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Corporatism

Published online by Cambridge University Press:  28 July 2009

J. T. Winkler
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Extract

This paper has two purposes: to define the concept of corporatism and to predict that a corporatist economic system is the most likely development for the United Kingdom over the next five to ten years. While the prediction logically presumes a concept of corporatism, the two parts of the paper are separable; the reasonableness of the definition and the accuracy of the prediction are distinct issues.

Type
Structure and Interest
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European Journal of Sociology / Archives Européennes de Sociologie , Volume 17 , Issue 1 , May 1976 , pp. 100 - 136
Copyright
Copyright © Archives Européenes de Sociology 1976

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References

(1) See, for example, Viljoen, S., Economic Systems in World History (London, Longman, 1974)Google Scholar, on the concept of ‘centrally-directed’ economies. Also Rocco, A., The Syndicates and the Crisis within the State, in Lyttleton, A. (ed.), Italian Fascisms (London, Cape, 1973)Google Scholar.

(2) For variations of this interpretation, see Sarti, R. (ed.), The Ax Within: Italian Fascism in Action (New York, New View points, 1974)Google Scholar; Neumann, F., Behemoth (New York, Harper & Row, 1966)Google Scholar; Poulantzas, N., Fascism and Dictatorship (London, New Left Books, 1974)Google Scholar; and Cliff, T., State Capitalism in Russia (London, Pluto Press, 1974), chs. V and VII on Nazi GermanyGoogle Scholar.

(3) Ruin, O., Participatory Democracy and Corporativism: the case of Sweden, Scandanavian Political Studies, Yearbook 1974Google Scholar.

(4) Selznick, P., TVA and the Grass Roots (New York, Harper & Row, 1966)Google Scholar. For the particular link to corporatism, see pp. 219–20.

(5) Andrew Shonfield applied this concept of corporatism to British attempts at planning in the 1960s. See his Modern Capitalism (Oxford 1965), pp. 160–3 and 230–3Google Scholar.

(6) On the theme of socially responsible capitalism, see Nichols, T., Ownership, Control and Ideology (London, Allen and Unwin, 1969)Google Scholar. Also Dore, R., British Factory-Japanese Factory, (London, Allen & Unwin, 1973), ch. XIII, esp. p. 364 ff.Google Scholar on ‘hierarchical corporatism’.

(7) Reich, C., The Greening of America (Harmondsworth, Penguin, 1972), ch. vGoogle Scholar.

(8) Delzell, C., Mediterranean Fascism 1919–1945 (New York, Macmillan, 1970)CrossRefGoogle Scholar.

(9) Marris, R., Is the Corporate Economy a Corporate State? American Economic Review, Papers & Proceedings, 1972Google Scholar.

(10) These contrasting conceptions of corporatism would appear to be grounded, in British academic life at least, in different disciplines, the state domination version being sponsored by sociologists and economists, the pluralism-plus view by political scientists. The need for some conceptual clarification first became apparent to me after participating in several long and fruitless discussions in which representatives of these disciplines talked past one another because they were using these different definitions of the concept.

(11) Brittan, S., The Corporate State: danger or delusion? Encounter, XLIV (1975) 5, 58–63Google Scholar.

(12) For some recent reassessments of what laissez-faire actually meant in the British economy, see Taylor, A., Laissez-faire and State Intervention in 19th Century Britain (London, Macmillan, 1972)CrossRefGoogle Scholar; Corrigan, P., The State as a ‘Market Relation’: the ‘economy’ of politics, University of Durham, 1974 (mimeo)Google Scholar; and Supple, B., The State and the Industrial Revolution, 1700–1914, in Cipolla, C. (ed.) The Industrial Revolution, Vol. III, (London, The Fontana Economic History of Europe, Collins, 1972)Google Scholar.

(13) See Murray, R., The International Company and the State, The Spokesman, No. 10, 03 1971Google Scholar. Reprinted as Spokesman Offprint No. 7 (Nottingham, Bertrand Russell Peace Foundation, 1973); C. Offe, The Theory of the Capitalist State and the Problem of Policy Formation. Paper to the Second International Conference of Marxist Studies, Florence, March 1975. See also Appendix.

(14) The Regeneration of British Industry, H.M.S.O., 1974, paras. 11–22Google Scholar. The original concept of planning agreements, formulated by Labour Party economic committees while in opposition, was severely emasculated during the translation into law in the Industry Act 1975, but it is used here only to illustrate internal business decision-making controlled by the state, For a history of the gelding process, see: Scaled-down Version, The Guardian, 3 November 1975, p. 14. For the most comprehensive statement of the original strategy, see The Socialist Challenge (London, Quartet, 1975)Google Scholar, by Stuart Holland, an economist who was a member of the committees.

