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Corporatism is a system of economic, political, and social organization where corporate groups such as business, ethnic, farmer, labour, military, patronage, or religious groups are joined together into a single governing body in which the different groups are mandated to negotiate with each other to establish policies in the interest of the multiple groups within the body. Corporatism views society as being alike to an organic body in which each corporate group is viewed as a necessary organ for society to function properly. Corporatism is based on the sociological concept of functionalism. Countries that have corporatist systems typically utilize strong state intervention to direct corporatist policies and to prevent conflict between the groups.

The word "corporatism" is derived from the Latin word for body, corpus. This meaning was not connected with the specific notion of a business corporation, but rather a general reference to anything collected as a body.

Corporatism has been supported from various proponents, including: absolutists, capitalists, conservatives, fascists, progressives, reactionaries and theologians.

Political scientists may also use the term corporatism to describe a practice whereby a 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, as well as sometimes running them, either directly or indirectly through corporations. This usage is particularly common in the area of East Asian studies, and is sometimes also referred to as state corporatism. Some analysts have applied the term neocorporatism to certain practices in Western European countries, such as the Tupo in Finland and Proporz system in Austria.At a popular level in recent years "corporatism" has been used in a pejorative context to refer to the application of corporatism by fascist regimes or to mean the promotion of the interests of private business corporations in government over the interests of the public.

History of corporatism

Early concepts of corporatism have been traced back to ideas found in ancient Greece, ancient Rome, and religions such as Buddhism, Christianity, Confucianism, and Islam.

Ancient Greece and Rome

Ancient Greece developed early concepts of corporatism. Plato developed the concept of a totalitarian and communitarian corporatist system of natural-based classes and natural social hierarchies that would be organized based on function, whereby the groups would cooperate to achieve social harmony by emphasizing collective interests while rejecting individual interests. Aristotle in Politics also viewed society as being divided along natural classes and functional purposes that were priests, rulers, slaves, and warriors. Ancient Rome copied Greek concepts of corporatism into their own version of corporatism but also added the concept of political representation on the basis of function that divided up representatives into military, professional, and religious groups and created institutions for each group called collegios.

Christian corporatism in the Middle Ages

During the Middle Ages, the Roman Catholic Church sponsored the creation of various institutions including brotherhoods, monasteries, religious orders, and military associations, especially during the Crusades to sponsor connection between these groups. In Italymarker, various function-based groups and institutions were created in the Middle Ages, such as universities, guilds for artisans and craftspeople, and other professional associations. The creation of the guild system is a particularly important aspect of the history of corporatism because it involved the allocation of power to regulate trade and prices to guilds, which is an important aspect of corporatist economic models of economic management and class collaboration.

Absolute monarchies in the Middle Ages gradually subordinated corporatist systems and corporate groups to the authority of centralized and absolutist governments, resulting in corporatism being used to uphold social hierarchy.

The French Revolution and the overthrow of absolutist corporatism

In the aftermath of the French Revolution, the existing absolutist corporatist system was completely dismantled due to its support of social hierarchy and special "corporate privilege" for the Roman Catholic Church. The new French government saw corporatism's emphasis on group rights as inconsistent with the government's promotion of individual rights. Subsequently corporatist systems and corporate privilege throughout Europe were abolished in response to the French Revolution. From 1789 to the 1850s, most supporters of corporatism were reactionaries. A number of reactionary corporatists favoured corporatism in order to end liberal capitalism and restore the feudal system.

Progressive corporatism

From the 1850s onward progressive corporatism rose in response to liberalism and Marxism. These corporatists supported providing group rights to members of the middle classes and working classes in order to secure class harmony. This was in opposition to the Marxist conception of class conflict. By the 1870s and 1880s, corporatism experienced a revival in Europe with the creation of workers' unions that were committed to class harmony and negotiations with employers. This new strand of corporatism also began to gain adherents in the United Statesmarker.

Freiburg meeting, corporatist internationale, and Rerum Novarum

In 1881, Pope Leo XIII commissioned theologians and social thinkers to study corporatism and provide a definition for it. In 1884 in Freiburgmarker, the commission declared that corporatism was a "system of social organization that has at its base the grouping of men according to the community of their natural interests and social functions, and as true and proper organs of the state they direct and coordinate labor and capital in matters of common interest."

In the aftermath of the Freiburg meeting, corporatism grew in popularity and the corporatist internationale was formed in 1890 followed by the publishing of Rerum Novarum by the Roman Catholic Church that for the first time declared the Church's blessing to trade unions and called for organized labour to be recognized by politicians. Many corporatist unions in Europe were backed by the Roman Catholic Church to challenge the rise of anarchist, Marxist and other radical unions, with the corporatist unions being fairly conservative in comparison to their radical rivals.

