Corporatism Part 1: Overview

This white paper lays out the foundation for a series of research papers on corporatism, influence, and its effects on the health and welfare of the Republic. The paper first lays out the complexities of corporatism and the vagaries of its definitions. It then develops a series of taxonomies on corporatism to guide the follow on research.

Why are corporate entities embracing the current memes? What is in it for them? How does history and political and economic theory and explain how we arrived at the current situation in time. These memes could be a red herring to distract focus away from a different goal.

 

 

Figure Red Herring

Under this lens, the term “communism” does not seem to apply to China, while “fascism” seems a close fit. The term “corporatism” is closely tied to fascism. The first fascist government, Italy, was also corporatist. Since WWII, the concept of corporatism has developed, and some theorists use neocorporatism or other variants to separate the concept from its fascist roots. But it pre-dates fascism. Mercantilism essentially embraced the tenets of corporatism. The corporations, at least on paper, served the government.

The Chinese government owns and directs most of the commercial activity. The term mercantilism also seems to apply to many of its activities in Africa and increasingly Eurasia. Casting aside the communism label may help to better address Chinese actions and how to respond to them. They are a classic fascist government that includes corporatism and mercantilism.

In the US, as we look at corporate activities, particularly from multi-national corporations (MNC), corporatism also comes to mind. There are some interesting corporatist theories emerging now, ranging from voting and representation not by geography, but by interest groups to increased corporate control of the government, to a blend of corporatism and fascism. The original Italian fascism was also corporatism, as the term “corporate” meant just that, corporations. But corporatism grew to include interest groups, unions, lobbyist, non-governmental organizations, and practically any group of people with a common agenda that seeks to influence policy.

Corporatism is a highly malleable term that has morphed. Philippe C. Schmitter (Pappi, 2020) defined it as:

“a system of interest representation in which the constituent units are organized into a limited number of singular, compulsory, noncompetitive, hierarchically ordered and functionally differentiated categories, recognized or licensed (if not created) by the state and granted a deliberate representational monopoly within their respective categories in exchange for observing certain controls on their selection of leaders and articulation of demands and supports.”

That is quite an academic mouthful. Sergio Notto’s (2016) definition parses this easier:

“a series of actions related to an economic policy which is not necessarily supported by an articulated theory. By means of the establishment of economic institutions, these actions aim to direct economic factors according to precise objectives that have been acknowledged by groups of varying sizes.”

Notto focuses on economic policy, but Schmitter is broader. Corporatism has traditionally focused on both economic and social policies. In a broader, neo-corporatism sense, it can apply to any policy and is the nexus of government and corporate agencies on policy formulation and implementation.

Miriam Webster defines corporatism as:

“the organization of a society into industrial and professional corporations serving as organs of political representation and exercising control over persons and activities within their jurisdiction”

This adds the concepts of political representation and control. While control may exist, political representation does not.

WikiDiff (Corporatism vs Communism ) defines it as:

“political/economic system in which power is exercised through large organizations (businesses, trade unions, their associated lobbying efforts, etc) working in concert or conflict with each other; usually with the goal of influencing or subsuming the direction of the state and generally only to benefit their own socioeconomic agendas at the expense of the will of the people, and to the detriment of the common good.”

The final “to the detriment of the common good” is, however, not necessarily true. Scandinavian corporatism is generally supportive of social welfare and the common good.

The web of influence by itself is neither good nor bad. Its effects depend on the way agents within the web use they influence and develop. Does corporatism need to be to the detriment of the common good? The experience in Scandinavia seems to show it can have some positive effects.

The key is the statement, “to benefit their own socioeconomic agendas”. How do we bring the corporate (this is broader than corporations) socioeconomic agendas into harmony with the charge in the Preamble to the Constitution to “We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.”

So where would a corporatist approach lead the US. Arguably, it could fit within a democratic approach, as we see in some parts of Europe. Arguably, it could lead to fascism. Or it could lead to a hybrid form where corporations have a great deal of power, a fascism turned on its head.

Figure 3 shows the broad directions a corporatist approach can take in any state. They range from a relatively benign support for a democratic government through revolution and a fascist state with several potential stages or terminal points in between. Going clockwise around Figure 3, the potential paths are:

