Corporatism Has Replaced Liberalism

It’s not capitalism. It’s not socialism. The new word we are hearing these days is the right word: corporatism.

That refers to the merger of industry and state into a unit with the purpose of achieving some grand visionary end, the liberty of individuals be damned. The word itself predates its successor, which is fascism.

But the “F” word has become totally incomprehensible and useless through misuse so there is clarity to be gained by discussing the older term.

Consider, as an obvious example, Big Pharma. It funds the regulators. It maintains a revolving door between corporate management and regulatory control. Government often funds drug development and rubber-stamps the results. Government further grants and enforces the patents.

Vaccines are indemnified from liability for harms. When consumers balk at shots, government imposes mandates, as we have seen. Further, pharma pays up to 75% of the advertising on evening television, which obviously buys both favorable coverage and silence on the downsides.

This is the very essence of corporatism. But it is not only this industry. It ever more affects tech, media, defense, labor, food, environment, public health and everything else. The big players have merged into a monolith, squeezing out the life of market dynamism.

The topic of corporatism is rarely discussed in any detail. People would rather keep the discussion on abstract ideals that are not really operational in reality. It’s these ideal types that split right and left; meanwhile the really existing threats sail under the radar.

And that is strange because corporatism is much more of a living reality. It variously swept through most societies in the world in the 20th century, and vexes us today as never before.

But corporatism has a long ideological history that actually stretches back two centuries. It began as a fundamental attack on what was then known as liberalism.

Liberalism began centuries earlier with the end of the religious wars in Europe and the realization that permitting religious freedom was overall good for everyone.

It lessens violence in society and still retains the opportunity for the vigorous practice of faith. This insight gradually unfolded in ways that pertained to speech, travel and commerce generally.

By the early 19th century, following the American Revolution, the idea of liberalism swept Europe. The idea was that the state could do no better for society than to let it develop organically and without a purpose-driven end state, a centralized authority that seeks to achieve a specific goal or purpose, often seen as a greater good or common end that justifies the restriction of individual liberties.

In the liberal view, in contrast, liberty for all became the sole end state.

Standing against traditional liberalism was Georg Wilhelm Friedrich Hegel (1770–1831), the German philosopher who explained the loss of territory at the end of the Napoleonic Wars as merely a temporary setback in the German nation’s historical destiny.

In his vision of politics, the nation as a whole needs a destiny that is consistent with his postulated laws of history. This holistic view was inclusive of church, industry, family and individuals: Everyone must march in the same direction.

The whole reaches its pinnacle in the institution of the state, he wrote in Elements of the Philosophy of Right, which “is the actuality of the ethical idea, “the rationality of the ethical whole,” the “divine idea as it exists on Earth” and a “work of art in which the freedom of the individual is actualized and reconciled with the freedom of the whole.”

If all of that sounds like mumbo jumbo to you, welcome to the mind of Hegel, who was trained in theology foremost and somehow came to dominate German political philosophy for a very long time.

His followers split into left- and right-wing versions of his statism, culminating in Marx and arguably Hitler, who agree that the state is the center of life while only arguing about what it should do.

Corporatism was a manifestation of the “right-wing” version of Hegelianism, which is to say that it did not go so far as to say that religion, property and family should be abolished, as Marxism later suggested. Rather each of these institutions should serve the state, which represents the whole.

The economic element of corporatism gained steam with the work of Friedrich List (1789–1846) who worked as an administrative professor at the University of Tübingen but was expelled and went to America where he became involved in the establishment of railroads and championed an economic “National System” or industrial mercantilism.

Believing that he was following up with the work of Alexander Hamilton, List advocated national self-sufficiency or autarky as the proper managerial trade for trade. In this, he stood against the entire liberal tradition that had long rallied around the work of Adam Smith and the doctrine of free trade.

Such is a brief look at the intellectual roots and development of corporatist thinking, complete with its most noxious ideological elements. The focus on a purpose-driven nationalism in each case comes through dividing and conquering the nation, usually by a “great man,” and allowing the “experts” to run roughshod over the desires of the common people for peace and prosperity.

The corporatist model was deployed in most countries during the Great War, which was the largest experiment in central planning in cooperation with munitions manufacturers and other large corporations.

It was deployed in combination with conscription, censorship, monetary inflation and a large-scale killing machine. It inspired an entire generation of intellectuals and public managers.

The U.S. New Deal, with its price controls and industrial cartels, was largely managed by people such as Rexford Tugwell (1891–1979) who was inspired to rally around corporatism by his experience in this war. The same pattern repeated in the Second World War.

This brief history only takes us only to the middle of the 20th century. Today corporatism takes a different form. Rather than national, it is global in scope.

In addition to government and large corporations, today’s corporatism includes powerful nongovernment organizations, nonprofits and huge foundations built by huge fortunes. It is as much private as it is public. But it is no less divisive, ruthless and hegemonic than it was in the past.

It has also shaved off most of its egregious (and embarrassing) teachings, leaving in place only the ideals of world governments working directly with the largest corporations in media and tech to forge a single vision for humanity on the march, such as spelled out daily by the World Economic Forum. With that come censorship and restrictions on commercial and individual liberty.

That is only the beginning of the problems. Corporatism abolishes the competitive dynamic of competitive capitalism and replaces it with cartels run by oligarchs. It reduces growth and prosperity. It is invariably corrupt. It promises efficiency but yields only graft.

It expands the gaps between rich and poor and creates and entrenches deep fissures between the rulers and ruled. It dispenses with localism, religious particularism, rights of families and aesthetic traditionalism. It also ends in violence.

Corporatism is anything but radical. The word is a perfect descriptive of the most successful form of statism of the 20th century. In the 21st century, it has been given new life and an ambition that is global in scope.

But as regards the highest American ideals and enlightenment values of freedom for all, it really does represent the opposite.

It is also the single most vexing problem we face today, far more of a going concern than old archetypes of socialism and capitalism. Also in the American context, corporatism can come in forms that masquerade as both left and right.

But make no mistake: The real target is always liberty traditionally understood.

The Daily Reckoning