Fascist corporatism

In Italy, corporatism became influential amongst Italian nationalists. The Charter of Carnaro gained much popularity as the prototype of a 'corporative state', having displayed much within its tenets as a guild system combining the concepts of autonomy & authority in a special synthesis. This appealed to Hegelian thinkers such as Mussolini who were looking for a new alternative to popular socialist & syndicalist stances which was also a progressive system of governing labor and still a new way of relating to political governance as a whole. Alfredo Rocco spoke of a corporative state and declared corporatist ideology in detail. Rocco would go on to become a member of the Italian Fascist regime.Italian Fascism involved a corporatist political system in which economy was collectively managed by employers, workers and state officials by formal mechanisms at national level. This non-elected form of state officializing of every interest into the state was professed to better circumvent the marginalization of singular interests (as would allegedly happen by the unilateral end condition inherent in the democratic voting process). Corporatism would instead better recognize or 'incorporate' every divergent interest as it stands alone into the state organically, according to its supporters, thus being the inspiration behind their use of the term totalitarian, perceivable to them as not meaning a coercive system but described distinctly as without coercion in the 1932 Doctrine of Fascism as thus:

This prospect in Italian fascist corporatism claimed to be the direct heir of Georges Sorel's anarcho-syndicalism, wherein each interest was to form as its own entity with separate organizing parameters according to their own standards, only however within the corporative model of Italian fascism each was supposed to be incorporated through the auspices and organizing ability of a statist construct. This was by their reasoning the only possible way to achieve such a function, i.e. when resolved in the capability of an indissoluble state. Much of the corporatist influence upon Italian Fascism was in part due to the Fascists' attempts to gain support of the Roman Catholic Church that itself sponsored corporatism. However fascism's corporatism was a top-down model of state control over the economy while the Roman Catholic Church's corporatism favoured a bottom-up corporatism, whereby groups such as families and professional groups would voluntarily work together. The fascist state corporatism influenced the governments and economies of a number of Roman Catholic countries, such as the government of Engelbert Dollfuss in Austriamarker and António de Oliveira Salazar in Portugalmarker. Fascists in non-Catholic countries also supported Italian Fascist corporatism including Oswald Mosley of the British Union of Fascists who commended corporatism and said that "it means a nation organized as the human body, with each organ performing its individual function but working in harmony with the whole". Mosley also saw corporatism as an attack on laissez-faire economics and "international finance".

Corporate liberalism, Fordism, and Tripartism

In the United Statesmarker, economic corporatism involving capital-labour cooperation was influential in the New Deal economic program of the United States in the 1930s as well as in Fordism and Keynesianism.

In the post-World War II reconstruction period in Europe, corporatism was favoured by Christian democrats, national conservatives, and social democrats in opposition to liberal capitalism. This type of corporatism faded but revived again in the 1960s and 1970s as "neo-corporatism" in response to the new economic threat of stagflation. Neo-corporatism favoured economic tripartism which involved strong and centralized labour unions, employers' unions, and governments that cooperated as "social partners" to negotiate and manage a national economy.

Neo-corporatism

In social science

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.

In the recent literature of social science, 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 they 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 Swedenmarker, Austriamarker, Norwaymarker, Irelandmarker, Belgiummarker and the Netherlandsmarker fit this classification. In the work of some scholars, such as Peter J. 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, the Economic and Social Committee of the European Union, the collective agreement arrangements of the Scandinavian countries, the Dutchmarker Poldermodel system of consensus, and the Republic of Irelandmarker'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 Singaporemarker, the National Wages Council and other state-created entities form a tripartite arrangement between the major trade unions (NTUC), employers, and the Government that co-ordinates the national economy. In Italymarker, the Carlo Azeglio Ciampi administration inaugurated in July 23' 1993 a concertation ( ) policy of peaceful agreement on salary rates between government, the three main trade unions and the Confindustria employers' federation. Before that, salary augmentations were always beset by strike. In 2001 the Silvio Berlusconi administration put an end to concertation.

Most theorists agree that traditional neo-corporatism is undergoing a crisis. In many classically corporatist countries, traditional bargaining is on the retreat. This crisis is often attributed to globalization, with increasing labour mobility and competition from developing countries (see outsourcing). However, this claim is not undisputed, with nations like Singapore still strongly following neo-corporatist models.

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 authoritarian or 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.

Asian corporatism

Under such a system, as described by Jonathan Unger and Anita Chan in their essay China, Corporatism, and the East Asian Model,
"...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 Chinamarker'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". Another example is the phenomenon known as "Japan, Inc.", in which major industrial conglomerates and their dependent workforces were consciously manipulated by the Japanese MITImarker to maximize post-war economic growth.

Russian corporatism

On October 9, 2007, an article signed by Viktor Cherkesov, head of the Russian Drug Enforcement Administration, was published in Kommersant, where he used the term "corporativist state" in a positive way to describe the evolution of Russia. He claimed that the administration officials detained on criminal charges earlier that month are the exception rather than the rule and that the only development scenario for Russia that is both realistic enough and relatively favorable is to continue evolution into a corporativist state ruled by security service officials.

Here is some background. In December 2005, Andrei Illarionov, former economic adviser to Vladimir Putin, claimed that Russiamarker had become a corporativist state.