(15) Conspicuously absent from the list of items covered by planning agreements are wages, that is, the ‘decision’ about what the owner/manager pays his workers is left to collective bargaining. The omission is, of course, illogical; to control all else and leave wages unconstrained is to risk undermining the entire corporatist strategy. It is to be explained only by the trade unions' success in breaking both the previous Labour and Conservative governments' attempts at statutory controls. In the event, while the planning agreements system has been considerably weakened, wage controls have been rather promptly and easily reinstituted in a ‘voluntary’ counter-inflation programme.

(16) Harris, N., Competition and the Corporate Society (London, Methuen, 1972)Google Scholar. for a history of corporatist thought in Britand ain in the twentieth century. The distinction in decision-making here is in essence the same as that he used to distinguish between ‘etatist corporatism’ and ‘pluralist corporatism’. The labels are, however, confusing and I think the point is more clearly conceptualised in terms of the role of the state.

(17) On the organicist background to corporatist thought, see Mosse, G., The Genesis of Fascism, Journal of Contemporary History, I (1967), n° 1Google Scholar.

(18) In Italy there was the distinction between voluntary and involuntary cartels, that is, between those spontaneously organised by companies themselves and those initiated and controlled by the state. See Sarti, , op. cit. pp. 132–7Google Scholar. The distinction is important for determining whether corporatism is a system of state control or self-regulation by producers. See Rocco, Minister of Justice in the Italian regime, op. cit., and also his ‘The Formation and Functions of the Corporations’, in the same volume, where he says, ‘the so-called self government of the various groups of producers can perfectly easily be reconciled with state intervention. The self-interest of the producers is not in fact an end but a means, an instrument employed by the state to achieve its own ends, as the representative of the whole collectivity’.

(19) Einzig, P., The Economic Foundations of Fascism (London, Macmillan, 1933), p. 63Google Scholar.

(20) For a fuller exposition of the effects of corporatism on law and administration, see my article: Law, State and Economy: The Industry Act 1975 in Context, British Journal of Law and Society, II (1975), 103–28Google Scholar. See also Daintith, T., Public Law and Economic Policy, Journal of Business Law, (1974) 9–22Google Scholar; Ganz, G., The Control of Industry by Administrative Process, Public Law, Summer 1967, 93–106Google Scholar; and Miller, A. S., The Legal Foundations of the oCrporate State, Journal of Economic Issues, VI (1972), 59–79CrossRefGoogle Scholar. Mihaïl Manoïlesco dramatically summarised the corporatist attitude to law in Le siècle du corporatisme (Paris 1936 [rev. ed.]), p. 110Google Scholar: ‘All that conforms to the national interest is just; all that is contrary to that interest is unjust’.

(21) See Delzell, op. cit. on the socialist elements in Fascism.

(22) See Shirer, W., The Rise and Fall of the Third Reich (New York, Simon and Schuster, 1960)Google Scholar.

(23) Einzig, , op. cit. pp. 108–9Google Scholar.

(24) Hayes, P., Fascism (London, Allen & Unwin, 1973)Google Scholar. See esp. chs VI and VII.

(25) For Italy, see C. Vannutelli, The Living Standard of Italian Workers, 1929–1939, and Sarti's own essay, Fascist Reforms and the Industrial Leadership in Sarti, op. cit. For Germany, see Neumann, op. cit.

(26) Carr, W., Arms, Autarky and Aggression (London, Edward Arnold, 1972)Google Scholar. The series data on which the profits v. wages comparisons are based naturally break off with the war and hence do not adequately reflect the negative effects of Nazi policy on industrialists. Carr concludes, ‘[…] up to 1936 the interests of German industry more or less coincided with those of the party and the army. This fragile “coalition”, if that is not too strong a word for it, was shattered by the economic crisis of the summer’ (p. 62).

(27) Kaysen, C., The Corporation, How Much Power? What Scope? in Gilbert, M. (ed.), The Modern Business Corporation, (Harmondsworth, Penguin, 1972)Google Scholar.

