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Corporatism for the Twenty-First Century

Ask voters about American politics, and they typically respond that it is ever more polarized, fragmented, divisive, and hyper­partisan. A recent report indicated that 78 percent of voters are un­happy with increasing partisan divisions. Beyond the issue of polar­ization, there is also a problem of performance. Satisfaction with American political institutions is decreasing. The dominant popular feeling toward the federal government is frustration—a sentiment now shared by 57 percent of Americans according to a March 2019 Pew survey. Surveys of public trust in the government tell a similar story, continuing the decades-long decline from the height of public trust in the early 1960s.1 Yet, at the same time, sizable majorities support increased federal spending on education, infrastructure, Med­icare, and scientific research; thus the sentiment of frustration seems clearly tied to the government’s ineffectiveness in these areas, not simply ideological opposition to government in general.2

Political fragmentation and distrust, whatever the cause, are often interpreted as signs of a decaying democratic system. But the usual response to this situation—another round of hand-wringing about civility—inevitably accomplishes nothing.3 Today’s combination of dissatisfaction and fragmentation should instead point to a different diagnosis. It is evident that there is no institution within which the country’s disparate interests can negotiate their differences with real consequences for political decision-making. For now, the United States still enjoys a tacit agreement on core issues such as pursuing economic prosperity, social mobility, and the sense of national and social integrity. But few would point to Congress as a place where important interest groups, like business and labor, hash out and negotiate their interests with reference to the common good. Instead, since lobbying occurs behind the scenes, representatives have little incentive to negotiate among competing interests in public. For the long-term health of the American regime, this lack of a trusted delib­erative body is very disturbing.

Although American citizens usually identify with several groups—their occupation, religion, educational background, and social and cultural preferences—those groups must pursue political influence in a fi­nancially driven, competitive system of associations, interest groups, and lobbying organizations. While voters are corralled into geographical representation and the two-party system, financially driven, group-based lobbying on behalf of particular industries flourishes. At the level of lobbying, corporate organization and political activity is easy wherever money flows freely; accordingly, many of our group inter­ests go unrepresented. Our system is one of dilapidated corporatism—corporatism for me but not for thee.

The chart below illustrates America’s broken pseudo-corporatist system. The chart highlights the disjunction between corporate political spending by industry and the portion of American employees those industries support. While measuring an industry’s lobbying activity against its total number of employees is an admittedly simple metric subject to multiple qualifications, the results are nevertheless revealing of big-picture trends. Larger numbers on the left indicate a disproportionate share of lobbying expenditure per employee; numbers on the right indicate industry share of total U.S. employment (note, union lobbies are included within the appropriate industry).

As the chart shows, it is generally the bigger industries by employment share that are less represented through lobbying. By contrast, some business groups vastly overspend on lobbying relative to the percentage of the American workforce they support. Indeed, some appear to have a business model driven by directing profits in large part toward lobbying. The gambling industry employs a small number of people but lobbies aggressively (and spends primarily on GOP candidates).

The pharmaceutical industry, to take another example, has the second smallest employment share, at a meager 0.25 percent of total employment, yet accounts for 12.6 percent of all lobbying expenditures in the United States. It is perhaps not surprising that Big Pharma is the least favor­ably viewed industry in America, as well, with a net favorability rat­ing of –31, according to Gallup.4 Pfizer, Amgen, and Roche Holdings each spent more than $10 million on lobbying in 2019, and industry associations spent much more. Other industries with disproportional expenditures on lobbying include air transport, oil and gas, telecommunications, and internet companies. Although electric utilities spend heavily on lobbying, they employ a significant number of citizens, and the electrical industry is a public good deserving of significant representation in any system. (The data do not include private donations by business leaders in particular sectors.) Overall, the simple average of lobbying expenditure across industries is $103.60 per employee. Apart from electric utilities, none of the top ten industries that spend more than this amount make up even 0.5 percent of the total American workforce.

In short, some of the least popular industries in the United States have a lobbying power far out of proportion to the employment base they support. Some industries are not lobbying because they’re profitable; rather, they have incorporated lobbying into their business models. The picture worsens when we consider that lobbying by business groups is not per se lobbying for employees. According to the Center for Responsive Politics, lobbying activity by labor organizations amounted to only 1.4 percent of total U.S. lobbying expenses in 2019; lobbying by business organizations accounted for almost 87 percent of the total.5

Even if we unrealistically assume that business group lobbying generally benefited employees, our analysis reveals an alarming fact: 13.5 percent of the American workforce has virtually no lobbyist representation in Washington at all. With numbers like these, it is no surprise that, in a 2018 Pew survey, 65 percent of Americans think new laws could control the influence of money in politics; and a 2016 Gallup survey indicated 63 percent of Americans were dissatisfied with the influence of major corporations on U.S. politics. Perhaps most strikingly, the 2018 survey from Pew showed that 68 percent of Democrats and even 50 percent of Republicans want “significant changes” to the “design and structure” of American government.6

Forms of fracturing and segmentation are not new in themselves. In the nineteenth and early twentieth centuries, “the social question”—the question of how to mediate the relationship between labor and capital—dominated political discussion.7 Then, too, seemingly unresolvable social fissures and a sense of dislocation from political processes required far-reaching reforms. Today new forms of class war, such as that between the working class and the managerial-professional class, have emerged alongside deepening political polar­ization.8 These major tensions, in addition to specific tensions be­tween industrial sectors, find no natural place to work themselves out in American politics except through the electoral successes of populist leaders who are in turn often quickly hamstrung by representative assemblies.

