MIA: History: ETOL: Document: Workers Party/Independent Socialist League: Neither Capitalism nor Socialism
Neither Capitalism nor Socialism, pp. 241–270.
New Politics, 1962.
... the application of joint-stock companies to industry marks a new epoch in the economical life of modern nations ... in joint-stock companies it is not the individuals that are associated, but the capitals. By this contrivance, proprietors have been converted into shareholders, i.e. speculators. The concentration of capital has been accelerated ... A sort of industrial kings have been created, whose power stands in inverse ratio to their responsibility – they being responsible only to the amount of their shares, while disposing of the whole capital of the society – forming a more or less permanent body, while the mass of shareholders is undergoing a constant process of decomposition and renewal, and enabled, by the very disposal of the joint influence and wealth of the society, to bribe its single rebellious members. Beneath this oligarchic Board of Directors is placed a bureaucratic body of the practical managers and agents of the society ... It is the immortal merit of Fourier to have predicted this form of modern industry, under the name of Industrial Feudalism. – Karl Marx, in N.Y. Daily Tribune, July 11, 1856.
The replacement of capitalism by a New Order is being discussed, even advocated or at least viewed with kindliness, by some very eminent and respectable thinkers in this country not usually associated with revolutionary ideologies. This trend, or school of thought, seems to have gained steadily in the last few years. Its meaning can best be understood in the context of a wider, a worldwide trend in relation to which it constitutes only one strain or national form.
The wider, international trend is the burgeoning of bureaucratic-collectivist ideologies in a broad-spread infiltration of all bourgeois thought today. By “bureaucratic-collectivist” I mean in this connection the ideological reflection or anticipation of a new social order which is neither capitalist nor socialist, but which is based on the control of both economy and government by an elite bureaucracy – forming a new exploitive ruling class – which runs the fused economic-political structure not for the private-profit gains of any individual or groups, but for its own collective aggrandizement in power, prestige, and revenue, by administrative planning-from-above. One premise of this conception is that the totalitarian statified economy developed under Stalinism in Russia, which is today consolidating its power over a good portion of the globe, is one well-developed form of bureaucratic-collectivism.
Whatever the label conferred on this system, however, it is less controversial that key elements characteristic of its structure have, in our own day, already had a massive impact on the capitalist world and its thought. The channels by which this society-wide pressure has been exerted are two related ones. First is provided by the contradictions and difficulties of capitalism itself, the solutions of which point to some type of collectivism and to some form of increased statification, whether under the Great Depression (with the New Deal as carrier) or under the Permanent War Economy of today. Second is the direct impact of the Russian advance-model on the system of the old world, in evoking emulation, triggering analogous patterns, enforcing imitation by the logic of rivalry.
The current – within the borders of this larger phenomenon – which this article proposed to investigate shares with all others a common desire to present itself as being “beyond capitalism or socialism.” In a key document to be discussed, W.H. Ferry, of the Center for the Study of Democratic Institutions founded by the Fund for the Republic at Santa Barbara, says for example:
I think there is something brand new emerging here as well as in Europe which is certainly not capitalism. If you wish, you can call it socialism. Several of my less friendly critics suggested that the new fascism was being proposed here. Naturally, I don’t agree to that statement.
But what apparently distinguished it from the other, more typical bureaucratic-collectivist currents is its hostility to statification or “statism,” which it aspires to replace with a more pluralistic constellation of corporate powers. Thus it finds itself developing a new corporatism – which naturally leads right back to bureaucratic statism by a different theoretical route.
A.A. Berle Jr. strikes this keynote in his foreword to the recent book edited by Harvard’s E.S. Mason, The Corporation in Modern Society, whose several chapters by leading authorities convey many of the leading conceptions of this neo-corporatism. Berle is discussing the “two systems” of modern industrialism, the one in Russia and the “modern corporation” in the U.S. He calls the corporations “these non-Statist collectivisms” and sees them as “suggesting an eventual non-Statist socialization” of profits. In another place Berle says the present system is really “Collectivism” or “non-Statist Socialism,” and though (being unafraid of labels) he also calls it “People’s Capitalism,” he makes clear he believes the social order is traveling beyond capitalism or socialism. [1]
These neo-corporatist ideas have their roots, in the immediate sense, not in a predilection for any of the older and more famous corporatisms which come to mind, but in a reaction to distinctively American conditions, in the soil of the one capitalism left in the world which seems to be a going concern.
One root is a wave of intensified soul-searching about the dominant institution of this capitalism, the corporation. “What Mr. Berle and most of the rest of us are afraid of is that this powerful corporate machine ... seems to be running without any discernible controls,” writes Prof. Mason. Why does the system seem to them out of control?
It is certainly not controlled by the famous Invisible Hand of the Market, they agree. A new stage in the concentration of economic power has come into being. In Power Without Property Berle has laid great stress on the immense expansion of the fiduciary institutions (pension funds, mutual funds, etc.) and their economic consequences. These funds buy common stocks, i.e. formal shares in the ownership of the economy. They grow and their holdings proliferate. Then —
A relatively small oligarchy of men operating in the same atmosphere, absorbing the same information, moving in the same circles and in a relatively small world knowing each other dealing with each other, and having more in common than in difference, will hold the reins. These men by hypothesis will have no ownership relation of any sort. They will be, essentially, non-Statist civil servants – unless they abuse their power to make themselves something else.
This, he argues, is creating “a new socio-economic structure,” with basic political effects. “Then, the picture will be something like this. A few hundred large pension trust and mutual fund managers (perhaps far fewer than this number) would control, let us say, the hundred largest American industrial concerns.” Again: “In result, the greatest part of American economic enterprise, formerly individualist, has been regrouped and consolidated into a few hundred non-Statist, collective cooperative institutions.”