(28) With achnowledgements to Seymour Melman. See his ‘The Peaceful World of Economics I’, Journal of Economic Issues, VI, 1972, 35–41Google Scholar. After a study of a particular type of Company, the armaments manufacturer, and its relations with the U.S. government, he concludes, ‘the military-industrial firm is not an autonomous entity. The managements of such corporations are not the final decision-makers with respect to obtaining capital, or determining the product, the quantity to be produced, the ways of carrying out production, the product price, and the distribution of the output. Final decisions in these spheres are demonstrably reserved to the state management […] What sorts of firms are these, whose managements have no options?’ They are corporatist firms, privately-owned, but controlled by the state, Galbraith generalises Melman's point, seeing the contract (i.e. the government prime contract and the subsequent proliferating sub-contracts) as a distinct mechanism of economic co-ordination, replacing the market in this sector of industry. See his Economics and the Public Purpose (London, Deutsch, 1975), ch. XIIIGoogle Scholar.

(29) Miller, S. M., Notes on Neo-Capitalism, Theory and Society, II (1975)Google Scholar.

(30) For fn epochal overview of the sometimes very dramatic shifts in the relationship between law, private property and the state, see Neumann, F., The Democratic and Authoritarian State (New York, Free Press, 1965), ch. IIGoogle Scholar. For a subtle analysis of the interrelation of law and property the contemporary United States, see A. S. Miller, op. cit.

(31) Any comparison of capitalism and corporatism depends as much on one's definition of capitalism as on the concept of corporatism. The market, profit, and private property are core elements in most conceptions of capitalism, but one could extend the list of defining characteristics in both Marxist and neo-classical terms. Surplus value, exchange value and accumulation would not be significantly altered by a move toward corporatism. The law of value, commodity production, appropriation, entrepreneurship and freedom of contract would. For an analysis of what aspects of capitalism were and were not changed by the Nazi economic system, in Marxist terms, see Cliff, , op. cit. esp. ch. V and pp. 198–202Google Scholar.

(32) Shonfield, op. cit., dates the change from the early 1960s, Harris, op. cit., from the late 1950s. Harris sees it as a reversion to corporatist thinking that prevailed in the party from the interwar period through to 1948.

(33) Benn, A. W., Heath's Spadework for Socialism, Sunday Times, 25 03 1973, p. 61Google Scholar.

(34) The most conspicuous exception, in part, is Sir Keith Joseph. See his collection of recent speeches, Reserving The Trend (Chichester, Barry Rose, 1975)Google Scholar. The trend in question is that toward increased state intervention.

(35) See Miskimin, H., The Economy of Early Renaissance Europe, 1300–1460 (Englewood Cliffs, Prentice Hall, 1969), esp. pp. 105–12 and 164–70Google Scholar, for an analysis of mediaeval France in many ways similar to the current situation in Britain. Also Miller, E., Government Economic Policies and Public Finance 1000–1500, in Cipolla, C. (ed.), The Middle Ages, Vol. I of The Fontana Economic History of Europe (London, Collins, 1972)Google Scholar. On the mercantilist period, for some recent interpretations, see Coleman, D. C. (ed.), Revisions in Mercantilism (London, Methuen, 1969)Google Scholar.

(36) For a concise summary of the main issues, see Utton, M., Industrial Concentration (Harmondsworth, Penguin, 1970)Google Scholar.

(37) Monopolies Commission, Department of Trade and Industry, A Survey of Mergers 1958–1968, H.M.S.O., 1970.

(38) See Newbould, G.D. and Jackson, A.S., The Receding Ideal (Liverpool, Guthstead, 1972)Google Scholar.

(39) See Newbould and Jackson, op. cit. for some speculation about how such companies might be formed, through divestments as well as acquisitions, and rearrangements based on ‘industrial logic’ rather than ‘financial logic’.

(40) See Robertson, J., Profit Or People? The New Social Role of Money (London, Calder & Boyars, 1974)Google Scholar. Also Practical Implications of a Non-Profit Economy, Proceedings of a Symposium co-sponsored by The Sunday Times and The Science Policy Foundation, 26 June 1974, available from the Foundation and summarised in Sunday Times, 30 June 1974, p. 62.

(41) Prais, S., A New Look at the Growth of Industrial Concentration, Oxford Economic Papers, XXVI (1964), 273–88Google Scholar.

(42) Galbraith, op. cit. has put the best known labels on the two sectors, the ‘planning system’, and the ‘market system’ respectively, but he acknowledges his debt to J. Meade. Holland, op. cit. calls them the mesoeconomic sector and the microeconomic sector; S. M. Miller, op. cit., refers to an oligopolistic sector and small business (interjecting medium business between them as well).

