The New Corporatism

Guest Post by The Zman

In the industrial age, the power centers in Western societies were capital, the government and the workers in that order. Because money is power, the capitalists could exert influence over governments, so they were at the top of the power structure, but that had its limits. Government has the monopoly of force and must be responsive to the people, even in private government. Labor, of course, had numbers and even in the most repressive regimes, numbers count for a lot.

Of course, there was natural conflict between labor and capital. Then as now, capitalists wanted to exploit their workers as much as possible. One solution to this was tripartism, which is economic corporatism. Labor, government and employers work together to form economic policy. Labor would be organized into unions, whose leaders would sit at the table with representatives from the state and industry to fashion polices that maintained social stability and economic prosperity.

For most of Europe, this has been the explicit arrangement. In Scandinavia, what is often called socialism is actually corporatism. Workers get generous benefits, but the state protects business from competition. In other parts of Europe it is not as explicit, but the social contract is based on the cooperation of the government, business and labor unions. The irony is that this was the approach favored by fascist movements, but no one dares mention that bit of history.

In America, this arrangement was never formalized. Industrial unions flourished in the north, but never got traction in the rest of the country. Into the 20th century, the central government was too weak to bring labor and capital to the table. Instead we got an informal version of tripartism, with activist groups inside the political system negotiating on behalf of labor. The political class used regulation, rather than force, to bring business owners to the table.

For the most part, this system worked well enough through the 20th century. It was not perfect, nothing is, but all the measures of society improved. Even as the West moved into post-industrial economies, the system held up. That’s increasingly not the case, especially in America, as we move fully into the technological age. That old informal arrangement is falling apart and being replaced with a bipolar social order, centered on money and information.

You see this with the Democratic Party. A generation ago, Democratic politicians would court industrial labor unions and salt their platforms with promises to the middle and working class. They were the party of labor. Today, Democrat politicians would not be caught dead with a union boss. Instead they hang out at Davos with bankers and global titans of the information age. They salt their platforms with weird aspirational messages that resonate with bourgeoise bohemians.

The new system is an informal arrangement between Silicon Valley, Wall Street and the political class in Washington. Left out of this is not only labor, but the bulk of business, which does not operate globally. You see this with Covid. Exceptions were made for the giant corporations, but the small and midsized business forced to knuckle under to draconian measures. A great transfer of power and money is underway from the middle-class to the elites.

Just as capital was able to exert influence over the state in the old industrial tripartite system, money and information is now able to push around the political class. You see this with the tech monopolies. Many in Washington know this is a serious problem, but they are powerless to stop it. Not only can the tech giants buy the votes they need, they get to read everyone’s e-mail and text messages. In the information age, control of information is as important as controlling the money.

What America is racing into is bipartism, an informal alliance between Silicon Valley and Wall Street, with Washington as junior partner. Silicon Valley controls the flow of information, while Wall Street controls the flow of money. When necessary, Washington supplies the force. There is no role for labor or even for the public at-large. In a world where elections are ceremonial, there is no need for Washington to appeal to the voters or even pretend to do so.

The problem with this emerging social arrangement is that it is not rooted in anything other than short-term greed. Corporatism of the industrial age was rooted in Catholic social teaching, where the parties had reciprocal duties. Human dignity and the common good were overriding concerns. The three parts of the system were bound by reciprocal duties to the other, but also bound by a duty to society. There was a clear moral component, rooted in 2000 years of history.

The system that is emerging is explicitly free of any moral duty to society, as it rejects the very notion of society. After all, society is about boundaries and the open society is about no boundaries, which is a contradiction in terms. The rhetoric is to disguise the fact that the whole point of this new order is to consume social capital, converting it into money and power for the two stake holders. Human dignity and the common good have been monetized to benefit the new ruling order.

The main flaw in this is that a world without social capital is a world without trust. This is why personal liberty is quickly shrinking. Prisons are low trust societies and they are controlled by limiting the choices available to inmates. The emerging social credit system and “freedom passes” are what the new ruling class thinks will replace the social capital they have devoured. Instead of a sense of community and an obligation to society, people will be motivated by their smartphone.

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