe that such neo-corporatist arrangements are only possible in societies in which labor is highly organized and various labor unions are hierarchically organized in a single labor federation. Such "encompassing" unions bargain on behalf of all workers, and have a strong incentive to balance the employment cost of high wages against the real income consequences of small wage gains. Many of the small, open European economies, such as Sweden, Austria, Norway, Ireland, and the Netherlands fit this classification. In the work of some scholars, such as Peter Katzenstein, neo-corporatist arrangements enable small open economies to effectively manage their relationship with the global economy. The adjustment to trade shocks occurs through a bargaining process in which the costs of adjustment are distributed evenly ("fairly") among the social partners.

Examples of modern neocorporatism include the ILO Conference or in the Economic and Social Committee of the European Union, the collective agreement arrangements of the Scandinavian countries, the Dutch Poldermodel system of consensus, or the Republic of Ireland's system of Social Partnership. In Australia, the Labor Party governments of 1983-96 fostered a set of policies known as The Accord, under which the Australian Council of Trade Unions agreed to hold back demands for pay increases, the compensation being increased expenditure on the "social wage", Prime Minister Paul Keating's name for broad-based welfare programs. In Italy, the Carlo Azeglio Ciampi administration inaugurated in July 23 1993 a concertation (italian: concertazione) policy of peaceful agreement on salary rates between government, the three main trade unions and the Confindustria employers' federation. Before that, salary augmentations always were conquered by strike actions. In 2001 the Silvio Berlusconi administration put an end to concertation.

Most theorists agree that neo-corporatism is undergoing a crisis. In many classically corporatist countries, traditional bargaining is on the retreat. This crisis is often attributed to globalization, but this claim is not undisputed.

State corporatism

While classical corporatism and its intellectual successor, neo-corporatism (and their critics) emphasize the role of corporate bodies in influencing government decision-making, corporatism used in the context of the study of autocratic states, particularly within East Asian studies, usually refers instead to a process by which the state uses officially-recognized organizations as a tool for restricting public participation in the political process and limiting the power of civil society.

Under such a system, as described by Jonathan Unger and Anita Chan in their essay China, Corporatism, and the East Asian Model[2],

at the national level the state recognizes one and only one organization (say, a national labour union, a business association, a farmers' association) as the sole representative of the sectoral interests of the individuals, enterprises or institutions that comprise that organization's assigned constituency. The state determines which organizations will be recognized as legitimate and forms an unequal partnership of sorts with such organizations. The associations sometimes even get channelled into the policy-making processes and often help implement state policy on the government's behalf.

By establishing itself as the arbitrator of legitimacy and assigning responsibility for a particular constituency with one sole organization, the state limits the number of players with which it must negotiate its policies and co-opts their leadership into policing their own members. This arrangement is not limited to economic organizations such as business groups or trade unions; examples can also include social or religious groups. Examples abound, but one such would be the People's Republic of China's Islamic Association of China, in which the state actively intervenes in the appointment of imams and controls the educational contents of their seminaries, which must be approved by the government to operate and which feature courses on "patriotic reeducation".[3] Another example is the phenomenon known as "Japan, Inc.", in which major industrial conglomerates and their dependent workforces were consciously manipulated by the Japanese MITI to maximize post-war economic growth.

In the United States, some claim that Franklin D. Roosevelt’s New Deal programs were an unprecedented jump towards a corporate state. Although there is a long history of narrow economic interests controlling the decision-making process in America, the New Deal in general and the National Recovery Administration in particular represented a new and broad experiment in corporatism. Some [4] claim that later US governmental programs represent further state corporatist activity.

Criticism

Anti-Corporate Criticism

Corporatism or neo-corporatism is often used popularly as a pejorative term in reference to perceived tendencies in politics for legislators and administrations to be influenced or dominated by the interests of business enterprises. The influence of other types of corporations, such as labor unions, is perceived to be relatively minor. In this view, government decisions are seen as being influenced strongly by which sorts of policies will lead to greater profits for favored companies.

Corporatism is also used to describe a condition of corporate-dominated globalization. Points enumerated by users of the term in this sense include the prevalence of very large, multinational corporations that freely move operations around the world in response to corporate, rather than public, needs; the push by the corporate world to introduce legislation and treaties which would restrict the abilities of individual nations to restrict corporate activity; and similar measures to allow corporations to sue nations over "restrictive" policies, such as a nation's environmental regulations that would restrict corporate activities.

Critics of capitalism often argue that any form of capitalism would eventually devolve into corporatism, due to the concentration of wealth in fewer and fewer hands. A permutation of this term is corporate globalism. John Ralston Saul argues that most Western societies are best described as corporatist states, run by a small elite of professional and interest groups, that exclude political participation from the citizenry.

In the United States, corporations representing many different sectors are involved in attempts to influence legislation through lobbying. This is also true of many non-business groups, unions, membership organizations, and non-profits. While these groups have no official membership in any legislative body, they can often wield considerable power over law-makers. In recent times, the profusion of lobby groups and the increase in campaign contributions has led to widespread controversy and the McCain-Feingold Act.

Free Market criticisms

Free market theorists like Ludwig von Mises, would describe corporatism as anathema to their vision of capitalism. In the kind of capitalism such theorists advocate, what has been called the "night-watchman" state, the government's role in the economy is restricted to safeguarding the autonomous operation of the free market. In this sense of capitalism, corporatism would be perceived as anti-capitalist as socialism. Other critics argue that corporatist arrangements exclude some groups, notably the unemployed, and are thus responsible for high unemployment. This argument goes back to the famous "Logic of Collective Action" by Harvard economist Mancur Olson. However, many critics of free market theories, such as George Orwell, have argued that corporatism (in the sense of an economic system dominated by massive corporations) is the natural result of free market capitalism.

See also

External links

Sources

On Neo-Corporatism

  • Katzenstein, Peter: Small States in World Markets, Ithaca, 1985.
  • Olson, Mancur: Logic of Collective Action: Public Goods and the Theory of Groups, (Harvard Economic Studies), Cambridge, 1965.
  • Schmitter, P. C. and Lehmbruch, G. (eds.), Trends toward Corporatist Intermediation, London, 1979.
  • Rodrigues, Lucia Lima: "Corporatism, liberalism and the accounting profession in Portugal since 1755," Journal of Accounting Historians, June 2003. [5]

de:Korporatismus fr:Corporatisme he:קורפורטיזם lt:Korporatyvizmas nl:Corporatisme pt:Corporativismo