Pundits on the left occasionally call for shifting toward proportional parliamentary representation, even though such proposals rare­ly gain traction and many countries with such systems face similar problems.9 Others call for generic reductions on corporate spending in politics, or stronger public financing of campaigns.10 Voices on the right, meanwhile, continue to call for rolling back the administrative state or decentralizing power, neither of which addresses the need for public negotiation among divergent national interests.11 Worse yet, many on the right continue to defend massive corporate expenditures in politics, even though such activity bears almost no relation to the “original understanding” of the Constitution they otherwise claim to support.

In the late nineteenth and early twentieth centuries, concern about similar dislocations spurred political theorists to propose a manner of organizing political and economic interests formally, through bodies dedicated to expression and negotiation of major social interests. Theorists as diverse as Emile Durkheim and Joseph Schumpeter called the system “corporatism,” not out of reference to privately organized corporations in the contemporary sense but as a description of the attempt to organize major social interests “corporately” into membership bodies.12 The system common to anglophone countries, by contrast, came to be known to political scientists as “pluralism”—not in the sense of promoting the diversity of lifestyles, but of giving free rein to private associations to organize themselves and seek to influ­ence politics. The corporatists concluded that a laissez-faire approach had led to social disharmony and political tension. On the economic front, corporatists suggested (as many progressives do today) that business activity should be organized around corporations involving both workers and owners. More generally, large groups reflecting real social and political interests would be the main political actors in society.13

The corporatist political framework seeks to define and organize every major stakeholder in the social contract, beginning with pro­ductive economic sectors, but also including the professional classes that contribute to society—doctors, lawyers, professors, scientists, and clergy. The purpose of such efforts is to give political recognition to vocational and group identity, through a process of negotiation rather than adversarial competition. Vocational and group representation was not thought to be a replacement for geographical representation, but a supplement to it. As liberal democracies become ever more fractured socially, economically, and politically, it is time to consider how American society might benefit from corporatist forms of repre­sentation, and what reforms along those lines might look like.

The Classification Problem

The American public is more segmented—economically, socially, and politically—than ever before. Companies collect massive amounts of data on consumers. And while they use, or purport to use, that infor­mation to “enhance customer experience,” they have also amassed a detailed sociological picture of their customers. Political campaigns have done the same, combining consumer data harvesting with political advertising. The result has been a form of microtargeting that threatens the core of modern democracy: the sense of coming togeth­er around a shared purpose. Instead, microtargeted political advertising seeks to match the candidate to whatever marketers suspect are voters’ most relevant commitments and interests. Targeted advertisements help “construct” candidates in the image of each of us, however minutely segmented we are.14

Much of the segmentation of American society is also plagued by a knowledge disparity. In many cases, commercial and political adver­tisers know our habits, likes and dislikes, interests and susceptibilities better than we do. Annual conferences in “Mass Customization and Personalization” push businesses to capture profits and win loyalty through different forms of customization.15 Consumers are then en­couraged to cultivate their own identity through product selection and brand identification.16 By fragmenting their markets and tailoring advertising to each sector, companies can even attract disparate purchasers of a single product or of small variations on it.

Hypersegmentation seems to create more satisfied customers in the consumer products and media spaces. Consumer views of American business sectors are largely positive. Only the advertising industry (–1), health care industry (–10), and pharmaceutical industry (–31) suffered net negative ratings. In politics, however, hypersegmentation has increased the sense that government does not reflect the interests of voters and, indeed, that government has no hope of doing so. Evaluated alongside American business sectors, the federal government suffers a net negative rating of 27 percentage points.17

Major internet conglomerates have turned political personalization into a science, as digitally delivered information, images, and experiences are now custom-made for particular segments of the population. The formation of highly segmented consumer identities has also been reinforced by digitization, as internet companies seek to deliver streams of information and images specially “curated” for market segments (or identities) that they have identified or even created. The resultant siloing of different political identities has made it easier for particular political segments to live exclusively within a particular media world. Political identity itself has become a consumer good delivered by media companies, which in turn has heightened popular dissatisfaction with government.

American democracy is thus suffering from a perfect storm of tendencies threatening its model of representation. Society has become more segmented than ever before, but with an increasing sense that our political system does not offer a place in which differ­ent groups can articulate their interests and see them represented in the making of political decisions. Instead, voters tend to think of the president as an all-powerful leader who will be able to implement his stated platform singlehandedly, while Congress is often viewed as powerless, corrupt, and incompetent—a body with no purpose be­yond media grandstanding. When it becomes apparent that a fractious Congress stands in the way of the president’s agenda, overall dis­satisfaction with the U.S. government seems to increase.18

In a word, the increasing fragmentation or “segmentation” of the American population does not map onto its decision-making institu­tions. At the same time, the corporations that have “hyper­segmented” the American population, especially our leading technology firms, have become more politically powerful through targeted donations and agency regulatory capture. They thus worsen the sense of politi­cal dislocation on both the consumer and governmental end, increasing popular segmentation while feeding the sense that political deci­sions are influenced by donors and private corporations that act beyond the reach of popular accountability.

The Return of the Old Social Question

Such hypersegmentation should not be blamed solely on internet companies or new advertising methods, however. In Western demo­cracies, the central questions of social organization—especially the old capital and labor question—have been politically obscured for decades, as parties on the right reinvented themselves along libertarian and individualist lines, while parties on the left sought to guarantee the protection of identities through further extension of equality and nondiscrimination. The hope on the right was that increasingly liberal markets would enable broadly shared prosperity and quell the need for identity-based politics at a national level. Meanwhile, the Left abandoned its traditional class-based politics in favor of seeking further social equality for marginalized identity groups. Both sides sought to put aside notions of class politics or group politics in favor of greater economic mobility (on the right) and greater social and cultural fluidity (on the left). Accordingly, efforts at corporatist representation were rejected as outmoded. In a mobile society with ever-changing means of production, having people join national workers’ unions or nationally chartered interest associations came to be considered outdated.

