Samuel Gregg

The Commercial Society

The tendency of bureaucracies to associate the promotion of their own interests with those of the state is neatly captured in Montesquieu's observations about taxation:

The public revenues are a portion that each subject gives of his property, in order to secure or enjoy the remainder. To fix these revenues in a proper manner, regard should be had both to the necessities of the state and to those of the subject. The real wants of the people ought never to give way to the imaginary wants to the state. Imaginary wants are those which flow from the passions and the weakness of the governors, from the vain conceit of some extraordinary project, from the inordinatet desire of glory, and from a certain impotence of mind incapable of withstanding the impulse of fancy. Often have ministers of a restless disposition imagined that the wants of their own mean and ignoble souls were those of the state.

It follows that those who head an employers' federation or a peak labor organization will often have considerable incentives to resist anything that might diminish their immediate relevance or power. This might include labor and business competition from abroad, the importation of new technology that allows certain tasks to be done faster and with less direct human input, not to mention new ideas that have the potential to replace an industry (such as typewriter manufacturing) or entire group of workers (such as typewriter repairmen) with another (such as computers and computer technicians). All such innovation and change is integral to the value that commercial society attaches to creativity and liberty of commerce. By contrast, neo-corporatist organizations tend to view such developments as a threat to their own existence. Nor, it should be added, do those who work in neo-corporatist organizations have any incentive to assist the unemployed. Under neo-corporatist arrangements, the unemployed are disenfranchised. The very nature of corporate representation means that they have no voice in workers' councils, chambers of industry, or trade unions.

A more insidious distortion introduced by neo-corporatist arrangements for the workings of commercial society is that of accountability. In commercial society, market competition and the need to make profits creates accountability at every level insofar as employers and employees who fail to perform are priced out of the market. By contrast, corporatism is very weak when it comes to the question of accountability. Instead of stressing accountability for performance, corporatism emphasizes avoidance of conflict and the delegation of power to decision-making bodies focused upon building consensus rather than doing what is necessary for those they purportedly represent. Under such arrangements, both trade union and business leaders can avoid accountability by stressing to their members and shareholders that they have a responsibility to the national interest, or that they have no choice but to agree to the demands of the state authorities, or no option but to abide by arrangements negotiated by business, union, and government leaders without consulting their respective constituencies.

Corporatism's accountability deficit points to another problem facilitated by corporatist tendencies: corruption. The public choice economist Gordon Tullock has concluded that corruption usually amounts to the state 'taking action, not for its ostensible reason [i.e., the common good], but for the secret reason of private benefit—i.e., one pretends to favor the public interest but is in fact favoring his own pocketbook.' Though corruption will exist in every economic system as long as human beings are capable of choosing evil, corporatism creates tremendous opportunities for corruption.