So, as noted, divorce between men and industrial things is becoming complete. A Communist revolution could not accomplish that more completely. Certainly it could not do so with the same finesse. When a Russian Communist government says to the workers that “the people” own the instruments of production but it will take care of them, it is assigning to its population a passive-receptive position closely comparable to the one we are studying. The difference lies in the fact that the criteria for reception are different, and that the political State exercised the power factor now gradually but steadily being aggregated under the American system is non-political but equally impersonal fiduciary institutions.
This concentrated power of the fiduciary managers, a stage beyond the “America’s Sixty Families” pattern, is only potential: in practice they eschew voting control. Thus, the lack of any control over the corporate managements becomes institutionalized. But whether they exercise their power or not, the result is a small oligarchy of uncontrolled managers, continuously making decisions which have a vital impact on the society as a whole.
Berle’s next question is: What “legitimates” this uncontrolled corporative power? Not assignment of this power to the managements by the shareholders. Berle and Means took care of the fiction of shareholder control back in 1932; and even Adler and Kelso’s Capitalist Manifesto only advocates that the shareholder should control, meaning that he does not now.
A second source of “legitimacy” could be the market, if one argues that it is the objective hand of the market which imposes decisions on the managers, not their whims. But our neo-corporatists do not believe this.
What then can legitimate the decisions of management? The solution of government control arises, of course, but to our subjects this means “state control,” which means “statism” which means socialism, communism, totalitarianism, Sovietism and other unthinkable things. In general, they are in a flight from statism under the impress of the Russian horrible example. They grope for an alternative.
What then? Beardsley Ruml has suggested an appointed-trustee system: the Board of Directors co-opts a special member to act as “trustee” for a given interest-group (the company’s customers, or suppliers, or employees, or the “community,” etc.) protecting its interest against the board. I cite this mainly to illustrate what “groping” means.
The next grope is cited not only because it is Berle’s but because it gives a proper sense of the hopelessness of the effort. This is the feudal analogy presented by Berle in The 20th Century Capitalist Revolution (1954), a much misunderstood book which does not present a Luce-type celebration of our economic system. In his strange chapter on The Conscience of the King and the Corporation, Berle is trying to answer the question: How have absolute, uncontrolled powers been curbed in the past, not by upheavals from below but by organic dispensations from above? – for perhaps this will also apply to the absolute, uncontrolled power which is our present problem. He finds an answer in the medieval Curia Regis. Any man could throw himself before the king’s feet and get justice dispensed on the spot by the kings’ conscience. The custom became institutionalized. Hence the beginning of equity courts and (one gathers, in this Berlean history) eventually other democratic counterpoises to the absolute power. “It is here suggested,” Berle concludes, “that a somewhat similar phenomenon is slowly looming up in the corporate field through the mists that hide us from the history of the next generation.”
The legitimation, therefore, is immanent in the historical process itself. The important thing, he is saying, is not whether the king’s rule was legitimate but that this was the way the new system arose.
The approach stirs a reminiscence. It is our American school’s analogue of the standard Stalinist “historical” justification of its absolute power: totalitarianism and terror are passing phenomena preparatory to a glorious morrow, mere flecks on the wave of the future. If it is dressed in feudal terms, this is partly because Berle has long been fascinated by the virtues of feudal society. (Compare his rather amazing paean of praise to medieval institutions, over 20 years ago in New Directions in the New World) But this nostalgia for feudalism is not confined to Berle. In reaction to monolithic-statism, feudalism begins to appear “pluralistic,” which in contemporary sociological jargon is high praise. Its integration of the individual in pre-capitalist community relationships looks good as against the alienation of man under capitalism. The feeling crops up especially in the neo-corporatists, as they view the “feudal” pattern of a society where overweening social power lumps up in a number of huge agglomerations, with a relatively small number of corporations lording it over their own “baronies,” each one with vassals dangling after, like the auto dealers after the Big Three of Detroit. [2]
Berle’s announcement in The 20th Century Capitalist Revolution that the big corporation not only has a soul but also a conscience was subjected to a good deal of understandable ribbing, even before those General Electric executives went to jail; but this discovery of the corporate conscience should be considered only one form of another grope, not yet examined. This is the proposal for the Statesmen-Managers. If the decisions made, without control, by the big corporation executives are so vital for society, these executives must be more than glorified shopkeepers.
Their decisive job cannot be simply to further the interests of the corporation, maximize profits, etc., with primary responsibility to the owners. They must train themselves to think in social terms, in terms of the impact of their decisions on the bigger world outside; in short, to be Statesmen rather than parochially profit-minded businessmen. This becomes also a solution, or part of a solution, to the problem of legitimacy. It may be soul-quaking to think that the fate of our whole society is in the hands of corporate overlords whose near-sighted eyes are fixed only on the shortest way to money-grubbing, but it is heartening to think that this fate is taken care of by Experts who, having proved their managerial skill in the rough-and-tumble of business, now blossom out as broad-gauged Social Thinkers too. This is the meaning of the refrain in Philip Selznick’s recent Leadership in Administration: “The executive becomes a statesman as he makes the transition from administrative management to institutional leadership.” The theme can also be found in some of the contributions to the Mason book.
In this approach, then, the new irresponsibility of the uncontrolled Institutional Leaders is no longer a thing to view with alarm but rather a necessary precondition to freeing them from the petty, distorting influences of short-range, profit-maximizing considerations.
In this context we get demonstrations (which once would have sounded like muckraking) of how our corporate barons are indeed making the vital decisions politically and socially, as well as economically: how the oil companies determine our foreign policy; how General Dynamics decides strategy in the struggle for the world, etc. The objection, of course, is not that this is done but that it is too often done by executives who are not also Statesmen.