The hypersegmentation of American society has been marked by a deep irony. While consumer-oriented companies have promoted an ever-increasing array of identity groups, there has been no corresponding increase in American social mobility. An array of reports from Raj Chetty have told a dispiriting story about the degree of social and economy mobility in the United States.19 Since the early 1980s, rates of relative intergenerational mobility have flattened. In another widely reported study, Chetty concluded that absolute in­come mobility, the likelihood that one is better off than one’s parents, has fallen sharply since World War II. All of those trends, Chetty points out, are also colored by unequal geographical distribution. The chance for upward mobility persists in parts of the Upper Midwest, and remains generally better in the Northeast, California, and Texas than in struggling parts of the Deep South and Rust Belt. From the standpoint of political cohesiveness, however, the approaches of both Left and Right have proven to be signal failures: we have achieved superficial consumer fluidity, without genuine social mobility.

Objections to corporate representation typically come from an expectation that, as modern capitalism advances, citizens will become ever less tied to particular social identities, and more fluid in their career options than earlier generations. Each in their own way, both Left and Right over the last forty years expected that the near future heralded a more fluid and more mobile society—more economically mobile, according to the Right, for individuals willing to work hard and sacrifice to get ahead, and more socially and culturally fluid for a Left ever less interested in its traditional working-class base. These viewpoints converged on the much-heralded “gig worker” of the 2010s, who would supposedly be able to put together an economically successful life by exercising his talents across a variety of industries just as he had a mind to do. For the gig worker liberated from sectoral attachments and free to customize both production and consumption, “corporatism” would be archaic and limiting. But as the promise of the fast-moving gig economy fades into a series of dead-end careers, the objection to corporatism on the basis of socioeconomic fluidity seems misplaced at best.

Now that the future has arrived, it is much more occupationally segmented and economically stratified than anyone expected. Contra­ry to the expectations of liberals on the left and the right, American society is primed to express itself in corporatist terms. Even in recent decades, Americans have been remarkably consistent in claiming a sense of identity from their jobs. With the exception of a slight drop in 1999, between 1989 and 2014 (the last year Gallup ran this survey) 54–58 percent of Americans responded that they get a sense of identity from their jobs, while 40–44 percent replied that a job is just something they do.20 At the same time, Americans have been sorting more firmly between the two major political parties, and in certain circumstances have begun to associate their other identities (family status, gender, religion, region, etc.) with their political identity.21

As Emile Durkheim argued more than a century ago, in modern society functional or professional identity would prove just as im­portant, if not more important than locational identity.22 The fur­ther development of the modern economy, and the transformation of our associational life through modern forms of communication, has only heightened the importance of his insight. Indeed, the bizarre irony of the present situation is that many forms of group identity are stronger than ever before,23 but the main forms of corporate “rep­resentation” in Washington come through the lobbying of private corporations rather than public deliberation by interest group rep­resentatives. As the United States Census of 2020 gets underway, we are more seg­mented and analyzed than ever before, but few feel that our political system reflects their interests.

In Durkheim’s view, the argument for corporatism stems from the fragmentation of society under liberalism. Where many of the tra­ditional forms of social organization, from guilds to local community groups, have been steadily eroded, cross-territorial occupational simi­larities already constitute proto-corporations. The state can organize occupational and functional corporations as a way of forming a citi­zenry ready for the task of governing itself, rather than remain susceptible to political influences calculated to appeal to individuals on the basis of political advertisers’ disproportionate knowledge about them. State-organized corporations become a way of reconstituting the sites of social knowledge, formation, and meaning that liberalism has steadily dissolved.

The Corporatist Alternative

Since the 1970s, corporatism has been used as a term through which to analyze corporatist or “corporatist-like” interest-group behavior in postwar capitalist societies. In its analytical mode, corporatism thus does not refer specifically to the theory and practice of authoritarian corporatism that emerged in Europe during the period between the two world wars. Although corporatist regimes like those of Italy, Austria, and Portugal belong to the history of corporatism, they are the ideological products of a very different time.

As the late Howard Wiarda, a leading scholar of corporatism, pointed out, while academics have generally declined to take a posi­tion on the value of corporatism, they have excelled at identifying its fundamental characteristics, as well as the opportunities and obstacles that corpo­ratist structures face in highly complex economies.24 Corporatism, in the words of Philippe C. Schmitter, “can be de­fined as a system of interest representation in which the constituent units are organized into a limited number of singular, compulsory, non­competitive, hier­archically ordered and functionally differentiated categories, recognized or licensed (if not created) by the state and granted a deliberate representational monopoly within their respective categories in ex­change for observing certain controls on their selection of leaders and articulation of demands and supports.”25

Schmitter’s description of corporatism as a “system of interest representation” depends on an understanding of the body politic as being deeply influenced by interest-group behavior and organization. Interest groups, in this context, should not be understood in the narrow sense as only those political advocacy groups that seek to shape public opinion regarding particular issues. They include such groups as trade unions, trade associations, and professional associations—and not only the official or documented membership of such groups. Discrete businesses and even families are also interest groups of a sort.

