Free Markets, Free People

Corporatists v. Capitalists

This guy is sooooo close to getting it exactly right, and at HuffPo of all places.

When I heard the word “corporatist” a couple of years ago, I laughed. I thought what a funny, made up, liberal word. I fancy myself a die-hard capitalist, so it seemed vaguely anti-business, so I was put off by it.

Well, as it turns out, it’s a great word. It perfectly describes a great majority of our politicians and the infrastructure set up to support the current corporations in the country. It is not just inaccurate to call these people and these corporations capitalists; it is in fact the exact opposite of what they are.

Capitalists believe in choice, free markets and competition. Corporatists believe in the opposite. They don’t want any competition at all. They want to eliminate the competition using their power, their entrenched position and usually the politicians they’ve purchased. They want to capture the system and use it only for their benefit.

The sensible approach would be to recognize the problem and figure out a way to avoid it the best we can. Money always finds a way in, but we can at least be cognizant of the issue and try to combat it as much as possible. We must do this as citizens who care about our democracy, but we must also do it as capitalists.

If he just realized that the answer isn’t “that we watch politicians with a very wary eye”, but instead to make sure that the politicians have as little and diffused power as possible. Without concentrated power, politicians have nothing to sell, including the power to protect big corporations. If there’s nothing to sell, the corporations have nothing to buy for their protectionist schemes and are left to sink or swim in the market just like the rest of us. The end result? More freedom and more free markets.

[ad] Empty ad slot (#1)!

Tweet about this on TwitterShare on FacebookShare on Google+Share on TumblrShare on StumbleUponShare on RedditPin on PinterestEmail this to someone

34 Responses to Corporatists v. Capitalists

  • Surprised this snippet is from HuffPo. It truly is a problem all real capitalists have to face. We don’t really have capitalism, and yet all problems get tarred by the left as if that  freedom were our problem.
    Real free markets, limited government, and deregulation would solve a lot of problems. Goliath corporations would fall apart for bloated overweight. Everything would be more efficient, and jobs more fun.
     

  • Capitalists believe in choice, free markets and competition. Corporatists believe in the opposite.

    No they don’t.  Capitalism involves private ownership of the means of production and the trade of goods in markets.  It does not mean that the markets or competition have to be free or unregulated.  Corporatists are capitalists, they’re just the ones wearing the black hats.

    • Okay Jeff, moral and ethical capitalists believe in choice, free markets, and competition.

      • That’s fine.   Applying the name “corporatist” to a subset of bad or immoral capitalists is perfectly acceptable and accurate.  But trying to define them as if there was no ideological common ground between capitalism and corporatism is fundamentally dishonest.

    • Corporatists are emphatically NOT Capitalists.  Corporatism is the basis of Fascism, in that the government runs the economy via organized bodies (hence the word “corporatismo”) of experts from the various sectors controlled.  Those bodies are comprised of handpicked people from the industry and labor leadership, whose purpose is to design the nitty-gritty details of accomplishing the overarching goal of the state.  Capitalists do not, in any way shape or form, adhere to that sort of structure.

      • I agree, and what you describe is a perfiect picture of our current auto industry.

        • That statement remains to be seen to be true.
           
          I could go into a long detailed diatribe about it, but suffice to say does a company that failed and taken away from its owners and investors just months ago seem like it had anyone in government looking out of it?  Or a regulatory angel over its shoulder?
           
          Contrast that with say the oil industry.  Another industry draped in regulation and government intervention.  Massive profits are had by all including the government getting a cut.  Nobody is going out of business there anytime soon.
           
          There’s no mistaking that Obama took advantage of the auto industry failure to perpetuate theft.  But that theft was against the industry owners and investors.  And the future is still up in the air as to whether they will let go of the auto companies or not, once they take their cut.

      • I would argue that outside of a few industries (domestic auto, Fannie Mae, etc.) we do not have corporatism by that definition.  What we have is capitalists influencing legislation and regulation to create competitive barriers  in their markets.  That isn’t the same as what you propose at all.

      • I disagree, Corporatism is also the basis of Oligarchy which consists of powerful business interests controlling the state.   A Capitalist Oligarch would direct the state to serve the best interests of his/her capital growth. 

    • Using Wade’s definitions, the only difference between a capitalist and a corporatist, is that a capitalist is only a capitalist until the capitalist reaches the top.
      Then the capitalist becomes a corporatist.
       
      One needs to look no further than Wal-Mart.  First praised as capitalists, then damned as corporatists.
       
      A caterpillar isn’t a butterfly, after all… but it wants to be.
       
      I know of no capitalist that doesn’t want to corner the market… by any means necessary.
       
      Cheers.

      • That’s not a bad way of describing it.  In fact, Adam Smith pretty much said the same thing.

        • Umm… You were supposed to argue with me, dammit.
           
          I hate it when we agree.  It’s not nearly as fun.  :)
           
          Damn that Adam Smith… No getting around that smart-ass motherf*cker.
           
          Cheers.

