ALBERTA – As the twentieth century neared, Pope Leo XIII, grieving for humanity’s choice between atheistic socialism and venal liberalism, commissioned Catholic intellectuals to devise a better solution. Named Corporatism and set forth in the 1891 encyclical Rerum Novarum, Leo’s interwar successor, Pius XI, recounted that it “laid down for all mankind the surest rules to solve aright that difficult problem of human relations called ‘the social question.’”
Corporatism (which should be distinguished from the tripartite bargaining structures that emerged in many countries in the 1970’s under the name “neo-corporatism”)became the most influential ethically motivated intervention into economics in modern history. As Catholic social doctrine until the late twentieth century, Corporatism still shapes constitutions, laws, and attitudes throughout the world. It can be distilled into four tenets:
· Equality is a cruel illusion: people are happiest if rightly placed in a hierarchy legitimized by Catholic teachings.
· Competition is spiritually demeaning. Associations – committees of Catholic business owners, labor leaders, and officials – must set quotas, prices, and wages within vertically connected swaths of the economy called corporations. A typical Corporatist economy might contain thirty or so corporations – foods, heavy industry, textiles, chemicals, etc. – each encompassing raw materials, production, distribution, and retailing firms. International trade and new firms are undesirable, because they undermine associations’ power.
· Private property is legitimatized by owners’ obedience to Church and association, but delegitimized by competition.
· The principle of subsidiarity devolves authority unneeded at higher levels to the lowest feasible level throughout the hierarchy.
Mussolini established the first Corporatist economy, albeit substituting “Fascist” for “Catholic” throughout. State holding companies controlled key listed firms directly; and associations controlled the rest, reconciling totalitarianism with nominally private ownership.
Italy, its foreign trade peremptorily suppressed, escaped the trade wars of the Great Depression. In 1931, Pius XI took credit. “Anyone who gives even slight attention to the matter will easily see…the obvious advantages in the system….The various classes work together peacefully; socialist organizations and their activities are repressed.” He exulted that Leo’s “Catholic principles on the social question have…passed little by little into the patrimony of all human society…not only in non-Catholic books and journals, but also in legislative halls and courts of justice.”
Indeed, Corporatism spread to country after country. In 1932, it was embraced by clerico-fascist Austria, under Engelbert Dollfuss. Falangist Spain under Francisco Franco and Portugal under António de Oliveira Salazar followed. Interwar Poland, Greece, Albania, Bulgaria, Estonia, Latvia, and Lithuania adopted forms of Corporatism. So did Hitler’s Germany, though in greatly modified form.
Vichy France embraced Catholic Corporatism, as did German protectorates over Belgium and the Czech lands, as well as nominally independent Slovakia under Monsignor Jozef Tiso. By the 1960’s, most Latin American countries were avowedly corporatist dictatorships. Lebanon’s Falangist Party gave voice to its Maronite Catholics.
Corporatism spread beyond Christendom – to Turkey under Atatürk and, using aliases to hide its Catholic provenance, to other Arab countries. Elite Catholic schools taught Corporatism to independence leaders in French, Spanish, and Portuguese colonies.
Indeed, the prominence of Corporatism in Catholic education is remarkable. In their book Young Trudeau, Max Nemni, Monique Nemni, and William Johnson quote from Canadian leader Pierre Trudeau’s 1930’s notes on Corporatism from a class at the elite Jesuit academy where he studied: “The democratic principle has contributed to the undermining of civilization by impeding the development of the elite.” Likewise, “Liberalism leads to excesses: to unemployment, anarchy. The ideal is corporatism, which does not separate people into parties, but unites their interests.”
Today, Catholic and Islamic countries, as well as former French, Spanish, and Portuguese colonies, all of which tend to have Corporatist institutional residues, also correlate with depressed living standards. That is not surprising: Corporatist institutions plausibly retard development. Sanctified hierarchies stifle initiative.
Pius XI thought that “the leadership and teaching guidance of the Church...in this field also” precluded abuse of authority. It seems to have evaded him that unchecked power might be more spiritually demeaning than competition. Corporatist subsidiarity lets the top of the hierarchy determine its own powers, while banishing competition and lauding private property generates inequality and inefficiency simultaneously.
As these failings grew manifest, the Church back-pedaled in the 1960’s, and John Paul II finally repudiated Corporatism. Today, few Catholics even know of the doctrine.
But interwar Corporatism is resurrected. Forsaking socialism, China did not adopt capitalism, but kept the Communist Party atop a self-legitimized hierarchy.
True, central planners no longer set wages, prices, interest rates, and quotas; but party cadres, not market forces, control the economy’s commanding heights. Industry ministries oversee vertical swaths of firms. State-controlled banks allocate capital. State-owned enterprises, or their subsidiaries, dominate key markets, as in interwar Italy. A subsidiarity principle even grants senior cadres discretion in delegating powers to underlings. How odd of Mao’s heirs, however accidentally, to resurrect this forsaken Catholic ideology.
China’s rapid growth has rescued multitudes from abject poverty, and quasi-Corporatist arrangements are clearly better than Mao’s Great Leap Forward and Cultural Revolution. But that is faint praise. Corporatism elsewhere begat vast inequalities, corruption, and dictatorships that eventually proved unsustainable.
The saga of Corporatism cautions economists against dismissing ethical concerns about markets. But it also warns theologians that economics contains real truths, however unattractive. Finally, it counsels Chinese technocrats against dogma-driven economic policies.