THE GROWTH OF CORPORATISM
NEO-CORPORATISM AND "FORDISM"
Corporatism was an ideology and model of social, economic, and political organization especially with extreme-right and fascist regimes in the 1930s and during World War II. The system of industrial relations in Western Europe between 1950 and 1975 was labeled as neo-corporatism.
Corporatism started as an ideological project, propagated by Catholics in the last quarter of the nineteenth century, referring to an idealized medieval society, without class conflict. Corporatism can be defined as a dual antagonism: antiliberal and antisocialist. In political liberalism the individual faces the state, without intermediary structures, which had been abolished with the French Revolution. Political participation is a right of the individual and only the state can impose rules, which, in principle, apply to all citizens. In corporatist ideology an individual belongs to a community based on his or her occupation and these communities are the foundations of society ("organic" society). Corporatism implies a degree of transfer of regulatory power from the state to organizations enabling them to impose rules on the members of the occupational community. The transfer of state power can vary, the highest stage being a corporatist parliament. Legally binding collective wage agreements are a weaker type of corporatism. Corporatism also was an answer to socialism, stressing class collaboration initially by integrating employers and workers in one organization as the medieval guilds ("mixed trade unions"), later by systems of social consultation. Corporatism hampered the solidarity of the working class since the principle of organization was not class but occupation (or economic sector). Corporatism was a means to enclose the working class as well. From an economic point of view, corporatism was more antiliberal than anticapitalist. In contrast to socialism, the private property of the means of production was not put into question and corporatism was a way to regulate the economy on another basis than laissezfaire liberalism and socialist state intervention.
These basic ideas were developed in the papal encyclical Rerum Novarum (1891), which favored the growth of Catholic trade unions, positioning themselves as an alternative to socialist unions. The corporatist ideal could be put into practice by means of councils for collective bargaining with representatives of the trade unions and the employers' organizations. This system was quite common after World War I, when the labor movement became a political force. This process of democratization had two basic components: universal (male) suffrage and the recognition of the trade unions. Systems of collective bargaining at sector level and advisory social and economic councils were introduced. The former decided on wages and working conditions while the latter advised government and parliament on social and economic policy. By means of these institutions trade unions and employers' organizations were integrated into the structures of the state. In Belgium commissions paritaires (joint commissions) were established in the key sectors of the economy. In the Netherlands the Hoge Raad van Arbeid (supreme labor council) with representatives of the labor unions, employers' organizations, and independent scholars was founded in 1919. In Weimar Germany a national economic council and collective bargaining at sector level were part of the postwar political pacification and was even constitutionalized.
The extent to which these systems match the ideal definition of corporatism is debatable, but groups advocating corporatist ideology saw these institutions as the starting point for a more ambitious reform. This was the case in the Netherlands where Catholic organizations elaborated a system of joint industrial councils in 1919–1920. The joint industrial councils would have far-reaching regulatory power in the social and economic field giving the labor unions employee participation on economic matters. This issue split the Catholic movement, employers arguing that the economy was the monopoly of business and that participation should not go beyond wages and working conditions. At the same time, the radicalization of the Dutch workers, of which the project was a manifestation as well as a reaction against, came to an end. The Belgian Catholic trade union campaigned for a corporatist program inspired by the Dutch example. It was an alternative to socialism as well, which grew rapidly in the wake of the war.
Corporatist programs were also part of the crisis of liberalism, which emerged after World War I and came to a climax in the 1930s, when corporatism, elaborated again in the encyclical Quadragesimo Anno (1931), was seen as an answer to the crisis. Attempts were made to introduce corporatist reform within parliamentary systems. The initiative came from Catholic organizations, for example, in Belgium and Switzerland. The idea was to make a separate structure for decision making on social and economic policy, based on the system of industrial relations already referred to. Basically, this corporatism had two political purposes: social pacification and a reform of the state. The economic crisis of the 1930s made economic regulation seem inevitable. Corporatism could avoid direct state intervention, which did not match the Catholic state theory built on the principle of subsidiarity. A corporatist organization, based on parity, protected business against a parliament and a government dominated by the labor movement. Through the corporatist structure, trade unions and employers' organizations obtained political power, direct or indirect, depending on the type of corporatism. This explains the support of the socialist trade unions for moderate corporatist projects, and projects with a corporatist component as Hendrik De Man's labor plan in Belgium.
