Monday, May 23, 2016

It's OK to Be 'Pro-Business' and 'Pro-Corporation,' Silly ^_^

Stuart K. Hayashi

You silly left-wingers think I am a "pro-business" shill for corporations! But I am "pro-market," not "pro-business" or "pro-corporation"!  I am for capitalism, and you mistake capitalism for something we both oppose:  corporatism.  Learn the difference!

That is a frequent rejoinder from libertarians. Marian Tupy of the Cato Institute employed it. Even some non-libertarians, such as the controversial YouTube vlogger Carl Benjamin (better known as "Sargon of Akkad"), have as well.  Some persons hostile to libertarianism, including Ralph Nader, do too.  For some years I employed that rejoinder as well in face-to-face conversations. I do so no longer.  Although I do not go around calling myself pro-"corporatism," I have dispensed with throwing around corporatism as a pejorative. It is unhelpful to apply the term corporatism to taxpayer-funded, governmental assistance to specific corporations at the expense of other businesses.

Yes, Mussolini Called His System "Corporatism," But That's Not Exactly What You Call "Corporatism"
First off, much of the way in which corporatism is used by libertarians and too many Objectivists is misleading. Libertarians often say that corporatism was coined by Benito Mussolini to describe his political-ecosystem system in which specific corporations were given government-enforced monopolistic franchises and cartels. If the government provides favors to multinational corporations like McDonald's or Monsanto, that is ostensively Mussolini's corporatism in action.  Even Robert F. Kennedy, Jr., who has expressed animus toward the Cato Institute, has offered that point on page 194 of this book.

But to say that U.S. government favors to business are forms of "corporatism" reminiscent of Mussolini is misleading. Both types of "corporatism" violate laissez faire, but they are dissimilar enough to place in separate categories.

When Mussolini called his politics "corporatist," he was describing something with important differences from the notion of the government favoring an entity like McDonald's or Monsanto. The "corporations" of Mussolini's corporatism were state-enforced monopolies that were confined to a single nation-state; they are not what one would presently call a for-profit multinational corporation.  Corporatist "corporations" were nominally private but Italians under Mussolini still recognized these entities as largely appendages of the government.

"Corporations" under Mussolini were comparable to electrical utility monopolies, the U.S. Postal Service, the Federal Reserve, and Amtrak. Analogous "corporations" under FDR's New Deal would be the Resolution Finance Corporation, the Federal Deposit Insurance Corporation, and the Tennessee Valley Authority. Also think of the Corporation for Public Broadcasting. Note that none of these are multinational or transnational organizations; because of their quasi-governmental status, they are confined to specific nation-states.

These are also the sorts of organizations that Adam Smith, Thomas Paine, and Andrew Jackson criticized when they spoke unfavorably of "corporations."  They meant large government-enforced cartels against which no independent party could compete legally; they meant guilds out of the Middle Ages, somewhat comparable to modern government employee unions. It is therefore disingenuous when leftists such as Noam Chomsky and Jeet Heer proclaim that Adam Smith's complaints of "corporations" imply that Smith would necessarily denounce multinational for-profit firms such as McDonald's.

 While employees of these organizations might bristle at being called government employees, their institutions cannot easily be confused with multinational corporations in the vein of McDonald's, Monsanto, Solyndra, Tesla Motors, and Goldman Sachs. This is the reason why Mussolini favorably compared his system of government to the New Deal -- a compliment that the architects of the New Deal did not reject.

Mussolini's "corporatism" is therefore distinct from a system where the government favors specific multinational corporations like McDonald's. Both systems are variants of statism, but it is misleading to say that governmental favors for McDonald's and other multinational corporations are an application of Mussolini's "corporatism." That is, if the political economy under Mussolini is what we call corporatism, then U.S. governmental favors to McDonald's and other multinational corporations is not corporatism.

And there is a more fundamental complaint.