But this line is inherently dangerous, as Mason points out:
If equity rather than profits is the corporate objective, one of the traditional distinctions between the private and public sectors disappears. If equity is the primary desideratum, it may well be asked why duly constituted public authority is not as good an instrument for dispensing equity as self-perpetuating corporate managements?
And Eugene V. Rostow warns that this trend invites the response that it is men elected to advance the general welfare who should make the decisions rather than uncontrolled oligarchs. But this implies democratic control of the decision-making apparatus, and democracy is the only way out which our neo-corporatists reject with unquestioning uncertainty.
Neo-corporatism presents itself, first of all, as another attempt to answer the problem of legitimacy. But this problem, after all, is only the current way in which its posers formulate to themselves the basic question of the underpinnings of the whole social system. Real solutions are bound to lie in radical, i.e., systemic, changes.
The outline of such a change appears under the name of Constitutionalizing the Corporation in the deliberations (already mentioned) of the Center for the Study of Democratic Institutions led by W.H. Ferry. [3] Ferry began with a number of complaints about the present system which could once have been part and parcel of a socialist propaganda pamphlet: against over-concentration of wealth, the “paradoxes and contradictions” of contemporary capitalism, alienation, the myth of the “self-regulating economy,” the “greed of the affluent,” economic individualism, “the messiness of the present economic arrangements,” etc. This leads on to formulations favoring “a political economy based on the purposive use of law, politics, and government on behalf of the common good,” “the primacy of politics” for “the rational control of our economic affairs,” “bringing the economic order under political guidance,” and so on.
These phrases seem to give the primacy to political power over the corporate power, subordinating the latter to the former, i.e. installing “statism,” in the terminology previously referred to. This general “socialistic” approach gave way to something else as the discussions at the Center advanced, with the participation of an impressive panel of eminent thinkers: Robert Hutchins, Berle, Scott Buchanan, Reinhold Niebuhr, I.I. Rabi, J.C. Murray, Walter Millis, and others. At a month-long meeting – a sort of enlarged plenum – of the Center held last summer, Ferry presented a programmatic paper for discussion by the group.
The concrete idea that emerged is the foundling of a new political order on a “commonwealth of corporations.” Ferry proposed (after raising the question of a “fourth branch of government” for economic questions):
A less dramatic form of constitutionalization might be the formation by statute of a commonwealth of corporations, an “association of free, self-governing nations.” This would call for federal charters, or “constitutions,” which would recognize the autonomy of the member-corporations but charge them collectively with specific powers and responsibilities ... Along some such route might also come the legitimacy that Berle believes the modern corporation is seeking. Establishing a commonwealth or federation of corporations would necessitate, for example, a review of corporate charters.
He explains further:
... we keep on thinking in the very limited terms of nationalization or non-nationalization, private ownership or national ownership. It is quite possible, for example, to give a good deal more authority and responsibility to corporations ... I am looking for a legal order to enclose and to make coherent what is being done in this country by the corporations.
And he stresses several times that his vision means “a new and different type of state,” “something new, a qualitatively different way of looking at the economy.”
Father Murray, the Jesuit member of the panel of consultants, who took a prominent part in the discussions, thereupon spoke the following, not at all antagonistically:
I know that you have expressly disclaimed that what you wish is socialism, and quite rightly, especially in the classic definition. It doesn’t seem to me that that is what you wish. However, the tendency of your paper is to install intervention of a sort that is referred to technically as the corporative state. I don’t mean the corporative state of the fascist sort, which was frankly totalitarian ... [Murray explains he means the corporative state as invented by “some German economists and political thinkers” as an alternative to both capitalism and socialism.] You seem to be aiming at something of the same sort. You seem to want an integration of the economic processes and political processes, if you will, or a constitutionalization of it. The net effect would be radically new. [A]
This observation by Father Murray, which was not a criticism, ties up with the views of another Jesuit social thinker who had recently published on the question. This is Father Harbrecht, whose brochure Toward the Paraproprietal Society (1960) had appeared with a laudatory introduction by none other than Berle.
Harbrecht’s thesis is that our social system is turning into a system of property tenure which is neither socialism nor really capitalism. His analysis starts at the same place as Berle’s discussion of the fiduciary institutions and the new stage of divorcement between property and power. In this new order “beyond property,” inevitably “the economic power that is growing in the institutions is being drawn, or shunted away, from the generality of the people.” The result has “striking parallels” with feudal institutions, which also “began with a separation of control from the ownership of productive property.” Today corporations correspond to the Great Domains of the baronial principalities. “A man’s place in medieval society was determined by his place in the domain. Today men are bound to their corporations ... the present-day corporate managers are like the vassals of the great domains. They have control, but not ownership of great wealth, yet their tenure in power is in fact limited by their continuing ability to perform a service.”
Thus Father Harbrecht in his own book. It is easy to see why it delighted Berle. For Harbrecht, this process of “feudalization” of the corporate-political structure is his own version of the Wave of the Future.
Now we learn from Father Murray (in the Center discussion) that Harbrecht made a criticism of Ferry’s paper. He found that Ferry wants to go too far with “the politization of the economic process” – that is, the imposition of outside political (state) controls over the corporations (the baronial powers), whereas Harbrecht sees the increased power as going to the corporations.
Faced with the explicit posing of this question, Ferry denied that Harbrecht’s criticism applied to his position: “I do not accept the criticism. I will accept Father Harbrecht’s own proposal for imposing larger responsibilities on corporations.” (Emphasis added.)
The distinction is very important for our purposes. What is being worked out here is not simply more of the familiar liberal-collectivist trend toward increased statification, a line running from Croly through the New Deal and on to Schlesinger and others today. This, as Berle likes to stress, is an attempt at a “non-statist” alternative: the assignment of political power not over the corporate bodies of the economy but to them.