Besides this corporatism compatible with parliamentarism, authoritarian corporatism was put forward by Far Right and fascist movements as an alternative to democracy. In the ideology of the Far Right corporatism had been present since the 1920s. The concept was rather vague because there was no model that could be followed until 1926 when Benito Mussolini introduced corporatism as part of Italy's fascist state. This corporatism was based on a single trade union and a single employers' organization. Membership was compulsory. In the corporations at sector level, representatives of both organizations were equally represented but the leader was appointed by the state. A national corporatist council was established as an advisory board to the ministry of corporations. Strikes were illegal and a labor magistrate dealt with social conflicts. Corporatism was a means to exclude the non-fascist trade unions. In 1926 the fascist union obtained the monopoly of workers' representation. In 1927 the new social organization was laid down in the Labor Charter, a feature of most authoritarian corporatist regimes. In Portugal and Spain a type of corporatism strongly resembling the Italian model survived until 1974 and 1975, respectively.
Portuguese corporatism was the most elaborate and illustrates how authoritarian corporatism actually worked. The labor statute and a corporatist constitution were promulgated in 1933, but the corporatist structure was only completed in the 1950s. The foundations of corporatism were gremios and syndicatos. All the employers of the sector were members of a gremio. Gremios were preexisting employers' organizations or were created by the state. Gremios represented the employers and negotiated with the syndicatos (trade unions). Syndictos were, like the gremios, single organizations. To frustrate working-class solidarity, they were organized at the district level and not at the national level (in 1931 the General Confederation of Labor, or CGT, had been disbanded). In the countryside casos du povo (people's community centers) were established at the level of the parish, matching the corporatist ideal of mixed organizations: the farmers were members, while the landowners were patrons and held power. In 1937 the Portuguese system changed: landowners had their gremios and the casos do povo played the same role as the syndicatos in industry. The fishery included casos dos pescadores (fishermen's centers), mixed organizations of workers, employers, and harbormasters, but workers were dominated by the other groups. These basic structures were established in the 1930s, but paradoxically the corporations were only created in 1956. Since 1936 the Organization of Economic Coordination (OEC) regulated the economy and was the link between the basic corporatist organizations and the state. The OEC enabled the state to control the economy. This was one of the reasons why the formation of the corporations lasted twenty years. In the meantime, a set of collaborative agencies promoted the corporative idea. The Unia Nacional, headed by A. O. Salazar, composed of bureaucrats and officials, had to mobilize support for the regime. A paramilitary organization was assigned to defend the social order and the corporatist idea. This social order had been defined in the labor statute, which strongly resembled the Italian charter. The socialist and communist unions had been outlawed before 1933 and the formation of the new syndicatos was a priority for the regime, which saw the working class as a threat. In contrast to the labor unions, private employers' organizations continued to exist and corporatism was advantageous to business: business dominated the OEC and the corporatist system favored monopolies and cartels. The standard of living of the Portuguese workers lagged behind and social security remained underdeveloped. The corporations had a political representation, the Chamber of Corporations, and were members of the Council of State, a top-level advisory body.
In the three southern European countries (France, Italy, and Spain), corporatism was a pillar of an authoritarian regime and state and party had a firm grip on the system. The same situation applied to corporatism in central and Eastern Europe: Bulgaria, Albania, Yugoslavia, the Baltic states, Romania, Greece, Poland, and Austria under Engelbert Dollfuss.
The social organization of Nazism differed from the "southern" model to the extent that the factory and not the sector prevailed. The factory was defined as a "community of labor," where labor and capital had to work together for the sake of the company. The Führerprinzip (leader principle) gave the employer, the Führer of his "community of labor," a dominant position. The role of the trade union, the German Labor Front, was rather limited at the factory level. The interests of the workers had to be defended by the State Trustee of Labor, a civil servant for whom maintaining social peace was the primary task. It can be debated to what extent the social and economic organization of Nazi Germany can be labeled "corporatism," because the state played a dominant role. This was especially true in the social field. The economy was organized in Reichsgruppen, compulsory statutory trade organizations that had the monopoly for the representation of business interests. In the Reichsgruppen workers had no representation at all. The stronghold of the state on the corporatist structure was in the end a feature of all the authoritarian corporatist regimes. There was a difference between worker's and business organizations, however. While the latter could maintain a certain degree of autonomy, and there often was a symbiosis between the private employers' organizations and the official corporatist structures, the trade unions lost their autonomy and were subordinated to party and state.
World War II expanded corporatism because corporatist structures following the Nazi model were introduced in occupied countries. In Vichy France a social system based on corporatism was established following the principles of a labor charter.