In the United States and Canada, the reigning system of interest representation has been what political scientists called pluralism, in which interest groups are “multiple, voluntary, competitive, [and] nonhierarchically ordered.”26 As a system of interest representation, pluralism bears an analogical resemblance to laissez-faire economics. In its ideal form, interest groups compete with one another for the attention and favor of the majority, which alone can turn their interests into power. The archetypal description of pluralist advocacy was Alexis de Tocqueville’s Democracy in America, which in 1835 and 1840 outlined the role that could be played by civic associations (such as a parent-teacher organizations) and political associations (such as the constitutional temperance movement) in staving off democracy’s tendency toward tyranny of the majority. The best-case scenario for a competitive interest group system is one in which different associations vie for the attention of the common man through public arguments, meetings, literature distribution, and other classic techniques of American democracy. The modern political sit­uation is very different: communications technology enables far-flung interests to connect and organize; money enables their efforts on a national level; and the laws permit private efforts at influence that bypass the intermediary of the American people.27

By contrast, corporatism is a system of interest representation which places an emphasis on cooperation rather than competition among interest groups. In such a system, the categories of interest-group representation are “singular” and “noncompetitive”: each “con­stituent unit” of a group of related interests may only belong to one officially recognized category, or corporation. Membership in such corporations is “compulsory,” meaning that one may only officially pursue one’s interests through membership in the corporation that represents it. These corporations are also “hierarchically ordered,” meaning that members must, in some fashion, earn status and responsibility within them. The last part of Schmitter’s definition describes the trade-off that cements the status of the corporation: the government grants a “representational monopoly” to each (such as through a system of licensing), and in exchange, the corporation must follow certain government-prescribed rules of operation and allow government input on policy.

Prewar authoritarian corporatism followed the model outlined in Schmitter’s definition almost exactly, at least in theory, but implemented and maintained it by fiat and focused on the interests of workers and employers in the vast assortment of professions that make up modern economic life. In this respect it sought to provide a “third way” between socialism and capitalism by transcending the antagonistic relationships between workers and employers in indus­trial economies. These antagonistic groups were to be brought togeth­er in corporations that would function like modernized guilds. Its success was, for the most part, limited by dictatorial government overreach, superficial implementation, and the destabilizing effects of the general political and economic turmoil of the era.

After World War II, although corporatism had been discarded as a politico-economic theory, it began to appear almost spontaneously within the far more complex postwar economies of Europe—par­ticularly those of Austria, Norway, and Sweden. In the United States, Britain, and Canada, pluralism continued to be the dominant tenden­cy, but the United States has displayed elements of what Wiarda calls a “creeping corporatism.”28 Postwar corporatism (or “neo-corporat­ism,” to use Wiarda’s term) is less authoritarian and prescriptive than its interwar predecessor, and it may be more accurately described as a system of “interest intermediation,” to borrow the modified term that Schmitter uses in another essay.29 It follows the spirit rather than the letter of Schmitter’s definition, and Wiarda describes it as a form of “societal corporatism” rather than “state corporatism.”30

Tocqueville and other advocates of the pluralist-competitive sys­tem took for granted a similarity in moral outlook among democratic citizens that can no longer be presupposed. Now companies as well as politicians view themselves as identity entrepreneurs, seeking to appeal to varied subsets of the American population, often instead of focusing on economic problems that confront otherwise dissimilar cultural or social groups. With the invention of modern advertising, corporations have been able to create and peddle consumer identities at scale, without regard to the political consequences of the resulting social fragmentation.

The point of a corporatist model is to create unitary organizations for stakeholders in a particular political system. National corporations ensure that, no matter how profitable industries seek to spend on political influence, every economic sector and major social interest has a direct say in decision-making on matters that affect them. More than that, corporatist organizations are also intended to orient the activity of their members toward the national interest, since those organizations also play a direct, public role in political decision-making. In the conditions of modern democracy, the hyper-pluralist model has given rise to enormous fracturing and hatred. A corporatist model would help give citizens a firmer identity linked in their social and political functions, rather than letting privately organized identity groups seek to commandeer national political life for sectional inter­ests.

Societal corporatism is compatible with a democratic society and can potentially incorporate a wide variety of interests as long as these groups are “functionally differentiated,” in the sense that they represent those who perform a specific function in society. That this form of corporatism has long thrived in postwar economies suggests that those who see value in the corporatist idea can potentially move beyond unlikely dreams of reorganizing society from above, and instead work toward a sort of corporatization from within. The United States in particular, with its mythology of bottom-up political organizing, is hardly at risk from suffering an excess of state-led corporatism. To get the pendulum to swing in the direction of corporatism, a strong, state-led effort at incorporating functional representation would be necessary.

Hamilton’s Miscalculation

Unfortunately, the framers of the U.S. Constitution excluded interest‑based representation, and instead calculated that a small, geo­graphically based representative body would dilute local factions within the large size of the United States as a whole. Such was the argument of James Madison’s Federalist no. 10, in which he hoped that the very size of the United States, combined with focusing the federal government on a limited number of areas, would dampen the pull of local factions. Anti-federalist opponents of the new constitution argued that the size of the proposed House of Representatives was far too small to provide adequate representation of the major political groups such as farmers, craftsmen, laborers, and merchants. The anti-federalists hoped for a representative assembly sufficiently large such that each of the major groups in society would recognize someone similar within the assembly. Whereas the federalists thought that representatives would refine the views of their constituents, anti-federalists wanted representatives to be sufficiently plentiful that they could reflect their constituents’ characteristics.

In defense of the federalist proposal, Alexander Hamilton in Federalist no. 35 rejected the possibility of politically representing each class:

The idea of an actual representation of all classes of the people by persons of each class is altogether visionary [i.e., utopian]. Unless it were expressly provided in the Constitution that each different occupation should send one or more members the thing would never take place in practice. Mechanics and manufacturers will always be inclined with few exceptions to give their votes to merchants in preference to persons of their own professions or trades. . . .