The Center consultant who has developed a more clearly thought-out program of corporatism, perhaps thereby inspiring Ferry, is Scott Buchanan. Buchanan was a leader of the Wallace Progressive Party in 1948; I do not know what his politics became after that, but when he published his Essay in Politics in 1953, the preface explained that it was based on conversations in 1947 which led most of the participants to join the Wallace movement the following year. The 1953 book presents essentially the same views he has now.
In a 1959 discussion at the Center, Buchanan criticized Ferry along the same lines as Harbrecht: for wanting to give too much power to the government instead of giving more powers to the corporations. But the government, he argued, “is obviously incapable of dealing with the big economic, military, and other problems that arise ... When you turn this all over to the government as is done in Sweden, you get a very dull, not necessarily stupid, kind of society,” So –
What I am thinking of, as some of you are guessing, is that you don’t hand such a function over to the government – the national government. You hand over this function to a new kind of corporation which is chartered to determine its own function and legalize its own operation – a self-governing body. This might be some federal scheme. You would not have one national economic corporation. You would have 200 or 500 corporations, or whatever they are, and some kind of congress of corporations that would deal with political-economic matters through legal means.
The corporation, said Buchanan, should “think about itself in terms of the rule of the law”:
This would mean that the corporation think of itself literally as a government, as Berle has put it often enough, and try to constitutionalize itself in some way. This doesn’t necessarily mean that we should impose a democratic dogma on it. It means that the corporation, if it isn’t going to be democratic, should say it is not going to be and find a mode of operation that will discharge its responsibilities and be efficient in its own operation.
This is laudably clear: not democracy but efficiency. In another brochure issued by the Center in 1958, Buchanan ties up a number of things in the olio:
The Marxist used to speak vividly, if not too accurately, about the concentration of capital and the expropriation of the worker. If the dialectic is still working, he ought now to point out the next stage or moment when the labor union applies for corporate membership in the big corporation whose directors grant annual tenure and salaries, pensions, and the power of veto on the policy of the corporation instead of the right to strike. As a result, the corporation is a government by and with the consent of the workers as well as the stockholders. As Adolf Berle puts it in The 20th Century Capitalist Revolution, creeping socialism has become galloping capitalism, and, we might add, corporate communism, free-world variety.
It is not surprising to find him adding that Russia has gone ahead to entrust its economy to “three separate but coordinated giant corporations” and “The other socialist countries have invented other forms to meet their needs. It is not to be supposed that we are lacking in inventive imagination.”
The final chapter of his 1953 book even presents some modest details of a New order in which the corporations have taken on certain sovereign powers making the corporate structure autonomous and coordinate with the government. (Example: the N.A.M. becomes the “sponsor” of the Federal Trade Commission.) There is a separate House “representing managers, engineers, and workmen.” The same corporations which “moderate socialists mark for nationalization” are in this scheme to be given wide self-governing “powers and privileges.” The “chronic civil war between labor and the corporation” will be eliminated. The “three giant corporations” of the Soviet system (which are the Trade Unions, Soviet, and Consumers Cooperatives!) “should be intelligible to us as a kind of preview of ourselves if we continue to increase our corporate development in the same way in the future as we have in the past ...” The vision is global: “incorporated trading companies, making cartel treaties in the twentieth century, could become the United States of the World ...”
Buchanan is the most unreserved of our neo-corporatists, but Berle is recognized as their leading theoretician. Berle, as far as I know, has not put it as bluntly as some others, and I am not certain how far he would go. He is, to be sure, entirely uninhibited in describing the present system as corporate collectivism. He militantly insists on labeling it collectivism as often as possible – “true collectivism,” etc. – and since he also quite calmly describes the corporate system as “an automatic self-perpetuating oligarchy,” we need not suppose he has any illusion that we are living under a democratic collectivism. Nor does he think there is an unbridgeable gulf between this system and the bureaucratic-collectivist system on the other side of the Iron Curtain:
The private property system in production ... has almost vanished in the vast area of American economy dominated by this system. Instead we have something which differs from the Russian or socialist system mainly in its philosophical content.
Nor, for this matter, is he even exercised about democratic controls over this spreading collectivism. One of the troubles with liberals, he writes, is that
... they thought of ownership by “the people” as something real, whereas a moment’s thinking would make it clear that “the people” was an abstraction. Its reality meant some sort of bureaucratic management.
And if bureaucratic management is inevitable, it should be efficient bureaucratic management. The oligarchic methods of the corporation “work remarkably well” and “Conventional stereotypes of ‘democratic procedure’ are not particularly useful in dealing with this problem.”
“Public consensus” is counterposed to “public opinion.” The important difference, of course, is that “public opinion” can finally be ascertained only by the conventional stereotypes of democratic procedure. But public consensus? This is the body of “unstated premises” lying behind the superficialities of public opinion. It does not emanate from the people, that abstraction; nor merely from the business community. Where then? Here is the answer: from “the conclusions of careful university professors, the reasoned opinions of specialists, the statements of responsible journalists, and at times the solid pronouncements of respected politicians.” These constitute “the real tribunal to which the American system is finally accountable,” and it is their consensus which confers legitimacy upon the system.
So the bureaucratic nature of this corporate collectivism – which by Orwellian rules he sometimes calls “the reality of economic democracy in the United States” – does not give him pause. It would indeed take a riotous imagination to equip the new corporate order with the aforesaid “conventional stereotypes” of democracy. In his good society, “organizations in each industry and inter-industry” – like the Iron and Steel Institute, which is properly “not Statist” – can be encouraged to “synchronize or harmonize” their planning, with the assistance of “relief from some of the rigidities of the antitrust laws.”