Although corporatism lost legitimacy with the defeat of fascism and Nazism, it did not disappear but was transformed: a system of collective bargaining and statutory trade organization became part of the model of democracy that took shape in the aftermath of the World War II. Organized labor and employers' organizations were integrated in the state through a specific set of institutions next to government and parliament, for social and to a lesser extent economic policy-making. These institutions consisted of councils for social consultation and collective bargaining and advisory economic and social councils. This "neo-corporatism" was a result of a tradeoff between employers and trade unions on one side and the state and organized interests on the other. The first tradeoff, following liberation from Nazi occupation, was in some countries laid down in solemn declarations of labor and employers' leaders as the Social Pact in Belgium or as the Foundation of Labor in the Netherlands. Workers' organizations did not question capitalism, as employers enhanced social progress and trade union participation. The second tradeoff was not subject to codification but developed with the actual functioning of the system. Trade unions participated in policy making and were responsible for the implementation of the decisions that had been taken, implying control over the rank and file. This was labeled "interest intermediation" by political sociologists of neo-corporatism. From the liberation to the economic crisis of the 1970s a new type of economic regulation, called "Fordism," emerged in Western Europe. Economic growth was based on mass consumption and the increasing purchase power of the workers, which was financed by gains in labor productivity. Neo-corporatism served as a mechanism to adjust wages and labor productivity in order to maintain profitability. The economic doctrine underpinning this economic policy was Keynesianism, stressing state intervention in the economy. The parliamentary system had originally been designed to contain state intervention, thus neo-corporatism served to adapt the structure of the liberal state to this new role. Social policy was no longer decided in parliament but in special (parity) councils and advisory bodies that guaranteed trade unions and employers' organizations direct involvement in social and economic policy making. The economic crisis of the 1970s caused a shift in economic thought from Keynesianism to neoliberalism, questioning neocorporatism as incompatible with free market capitalism. By the end of the twentieth century, however, systems of industrial relations based on wage moderation agreed on by employers' organizations and labor unions, such as the Dutch "polder model," emerged. These systems, which were often codified in a social pact, had corporatist characteristics as well.
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Corporatism is a system of interest intermediation in which vertically organized and functionally defined interest groups are granted official representation in the state policymaking apparatus. Corporatism is usefully contrasted with pluralism, a system in which interest groups openly compete with one another to gain access to the state. Under corporatist systems, groups such as labor and business are represented to the state by peak associations, which tend to be subsidized by the state. Other labor and business associations must thus work through these peak associations to gain access to the policymaking process. The major dilemma of corporatism is the balance between the autonomy and state control of interest groups.
Through the mid-twentieth century, corporatism was associated with the systems of interest intermediation found in Nazi Germany and fascist Italy. In the 1960s and 1970s, however, debate emerged over whether European industrial democracies were also characterized by corporatist arrangements. By the late 1970s, scholars had agreed that corporatism could indeed exist within democratic frameworks. They called this system liberal or neocorporatism, contrasting it with the state corporatism of earlier periods.
In the European democracies, corporatism was understood as either a response to or an accommodation of industrial capitalism. Neocorporatist systems allowed governments to facilitate consensus over economic policy by bringing together interest groups with significant stakes in the future of economic policy to negotiate with one another in a formal setting. In doing this, corporatist systems implicitly limited who would have the most influential voices in the economic policymaking process—and, as a result, helped shape the contours of the debate. For example, the Austrian Joint Commission on Prices and Wages—a corporatist arrangement that included the three largest agriculture, business, and labor associations in the country—was formed in 1957 to consider the future of Austrian economic policy. Sweden and Switzerland also developed particularly strong neocorporatist systems.
At the same time, scholars of the developing world generally—and Latin America particularly—were observing corporatist systems under nondemocratic regimes. In these nondemocratic polities, corporatism tended more toward a means of political control than a means of building consensus. That is, these corporatist arrangements were designed more to co-opt potentially disruptive political actors than to provide a forum for policy discussion and debate. In authoritarian Mexico, for example, labor and peasant groups engaged the state through peak associations that were heavily subsidized by the government. By creating this system of corporatist intermediation, the Mexican government could co-opt and control powerful social actors that had been influential in the early years of the Mexican Revolution. Brazil in the 1930s and Argentina in the 1940s also developed corporatist systems.
Though the early 1990s witnessed some debate over the possibility of new corporatist arrangements in the post-Soviet bloc, corporatism is no longer as frequently invoked as it was in earlier decades—due in large part to the current dominance of pluralist political and economic models of governance. Nonetheless, corporatism remains a viable alternative form of interest intermediation, should pluralist models of interest intermediation meet significant challenges.
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William T. Barndt