      • I know of no capitalist that doesn’t want to corner the market… by any means necessary.

        There are a few. T.J. Rodgers, for example, who told the government-sanctioned semi-conductor memory cartel to go to hell. But they are indeed a very rare species.

      • Hell, there are plenty of them.  Not every capitalist business owner is looking to corner the market. Many just want to be comfortably well off.  For one thing, it’s a lot of work to dominate a market. Not everyone has that desire.

  • Without concentrated power, politicians have nothing to sell, including the power to protect big corporations. If there’s nothing to sell, the corporations have nothing to buy for their protectionist schemes and are left to sink or swim in the market just like the rest of us.


    AMEN!

  • Michael: I wish you’d made the point about the redefintion of “corporatism” in the main post rather than a comment.
    In the sense that it’s been redefined and abused, it <I>is</i> a “made up” word, and anti-business, because it’s typically used as shorthand for “corporations bad because they’re corporations (unless they’re one of the Enlightened, of course)”.
    It should also be noted that Corporatism in the Italian Fascist sense also included representatives of the Church and Army. Not just labor and business, but every sector of the State as the Fascists conceived it.
     
     
     

  • I’m all in favor of people trying to corner the market. But Government should not help them with rules and regulations. Let the FREE market make the choice.

  • Good post.  HuffPo… Whooda thunkit???

    The description of “corporatists” reminds me of the description of Vito Corleone’s rise to power in Puzzo’s The Godfather: Corleone discovered early on that competition was chaotic and expensive, while monopoly was efficient… for him.  Therefore, he took certain (ahem) steps to see to it that HE had the monopoly.

    And that raises the other side of the coin:

    MichaelWIf there’s nothing to sell, the corporations have nothing to buy for their protectionist schemes and are left to sink or swim in the market just like the rest of us.

    So, what DO we do about monopolies?  Ideally, people as individuals would recognize (for example) Standard Oil as a monopoly and refuse to buy from it.  But if Standard Oil sells something that people MUST have, then what choice have they really got?  The only power that can realistically counterbalance a powerful monopoly is a powerful government.  Yet, as we’ve learned, the government power that can break up a monopoly can also create one.

    What to do?

    • What you’ll find is monopolies are pretty darn hard to establish in a market (especially if substitutes and alternatives exist as they usually do) and usually only exist with government’s tacit support (artificial bars to entry, protective legislation, etc). Hayek, I believe, does a great job explaining why that’s so.

    • Interestingly, while Standard Oil was a dominant market player, it never was able to extract monopoly prices. Standard was not a monopoly, there were many small oil companies like the Pennsylvania based Sun (Sunoco stations now).
       
      Standard gained its dominant partially by being the low cost producer. Its attempt to corner the market on oil transport by buying up all the oil rail cars spurred on the oil pipeline business.
       

    • So, what DO we do about monopolies?

      Monopolies are strange beasts.  They are rarely witnessed in nature outside of government interference.  In fact, in modern times, they are a virtual impossibility without it.  Moreover, sometimes we actually want them (e.g. the pharmaceutical industry which is protected by patents, and thus is able to take the risks of innovation that would otherwise be foregone), while other times we want them crushed.

      Typically, monopolies are almost impossible to form, simply because the key to their maintenance is the erection of barriers to entry.  Even when natural commodities (think oil) are involved, monopoly pricing incentivizes the discovery and use of alternatives, thus crashing those barriers.  OPEC is often held up as the model monopoly, until any examination is done of how much influence it actually has on oil markets, and the revelation that cheating becomes rampant when price maintenance is attempted.

      Without government enforcement, monopolies really have a difficult time of existing for any length of time.

    • Thanks to all for comments on monopolies.

  • Great distinction to be made between “Corporatism” and “Capitalism”!  I would love to see a complete seperation between the government and the economy! 

  • Sounds suspiciously like a modernized version of mercantilism.

  • I just wrote something up about this.
     
    It isn’t just corporations.  Not by a long shot.
     
    Corporations don’t have purposes or minds.  People do.
     
    There are people behind those corporations.  In fact, there are quite a few individuals these days that have more money than most corporations.  To these people corporations are sometimes a means or a suit that they wear.
     
    Focusing on ‘Corporations’ won’t stop this kind of corruption in Washington by a longshot.

  • This is actually Cronyism.
    Corporatism is a fascist economic model where business, government, and labor plan the economy for the good of the state.
    Italian Fascism involved a corporatist political system in which economy was collectively managed by employers, workers and state officials by formal mechanisms at national level. [30] This non-elected form of state officializing of every interest into the state was professed to better circumvent the marginalization of singular interests (as would allegedly happen by the unilateral end condition inherent in the democratic voting process).
     

  • Darn good topic. Great blog. Great comments! We really need more public awareness on this one.

  • Up & Comers prefer free markets; established entities prefer a closed /guild system, be they corporations, unions, bureaucracies.

  • Look at the situation where UPS is trying to force unionization (putting the carriers under the NLRB rather than the FAA) on FedEx.
    No more UPS for me,