Investigations into “Universalist Corporatism” (Pt. I of II)

Bogumil,

I did some research over the past few days to investigate the philosophy of Othmar Spann and the relationship of his ideas with Gottfried Feder. I am convinced that my conclusions here are accessible enough for anyone interested in the history of Corporatism. The best way to comprehend Spann’s connection to the ideas of Feder is to investigate the dynamics of Universalism as a philosophical concept. The ideas surrounding Universalism were described in great detail throughout Spann’s book, Der Wahre Staat (The True State), where he contrasted it with “Individualism.” Individualism was defined as any worldview with inclinations toward conceiving the nation in atomistic terms.

Universalism advocated for the belief that nothing can be evaluated individually in relation to the whole but solely as the whole itself. The Totality (or “Society”) should not be understood as a collection of autonomous individuals who have no relation to each other. Rather, it is a community of estates whose social relations are bound by cooperation than competition. Within its conception of Corporatism, the nation is organized as an ‘organic body’ of “corporate cells” (which is a more accurate term for describing these ‘occupational estates’) controlled and operated by different professions. The government is led by talented, experiences officials who direct the administration of the national economy through those corporate cells.

The “corporate cell” is arguably the best way to grasp how Universalism was capable of straddling between Catholic Corporatism and Fascist Corporatism. In essence, if the nation is defined in Universalism as an organic body, then these corporate cells exist as decentralized polities scattered throughout the nation. These corporate cells carry out specific functions that sustain the activities of the state (the ‘brain’) and the economy (the ‘heart’). The inclination toward decentralization is not an aspect of Fascist Corporatism but one associated with Catholic Corporatism. Given Spann’s frequent invocations of the Catholic faith throughout his writing, it can be argued that this decentralization is related to the concept of Subsidiarity which was emerging in the wake of Pope Leo XIII’s encyclical, Rerum Novarum. Yes, Universalism’s emphasis on “distributive justice” has its origins in Rerum Novarum.

While it is understandable that he would put Liberal Capitalism as an Individualist worldview, he also framed Scientific Socialism as being an Individualist worldview as well. Outside of Scientific Socialism, Spann believed that most Socialisms represent a compromise between the Universalist and Individualist worldviews. This is interesting because when he became attracted to Pan-Germanic Socialism, he saw the ideology as a vehicle through which his Universalist philosophy could be realized within a unified German-speaking world. It is known in the historical record that Spann was supportive of Pan-Germanism, explaining why he was willing to assist in efforts to redefine Pan-Germanic Socialism as a “Pan-Germanic Corporatism.”     

In Types of Economic Theories, Spann outlined the forms in which Universalism could take if realized and the extent of its influence on Pan-Germanic Socialism through Feder. Aside from the “organic conception of the State” in Der Wahre Staat, the State could also assume a Catholic Integralist conception in which legal jurisprudence and governmental policies are parallel to the Magisterium, the teaching authority of the Catholic Church. Another is the “Feudal conception of the State” in which the State could resurrect the characteristics of the Feudal order which Liberal Capitalism abolished. As one would surmise from what I have described thus far, Spann was an adherent of the German Romanticist and Idealist tendencies that predated the 20th century.       

As for Feder, there is a brief section in Types of Economic Theory where Spann discussed about Pan-Germanic Socialism as one of the then-emerging Socialist ideologies within the German-speaking world. He evaluated Feder’s ideas about the nationalization of banking, the abolishment of Interest Rates, and the issuance of Interest-free financial instruments to finance the State. I should note that these ideas were being mentioned in relation to a monetary policy debate concerning Bimetallism and Chartalism. Since his passage on Pan-Germanic Socialism overlaps with this later discussion on monetary policy, Spann stated that Feder was affiliated with the “banking principle” of Chartalism and the State Theory of Money. Feder and other adherents of the “banking principle” are opposed to Bimetallism and the Quantity Theory of Money, what Spann himself referred to as the “currency principle.”

While there is evidence in Spann’s language that he was sympathetic to the “banking principle,” there also appears to be a bit of uncertainty from him regarding its feasibility. Since the “banking principle” advocates wanted to eliminate Interest Rates and nationalize the banking sector, Spann raised the question of whether the Inflation/Deflation Rate would still exist in a Universalist state if it were to adopt such monetary policies. It is an understandable concern which I feel deserves mention here.

Imagine for a moment that a Universalist state exists somewhere in the world, and it decides to nationalize its banking sector, allowing the central bank to control the money supply of its currency and limiting the ability of the banks to issue loans to potential borrowers. When that state decides to let the central bank expand the money supply without at 0% Interest, would the increased circulation of money cause Inflation?  If there is going to be Inflation, would there also be Currency Depreciation (the value of the currency decreases)? Can we make similar arguments about a contraction of money supply creating Deflation and in turn Currency Appreciation (the value of the currency increases)?  

Spann stated that Feder and the other “banking principles” believe that the elimination of Interest Rates would also result in the elimination of Inflation/Deflation. They believed that expansions of the money supply would not cause an increase in prices vis-à-vis Currency Depreciation caused by Inflation. Their solution called for “Bills of Exchange” where money expansion is negotiated over the short-term as a binding agreement. A Drawer (the “Lender”) issues a Bill of Exchange to the Drawee (“Borrower”), who must pay an amount of money listed on the document intended for the Payee. The Payee is a third party who receives the payments from the Drawee, the Drawer acting as an intermediate. This Bill of Exchange has to be paid on demand or on a fixed date. For the latter fixed date, the Bill of Exchange has a “Maturity Date” in which the Drawee must pay the Drawer the amount listed on the instrument. These Drawers, Drawees and Payees in a Universalist state will predominately consist of financial institutions, these corporate cells, and the enterprises manufacturing goods and services. We can expect the roles of Drawer, Drawee and Payee to alternate under different contexts, but the process remains constant.   

There is nothing innovative or revolutionary about the use of Bills of Exchange. They are only practical for international trade, commerce and banking. Such negotiable instruments are never meant for an Individual nor are they suitable for a State as part of a monetary policy. They also do not eliminate Inflation/Deflation Rate as a factor, nor do they guarantee an absolute removal of Interest Rates (any Bill of Exchange may include a fixed Interest Rate). At best, we are still dealing with a fiat currency issued by a financial system that is still working with Kapital and Schuld. The key differences that distinguish the “banking principle” from the “currency principle” are State control over the money supply and the abandonment of the Gold Standard.

Signed,
-DAH  

PS: Given the multiplicity of different political-economic systems within our respective areas of research, I feel that I should create charts depicting a hierarchy of different ideological models of political-economic systems. If I get a chance to work on that, I will post them on my Blog and share them here.



Categories: Philosophy

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