Economy & Business

Elizabeth Warren, Corporatist

Sen. Elizabeth Warren in Fairfield, Iowa, May 26, 2019. (Rachel Mummey/Reuters)
The Left has endorsed a new form of corporate paternalism.

Corporatism” is one of the most misunderstood words in the political vocabulary. American progressives use it to indicate the domination of the state by business interests, when in fact it means something closer to the opposite: the subordination of commerce and industry to political mandates.

Corporatism is a concept closely associated with the fascist government of Benito Mussolini. The word “fascism” surely has earned the stink attached to it, but it, too, is widely misunderstood as a body of policies. As George Orwell wrote back when fascism was still something of a going concern, the word “fascist” is used as very little more than a term of denigration.

But the corporazioni of the Italian fascist model were not the profit-oriented private concerns we now call “corporations.” They were something closer to consultative associations, in which the interests of business owners, workers and workers’ organizations, and the Italian state were, in theory, all represented. The concept, which is a variation on socialist central planning, was that privately owned businesses were entitled to a profit, but not too much profit; that the workers were entitled to as much compensation and to such working conditions as were consistent with the overall health of the Italian economy and state; and that the state was entitled to coordinate these calculations and negotiate the related interests, and also entitled to have its interests trump those of either the business owners or the workers.

Fascism more or less disappeared as a brand name after that unpleasantness toward the end of the first half of the last century, but corporatism never really went away. The German workers’ councils that are much admired by many American progressives are corporatist undertakings; Senator Warren’s agenda is fundamentally corporatist. It would impose federal charters on businesses with more than $1 billion in revenue and empower the federal government to dictate to those firms the composition of their boards of directors, their compensation practices, the details of their internal corporate governance, their personnel policies, the scope and content of their political speech, and much more. She calls the legislation she is proposing the “Accountable Capitalism Act.”

Accountable to whom? There you have it.

Using corporations as instruments of politics is attractive to politicians for many reasons, cowardice prominent among them. If Senator Warren wants to increase the purchasing power of low-income workers by $1 trillion, she could propose legislation that would entail the appropriation of money for this purpose and distribute that $1 trillion to the workers in question on any terms she saw fit. But that would bring with it difficulties: That $1 trillion appropriation would show up on the budget, which would mean an uncomfortable discussion about raising taxes to pay for it (Senator Warren has fanciful views about taxation, the progressive version of “voodoo economics”) or its contribution to the deficit (which is why the Obama administration leaned on the CBO to endorse, jaw clenched, its ludicrous claims about the debt-reducing features of the Affordable Care Act) and more. The politically expedient alternative to that is to impose a mandate on businesses to pay those workers an additional $1 trillion in wages or benefits, which shows up on the books as a regulation rather than as an expenditure. When government proposes to spend money, somebody — Senator Paul, Representative Amash — can be counted on to ask, “How do we pay for this?” The corporatist model says to businesses: “You can figure out how to pay for this.”

Subordinating business interests to political mandates in the matter of economic policy is old hat. But politics is more than a question of taxing and spending, and American progressives are now pushing corporatism to purely ideological ends, for instance by deputizing Facebook, Twitter, Google, and other tech companies to act as proxy censors to suppress political speech that progressives do not wish to be spoken, and using employers ranging from Silicon Valley giants to Starbucks and fast-food restaurants as enforcers of political discipline, dismissing senior executives and obscure food-service workers alike for their private political views and speech. The business corporation has become the disciplinary corporation, an instrument of direct social domination put to explicitly political and ideological ends.

Sometimes the state takes the lead in this, as in New York Democrats’ authoritarian efforts to ruin the NRA financially by using New York’s regulatory whip hand over financial institutions to deny the advocacy group ordinary financial services. (Marijuana-based businesses face similar pressure, even when they operate in states where their business is legal.) Sometimes, progressive business owners take the lead, as in the case of Salesforce, which has announced that it will forbid certain companies that deal in firearms to use its software. As a purely libertarian question, Salesforce has every right to exclude businesses based on its own moral sense. (Set aside, for the moment, that progressives would deny the same license to firms such as Hobby Lobby, and even to explicitly religious organizations such as the Little Sisters of the Poor.) The convulsions of Facebook, which operates simultaneously under scores of local legal regimes and the pathologically homogeneous and homogeneously pathological political monoculture of seven very expensive ZIP codes in California, should alert us to the practical limitations of such a model.

But there are larger concerns. To what extent do we want private corporations to function as the effective censors of political speech? At the moment, progressives are very comfortable with that, mostly because they believe, with some reason, that they can dominate those corporations and bully them into submission. To what extent do we want the welfare state offloaded to the corporate payroll and benefits departments rather than treated as a straightforward transfer? The fact that millions of Americans have been effectively held hostage by employer-based health-insurance plans shows one obvious downside to this model.

The perverse aspect of the contemporary progressives’ remix of classic corporatism is that the very people who believe themselves to be the main check on corporate power are working to aggrandize corporate power in ways that are without close precedent, their nearest analogue being the old “company town” model of corporate paternalism, which is not universally admired by the American Left. The danger is that the ability and inclination to satisfy the cultural, political, and social sensibilities of the Fortune 500 will become in practice a condition of full citizenship.

That may not be exactly what Senator Warren wants. But it is not exactly not what she wants, either.

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