Like Buchanan, he sees that “in any long view the American and Soviet systems would seem to be converging rather than diverging.” For here too “power centralizes itself around a politico-economic instead of a governmental institution,” the politico-economic institution on this side being the corporation. He is as enthusiastically in favor of cartels as Buchanan, with a similar vision of a corporate world government:
In point of surprising fact, the large American corporations in certain fields have more nearly achieved a stable and working world government than has yet been achieved by any other institution. The outstanding illustration is the case of the oil industry.
For Berle, corporatism is the American surrogate for socialism. Socialism, he writes, was the instrument of the 20th century revolution in many countries, but “In the United States, the chief instrument has proved to be the modern giant corporation.” If the corporations “do not assume community responsibilities, government must step in and American life will become increasingly statist.” The corporation’s powers are in fact “held in trust for the entire community.”
The choice of corporate managements [he writes in the chapter Corporate Capitalism and ‘The City of God,’ in The Twentieth Century Capitalist Revolution] is not whether so great a power shall cease to exist; they can merely determine whether they will serve as the nuclei of its organization or pass it over to someone else, probably the modern state ... It seems that, in diverse ways, we are nibbling at the edges of a vast, dangerous and fascinating piece of thinking.
Vast, dangerous and fascinating it is, and Berle is nibbling.
In discussions of corporatism, the word corporation is more often than not used in more than one sense. The broader and earlier sense is any body (of people) corporate, whose association for some purpose is recognized; the narrower sense is the business corporation. The “corporations” of Italian Fascist theory were, however, not business corporations nor joint-stock companies, but associations of labor and capital assigned a given role in society. Corporatist ideologies have not necessarily begun with the business corporation; but as we have seen, our own neo-corporatists do begin this way. While beginning this way, however, do they go on to a broader conception of corporatism?
The bridge from the narrower to the broader sense is constituted by the question of who are the “members” of a corporation.
Once you entertain the idea of turning the corporation into a sovereign power, of turning autonomous political powers over to it in some fashion, you must bethink yourself that it will not do to confer this boon simply on the Board of Directors. The base must be widened to receive the weight. The corporation must be more inclusive, if it is to be turned into a political community or the base for one. We do not want to strengthen management at the expense of labor – no, we are all liberals and believe that labor must be treated equally. The solution is plainly to integrate labor into the corporation ... on an equal basis, naturally ... In a number of steps presented as expanding the “membership” of the corporation, the business corporation of today becomes the politically autonomous body of corporatist theory. Basic is the unity of all classes inside the confining forms of the corporate structure.
Buchanan has it all laid out: he wants “a highly structured corporation in which the union would be a part of the structure.” Not only investors and managers but “creditors, workers and buyers” should all get “explicit status as members or citizens of these governments [corporations].” Hutchins opines it is labor itself, not the union as such, which should be included in the structure of the corporation, since the idea “does not necessarily involve the maintenance of a national union of any kind.” We have seen that in Father Harbrecht’s wave of the future, “men are bound to their corporations.”
In the Mason tome, Prof. Abram Chayes of Harvard elaborates a “more spacious” conception of “membership” of the corporation: “Among the groups now conceived as outside the charmed circle of corporate membership, but which ought to be brought within it, the most important and readily identifiable is its work-force.” Does this mean worker representation in its managing board? Apparently not, however. Still, something has to be done about the present sad state of affairs in which labor and management “are made to appear as hostile antagonists in a kind of legalized class-warfare.” (The reference is to ordinary collective bargaining.) By bringing the labor force into the corporation, negotiations become merely an act of adjusting common relations. Chayes is arguing that class collaboration, as against class struggle, entails the corporatist principle as the method of tying up two now-warring constituencies into a single constituency.
For Frank Tannenbaum in A Philosophy of Labor, the unions must save the corporation by endowing it with “a moral role in the world, not merely an economic one.” “In some way the corporation and its labor force must become one corporate group and cease to be a house divided and seemingly at war.” [B]
In that one of his many, and not always consistent, books in which he comes closest to a kind of corporatism, Peter Drucker also naturally turns up with the notion that the trade union must be made an institutional part of the corporate structure. This is in his The New Society (1949), written under the impress of the British Labor government. A man who thinks in managerial terms from first to last, Drucker views the trade-union leader as just another type of manager, who, like the corporation executive, has a responsibility not to his organization’s members but to the Organization as such. Integration of the union will also help to make the government of the corporation “legitimate,” he argues.
Interesting is the context of Drucker’s approach to corporatism in this book. Generally speaking Drucker is a militant conservative, and in his other books he is usually a fervent apologist for the corporation and its managers as a going concern. Here, however, Drucker has a remarkable section on Democratic Socialism, plainly meaning mainly the ongoing British Labor regime, in which he defends it against American misunderstanding – in his own way. His own way is the corporatist way.
He announces that capitalism has failed at least outside our own charmed country, that the New Society will be (naturally) “beyond capitalism and socialism,” and insofar as he concretizes this vision, it is in terms echoing what we have already considered. The modern industrial enterprise is already “collective,” it is a “governmental institution”; it is, however, “independent of the State in its origin as well as in its function. It is an organ of Society rather than one of the state ... There is not one prime mover in our society but at least two: State and enterprise.” The investor (shareholder) deserves no special rights in the corporation; the thing to do is to put the de-facto situation on a legalized basis, so that the sovereign control of the corporation by its managers is institutionalized.
From here Drucker naturally goes over to the question of how to broaden the corporate structure in line with its broader role: we get an echo of Ruml’s trustee-tribunes. We get the theory of the convergence of the capitalist corporation with the Russian system, a characteristic accompaniment. [C] And we also get the already mentioned integration of the trade unions into the “membership” of the broadened corporation, which is now ready to fulfill its bigger tasks.
Our neo-corporatist school consists of liberals, not conservatives or reactionaries.
