Brown Sludge

Corporatism vs. Capitalism

January 30th, 2006

In order to understand the difference between Capitalism and Corporatism, it helps to start with an understanding of what you’re comparing.

Capitalism may seem like a simple and straightforward concept, but it can be tricky for the uneducated zealot.

The Wikipedia lays it out it fairly succinctly :

“Capitalism has been defined in various ways. In common usage, the word capitalism means an economic system in which the means of production are overwhelmingly privately owned and operated for profit, with privately determined investment of capital, and where production, distribution, and the prices of goods, services, and labor are affected by the forces of supply and demand in a largely free market.”

It then goes on to (rightly) point out that we don’t live in a “Capitalist” society – and never have – because of the governments involvement in many ‘state owned’ means of production. We live under what most economists would refer to as a “mixed” economy.

Corporatism is a whole lot trickier concept to get your mind around. I’ve defined it in other pieces – and at the risk of being repetitive I’m going to reprint the definition here :

“corporatism is a tricky word. It’s been around for a long, long time, and it has come to have a few different meanings.

One of those meanings is an older traditional meaning that has its roots way back in the days of European feudalism and represents the way that different socio-economic classes used to organize themselves so they would be included in state politics.

But… there is another more modern, pejorative meaning that is generally accepted to refer to the way in which today’s corporations, aided by a willing government via legislation and unrestricted lobbying, are growing in power and influence at the expense of the public’s welfare.”

Robert Locke, former editor for FrontPage Magazine, defines corporatism as “socialism for the Middle Class.”

He points out that Big Business loves Big Government because Big Government gives it a huge competitive advantage over small businesses through the negotiation of favors for payment in kind. Big Government loves Big Business because its size makes it so easy to manage. It’s easier to impose Big Government programs like Affirmative Action on a corporation of 50,000 people than it is to herd thousands of independents into a corral that odious.

Many of the arguments that you will hear those who have confused corporatism with capitalism use are socialist arguments.

“Big Box Mart Has Helped The Poor With Their Low Prices.” Can you spell “Re-distribution of wealth”? I knew you could.

“Big Box Mart Drives Innovation!” How? With federal funding of R&D? You don’t get much more socialist than the public dole.

Look at HillaryCare – there were no more eager sign-ons to that debacle than Corporate America – because they were slobbering over the idea of off-loading health-care costs onto the state. There was nothing “capitalist” about HillaryCare. You don’t have to be Fellini to figure THAT out.

When you examine a corporation for what it is – a collective of stockholders – it’s easier to see the socialism inherent in everything they do.

And for those who man the Randian wing of the Libertarian Party – I suggest you be a bit more careful. The beating heart of Rand’s love affair with capitalism was a truly scathing hatred of the states intervention in business – and you simply can’t square the Randian philosophy with the incestuous relationship between many of today’s Big Business Behemoths and Big Government - Period.

The Randian hero was first and foremost an INDIVIDUAL. By trying to paint a socialist collective like most of today’s Big Business Entities as being on par with her vision - you do her – and yourselves – a giant disservice. The “Big Businessmen” she lists in her books as examples – James Jerome Hill, Andrew Carnegie, J.P. Morgan – they were all self-made individuals. Not gigantic collective hives.

That Rand was at odds with most of the “Austrian” capitalists – accepted giants like F.A. Hayek and Murray Rothbard and Ludwig von Mises - speaks volumes. More on that later.

Entry Filed under: General