Our Economic Past Quasi-: America’s Homegrown

BY ROBERT HIGGS

ull-fledged corporatism, as a system for organizing operated similarly. In light of this experience, one might the formulation and implementation of econom- judge fascist corporatism to have been something of a Fic policies, requires the replacement of political fraud.The appearance of rationalized popular participa- representation according to area of residence by political tion in government failed to mask the dictatorial char- representation according to position in the socioeco- acter of the system. nomic division of labor.The citizen of a corporate state Not surprisingly,after World War II,fascism became a has a political identity not as a resident of a particular dirty word and full-fledged corporatism a discredited geographical district but as a member of a certain occu- program. Nevertheless, arrangements bearing some sim- pation, profession, or other economic community. He ilarity to fascism’s corporate state developed in the dem- will probably be distinguished according to whether he ocratic countries of western , most notably in is an employer, an employee, or self-employed. Scandinavia, Austria, and the Netherlands, but also to One who looks for information about corporatism is some extent in other countries. No one describes these frequently referred to fascism. (In the International Ency- arrangements as fascist; most commonly they are called clopedia of the Social Sciences, for example, the entry for neocorporatist. corporatism reads simply, “See Fascism.”) Indeed, the Neocorporatism (also known as liberal, social, or corporatist ideal achieved its fullest historical expression societal corporatism, sometimes as tripartism) shares in Italy under Mussolini’s regime. There, workers and with fascist corporatism the preference for representa- employers were organized into syndicates based on local tion according to membership in functional economic trades and occupations. Local syndicates joined in groups rather than according to location. It disavows, at national federations, which were grouped into worker least rhetorically,fascism’s totalitarian aspects and its sup- and employer confederations for broad economic sec- pression of individual civil and political rights. Neocor- tors, such as industry, agriculture, commerce, banking, poratists support the organization of economic interest and insurance. In 1934 the government made peak asso- groups and their participation as prime movers in the ciations part of the apparatus of state, with one corpora- formulation, negotiation, adoption, and administration tion for each of 22 economic sectors.The corporations of economic policies backed by the full power of the received authority to regulate economic activities, to fix government. the prices of goods and services, and to mediate labor Political scientists have concluded correctly that the disputes. United States is not a corporate state—certainly not a In practice the Italian corporate state operated not as corporate state comparable to modern Sweden or Aus- a grand compromise among economic interest groups tria. American interest groups have been too partial in but as a collection of sectoral economic authorities their membership. Normally the government power organized and dominated by the government in the they hope to seize has itself been fragmented, divided at service of the dictatorship’s aims. Neither capitalists nor each level among executive, legislative, and judicial laborers enjoyed autonomy or private rights defensible branches and dispersed among the national, state, and against the fascist regime. (See Mario Einaudi,“Fascism,” local levels in a federal constitutional system. Residual International Encyclopedia of the Social Sciences [New York: Robert Higgs ([email protected]) is senior fellow at the Independent Macmillan and The Free Press, 1968], pp. 334-41.) Institute (www.independent.org), editor of The Independent Review, Other fascist regimes in Europe and Latin America and author of Resurgence of the Warfare State (Independent Institute).

THE FREEMAN: Ideas on Liberty 34 Quasi-Corporatism: America’s Homegrown Fascism allegiance to liberal ideology and its political norms and Government Sponsorship practices, including limited government and territorial ar from resenting such a private coalescence of inter- representation in the legislature, has also impeded the Fests, the government usually approves, encourages, development of corporatism.The American economy is and sometimes even sponsors it. In a crisis, swift action vast and complex.To bring it within the effective con- is imperative, and the government needs private interests trol of a few hierarchical, noncompetitive peak associa- with whom it can deal quickly while preserving the tions, as the fascists tried (or pretended) to do in interwar legitimacy that comes from giving affected parties a role Italy,is almost unthinkable.The closest peacetime exper- in policy-making. When the government is imposing iment, under the National Industrial Recovery Act dur- unusual restrictions or requirements on the citizens, as it ing 1933–35, did not work and was collapsing of its own always does during major emergencies, it needs to cre- weight when the Supreme Court put an end to it. ate the perception, if not the reality, that these burdens Nevertheless, recent American history has brought have been accepted—better yet, proposed and chosen— forth a multitude of little corporatisms, arrangements by those who bear them. within subsectors, industries, or other partial jurisdic- National emergencies create conditions in which tions.They have drawn on both national and state gov- government officials and private special-interest groups ernment powers.They operate effectively in the defense have much to gain by striking political bargains with sector, in many areas of agriculture; in many profession- one another. The government gains the resources, al services, such as medicine, dentistry, and hospital care; expertise, and cooperation of the private parties, which and in a variety of other areas, such as fishery manage- are usually essential for the success of its crisis policies. ment and urban redevelopment. These abundant “iron Private special-interest groups gain the application of triangles” normally involve well-organized private- government authority to enforce compliance with their interest groups; government regulatory, spending, or cartel rules, which is essential to preclude the free-riding lending agencies; and the congressional subcommittees that normally jeopardizes the success of every arrange- charged with policy oversight or appropriations.A polit- ment for the provision of collective goods to special- ical economy in which such arrangements predominate, interest groups. Crisis promotes extended politicization as they do in the United States, is commonly called of economic life, which in turn encourages additional interest-group liberalism or neopluralism. (Elsewhere I political organization and bargaining. have followed Charlotte Twight in calling it participatory In U.S. history,quasi-corporatism has risen and fallen fascism.) But it might just as well be called disaggregated over the course of national emergencies, but each neocorporatism or quasi-corporatism. episode has left legacies, accretions of corporatism Under crisis conditions, all the forces normally embedded in the part-elitist, part-pluralist structure of obstructing the development of U.S. corporatism dimin- American government. By now these accretions, taking ish. Since the early twentieth century, in the national the form of disaggregated neocorporatist arrangements emergencies associated with war, economic depression, scattered throughout the economy, add up to a signifi- rapid and accelerating inflation, or large-scale labor dis- cant part of the political economy.* turbances, the national government has responded by adopting policies that consolidate power at the top and extend the scope of its authority.With power more con- centrated and more actively employed, the incentive is greater for latent private-interest groups to organize, *The foregoing discussion is drawn from a much longer, fully documented account in my book Against Leviathan: Government increase their membership, suppress their internal dis- Power and a Free Society (Oakland, Cal.:The Independent Institute, putes, and demand a voice in policy-making. 2004), pp. 177–200.

35 JANUARY/FEBRUARY 2006