Corporatism in America Part III
The Decline and Fall of American Corporatism
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WWII may have been the height of Corporatism, but the end of the war did not signal a drop back to pre-NRA levels. In fact, it took many years to unravel the regulations and restrictions put in place during the corporate years.
Libertarians often argue that in fact we may be becoming less free and more state run today. I don't think this is the case. Over the 50 years following the union-peak (34% unionized, still a far cry from Sweden's 80-90%) there was a matching fall in regulation. Corporatist restraints slowly uncoiled.
Regulatory timeline:
1940s: After NIRA is overturned, antitrust law and policy becomes "pro-competitive" and for low-price rather than fair-price.
1945: End of major price controls, output controls, nationalization and other firm controls. Some nationalization left in place, along with regulation and some price controls.
1947: Taft-Hartley reinstated the right to not join a union, the right to fire unionized workers and some other basic rights in the labor market.
Korean War: A return to price controlling and regulation during wartime.
1961: JFK still used his powers to force the hand of the steel industry, on the wage front explicitly and on the price front through threats. No corporation felt safe firing unionized workers for fear of this kind of government intervention.
1970s controls: Nixon and Carter impose price controls, Nixon as part of ending gold-backing of Bretton Woods and then "due to the oil crisis"; Carter as part of trying to keep gas cheap for consumers. These were the last national-level price controls to be explicitly enacted. There are some calls for healthcare-related price controlling but there is no longer unanimous support for such things.
1970s deregulation: Ford proposes deregulating the airline industry, becomes law under Carter (ADA); Deregulation in utilities (PURA and NGPA); ICC ended with MCA; Deregulation (and breakup) of AT&T.
1981: Reagan signals to firms that they can fire unionized workers by himself firing the striking government airline workers.
1992: Caterpillar hires replacements for (fires) UAW members after a 5 month strike.
Theory and public opinion (summarized from the Cato article):
1. Competitive pricing is understood, above-competition prices cause unemployment. This comes with changes to anti-trust, the neoclassical wave in economics etc.
2. Union political power is recognized as having its own problems. Hayek and Friedman and others weigh in.
3. Public choice economics takes this to the next stage, on the economic side: unions do not create offsetting productivity to pay for higher wages but just collect rents; on the political side: rent-seeking means consolidation of power and garnering of public funds for private use. The main beneficiaries of regulation turn out to be the regulated companies (which explains why they were always the ones fighting for it!).
4. The old assumptions about competition leading to conglomeration fail to emerge.
5. Unions are only useful with the rest of corporatism in place-- when prices are controlled to allow for union wages, for example. Unions remain interesting only to public employees.
What about intra-corporate questions:
Unocal v. Mesa Petroleum (see also "Revlon v. McAndrews & Forbes Holdings, Inc.") -- can a director of a corporation reject a takeover because the takeover would be bad for workers, even if it is good for shareholders (or what about, just because he feels like it)? Isn't that intra-firm and should be left to the private actors to battle it out? Cato represents this case as anti-corporatist because the director must do what is in the interests of shareholders, of the firm, rather than the firm being subjected to labor control. I'm not buying it.
-----------------------------------------------------------
WWII may have been the height of Corporatism, but the end of the war did not signal a drop back to pre-NRA levels. In fact, it took many years to unravel the regulations and restrictions put in place during the corporate years.
Libertarians often argue that in fact we may be becoming less free and more state run today. I don't think this is the case. Over the 50 years following the union-peak (34% unionized, still a far cry from Sweden's 80-90%) there was a matching fall in regulation. Corporatist restraints slowly uncoiled.
Regulatory timeline:
1940s: After NIRA is overturned, antitrust law and policy becomes "pro-competitive" and for low-price rather than fair-price.
1945: End of major price controls, output controls, nationalization and other firm controls. Some nationalization left in place, along with regulation and some price controls.
1947: Taft-Hartley reinstated the right to not join a union, the right to fire unionized workers and some other basic rights in the labor market.
Korean War: A return to price controlling and regulation during wartime.
1961: JFK still used his powers to force the hand of the steel industry, on the wage front explicitly and on the price front through threats. No corporation felt safe firing unionized workers for fear of this kind of government intervention.
1970s controls: Nixon and Carter impose price controls, Nixon as part of ending gold-backing of Bretton Woods and then "due to the oil crisis"; Carter as part of trying to keep gas cheap for consumers. These were the last national-level price controls to be explicitly enacted. There are some calls for healthcare-related price controlling but there is no longer unanimous support for such things.
1970s deregulation: Ford proposes deregulating the airline industry, becomes law under Carter (ADA); Deregulation in utilities (PURA and NGPA); ICC ended with MCA; Deregulation (and breakup) of AT&T.
1981: Reagan signals to firms that they can fire unionized workers by himself firing the striking government airline workers.
1992: Caterpillar hires replacements for (fires) UAW members after a 5 month strike.
Theory and public opinion (summarized from the Cato article):
1. Competitive pricing is understood, above-competition prices cause unemployment. This comes with changes to anti-trust, the neoclassical wave in economics etc.
2. Union political power is recognized as having its own problems. Hayek and Friedman and others weigh in.
3. Public choice economics takes this to the next stage, on the economic side: unions do not create offsetting productivity to pay for higher wages but just collect rents; on the political side: rent-seeking means consolidation of power and garnering of public funds for private use. The main beneficiaries of regulation turn out to be the regulated companies (which explains why they were always the ones fighting for it!).
4. The old assumptions about competition leading to conglomeration fail to emerge.
5. Unions are only useful with the rest of corporatism in place-- when prices are controlled to allow for union wages, for example. Unions remain interesting only to public employees.
What about intra-corporate questions:
Unocal v. Mesa Petroleum (see also "Revlon v. McAndrews & Forbes Holdings, Inc.") -- can a director of a corporation reject a takeover because the takeover would be bad for workers, even if it is good for shareholders (or what about, just because he feels like it)? Isn't that intra-firm and should be left to the private actors to battle it out? Cato represents this case as anti-corporatist because the director must do what is in the interests of shareholders, of the firm, rather than the firm being subjected to labor control. I'm not buying it.
Labels: corporatism, NRA
posted by liberty at
4:34 PM
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