It is said to be necessary that all classes of citizens should have some of their own number in the representative body, in order that their feelings and interests may be the better understood and attended to. But we have seen that this will never happen under any arrangement that leaves the votes of the people free. Where this is the case, the representative body, with too few exceptions to have any influence on the spirit of the government, will be composed of land-holders, merchants, and men of the learned professions.31

More than two hundred years later, Hamilton’s expectations about the makeup of Congress are not too far off from reality. According to a New York Times report last year, “More than 70 percent of House members were lawyers in private practice, businesspeople (including employees in insurance, banking, finance and real estate) or medical professionals. . . . Among both Democrats and Republicans, lawyers are staggeringly overrepresented: They constitute less than 1 percent of the voting-age population but more than one-third of the House.”32

But Hamilton’s sense that this result would come about due to genuine trust seems to have been mistaken. The New York Times report suggests that, rather than being the natural objects of community trust, lawyers and businessmen are better at running for office and gaining the votes of other parts of the community.

Recent studies suggest, moreover, that members of Congress continue to think and vote with their class and profession, rather than as the trusted community members Hamilton envisioned. In a 2013 book on the role of class in Congress, Nicholas Carnes of Duke University summarized his studies by noting that “Lawmakers from different classes bring different perspectives to public office, and they routinely act on them—how they vote and the kinds of bills they introduce often depend on the classes they came from. In the aggre­gate, legislatures made up of different classes of people tend to enact different kinds of economic policies.”33 For most of the last ten years, with some exceptions, only between 15 and 20 percent of Americans have approved of Congress’s job performance according to Gallup, down markedly from a (still relatively low) approval rate usually between 20 and 40 percent from the mid-1970s through 2010.34

Stakeholder Governance and Corporatism

Hamilton was probably correct that only an express provision in the Constitution would have led to corporate representation in Congress. Outside of Congress, however, many administrative agencies employ corporatist elements in their decision-making processes. In contrast to the relatively unfavorable views of Congress (and contrary to propa­ganda from conservative think tanks), federal agencies are rather popular. The U.S. Postal Service, the CDC, the Social Security Administration, the Federal Reserve, HHS, EPA and several other agencies are all viewed positively by a majority of Americans.35

The main stakeholder-based systems of rulemaking used by these agencies include elements of a corporatist approach. Negotiated rule­making, as one method is called, came on the scene beginning in the 1980s in order to provide a way to incorporate those affected by agency rules into the rulemaking process itself. In a typical instance of “neg reg,” an agency convenes a committee of those with a stake in seeing that a proposed rule is made in fairness toward their interests. The details of negotiated rulemaking do not concern us here, but some of its proponents have seen negotiated rulemaking as a way to incorporate major interest groups or affected parties into a crucial part of American government.

More strikingly, Elizabeth Magill and Adrian Vermeule have also called attention to the representation of stakeholders within agency structures themselves. In many cases, the statutes establishing admin­istrative agencies require stakeholder participation on advisory com­mittees, review boards, or on decision-making panels. Depending on the circumstances, such representatives may be drawn from industry, consumer groups, or professional bodies. “An agency’s high‑stakes rulemaking or adjudication,” they note, “is likely to involve significant input from civil servants, lawyers, scientists, economists, and political appointees.”36 The late Philip J. Harter, an early advocate of negotiated rulemaking, argued that “con­siderable benefits can result if [an] agency actually shares the decision‑making by engaging representatives of those who will be sub­stantially affected by the policy in its development.”37 As ever more areas fall under administrative agen­cies, the incorporation of stakeholders into rulemaking has improved American government.

The governance of business corporations, too, has come under increased pressure to incorporate forms of stakeholder representation—marking the return of an early corporatist proposal. In August 2019, the Business Roundtable issued a new “statement of purpose” that, according to the Financial Times, “placed shareholders as one of five stakeholders, alongside customers, workers, suppliers and com­munities.”38 The most compelling proposal has come from Lenore Palladino of the Roosevelt Institute, which published her working paper “The Economic Argument for Stakeholder Corporations” this past summer. Palladino attacks the shareholder governance model as woefully out of step with the way that corporations actually operate. Shareholder primacy is premised on a view that only shareholders take risks that deserve future reward and operating control, and on a neoliberal view that corporations are merely nexuses of contracts rather than socially embedded and obligated institutions.39 Palladino outlines a four-part proposal for shifting corporations to a stakeholder model: “boards of directors should be accountable to all stakeholders, not just shareholders . . . ; corporate purpose statements should include a requirement that corporations positively benefit society; multiple stakeholders should elect and be represented on corporate boards; and large corporations should be required to charter federally, in order to enable the substantive reforms.” Palladino’s plan internalizes stakeholder representation within a corporation. In its political sense, corporatism may be considered a broader form of stakeholder representation, insofar as each group of the main stakeholders in the polity are politically represented and can negotiate accordingly.

In the United States, the pluralist-competitive system has effectively been gamed by the savviest and wealthiest political actors. Political associations do not merely crop up as Tocqueville thought they did, with enterprising citizens banding together to advocate for this or that policy. Rather, private corporations seek to exercise political influence directly and indirectly, in public and private, through dona­tions as well as the provision of “expertise” via corporately sponsored think tanks. In this system, private corporations and industry lobby­ing groups engage in a form of group politics—just one that is not publicly recognized as such.

In a corporatist political system, specific interest groups are formed and licensed by the state and given public recognition in deci­sion-making processes. In the American context, such a process could piggyback on existing structures of professional licensing, as well as existing unions and sectoral associations already tracked by the De­partment of Labor. They are thus forced (in the case of private corporations) or enabled (in the case of worker organizations) to step out from behind the scenes and make a public argument for their proposals. When that system works, industry groups can be publicly recognized as seeking to act on behalf of the common good. By contrast, the American system today is divided between highly seg­mented mass politics at the electoral level and lobbying behind the scenes driven by corporate interest groups directed entirely at ad­vancing private interests. The American system is one in which industry lobbying groups are well organized “corporately” but ordinary voters are not.