Corporatism, As a Pejorative, Implies Modern For-Profit Corporations Are Generally Bad
If your term for a negative phenomenon is "X-ism," your use of X- as the prefix implies that X is the party or entity primarily to blame for the problem. That is even more apparent with the epithet corporatocracy. I say "statism" or "etatism" (actually, I coined governism) because I think that the State is the institution that is to blame for such initiations of the use of force on the part of government employees. Now we have this corrupt system where corporations that buy favors from politicians receive such favors and corporations that refrain from buying favors end up the target of governmental retribution. If we designate this as corporatism, then the implication is that corporations are the institution that is most to blame for the problem. Given that it is the politicians who are extorting favor from corporations, I find it unfair to insinuate that corporations and their owners are the most blameworthy institution in this scenario.

It is for similar reasons that I avoid bandying around scientism. Scientism is allegedly the phenomenon of people inappropriately trying to apply rational and scientific methods to areas of philosophy where reason and science ostensibly do not apply. For instance, if you try to say that facts can clue us in on the morally correct course of action, you are accused of scientism because reason and science supposedly cannot be applied to philosophic topics like ethics. The implication is that scientism amounts to being too sciency and corporatism is being too corporationy. I dispute Steven Pinker on several respects, but he is correct to repudiate scientism as the smear term that it is.

To illustrate, I object to farm subsidies. I do not agree with the farm subsidy program. But suppose the term I used for this phenomenon was "farmerism." If I referred to this oppressive situation as "farmerism," would it not immediately bring to mind the notion that farmers, and not the governmental regulatory apparatus, must be the main focus of blame for the practice?

I use statism because there is too much "State." I suppose one can turn this around on me, and say, "If you use statism, aren't you implying the State is inherently bad? Are you a Murray Rothbard anarchist after all?" I do not think the State is inherently bad. I do, though, think that when the government initiates the use of force, the government/State is the institution that must be looked upon with distrust. I suppose a more specific term would be initiation-of-the-use-of-physical-force-ism.

"Capitalism" Good; "Corporations" Bad?
I am aware of libertarian arguments that corporations are inherently bad. They say that corporations are evil because of the government recognizing that a corporation has limited liability, supposedly meaning that if a corporation's owner damages you and your property, you can only sue the corporation and not go after the owners' personal assets. These libertarians conclude that a corporation is therefore "a creature of the State."   Stefan Molyneux advances this idea. [Old link went here.  --S.H. on 24 Jan. 2018.]

I once fell for those arguments.  Yet it is actually not true that if corporate executives victimize you, you are unable to go after their personal assets in a lawsuit. If justice requires that you not only sue a corporation for its assets, but also seek redress by targeting the corporation owners' personal assets, such methods are available. That is called "piercing the corporate veil." Lawyers have told me that this is a more complicated process. Still, the possibility exists.  As a historical case study, Charles B. Matthews, a cofounder of the Buffalo Lubricating Company, filed a lawsuit against the Vacuum Oil Company (a subsidiary of Standard Oil) and filed personal lawsuits against Vacuum shareholders John D. Archbold and Henry H. Rogers.  Matthews did not win those suits, but it was entirely legal for him to attempt to lay claim to Achbold's and Rogers's personal assets as he also sued their corporation. I do not think the complications under the present legal system are sufficient reason to judge corporations as inherently violent institutions.

While I do not go around calling myself "pro-corporatism," I am unabashedly pro-corporation.

Moreover, if one is a libertarian who has general distrust for big institutions, then it does not make sense to assume that the word capitalism necessarily comes closer to describing the laissez-faireist position than corporatism does. Capitalism was coined as a pejorative in a manner very similar to the way in which libertarians and leftists apply corporatism as a pejorative. Contrary to Thomas J. DiLorenzo's inaccuracy (page 1 of this book), it was not Karl Marx, but a Marxist contemporary of Friedrich Engels' -- Werner Sombart -- who coined capitalism (see page 237 of Fernaud Braudel's Civilization and Capitalism volume 2: The Wheels of Commerce).