Table 1 Corporatism Pathways
Path	Discussion
Democratic Corporatism	Corporate entities work with the government to develop effective social policies that support employment and social stability. This is the “Scandinavian” model that was strong post-war through the 1970s and never truly went away.
Overthrow	While there are groups that seek to overthrow western governments, communist and communist offspring movements are the most obvious, the corporate motives for an overthrow are obscure. What would an overthrow accomplish, unless it is to follow the arrows to Fascism and Mercantilism? Perhaps the answer to this question is, “what is the value of a modern state?” Some analysts have predicted the era of the modern state is over.
Fascism	Fascism is an authoritarian form of government with strong relationships between the state and businesses to control markets and economic activity. Corporations may or may not be government owned. The Italian fascism is often seen as the first variant of corporatism. However, the mercantilist approaches in the colonial era may have been the first.
Mercantilism	Government and business work together to generate wealth for the state. In the mercantile era was often associated with colonialism. The state created colonies to control key natural resources. The colonies sent raw materials back to the mother country. Corporations in the mother country than developed and exported finished goods. The British East India Company and Hudson Bay Company are two good examples. China may have developed a new kind of mercantilism, where state-owned corporations buy overseas companies for either raw materials, such as Smithfield Hams, or for geopolitical reasons such as developing the Ring and Belt. This can be closely aligned with a fascist government. Arguably, China is fascist, not communist.
Puppet Master	This scenario is like the guild control of city governments in medieval through the rise of the Industrial Era. While there was a city government, the guilds were often represented in the governing council and, depending on the city and the strength of the guilds, could control it. In the post-Industrial Era, corporatism could again take this form through lobbyists and corporate campaign contributions. While ostensibly the government remains in control, the corporations are puppet masters behind the scenes. They own the politicians and control legislation and policy development.

The full development of these pathways requires research and analysis to:

• Update/derive definitions for these concepts to fit the current times.
  • Is China a modern fascist government?
• Gather evidence to confirm whether modern governments and corporate entities are moving in these directions.
  • Does China engage in modern mercantilism?
  • What paths are other governments pursuing?
• Are there other pathways to consider?
• How do these pathways affect the health and welfare of a Republic?
• How do these pathways affect our concept of the modern state?

This full development of these pathways and options requires research and analysis of:

Figure Potential Directions from Corporatism

• The modern state and whether its time is passed.
• Modern corporatism, such as Gladden Pappin’s Corporatism for the Twenty-First Century.
• Impact of government legislation and regulation
• Current corporate activities:
  • MNC actions
  • Interest groups, labor unions and other non-commercial corporate entities
  • Corporate lobbying and other government influencing activities

Figure Corporatism Web of Influence

Table 2 Influence Web Agents
Agent	Discussion
Interlocking Boards	Several academic papers address the influence of interlocking boards and how they help to shape ideas and to share them and develop influence between corporations.
Networking Groups	There are two levels of influence groups. The first is the senior executive level. This can include meetings like Davos and paid membership groups and selected university training. The second level is for everyone else and includes sites such as LinkedIn and Twitter. Regardless of level, these groups share and shape ideas.
Industry Groups	Virtually every industry has an advocacy group. These groups help to generate ideas, provide training, and networking.
Political Operatives	These include political party staffers and campaign professionals. They understand the influence process at their levels and who they can and cannot effectively influence.
Bureaucrats	The Wilsonian reforms that aimed at eliminating patronage and establishing scientific management effectively created an unelected fourth branch of government. Many academic papers discuss the bureaucracy’s power and influence. There is also movement between corporate bodies and the bureaucracy.
Regulators	There is extensive literature on corporate regulatory preferences and their ability to influence regulation. While Congress sets regulatory policy, regulatory agencies determine how to implement the policy. Corporate bodies can and do influence the development of regulatory implementation and the specific rules and their application. Movement between regulatory agencies and corporations can also shape and influence regulatory impacts.
Congressional Staffers	In function, the congressional staffers are like the executive bureaucracy. However, unlike the bureaucracy, their tenure is more precarious. They serve with and at the pleasure of the congress member on whose staff. A congressional document of staff states, “Members of the House and Senate establish their own employment policies and practices for their personal offices”. (Petersen, 2020) Staffers do most the policy research and writing. Senior staffers with a senior member of congress can wield a great deal of influence.
Congressional Members	Congressional members are the epitome of influence brokers. The only requirements for membership are age, residence, and the ability to be elected. Increasingly being elected requires money and influence. The more influence a member has the more money they can raise. The longer they stay in congress, the more senior they become and the more influence they have. It is an interesting dynamic.

This full development of the web of influence requires research and analysis of:

• Is there evidence to support the shared influence and its effect on government policy?
• Do interlocking boards violate legal and ethical strictures?
• Is there a case for modern trust-busting like President Roosevelt’s trust-busting in the early twentieth century?
• How can governments effect reform to ensure ethical and effective government amid this web of influence?

Greenman House will conduct the research and analysis recommended above. Follow-on white papers and research papers will develop the lines of inquiry, present evidence and conduct an analysis of the evidence.

Bibliography

Corporatism vs Communism – What ’ s the difference ? (2021). 1–2. Accessed 8/29/2021. https://wikidiff.com/communism/corporatism

Definition, C. (1828). https://www.merriam-webster.com/dictionary/corporatism 1/9. 1–9.

Noto, S. (2016). Corporatism. January. https://doi.org/10.13140/RG.2.1.2978.9200

Pappin, G. (2020). Corporatism for the Twenty-First Century. American Affairs, February 20, 2020.

Petersen, R. E. (2020). Congressional Staff : Duties , Qualifications , and Skills Identified by Members of Congress for Selected Positions Congressional Staff : Duties , Qualifications , and Skills Identified by Members of Congress for Selected Positions. 1–51.