This is Richard Wolff from Democracy at Work responding to another Ask Prof.
Wolff question from our Patreon community,
and this one comes from a member of our Patreon community who identifies as 15 years old and
as a “young revolutionary.” I don't know whether it's a he or a she, nor does it matter,
but I am very happy that a 15 year old person is following our work and asking really good
questions such as this one. The young revolutionary wants to know about corporatism.
Has the United States become corporatist instead of capitalist? My answer is: yes and no—which
is always frustrating, but is not so unusual when you ask a really good, profound question
like this one. So let me briefly respond. First: what is corporatism? Well, it comes from the word
“corporate,” has to do with corporations, and it's a word we use to describe an economy
that is governed by, controlled by, dominated by big corporations. You know, the kind of mega
corporations that are quite familiar to us here in the United States. Companies with
tens or hundreds of thousands of employees. Companies with huge profits and resources.
Often, companies that make many different products across many different countries.
Multi-product, multinational corporations. They have so much money that they are often in
a monopoly position. They become one of the very few making something, and so they can jack up the
prices. We call that “monopoly pricing.” That's not very respectful to the consumer. And they look
upon their workers as interchangeable parts, not all that different from their tools and machines.
They have HR departments to run the workers as if they really were animals. They're companies
that control politicians because they have so much money to throw at the candidates, at the parties,
to pay for lobbyists, to work year-round at the state house, at the congress, and so on.
Companies—big ones—dominating corporate power. That's what corporatism is. Now, how is it related
to capitalism? Here things get murky. The people who mostly talk about corporatism don't like it.
It's a negative word. It is usually used by people who don't think that's a good way to have an
economy organized, who oppose big corporations. And they do so typically and often here in the
United States in the name of capitalism—by which they mean: smaller companies, small businesses,
perhaps a family or an individual who started it. The famous “entrepreneur,” a word that these folks
really like, and they counterpose as the opposite of the big corporation.
The small business is competitive and so delivers products at a competitive price, therefore not
gouging the consumer. They have small numbers of employees, whose names they know and about whom
they care. It's an image of a small capitalism which these folks much prefer. I understand
all of that, and these are indeed different systems. But I would call them all “capitalist.”
Why? Because they have something in common: a relatively small number of people at the top.
The owner, the family that started it, the entrepreneur, or (in the case of the corporation)
the board of directors (a group of usually 15 to 20 people playing pretty much the same role
as the entrepreneur plays). The workers come, are hired, either by the board of directors
or by the entrepreneur. They produce more than they get paid, and the difference is the profit,
and it goes either to the individual entrepreneur who has 10 employees or to the board of directors
of a corporation that has 10,000. So these are different kinds of capitalism,
and I have no problem with anyone who prefers one kind to the other (a preference I share), but I
don't think it's an either-or about capitalism. It's an either-or about different kinds of
capitalism. But now let me take that point a bit further. Where do corporations come from? Well,
in almost every case, they come from a situation where there were competitive capitalists once,
and the competition among them weeded many of them out, leaving a few huge corporations at the end.
When the american automobile industry began, there were 50 car companies
and there ended up being Ford, General Motors, and Chrysler (three of them). There were once
hundreds of cigarette companies and ended up half a dozen. There were once many makers of computers,
there are now relatively few, and on and on and on. Why? Because when competition happens among
small companies, some win and some lose. Some will come up with a better product or a lower price.
Customers go to them. Customers leave the other companies that didn't come up
with a better price or better quality. So, eventually the less successful go out of business.
Their products, their machines, their workers move over to the ones that did succeed.
Many companies become few. The successful competitor absorbs the less successful,
the unsuccessful. What emerges in the end are big mega-corporations, a few or one that does it all.
And all the others have been absorbed. So, the irony here, the problem intellectually,
is that to juxtapose corporatism and small business capitalism misunderstands
that they are different forms of capitalism, and that typically the history of capitalism,
industry by industry, is that the many become the few. Final point: when sometimes big corporations
are destroyed, broken up, by the government, by revolution from below, if you just replace them
with competing small ones, you set in motion the same process that will
end up with corporations and may take a few years. So, the problem here is not that it's,
yes or no, the United States has become corporatist (it has), but that that is
built into the capitalist system, which is why you will find it in so many different capitalist
economies and countries around the world. This is Richard Wolff for Democracy at Work.