The people of the Santa Barbara Center are in general conscious liberals, as evidenced by their output on other questions like war and nuclear disarmament, civil liberties and civil rights, etc. Berle is a certified liberal, being a leader of the New York Liberal Party. Buchanan was what I am accustomed to call a Stalinoid-liberal, and probably still is. Drucker, the conservative proved the rule, as explained, in the book in which he approached corporatism. Tannenbaum is an ex-socialist; and so on.
The trend is cropping out of the bureaucratic-collectivist side of today’s liberalism. It is not the only outcropping; the dominant one is still what Berle would call “statist.” But it is an especially interesting outcropping.
These are not the first liberals to discover corporatism. The famous German liberal capitalist Walter Rathenau embodied it in the new social order outlined in his book In Days to Come, written during the First World War. In 1947 John Fisher in Harper’s (he was then one of its editors and is now editor-in-chief) offered a well developed program of corporatism as platform for the revival of liberalism, very similar to Buchanan’s finished product. In return for this dispensation, “In a few peculiarly vital industries, however, labor might have to forego its right to strike: and in return it would have to receive a special standing and special privileges comparable to those of the civil service.” Rightists, he admitted, “might try to convert it into a corporative state.”
Probably more significant are the views of the liberal whose economics is the bridge between liberalism and Laborism, J.M. Keynes. In The End of Laissez Faire (1926) Keynes advocated a status for corporations as “semi-autonomous bodies within the State”:
I propose a return, it may be said, towards medieval conceptions of separate autonomies. But, in England at any rate, corporations are a mode of government which has never ceased to be important ...
But more interesting than these is the trend of Joint Stock Institutions, when they have reached a certain age and size, to approximate to the status of public corporations rather than that of individualistic private enterprise. One of the most interesting and unnoticed developments of recent decades has been the tendency of big enterprise to socialize itself ...
... The battle of Socialism against unlimited private profit is being won in detail hour by hour ... It is true that many big undertakings ... still need to be semisocialized ... We must take full advantage of the natural tendencies of the day, and we must probably prefer semi-autonomous corporations to organs of the Central Government ...
Note that views similar to those which are American school counterposes to socialism are here offered as socialistic. To confound the picture further, the reader has no doubt been aware that corporatism is most notorious as a fascist ideology. Well, then, is corporatism liberal, socialist, or fascist? Or are there three distinct kinds of corporatism? When a liberal adopts corporatism, is he falling for a fascist theory or is he rescuing this theory from the fascists? Where, in short, does this neo-corporatism fit in?
The difficulty arises because corporatism is thought of as being a fascist theory. It became so, of course; we shall see how. But historically it arises as a socialist idea, and as such it has a far from negligible past. Its liberal incarnation, which we have been observing, is only an extension of this phenomenon.
Its main appeal to socialist thought, as to Berle, was as a framework for the radical reform-from-above of capitalist society through what were thought of as “non-statist” or non-political channels. It looked to a transformation of society not through a struggle for political power but through the assignment of social powers to autonomous economic bodies. (This in fact is the basic definition of corporatism in whatever form it presents itself.)
Some elements usually associated with corporatism go back very far in pre-Marxist socialist thought, particularly a beehive-view of society as an organic whole of which the human individual is only a cell (organicism) and a related “communitarian” outlook. But these are by no means peculiar to corporatism, being common in all forms of socialism-from-above. Fourier’s phalanx, Cabet’s Icaria and Robert Owen’s model factory can also be taken as ancestors, but these utopian socialisms, of course, saw their autonomous economic bodies as infiltrators on the margin of society rather than commanders in the center.
The first prophet of a full-fledged corporatism was Saint-Simon – not a utopian and not really a socialist – who was fertile in schemes for the radical reform-from-above of society through autonomous economic and social bodies which would dispense with “politics” and rule by direct administration, under the benevolent control of financiers, businessmen, scientists, and technicians. In Saint-Simon labor and capital were institutionally amalgamated not only in theory but in terminology: the very term “workers” meant primarily the capitalists who carried on productive work as distinct from the “idlers” of the old ruling class. (Derivative trends in bourgeois thought stem from Saint-Simon’s disciple, Comte, and the schools of sociology basically inspired by him; vide Durkheim.)
The conception of a new order built along the lines of a corporate society was one element in Edward Bellamy’s version of socialism. Bellamy’s system, though mainly modeled after military organization, explained the great change in terms of pushing the corporate development to its final conclusion, “the one great corporation in which all other corporations were absorbed.”
Perhaps the classic statement of “socialist” corporatism was expounded by Charles P. Steinmetz, prominent socialist in his day as well as eminent scientist. In his America and the New Epoch (1916) “socialism” is a society where the giant corporations, like his employer General Electric, literally rule directly, having eschewed profit and embraced the goal of sheer efficiency.
But the most massive corporatist element in the development of socialist thought was injected by syndicalism. The basic conception of the re-organization of society through (presumably) non-political but autonomous economic bodies was here the distinctive content of the movement.
Here corporatism diverged in two quite different directions. Saint-Simon, Bellamy’s Looking Backward, and Steinmetz were almost purely authoritarian, not to say totalitarian. But syndicalism, like socialism as a whole, was a movement with two souls.
One was a socialism-from-below which looked toward the organization of democratic control of governmental authority through workers’ control; the other was a thoroughly anti-democratic, elitist and “administered” view of the new order which was associated with the anarchist element in anarcho-syndicalism. [D] The former strain later dissolved itself into the general socialist movement and early revolutionary Communist movement, where its positive outcome was represented in such tendencies as guild-socialism and acceptance of a workers-council basis for a new type of democratic state. (These can still be termed “corporative,” if one absolutely insists, insofar as they look to the assignment of power in society to “occupationally” determined bodies, although these bodies were not “economic” but thoroughly political.)