(43) The principal articles in this discussion are: Glyn, A. and Sutcliffe, B., The Critical Condition of British Capital, New Left Review, LXVI (1971), 3–33Google Scholar; Yaffe, D., The Crisis of Profitability, New Left Review, LXXX (1973), 45–62Google Scholar; Panic, M. and Close, R., The Profitability of British Manufacturing Industry, Lloyds Bank Review, (1973), 17–30Google Scholar; Burgess, G. and Webb, A., Rates of Return and Profit Shares in the United Kingdom, Lloyds Bank Review, 04 1974Google Scholar; King, M., The United Kingdom Profits Crisis: Myth or Reality?, Economic Journal, LXXXV (1975), 33–54CrossRefGoogle Scholar; S. Holland, op. cit. Appendix. King is a partial dissenter concerning the length of the post-tax decline.

(44) The principal problems concern how one accounts for depreciation and stock appreciation, how to measure assets if the concern is rate of profit, or how to deal with wage movements if the focus is share of profits, and which measure is appropriate for which questions. All estimates have to begin from reported profits, and post-tax figures are affected by innovations in corporate tax avoidance.

(45) Series data on bankruptcies and liquidations are published regularly in Trade and Industry Journal.

(46) On the decline of the effective rate of corporate tax from 38% in 1951 to 11.6% in 1973, see King, op. cit. On the decline in dividends, see series data in Financial Statistics, H.M.S.O., Table 79. Dividends on ordinary shares as a percentage of total apprecorporate income have declined from 20% in 1964 to 7% in 1974 (taking cognizance of the changed basis for recording dividends since the 1973 adjustments).

(47) See Walker, J.L., Structure of Company Financing, Economic Trends, No. 263, 09 1975Google Scholar, H.M.S.O. The figures are taken from the more comprehensive national accounts data section of the summary table on p. 101.

(48) National Economic Development Office: Financial Performance and Inflation (London 1975), p. 6Google Scholar. See also Walker, , op. cit. In 1974Google Scholar, depreciation and stock apprecorporate ciation absorbed all internally-generated revenues. Internal funds accounted for 0% of growth capital in that year as compared with 55% in 1964. But 1974 was an extraordinary year, os explained below in the text, so importance should not be attached to the percentages, only to the trends.

(49) Walker, , op. cit. p. 102Google Scholar.

(50) The Great Stock Market Crash, Sunday Times, 25 August 1974, p. 13.

(51) Industry Act 1972, Annual Report by the Secretary of State for Industry for the year ended 31 March 1975, H.M.S.O.

(52) Strategy for Survival [Transcript], The Guardian, 6 November 1975.

(53) Series data on corporate liquidity notare published regularly in Market Review, the monthly publication of stockbrokers Philips and Drew. The massive cash deficit is merely the obverse way of expressing Assothe point made by Walker (see footnote 48) that internal funds were entirely absorbed in just maintaining the physical assets of companies. Both calculations are re-workings of raw data published monthly in Financial Statistics, H.M.S.O., Tables 79 and 81. The author would like to thank Martin Gibbs, Research Director of Philips and Drew, for his repeated assistance on questions of corporate finance, notwithstanding rather different estimations of what is likely to happen to the British economy. See his paper: Private Industry Can Survive Inflation, to the British Association Meeting, Guildford, 1 September 1975.

(54) See, for example, Codifying Industry's Investment Needs, Financial Times, 8 August 1975, p. 15.

(55) For an analysis of the role of the state in the economy that uses technology as a major variable, both in the genesis of capitalism and at present, see Gellner, E., The Social Contract in Search of an Idiom: the death of the Danegeld State, Political Quarterly, XLVI (1975), 127–52CrossRefGoogle Scholar.

(56) See Galbraith, op. cit. ch. XIII.

For a practicing businessman's viewpoint, see Sir Frank McFadzean, retiring chairman of Shell: «I now feel strongly that when you look at these very advanced technologies, the money and the risks are becoming to great for private industry to bear», Sunday Times, II April 1976, p. 58.

(57) Canada is the extreme example. See Levitt, K., Silent Surrender: The Multinational Corporation in Canada, (Toronto, Macmillan, 1970)Google Scholar.

(58) See the Memorandum of Agreement and Code of Practice between the OSO and the United Kingdom Offshore Operators Association, November 1975. This was described by the OSO as a ‘voluntary’ agreement. ‘Voluntary’ is set fair to become the euphemism of the corporatist economy, in the same way as ‘free’ is for a market economy.

(59) Johnson, H. (ed.), The New Mercantilism (London, Macmillan, 1975)Google Scholar.