Corporatism and Vocational Democracy

Although the United States has little experience with corporate politi­cal organization, it is not difficult to envision how such a system might be introduced, even within the confines of the existing Con­stitution. Proposals to modify the American voting system—from the National Popular Vote proposal to the Harvard Law Review’s call for equal representation40—are becoming increasingly common, and corporatist proposals should join the fray.

Maurice Glasman, a Labour life peer in the United Kingdom, recently outlined the argument for transforming the House of Lords into an institution for corporate representation. Such a transformation would emphasize the importance of corporate and group identity in the population as a whole. The government would then have one body reflecting regional loyalties and another reflecting functional loyalty. In Glasman’s proposal, the House of Lords would represent “vocational democracy” while the House of Commons would be “locational democracy.”41 “There should be people elected from each sector,” Glasman wrote, “whether that be electrical or academic, med­ical or administrative. . . . It would give an incentive to the organisation of carers, builders and gardeners, who would each select a rep­resentative from within their organisation.” Representatives of major religions should also give voice to the concerns of their various confessions, not resulting in a state establishment of religion but rather a corporate recognition of the contributions of major religions. In this way, corporatism aims to relieve some of the pressure felt by today’s “identity politics,” but through formal public expression and negotiation, rather than adversarial competition for scarce political opportunities.

Two modern democracies already employ forms of corporate political representation: Hong Kong through its functional constituency system, and Ireland through its vocational panels. The Senate of Ireland was established in accordance with the 1937 Constitution of Ireland, and consists of eleven senators selected by the Taoiseach, six senators nominated by Irish universities, and forty-three senators elected by five vocational panels. The vocational panels represent the leading corporate interests in Irish society, divided among an Admin­istrative Panel, Agricultural Panel, Cultural and Educational Panel, Industrial and Commercial Panel, and a Labour Panel. Unfortunately, the Senate of Ireland was established with only limited oversight powers, primarily as a sop to the Catholic corporatism promoted by Pope Pius XI in Quadragesimo anno (1931) and which was also in vogue across other corporatist countries. In Hong Kong, of the sev­enty seats in its Legislative Council, thirty are elected by functional constituencies (agriculture, education, medical, etc.) whose constit­uents include registered members as well as key organizations.

Forms of corporatist economic organization are yet more common. In a typical corporatist economic arrangement, group interests are organized into large associations and those associations are coor­dinated with and through the state. Corporatist economic arrangements do not necessarily require political representation, and flourish in many major democracies—with Austria, Finland, the Netherlands, and Slovenia all maintaining a high degree of corporatist arrangement in recent decades. Denmark, Luxembourg, Singapore, and Slovakia have all become more corporatist in recent years, while Belgium, Germany, Norway, and South Africa have maintained their high levels of corporatism. The United States, UK, and Canada are outliers from the rest of Western democracies in this respect.42

In the American political context, as in the British, the upper legislative chamber would be the most naturally susceptible to re­form. After the introduction of direct election through the Seventeenth Amendment, the U.S. Senate ceased to be the representative of states and became instead an incoherent halfway house between the federal representation of states and the proportionate geographic dis­tribution of the House of Representatives. The oversight functions performed by the Senate have encouraged opponents of nondemocratic forms of representation to call for its abolition entirely.43

A better solution would be to implement a form of Glasman’s proposal and remodel the Senate as a chamber of functional representatives, reflecting the main institutions and professions in American society. American citizens would be assigned to particular na­tional associations upon reaching the age of majority, and could belong to multiple groups depending on their career paths and posi­tions held. National associations, e.g., of health care employees, could be further subdivided geographically as well as according to type of work, following standard classifications already used by the government. Membership in each corporation would be on the basis of a national charter and nationally administered standards, many of which already exist in prototype in industry regulations and career licensing. As industries become more or less relevant over time, the corporate system could be reweighted very decade, just as the electoral system is currently.

The chief functions of such a body would be, as they are today, to initiate and amend legislation within its purview. But the Senate would also take on a formal role of incorporating functional constituencies and corporate representatives into the issuing of regulations by administrative agencies in the executive branch. In the initial stage of change, industry lobbyists would be required to register with their corresponding corporation, and coordinate their activity with the public, nationally oriented corporative Senate. The Senate would re­tain its limited oversight over judicial appointments but, in keeping with the popular expectation that presidents can make appointments as they see fit, a two-thirds vote would be required to stop judicial nominations.

Industry and stakeholder representatives are already called upon by congressional committees to testify during the writing of legislation, and to take part in many aspects of administrative rulemaking, particularly in situations of negotiation. Those participating in reg­ulatory negotiation or legislative advising would not necessarily need to be members of the new chamber, but could be drawn from the national associations whose leaders sit in the new chamber. Such a chamber of functional representatives would provide a centralized, public, visible place for “stakeholders” in American democracy to participate in policy formation and offer a forum in which interest group priorities are honestly acknowledged and mediated. Even short of a reform of the Senate, the Congress could create such a chamber legislatively and limit it to a purely advisory role so as to avoid con­stitutional objections.