Sombart intended for the expression to be an insult. He said that people who agreed with him were "socialist" because they were social, and "communist" because they were for the "community" in their "commune." He then set up the alternative as a foil to that. If you disagree with Sombart, you are for "capitalism," meaning money-ism. Instead of being social, your priority is money and the factory machinery that the money purchases; you prioritize that over your fellow human beings, the workers. And who held all the capital? Big banks, big institutions, big corporations. In Sombart's time, to rail against "capital" was the same as to rail against "corporations." If you called yourself a capitalist, it meant you sided with capital over human beings, just as now libertarians and leftists tell us that to be a corporatist is to side with multinational corporations over human beings.

It is a testament to the horse sense of the American people that, rather than be cowed and intimidated by the insult capitalist, they took it as a badge of honor. Sombart's name-calling backfired. Americans rejected the idea that socialism is synonymous with "social" and that communism is synonymous with "community." Hence, even Americans who are actually rather hostile to the free market, such as Bill O'Reilly, consider socialist to be demeaning and think it is preferable to be pegged a capitalist.

That Americans are less intimidated by the term capitalism than corporatism, though, does not change that when you look at the roots of these words, capitalism does not have a meaning more suited to the anti-corporate libertarian's ideology than corporatism does.  That is why the Rothbard-influenced anarchist Kevin Carson pronounces himself a "free-market anti-capitalist."

Silly, It's OK to Be "Pro-Business"  😊
For reasons comparable to their contrived capitalism-corporatism distinction, I also hear libertarians defensively propound, "Stop calling me 'pro-business' or 'pro-corporation'!  I am 'pro-market'!  Get it straight!"  Steven Horwitz of Bleeding Heart Libertarians does this, as does the Cato Institute's David Boaz.  Mark Ehrenfeld says that University of Chicago economist Luigi Zingales thinks of President Donald Trump's policies as pro-business rather than pro-market. Even the Evonomics website, which is not friendly to laissez faire or libertarians, says this.

Again, these pundits mean that to be "pro-business" and "pro-corporation" is for the State to give preference to some businesses and corporations over others, subverting laissez faire by the imposition of government regulations, in the form of tariffs and tax-funded subsidies. But to refer to these measures as pro-business and pro-corporation is misleading. When the State affords privileges to some businesses and corporations, it forcibly detracts from the well-being of other businesses and corporations.

As a case study, one might say that it was anti-free-market but "pro-business" when George W. Bush and Barack Obama each placed tariffs against foreign steel.   Supposedly these U.S. Presidents were pro-business in how they advantaged domestic steel producers and domestic steelworkers unions. But they certainly were not pro-business in helping international steel producers. Insofar as international steel producers were concerned, such measures were anti-business.

Moreover, it was not preferential treatment toward the domestic U.S. businesses that consume steel, such as construction companies, which now had to pay higher prices for steel than they otherwise would. U.S. employees of steel-using companies outnumber U.S. steelworkers 50 to 1. As far as these U.S.-based steel-using firms are concerned, the steel tariffs are anti-business and anti-corporation. Therefore, it is not pro-business or pro-corporation for the State to give preferential privileges to some firms over others.

Suppose that someone got away with stealing because he was the governor's nephew. The governor's nephew would be receiving a privileged status from the State. Would it be accurate to say that the State's special treatment of the governor's nephew was "pro-human," because the nephew is a human, and therefore a human received special treatment? No, it would not be pro-human, because that special treatment allowed the nephew to victimize another human.

By the same token, government regulations that handicap some businesses and corporations over others -- handling them unequally under the law -- is not pro-business. To maintain a free market -- to have all businesses and corporations treated equally under the law -- is pro-business and pro-corporation, just as punishing murderers is pro-human.

Proclamations such as "I'm pro-capitalism and pro-market, not corporatist or pro-business or pro-corporation; learn the difference!" are not worth it. There is nothing in those sentiments to appreciate. I am liquidating the cliche. To value free markets and capitalism is largely to value business and corporations.

On November 30, 2016, this was updated to include the example of Luigi Zingales calling Donald Trump "pro-business" bu not "pro-market." On January 24, 2018, I replaced a link to a quotation from Stefan Molyneux. I should return to the topic of that in the future, because of its implications.