Corporatism, A Fascist Doctrine

On a free market, characterized by competition, need is the best teacher. A pupil incapable of learning goes bankrupt and is out of business. Business competence means capacity to adapt to permanent, often surprising changes of market data and consumer preferences. This competence is also reflected in the selection of managers by employers and further in the recruiting and training of staff, and in the organizational models of companies. Adaptable, capable people are needed, willing to think and make decisions, and familiarized with it, especially in complicated or crisis situations.

I said ‘on a free market, characterized by competition’, which is at best an isolated situation in our times. Things are very different in the pseudo-capitalism prevailing nowadays. Ensconced, protected and spoiled by authorities more than the unemployed or other welfare beneficiaries, the great corporations turned into giants with feet of clay, competing outstandingly in terms of inertia with the most bureaucratic government agencies. The basic rule is now ‘follow orders, complete tasks and do not doubt.’

As absurd as it might seem, not only your country, but in many cases also your company needs you dumb. It’s not a mere asset: it’s now a must. Under these circumstances, it’s hardly surprising that no one anticipates anymore, no one feels crises, not even of the size of the one where we are stagnating for years. And when such things occur, no one knows how to react and everybody scrambles for their lives.

It is the conclusion of a recent research by two university scientists, one Swede and one British. Its title is more than eloquent: ‘A Stupidity-Based Theory of Organizations.’ According to the authors, in big banks and organizations, for instance, the employees are encouraged not to use their full intellectual capability, and even rewarded for that. On the contrary, criticism, initiatives and generally all approaches involving active thinking are deterred. No one may get out of the ghetto of their job description. Orders are not merely questioned, they’re directly followed, without even processing them through thinking. Thus order, discipline, and a pleasant and friendly working environment are guaranteed.

The consequence is, in the terms of Nassim Nicholas Taleb, that large banks and corporations have become very frail, vulnerable both to stress from outside and to errors and frauds from inside. An error or a fraud have every chance to pass unnoticed along the decision chain, as long as no link of it stops to think about it, simply executing it or passing it along instead, in a nearly mechanic way. So what’s the matter? When you’re Too Big To Fail, the state will always come to rescue, on taxpayers’ money.

We have so far discussed corporation and their employees, with a mention for corporatism as a consecrated term, not just a license. Elie Wiesel National Institute for the Study of the Holocaust states in a release that in his works “Mihail Manoilescu has developed a plea for fascist dictatorships of Germany and Italy, for totalitarianism, for one-party systems and for the Mussolinian concept of corporatism.”

Unlike José Jerônimo Moscardo de Souza, the Brazilian ambassador interviewed by Formula AS magazine, who has a different take on the same Romanian economist: “They thought we are condemned to stay an agrarian country, like Romania at some point. But God gave us a great Romanian, an ex-minister of foreign affairs of your country and a world-class economist: Mihail Manoilescu. Since his genius work ‘Theory of Protectionism and of International Trade’ was translated in 1932, it has inspired the economic development of Brazil. With Manolescu’s help, the Brazilian officials have understood the origins of inequity, the role of industrial development projects, the relations between industry and agriculture, between exports and imports, etc. Manolescu is now considered one of the founding fathers of modern Brazil.”

Moreover, in 1934, Brazilian president Getúlio Vargas imposed a new Constitution, with elements inspired by Mussolinian corporatism; it was considered semi-fascist. And the proof that Brazilians, like Perón’s Argentinians, believed in corporatism, is that they hosted many Nazis and Fascists refugees from Europe after WWII of the past century. Nestor Kirchner and Cristina Fernández de Kirchner, husband and wife, who took turns in ruling Argentina, much like Juan and Isabel Perón, climbed to power on a neo-Peronist platform.

But since I mentioned fascism, it’s useful to find out what it was and what its intentions were, by quoting from Benito Mussolini’s ‘The Doctrine of Fascism’, published in 1932:

“Against individualism, the Fascist conception is for the State; and it is for the individual in so far as he coincides with the State , which is the conscience and universal will of man in his historical existence. It is opposed to classical Liberalism, which arose from the necessity of reacting against absolutism, and which brought its historical purpose to an end when the State was transformed into the conscience and will of the people.

Liberalism denied the State in the interests of the particular individual; Fascism reaffirms the State as the true reality of the individual. And if liberty is to be the attribute of the real man, and not of that abstract puppet envisaged by individualistic Liberalism, Fascism is for liberty. And for the only liberty which can be a real thing, the liberty of the State and of the individual within the State.

Therefore, for the Fascist, everything is in the State, and nothing human or spiritual exists, much less has value, outside the State. In this sense Fascism is totalitarian, and the Fascist State, the synthesis and unity of all values, interprets, develops and gives strength to the whole life of the people.”

To keep a balance, we must of course let also the supporters of classic liberalism. About corporatism (economica corporativa in Italian, as proposed by Mussolini, Ständestaat in German), Ludwig von Mises notes in his essay ‘Interventionism: An Economic Analysis’ that “it stems from English guild socialism.” It wanted to implement a “self-government” of the individual industries. But, in a society based on the division of labor, it is in everyone’s interest to have the most efficient possible companies and industries. “While the entrepreneur of the capitalist economy is boss in his own business he nevertheless remains subject to the law of the market; if he wants to avoid losses and to make profits he has to endeavor to fulfill the wishes of the consumers as well as possible.

The corporatively organized industry which would not have to fear competition would not be the servant but the master of the consumers.” “The corporative occupies in the market the position of sole producer and seller(...) It need not be afraid of the competition of producers of identical goods because it has the exclusive right to engage in such production. We would therefore have a society of monopolists.”

Mises thinks that the corporate system has no reason to make its production as efficient as possible; corporations aim to restrict it, in order to exact monopoly prices. “The position of the corporatives will be the stronger the more urgent the demand for their products; the urgency of the demand will make it possible for some of them to restrict production and still to increase their total profit. The entire system would eventually lead to an unrestricted despotism of the industries producing goods which are vital in the strict sense of the word.”

“All proposals for a corporative system provide state intervention, at least in the case that an agreement cannot be reached between the corporatives in matters concerning several or all of them. Among these matters prices certainly have to be included”, Mises stresses, referring to Mussolini’s speech of January 13, 1934 in the Italian Senate. And the Austrian economist points out that the price policy is not the single obstacle; such a system makes impossible any change of the production process.

Our readers, which are more intelligent than ourselves, as ‘Catavencu’ magazine used to say, only have to choose the model they agree with. With division of labor and market economy, or with corporatism, which encourages, according to the mission of corporate games, the morale, team spirit, active lifestyle, business relations, and social integration.