Corporatist Coordination in Employment

Even though there is popular demand for institutional reform, cor­poratist changes should not be pursued exclusively at the level of political representation. To be successful, it is also necessary to reform America’s broken educational and employment credentialing system. Outside politics, the lack of interest coordination in American society is particularly evident at the nexus of education and employment, where observers have complained for years about the “skills mismatch.” As university education becomes more expensive and firms become more particular about their hiring interests, the disjunction between training and employment has become more glaring. In a pluralist-competitive system like the one we have, an array of interest group associations fracture participants in the educational system, and on the employer side there are a large range of professional and trade associations. The various employment sec­tors as well as university associations have become self-interested enclaves, communicating with each other only when necessary in “negotiations” that are too often premised on opposition. Accordingly, our employment landscape has become one of waste and mismatch, leading many to question the value of universities entirely.

A growing emphasis in higher education on cooperative education (paid work experience within degree programs), internships, and ex­periential learning has helped in some respects but has not healed the underlying divide. The challenge in implementing a corporatist solu­tion to this dysfunctional pluralist system lies in creating a structure for cooperation among competing interests.

One solution would be to create a single federal Department of Workforce Development, containing an array of micro-corporations that represent each of the major sectors of employment. Legislation could then require that all lobbying activities at the federal level per­taining in any way to education, training, and human resources be mediated through these corporations. At the same time, participation by universities and state governments in the department would be required in order for states to receive federal money for education. The functions of such a department could also be combined with a Department of Economic Growth and Security, like that proposed by Timothy Meyer and Ganesh Sitaraman.44

The corporations within the new department would be tasked with establishing training standards, reviewing relevant programs in colleg­es and universities, and ultimately sponsoring and certifying programs that meet the standards required by the profession or area of employment represented by the corporation. Programs that receive such sponsorship could include this in their promotional materials, sig­nificantly raising their profile in the academic recruitment landscape. Eventually, such sponsorship could become a standard by which the quality of programs, and in particular the employability of their graduates, could be measured.

In this respect, the corporations would be similar to existing pro­fessional associations that provide accreditation for select college or university programs, but they would be far greater in number and have more power to mediate the interests of labor, management, and government within each profession. They would have some say in the control of admission numbers, which would help avoid the overproduction of graduates, and they would also provide a link through which cooperative education opportunities and apprenticeship pro­grams could be arranged.

University or college staff and faculty could communicate with industry representatives through the corporation in order to stay on top of new economic or technological developments. The universities could also arrange, through the corporations, to provide online or in-person extended education programs to encourage skill development among those already working in the profession or area of employment. Unapproved educational programs in colleges and universities could still continue, but they would likely become less attractive for those pursuing education as a path to a career. Bachelor of Arts pro­grams, in particular, would then shrink to a size more in keeping with the genuine demand that exists for liberal arts education.

A corporatist approach to educational priorities would also be a step toward solving the problems of an American elite more concerned with private profit and global scope rather than orientation by national priorities. National corporations would allow the state to tie corporate prestige toward making nationally helpful contributions. Reconfiguring the nexus of universities and employers would not require the imposition of an economic dictatorship, but it would still reflect some of the fundamental principles of corporatism. Further, although sig­nificant in itself, it could be the nucleus for greater realignments on corporatist lines.

Reuniting the Body Politic

As a system of interest representation, competitive-associational pluralism is no longer sufficient, and in order to avoid the consequences of further political splintering in our society, we must look for ways to foster cooperation and rebuild the body politic on the basis of our existing loyalties. Corporatism is a politico-economic ap­proach based on the organization of the state according to vocation, profession, or function. The education-employment nexus, in particu­lar, is a necessary starting point for the development of any larger corporatist structures. Legislative institutions in the United States are already at a low point in their credibility and levels of social trust. Contrary to the hopes of their framers, they can veer far from their intended representative functions, all while being easily captured by corporate interests that are able to stay outside the public eye. A state‑led program to establish the corporate bodies of society and bring them to negotiations can point American political institutions toward a method of discerning the common good. Without that, we will face the continued dislocation of our hallmark institutions, feebly clinging to institutions which nostalgia cannot salvage.

This article originally appeared in American Affairs Volume IV, Number 1 (Spring 2020): 89–113.

Notes

The author thanks D. W. Lafferty for his assistance with the sections “The Corporatist Alternative” and “Corporatist Coordination in Employment.”

1 Pew Research Center, “Little Public Support for Reductions in Federal Spending,” April 11, 2019, 14.

2 Pew Research Center, “Little Public Support,” 2.

3 Pew Research Center, “Partisan Antipathy: More Intense, More Personal,” October 10, 2019, 9.

4 Gallup, “Business and Industry Sector Ratings,” August 1–14, 2019.

5 Center for Responsive Politics, “Business, Labor & Ideological Split in Lobbying Data,” OpenSecrets.org, January 23, 2020.

6 Pew Research Center, “The Public, the Political System and American Democracy,” April 26, 2018.

7 On the return of the social question see Jan Bremen, et al., eds., The Social Question in the Twenty-First Century: A Global View (Oakland: University of California Press, 2019).

8 Michael Lind, The New Class War: Saving Democracy from the Managerial Elite (New York: Penguin, 2020).

9 See, for example, Lee Drutman, “Let a Thousand Parties Bloom,” Foreign Policy (Fall 2019).

10 Lawrence Lessig, Republic, Lost: How Money Corrupts Congress—and a Plan to Stop It (New York: Twelve, 2011).

11 See, most characteristically, Yuval Levin, The Fractured Republic: Renewing America’s Social Contract in the Age of Individualism (New York: Basic Books, 2016).

12 Philippe Schmitter names Henri de Saint-Simon the first modern corporatist. Within Catholic corporatism he highlights René de La Tour du Pin, Pope Leo XIII and Pope Pius XI; within authoritarian corporatism Mihail Manoilescu; and within radical corporatism Léon Bourgeois and Emile Durkheim. See his Corporatism and Public Policy in Authoritarian Portugal (London: Sage, 1975), 9–10. On Schumpeter’s corporatism, see Dale L. Cramer and Charles G. Leathers, “Schumpeter’s Corporatist Views: Links among His Social Theory, Quadragesimo Anno, and Moral Reform,” History of Political Economy 13, no. 4 (1981): 745–71. Thanks to Michael Lind for this reference.