The latter strain flowed into the later bureaucratic-collectivist ideologies of corporatism, the ones to which that term actually became attached. In the heartland of the syndicalist movement, pre-1914 France, this current in syndicalism was documented in the book which most bluntly concretized the syndicalist new order: Pataud and Pouget’s Comment Nous Ferons la Revolution (1909). When syndicalism traveled north to England, its anarchist element tended to dissolve out, leaving guild-socialism as a deposit; but when it traveled south to Italy, it was anarcho-syndicalism and Georges Sorel’s proto-fascist reading of syndicalism which expanded.
Now it was this latter wing or current of syndicalism which transformed itself organically into the “black socialist” wing of Italian Fascism, and which thereby created what we know as the corporatism of the fascist ideology. Its architects were Enrico Corradini, Edmondo Rossoni, and other syndicalists-turned-fascist, plus D’Annunzio-type nationalists-turned-syndicalist like Alfredo Rocco and Dino Grandi. Corporatism was the serious ideology only of this “socialist” face of fascism. As is well known, though Mussolini later adopted it officially it remained an empty facade for purely social-demagogic purposes. [E]
In German fascism too, within the Nazi movement, it was the assigned manipulators of the “Labor Front” who played with it and it was the serious ideology only of the “black socialist” wing. Strasser developed it into a view of a new corporate order called “state feudalism,” with a chamber of corporations, etc. Here it was not even officially adopted for demagogic purposes; the Hitler regime rejected it.
We see, then, that corporatism enters the fascist world not as a fascist ideology but as a socialistic idea, indeed as the program to transform fascism into socialism. In this role corporatism is a direct and organic outgrowth of that one of the “two souls of socialism” which I have called socialism-from-above.
Once having arisen in this way, fascist corporatism had a powerful reactive impact on the socialist movement itself. It attracted – sucked out toward itself, so to speak – precisely those socialist currents which felt their kinship to it. In the case of the Marquet group in the French Socialist Party and the Mosley group in the British Labor Party, wings of the socialist movement split off to become fascist themselves. But more significant were the currents which were attracted specifically by corporatism without going over to fascism.
A hand of ideological sympathy to the Strasser wing of Nazism was stretched out by the not-insignificant tendency in the Social Democracy led by the German-Czech social-democrat Wenzel Jaksch. Bernard Shaw, the no. 2 architect of Fabianism, was enthusiastically pro-Mussolini before he became even more enthusiastically proStalinist; in a sober lecture before the Fabian Society in 1933 he described the Italian corporate-state plan and added, addressing Il Duce in the name of Fabianism:
I say “Hear, hear! More power to your elbow.” That is precisely what the Fabian Society wants to have done ... Although we are all in favor of the corporative state, nevertheless it will not really be a corporative state until the corporations own the land in which they are working ...
In Belgium, the socialist party leader Henri de Man, who had made a great if now forgotten reputation as a “revisionist” offering a theoretical alternative to Marxism within the socialist movement, wrote Corporatisme et Socialisme in 1935 and later became virtually a Nazi collaborator. Lincoln Steffens – I list him here rather than as a liberal; the distinction becomes terminological – glowed with ardor for both Mussolini and the application of the corporative idea to the U.S. Without throwing him into the very same bag, I would also suggest a look at Leon Blum’s introduction to the French edition of Burnham’s Managerial Revolution.
Corporatism was also an element in the ideological jumble of the New Deal, but my impression is that it was more prominent in non-socialistic New Dealers like Hugh Johnson than in the radical wing, who tended to be overweeningly “statist.”
This identification of corporatism as a socialist current – as one of the strains in the history of socialism-from-above – rather than as an idea necessarily connoting fascism, is the first key to understanding the burgeoning of new corporatist ideologies today. But now widen the focus on this picture:
”Socialism-from-above” did not arise from socialism. It was and is merely the form taken within the framework of socialism – the intrusion into socialism – of what is in fact all-pervasive in the entire history of man’s aspirations for the good society and a better life. This is true everywhere, in all times, and in all ideological guises. It is the expectation of emancipation or reform from some powers-that-be who will hand down the new world to a grateful people, rather than the liberating struggle of the people themselves, associated from below, to win and control the good society for themselves. It is the octroyal principle, which is still dominant as always, versus the revolutionary-democratic principle, which during most of man’s history could be nothing but a phantasm and which could become a realistic aspiration only within the framework of socialism. What is distinctive about socialism is not its dominant “socialism-from-above” wing, for this is dominant everywhere, but the fact that it and it alone could generate the ever-arising and so-far-defeated movements for emancipation-from-below.
Reform-from-above, under the economic and political impulsions of a period when the dominant social system is decaying, characteristically takes the form of a bureaucratic-collectivist ideology. Corporatism is one of the bureaucratic-collectivist ideologies which arises. It arises quite inescapably both inside and outside the socialist movement. What we have examined in the case of the American school, in a country with a tiny socialist movement, is its rise in circles outside the socialist movement. But in most countries of the world, ideologists like Berle, Buchanan, Ferry, et al. would not be outside the broad socialist movement; they are social-democratic types. Their ideology would arise within the framework of socialism and take on a socialistic coloration and vocabulary, instead of taking care to couch itself in non-socialist or even anti-socialist terms. This American development is an anomaly in that it produces a corporatism stripped of any socialist dress.
But this means that if we look abroad, we should expect to see its analogues with a socialist dress. And we do plainly enough; in fact, the picture is gratifyingly simplified when we find that both sides recognize their affinity.
The British co-thinker of our American school is C.A.R. Crosland, the leading theoretician of the right (Gaitskell) wing of the British Labor Party. He, in turn, is the apostle of a new “revisionism” (his term) for which he claims most of the European social-democracies.
