Corporatism and Capitalism

Libertarians seem to believe that the semantic debate over capitalism is settled by the use of one term, corporatism. The highly complex nature of capital accumulation, based around different structures that involve both competitive and planned dynamics, is made simple by differentiating between corporatism, a bastardised form of crony capitalism where monopoly dominates and the state’s regulatory apparatuses are at their most coercive, and a pure capitalism, “a world of perfect competition among enterprises who are all market price takers (none has the power or size to shape markets), where no advertising enables producers to shape the desires of consumers, where all workers bargain individually for their wages, and so on”[1].

Corporatism thus represents the ills of the modern system, making it easy to blame things like “big government, monopolies, the Federal Reserve, welfare, taxation, and labor unions” while making the case for market competition made smooth by its own self-regulating, internal dynamics, where institutions are irrelevant. It’s a clever semantic trick, because capitalism becomes something that is almost utopian, unable to ever be imbalanced or monopolistic. Everything that has occurred under the system of capital accumulation for profit can never be capitalism, only corporatism, while the subjectively good things do become a product of capitalism. It’s both confusing and pointless to argue against because it is simply a false narrative from the beginning. According to its proponents (nominally anarcho-capitalists or certain libertarians) the economy is extremely monopolistic, with the government rigging enterprise and eliminating competitive functionings. However, at the same time things like iPhones and the proliferation of a multitude of products and services (the subjectively good products of capital accumulation) are fundamentally capitalist, being borne of a profit motive and competitive market.

Effectively, the argument boils down to “we’ve never had capitalism” or “free market capitalism has never existed”, while at the same time defending capitalism by referring to companies like Wal-Mart and Apple, both major beneficiaries of state intervention. This is just semantic bullshit at the end of the day. “Impure capitalism is the only kind we have ever had. For example, government always accompanied capitalism. Government often served a rising capitalist class to undermine, defeat, and destroy other classes. In the French Revolution, the rising class of merchants, bankers, and small capitalists captured state power and used it to undermine French feudalism.” The search for pure capitalism becomes neverending, because it is impossible. Throughout the development of early capitalism in the Italian merchant banks, through to the Industrial Revolution and onto the rise of Fordist and post-Fordist modes of production, the state has always been a mechanism for capital accumulation and the production of profit. Monopoly has always accompanied capitalism, with markets being one of many tools for further growth and accumulation which are at no point freed from the anchor of states and quasi-governmental institutions.

Further, this semantic trick makes no sense. Corporatism is itself a system that has been appropriated for different ends. There was the development of corporatist systems under Franco in Spain and Mussolini in Italy, where corporations and particular trade unions were aggregated under the state for the purpose of funding the national economy. Then there was the development of similar institutions during the Bretton Woods era, where tripartite negotiations between the state, major national companies and trade unions created agreements that shared productivity gains between capital and labour, raised wages in line with inflation and limited the mobility of capital. Corporatism was the defining organisational paradigm of the Fordist growth regime. It wasn’t just a method of state-capital cooperation, but a means for establishing stable growth in contravention of the previous modes of laissez faire in the 19th century, where monetary policy was less overtly regulated and crises that pushed the costs onto the labour-force were more common. “The Federal Reserve replaced alternative monetary institutions when and because the latter proved unacceptable for capitalists (among others)”. Even during this period of laissez faire, the state was a major organisational tool that allowed for the further accumulation of capital for profit.

Attempting to define capitalism as a black-and-white issue leads to this kind of semantic nonsense. One cannot love the fruits that modern capitalism bears while simultaneously saying it’s a destructive system of monopoly power. And they cannot wrongly appropriate a term to mean something that has defined capitalism since its birth. The use of coercive institutions, such as central banks, governance systems and military-industrial complexes have been major areas of growth and monopolisation. On the other hand, markets, as systems of social and economic relations, have existed long before capitalism and consistently during its development. Today, as seen in cooperative economic systems that empower labour, and the micro-markets of the Shanzhai and Emilia-Romagna economies, these market systems still exist interstitially, in between the dominant state-corporate nexus of modern capitalism.

Defining capitalism as a system that increases freedom, as one that is the apex of free market activity, is both ahistorical and nonsensical. Even taking the simplistic definition of capitalism as provided by anarcho-capitalists and libertarians, that of a system of decentralised profit-making, we still see that profit as a valuation mechanism dominates, thus curtailing or eliminating other axiomatic understandings of socio-economic activity. It cannot be decentralised, as according to this doctrine everyone thinks rationally, with prices originating from these rational decision-making processes and creating a fully integrated market economy. The fundamental axiom, profit, centralises everyone’s activities to its directional consequences. However, not everyone thinks rationally, and even those who think rationally do not do so all the time. Alternative systems of price discovery are either ignored or purposefully eliminated under such a simplistic understanding. Things like common ownership, non-market production and social provisioning would either be institutionally outlawed or psychologically impossible. However, the world is not this simple, and cannot be conditioned to rationalist discourses which separate capitalism from the state, and make capitalism out to be something it never has been and never will be.

[1] https://thelibertarianideal.wordpress.com/2017/01/17/pure-capitalism-is-pure-fantasy/

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