13 Joseph F. X. Sladky, “René de La Tour du Pin & the Renewal of the Social Order,” Crisis, December 9, 2013.

14 See Daniel Kreiss, Prototype Politics: Technology-Intensive Campaigning and the Data of Democracy (New York: Oxford University Press, 2016); Eitan D. Hersh, Hacking the Electorate: How Campaigns Perceive Voters (Cambridge: Cambridge University Press, 2015).

15 See, for example, the MCP-CE 2020 conference, http://mcp-ce.org.

16 Nicola Stokburger-Sauer, S. Ratneshwar, and Sankar Sen, “Drivers of Consumer-Brand Identification,” International Journal of Research in Marketing 29, no. 4 (December 2012): 406–18.

17 Gallup, “Business and Industry Sector Ratings,” August 1–14, 2019.

18 Adrian Vermeule, “Imagine There’s No Congress,” Washington Post, January 11, 2016.

19 Richard V. Reeves and Eleanor Krause, “Raj Chetty in 14 Charts: Big Findings on Opportunity and Mobility We Should All Know,” Brookings Institution, Social Mobility Memos (blog), January 11, 2018.

20 Rebecca Riffkin, “In U.S., 55% of Workers Get Sense of Identity from Their Job,” Gallup, August 22, 2014.

21 Emily Badger and Quoctrung Bui, “Americans Say Their Politics Don’t Define Them. But It’s Complicated,” New York Times, October 12, 2018.

22 Emile Durkheim, The Division of Labor in Society, trans. W. D. Halls (New York: Free Press, 1984), esp. Durkheim’s preface to the second edition. On Durkheim’s corporatism, see Timothy V. Kaufman-Osborn, “Emile Durkheim and the Science of Corporatism,” Political Theory 14, no. 4 (November 1986): 638–59. Thanks to Michael Lind for this reference.

23 On this point, see the research summarized by Anders L. Sønderlund, Thomas A. Morton, and Michelle K. Ryan, “Multiple Group Membership and Well-Being: Is There Always Strength in Numbers?,” Frontiers in Psychology 8, article 1038 (June 2017).

24 Howard J. Wiarda, Corporatism and Comparative Politics: The Other Great “Ism” (Armonk, N.Y.: Sharpe, 1997).

25 Schmitter, 93–94.

26 Schmitter, 96.

27 For an overview, see William F. Shughart II and Diana W. Thomas, “Interest Groups and Regulatory Capture,” in Roger D. Congleton, Bernard Grofman, and Stefan Voigt, eds., Oxford Handbook of Public Choice, 2 vols. (Oxford: Oxford University Press, 2019), 1:585–603. The classic text on pluralism as a system and as a model for analysis is David B. Truman’s The Governmental Process: Political Interests and Public Opinion (1951, second edition 1971), in which the interaction of interest groups with each other, with the public at large, and with the government, is portrayed as being one of the foundations of American democracy.

28 Wiarda, 129.

29 “Modes of Interest Intermediation and Models of Societal Change in Western Europe.”

30 Wiarda, 118.

31 Alexander Hamilton, Federalist no. 35, in The Federalist with Letters of “Brutus”, ed. Terence Ball (Cambridge: Cambridge University Press, 2003),
159–61.

32 Chinoy and Jessia Ma, “How Every Member Got to Congress,” New York Times, January 26, 2019.

33 Nicholas Carnes, White-Collar Government: The Hidden Role of Class in Economic Policy Making (Chicago: University of Chicago Press, 2013).

34 Gallup, “Congress and the Public.”

35 Pew Research Center, “Public Expresses Favorable Views of a Number of Federal Agencies,” October 1, 2019.

36 Elizabeth Magill and Adrian Vermeule, “Allocating Power within Agencies,” Yale Law Journal 120 (2011): 1037–38. On neg reg, see Curtis W. Copeland, Negotiated Rulemaking, Congressional Research Service.

37 Philip J. Harter, “Collaboration: The Future of Governance,” Journal of Dispute Resolution 2009, no. 2 (2009): 418–19.

38 Richard Henderson and Patrick Temple-West, “Group of US Corporate Leaders Ditches Shareholder-First Mantra,” Financial Times, August 19, 2019.

39 Lenore Palladino, “The Economic Argument for Stakeholder Corporations” (Roosevelt Institute Working Paper, New York), 18–19.

40 “Pack the Union: A Proposal to Admit New States for the Purpose of Amending the Constitution to Ensure Equal Representation,” Harvard Law Review 133 (2020): 1049–70.

41 Maurice Glasman, “Yes, the House of Lords Needs Reform. Why Not Create Vocational Peerages?,” Guardian, October 20, 2017.

42 Detlef Jahn, “Changing of the Guard: Trends in Corporatist Arrangements in 42 Highly Industrialized Societies from 1960 to 2010,” Socio-Economic Review 14, no. 1 (2016): 47–71.

43 Most notably John D. Dingell, “I Served in Congress Longer Than Anyone. Here’s How to Fix It,” Atlantic, December 4, 2018. Among many others, see Daniel Lazare, “Abolish the Senate,” Jacobin, December 2, 2014.

44 Timothy Meyer and Ganesh Sitaraman, “It’s Economic Strategy, Stupid: The Case for a Department of Economic Growth and Security,” American Affairs 3, no. 1 (Spring 2019): 3–16.


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