What is corporatism?
Corporatism is an economic system in which the state organizes major economic interests, typically business, labor, and sometimes agriculture, into formally recognized groups that negotiate and coordinate economic policy together, rather than leaving coordination to markets or open competition among many independent actors.
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Core tenets
- Organized interest groups
- Economic actors are organized into a limited number of formally recognized sectoral bodies, such as a single national business federation or labor union, rather than many competing independent groups.
- State-sanctioned negotiation
- These organized groups negotiate wages, prices, and economic policy together, often with the state acting as a convening or overseeing party.
- Coordination over pure competition
- Emphasizes negotiated coordination among organized interests as the primary mechanism for economic decision-making, rather than relying solely on market competition.
How it works in practice
Corporatist arrangements have varied from state-imposed structures under authoritarian governments to voluntary tripartite bargaining in democratic welfare states.
- Tripartite bargaining
- Government, organized business, and organized labor negotiate wages, working conditions, and economic policy together, a structure common in several European welfare states.
- State-sanctioned sole representation
- In more authoritarian corporatist systems, a single state-recognized body is designated to represent an entire sector, with independent competing organizations banned.
Common variants
- Societal corporatism
- Organized interest groups negotiate voluntarily within a democratic system, common in several Northern European welfare states.
- State corporatism
- The state imposes and controls a single official organization per sector, historically associated with authoritarian governments in the early twentieth century.
What it is often confused with
Corporatism is a term about how economic interests are organized and negotiate, and is unrelated to the everyday use of corporate to mean a large private business; corporatist systems can be strongly regulated and are distinct from unregulated private enterprise.
Criticisms and debates
Criticism of corporatism centers on whether formally organizing interests into a small number of recognized groups serves the broader public or mainly the organized groups themselves.
Pluralist critique
Argues that formally recognizing only a limited number of organized groups excludes smaller or unorganized interests from the negotiating table entirely, unlike a more open, competitive system.
Response: Defenders of societal corporatism argue that organized negotiation among major interests can produce more stable and predictable economic outcomes than fragmented, purely competitive bargaining.
Authoritarian-association critique
Points to state corporatism's historical use by authoritarian governments to suppress independent labor organizing by replacing it with a single state-controlled body.
Response: Defenders of societal corporatism argue this critique applies specifically to state-imposed corporatism, not to voluntary tripartite bargaining as practiced in democratic welfare states.
Historical examples
- Austrian social partnership, postwar era
- A voluntary tripartite bargaining system among government, business, and labor federations, a widely cited example of societal corporatism within a democracy.
- State-organized sectoral bodies, early twentieth century Europe
- Several European governments organized industry into state-controlled corporations by sector during this period, banning independent labor unions, a defining historical example of state corporatism.
Sources
- 1.Schmitter, Philippe C. Still the Century of Corporatism? 1974.
- 2.Stanford Encyclopedia of Philosophy. Political Legitimacy.
- 3.Encyclopaedia Britannica. Corporatism.