"The process of this state evolving into a new corporativist (sic) model reached its completion in 2005. ... The strengthening of the corporativist state model and setting up favorable conditions for quasi-state monopolies by the state itself hurt the economy. ... Cabinet members or key Presidential Staff executives chairing corporation boards or serving on those boards are the order of the day in Russia. In what Western country—except in the corporativist state that lasted for 20 years in Italy—is such a phenomenon possible? Which, actually, proves that the term 'corporativist' properly applies to Russia today."

All political powers and most important economic assets in the country are controlled by former state security officials ("siloviks"), according to some researchers. The takeover of Russian state and economic assets has been allegedly accomplished by a clique of Putin's close associates and friends who gradually became a leading group of Russian oligarchs and who "seized control over the financial, media and administrative resources of the Russian state" and restricted democratic freedoms and human rights

Illarionov described the present situation in Russia as a new socio-political order, "distinct from any seen in our country before". In this model, members of the Corporation of Intelligence Service Collaborators [Russian abbreviation KSSS] took over the entire body of state power, follow an omerta-like behavior code, and "are given instruments conferring power over others – membership “perks”, such as the right to carry and use weapons". According to Illarionov, this "Corporation has seized key government agencies – the Tax Service, Ministry of Defense, Ministry of Foreign Affairs, Parliament, and the government-controlled mass media – which are now used to advance the interests of KSSS members. Through these agencies, every significant resource of the country – security/intelligence, political, economic, informational and financial – is being monopolized in the hands of Corporation members"

Analyst Andrei Piontkovsky also considers the present situation as "the highest and culminating stage of bandit capitalism in Russia”. He believes that "Russia is not corrupt. Corruption is what happens in all countries when businessmen offer officials large bribes for favors. Today’s Russia is unique. The businessmen, the politicians, and the bureaucrats are the same people."

In popular usage

Contemporary popular (as opposed to social science) 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, a form of plutocracy. If there is substantial military-corporate collaboration it is often called militarism or the military-industrial complex.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.

In the United States, corporations representing many different sectors are involved in attempts to influence legislation through lobbying including 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 lawmakers by money donations. In recent times, the profusion of lobby groups and the increase in campaign contributions has led to widespread controversy and the McCain-Feingold Act.

Many left wing 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. Many supporters of the free market see this as unnatural and due to extensive state intervention.

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.

Other critics say that they are pro-capitalist, but anti-corporatist. They support capitalism but only when corporate power is separated from state power. These critics can be from both the right and the left.

In the United States, Republican President Ronald Reagan echoed Republican President Herbert Hoover and others who claimed that Franklin D. Roosevelt’s New Deal programs represented a move in the direction of a corporatist state. In particular, these critics focused on the National Recovery Administration. In 1935, Herbert Hoover described some of the New Deal measures as "Fascist regimentation." In his 1951 memoirs he used the phrases "early Roosevelt fascist measures", and "this stuff was pure fascism", and "a remaking of Mussolini's corporate state". For sources and more information, see The New Deal and corporatism.

Some authors also discuss modern American corporatism.

Other critics, namely Mancur Olson in The Logic of Collective Action, argue that corporatist arrangements exclude some groups, notably the unemployed, and are thus responsible for high unemployment.

Fascism and corporatism

Some critics equate too much corporate power and influence with fascism. Often they cite a quotation that has been attributed to Mussolini, although it doesn't appear in any of his texts: "Fascism should more properly be called corporatism because it is the merger of state and corporate power." Several variations of the alleged quotation exist. However, no text written by Mussolini has yet been found with any variation of the alleged quotation. Despite this, the alleged quotation has entered into modern discourse, and it appears on thousands of web pages, and in books, and even an alternative media advertisement in the Washington Post. However, the alleged quotation contradicts almost everything else written by Mussolini on the subject of the relationship between corporations and the Fascist State.

In one 1935 English translation of what Mussolini wrote, the term "corporative state" is used, but this has a different meaning from modern uses of the terms used to discuss business corporations. In that same translation, the phrase "national Corporate State of Fascism," refers to syndicalist corporatism. The dubious quotation is sometimes claimed to more accurately summarize what Mussolini did and not what he said. However, many scholars of fascism reject this claim.

There is a very old argument about who controlled whom in Fascist Italy and Nazi Germany at various points in the timeline of power. It is agreed that the army, the wealthy, and the big corporations ended up with much more say in decision making than other elements of the corporative state. There was a power struggle between the fascist parties/leaders and the army, wealthy, and big corporations. It waxed and waned as to who had more power at any given time. Scholars have used the term "Mussolini's corporate state" in many different ways.

Franklin D. Roosevelt in an April 29, 1938 message to Congress warned that the growth of private power could lead to fascism:

From the same message:

Critics of the notion of the confluence of corporate power and de facto fascism included President Dwight D. Eisenhower, who nevertheless brought attention to the "conjunction of an immense military establishment and a large arms industry" in his 1961 Farewell Address to the Nation, and stressed "the need to maintain balance in and among national programs -- balance between the private and the public economy, balance between cost and hoped for advantage."

See also



References

Sources

On Tory Corporatism

  • William Stewart, Understanding Politics


On Italian Corporatism

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.

On Fascist Corporatism



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