Prof. Mason appeals to Crosland’s book The Future of Socialism for British evidence that “the form of ownership of large enterprise is irrelevant” and that the large corporation is fundamentally the same whether private in the U.S. (where it is called capitalism) or public as in Britain (where it is called an installment of socialism). If this is so, then the transplantation of Crosland revisionism to the private “corporate collectivism” of the U.S. produces a resultant ideology similar to the neo-corporatism we have been discussing.
Prof. Rostow states his understanding of Crosland-Gaitskellism in terms of the American problem as follows: “In England, socialists say that the managers have already socialized capitalism, so that it is no longer necessary to invoke the cumbersome formality of public ownership of the means of production.” By the same token – this is Rostow’s point – the managers may also be said to have already socialized capitalism in the U.S. Thus Crosland equals Berle plus a difference in latitude and longitude.
The chapter in Mason’s book on the British corporation was, in fact, assigned to Crosland himself, as collaborator with the American authors. Crosland winds up this essay by quoting the 1957 thesis of the Labor Party, Industry and Society, in which the anti-nationalization view was established: “The Labor party recognizes that, under increasingly professional managements, large firms are as a whole serving the nation well.” This is why nationalization is unnecessary, according to Crosland. It follows that the big corporations, under even more professional managements, are serving the U.S. at least as well if not better.
Industry and Society was the official theoretical exposition of this revisionism; and especially because it was a formal “resolution” and not simply an article, it is interesting to see, in “motto” form at the head of a chapter, not a quotation from Marx but one from Berle’s 20th Century Capitalist Revolution. Quoted also is the Drucker of The New Society. This is symbolic of a fact. The line of analysis in Industry and Society is essentially Berlean.
If W.H. Ferry proposes a corporatist program for the U.S., he himself at any rate sees no great difference between this and the views of the Swedish social-democrat Gunnar Myrdal, or with the British and New Zealand welfare-states. Scott Buchanan says he wants to see his ideas worked out by a Fabian Society.
It is this relationship, mutually recognized, between American neo-corporatism and the new post-war trend of European social-democratic reformism which helps to explain both. I refer to the trend toward the repudiation of public or social ownership (not merely nationalization) as an important part of the socialist program. Crosland (Encounter, March, 1960) chortles that “nearly all the European socialist parties” have gone this way.
But this is not traditional or historical social-democratic reformism in economic program, any more than Molletism in France has been traditional reformism in politics. The qualitative transformation that has taken place was pointed up when Crosland denounced “the extremist phraseology of the Party’s formal aims” in its constitution regarding nationalization, and demanded that it be rewritten. This phraseology, now “extremist,” was written in by Sidney Webb and Arthur Henderson.
Why is this neo-reformism engaged in a precipitous flight away from public ownership? First it should be seen as analogue to Berle’s evolution from New Deal “statism” to his new enthusiasm for “non-Statist collectivism,” which we have discussed. The line of thought goes like this
Public ownership is no longer necessary for the gradual reform of capitalism into socialism because capitalism is socializing itself in other forms. The transference of power in the corporations to socially responsible managers means that the forms of private property are no longer incompatible with our ends. Socialization will now go forward with the inevitability of gradualism in these new corporate forms. Public ownership can now be stored away in the cellar of our program because the development of the new corporate collectivism is adequately doing the job which the socialist movement once thought it was called on to perform.
”What is accepted as the road to “socialism” is the ongoing process of bureaucratic- collectivization of the capitalist world. This neo-reformism of the European social-democrats and the neo-corporatism of our American liberal school are analogous forms of one type of bureaucratic-collectivist ideology.
A. It should be remembered that the Catholic Church officially has its own program for a sort of corporatism (also called “industry council plan,” etc.), a very elastic one: it has been interpreted into anything from Mussolini’s fascist corporations to mere labor-management committees. Father Murray can therefore raise the question of corporatism more objectively than most.
B. In 1921 (The Labor Movement, N.Y.). Tannenbaum was for the revolutionary mission of the working class and socialism, and friendly to something he called the “dictatorship of the proletariat,” but it is interesting to see how, even then, this revolutionism was based on as reactionary and anti-humanistic a version of the organicist theory of society as I have ever seen and was combined with insistence on the outlawry of strikes and the excommunication from society of strikers.
C. This theory of convergence and its popularity deserves an article by itself. One of the most amazing examples is Industrialism and Industrial Man, by Clark Kerr and three colleagues (Harvard 1960), which paints the coming New Order as an authoritarian society (“a new slavery”) extrapolated almost entirely from the convergence of a bureaucratized capitalism with a somewhat mellowed Stalinism. The authors insist this is the wave of the future to be accepted without vain “moral indignation.”
D. I am aware that this passing remark flies in the face of the myth of anarchist “libertarianism” and “anti-authoritarianism.” I have dealt with this legend in Vol. 4 of Karl Marx’s Theory of Revolution, published by Monthly Review Press.
E. For the benefit of Berle, it should be emphasized that even if the corporative structure had ever been realized, it would not and could not have been “non-statist” in any meaningful sense. The state power would still have been omnipotent, however dressed up. The “non-statist” illusion about corporatism is analogous to the “non-political” illusion of its ancestor syndicalism, which was thoroughly political.
1. The role of the corporation in dissolving the property relations of capitalism was already explained in some detail by Marx in Capital, III, 516–22 (Kerr, ed.); cf. 450–59; see also Marx-Engels, Selected Correspondence (N.Y. ed.), p. 105, and the passage which stands at the head of this article.
2. For an acadamese version of the comparison, see Richard Eells, The Meaning of Modern Business (N.Y. 1960), which invents the term “metrocorporate feudalism.”
3. See W.H. Ferry, The Economy Under Law (1960), published by the Center; also his The Corporation and the Economy (1959). The Center also published Scott Buchanan, The War Corporation and the Republic (1958) and Berle, Economic Power and the Free Society (1957).
Last updated on 8 November 2020