(60) Robinson, J., The New Mercantilism (London, Cambridge U.P., 1965)Google Scholar; Levitt, op. cit., also calls the spread of the multinational corporation ‘the new mercantilism’. The definitions behind the label vary, but the theme remains the same.

(61) This is a variant of the standard argument about ‘externalities’. What is omitted in this case are not the costs external to a selected economic unit (i.e. a company), but to a selected economic process (i.e international trade). The mathematical demonstration of universal gains-from trade, like the positive balances at the bottorn of many Profit-and-Loss Statements, is sustainable only because certain real costsare artificially excluded from the calculation.

(62) It is not coincidence that the major capitalist countries most vociferous about maintaining free trade at the time of writing are those with the largest trade surpluses, West Germany, Japan and the United States, and those taking action to protect home industry are those with trade deficits, Italy and the United Kingdom.

(63) Calleo, D. P. and Rowland, B. M., America and the World Political Economy (Bloomington, Indiana U. P., 1973)Google Scholar. The U. S. ‘has become addicted to the rhetoric of impea specious internationalism which uses “interdependence” as a euphemism for imperialism. Given our postwar position of hegemony, an ideology stressing “outward looking” transatlantic “interdependence” and denigrating “inward-looking nationalism” is transparently convenient for impearialist purposes’ (p. 7).

(64) On forms of interdependence, see Thompson, J., Organisations in Action (New York, McGraw-Hill, 1967)Google Scholar. Most mass manufacturing operations involve sequential interdependence, the outputs of any given stage of the production process depend on inputs from a previous stage. Multinational operation sometimes involves a stronger form, reciprocal interdependence, the outputs of both units depend on inputs from each other. Ford U.K. and Ford Germany are linked in this way.

(65) Transfer prices are those on sales of goods and services between different national subsidiaries of the same multinational corporation. These may be manipulated, among other purposes, to avoid taxation whatin high-tax countries. This may involve either the artificial raising of the prices paid by British subsidiaries on intra-company purchases or the lowering of the prices for their exports to these other national subsidiaries. Both serve to reduce the profit made and the taxes paid in the U.K., shifting both to other countries where lower tax rates apply.

(66) The first solution was employed by oil producing countries with the ‘posted price’ system, before OPEC became an effective cartel; the second is that proposed by Sweden for taxing multinational oil companies as if they made the same rate of profit as the local Swedish co-operative; the third has been instituted by Guyana. Multinationals are not the only companies that escape taxation, of course. Phillips and Drew monitors the performance of 115 of the largest British companies, which account for 75% of the market capitalisation on the London Stock Exchange. Of these 43% pay virtually no U.K. tax what soever. And since, as suggested earlier, corporatism is a cash flow system, not a profit system, a corporatist regime might be inclined to a revenue/value added taxation system, in general. It would be feasdiaries. ible. See A. Pakenham-Walsh [Trinity College, Dublin], Systems Accounts (forth-coming).

(67) The starting points for this debate were Miliband, R., The State in Capitalist Society (London, Weidenfeld and Nicolson, 1969)Google Scholar, and Poulantzas, N., Political Power and Social Classes (London, New Left Books, 1973)Google Scholar.

(68) Indirect forms of government admilustration have recently been the subject of an extended Anglo-American research project. See, for Britain, Hague, D.C., Mackenzie, W.J.M., and Barker, A. (eds.), Public Policy and Private Interests: The Institutions of Compromise (London, Macmillan, 1975)CrossRefGoogle Scholar, and, for the United States, Smith, B.L.R. (ed.), The New Political Economy: the Public Use of the Private Sector (London, Macmillan, 1975)CrossRefGoogle Scholar. For a short theoretical statement, see Hood, C., The Rise and Rise of the British Quango, New Society, 16 08 1973Google Scholar. For an extension of the argument, that what is happening is the delegation of the enforcement of state control to private organisations, see the second half of my article, The Corporatist Economy: theory and administration in Scase, R. (ed.), Cleavage and Constraint: studies in industrial society (London, Allen and Unwin 1976)Google Scholar.

(69) The fullest statement of Miliband's position on the autonomy issue is in Marx and the State, Socialist Register 1965, reprinted in T. Bottomore (ed.), Karl Marx (Englewood Cliffs Prentice Hall), 1973, and in his review of Poulantzas: Poultantzas and the Capitalist State, New Left Review (1973), n° 82, pp. 83–92. Poulantzas is clearest on this point in Fascism and Dictatorship, op. cit.