The Third Place: On “Council States” and “Corporate States”

In The Third Place (1st Ed.) as well as The Work-Standard (2nd Ed.), every Entry is written from the position that the nation adopting the Work-Standard is not a “Corporate State.” Unlike the Council State, which represents the political system of Pure Socialism, the Corporate State is the political system of most forms of “Corporatism.” Corporatism is the economic ideology that envisages the national economy being organized specifically around a constellation of corporate bodies representing various professional interests.

For most conceptions of Corporatism in the State of Total Mobilization, there is “Organized Labor” and the there is the “Business Community,” with the true Corporate State acting as the intermediate. When there is a dispute between Organized Labor and the Business Community, it is in the interests of the Totality that the Corporate State find the best-possible response to resolving the dispute. Sometimes, the Corporate State may support Organized Labor. And in another instance, the Corporate State might decide on favoring the Business Community instead.      

There are always two distinct variants of Corporatism that will always be mentioned in any study of the economic ideology, the Social Corporatism of “Tripartism” (alternatively referred to as “Tripartitism”) and the State Corporatism of “Fascism.” It is important to understand that when certain Social-Democrats and Christian Democrats in European Parliamentary Democracies are advocating in favor of Corporatism, they are referring to Tripartism. When actual Fascists are advocating for Corporatism, what they actually mean is State Corporatism. And as far as this Author is concerned, there are two key differences between Tripartism and Fascism’s applications of Corporatism.

In Tripartism, a Parliament acts as the mediator between Organized Labor and the Business Community. This was at one point the arrangement upheld by Social-Democrats and Christian Democrats during the height of Bretton Woods. After the Death of Bretton Woods, Organized Labor began to be supplanted by the Fraction-Reserve Banking System, the financial markets, and the privatized commercial banks. Where Fascism differed was that it made the Corporate State as a political authority higher than that of Organized Labor and the Business Community. There is to be no financial markets and privatized commercial banks, not to mention a Fractional-Reserve Banking System, supplanting the role of Organized Labor.   

Those who have read The Work-Standard will recall that arguments were posited by this Author, who insisted that America is more far compatible to Pure Socialism than Corporatism. Given the manner in which American Federalism was organized by the Framers of the Constitution and the Federalist Party in particular, the foundational groundwork was already laid for anyone willing to adopt any form of Pure Socialism at the Federal government. Even now, I remained adamantly convinced that Alexander Hamilton was the one who laid those foundations, and there clues in The Federalist Papers where he was wondering whether Corporatism has any place in the American Way of Life.

When he was not writing about Federal economic and taxation policies, Hamilton sought to posit the obscure question of whether any Federalist conception of America should be a Council State or a Corporate State. If the old Federalist Party did lay the foundations for these United States to turn the Federal government into a Council State, then the question of why the alternate route of Corporatism was rejected. In The Federalist Papers, the subject of Corporatism was discussed in relation to the broader context of taxation policy in Federalist Paper No. 35 (“The Same Subject Continued Concerning the General Power of Taxation”). Hamilton addressed the proposal of the Federal government adopting Corporatism in response to the Anti-Federalists, whom they believed that the number of Representatives in the House of Representatives would not be enough to delegate in the interests of all Professions and Social Ranks. The Anti-Federalists believed that applying Corporatist principles to the Federal government would enable the House of Representatives to have to promote “Class Collaboration” because all Professions and Social Ranks will be accounted for among all constituents.

Hamilton’s discussion of Corporatism in Federalist Paper No. 35 reads as follows:    

“One which, if we may judge from the frequency of its repetition, seems most to be relied on, is, that the House of Representatives is not sufficiently numerous for the reception of all the different classes of citizens, in order to combine the interests and feelings of every part of the community, and to produce a due sympathy between the representative body and its constituents. This argument presents itself under a very specious and seducing form; and is well calculated to lay hold of the prejudices of those to whom it is addressed. But when we come to dissect it with attention, it will appear to be made up of nothing but fair-sounding words. The object it seems to aim at is, in the first place, impracticable, and in the sense in which it is contended for, is unnecessary. I reserve for another place the discussion of the question which relates to the sufficiency of the representative body in respect to numbers, and shall content myself with examining here the particular use which has been made of a contrary supposition, in reference to the immediate subject of our inquiries.”

What Hamilton genuinely thought about Corporatism was that it was a far-fetched promise that sounded too good to be true. In his own words, he felt that it was unrealistic and impractical for any serious application by the Federal government. For unlike the Council State, in a Corporate State, everyone from the different Professions and Social Ranks are expected to achieve “Class Collaboration.” Class Collaboration was the very thing that made Corporatism an economic ideology distinct from that of Capitalism and Socialism. Everyone from every Profession and Social Rank are expected to vote in the interests of their own Profession or Social Rank, as if there can be no compromise or dissent among all members whatsoever.

But what happens if certain members decide to dissent against their own Profession or Social Rank and decide to support others from another Profession or Social Rank? What then becomes of Class Collaboration when there is a real and genuine division between different Professions and Social Ranks? What can be said about those who decide to go against the interests of their own Profession and Social Rank and decide supporting those from another Profession and Social Rank?  

“The idea of an actual representation of all classes of the people, by persons of each class, is altogether visionary. Unless it were expressly provided in the Constitution, that each different occupation should send one or more members, the thing would never take place in practice. Mechanics and manufacturers will always be inclined, with few exceptions, to give their votes to merchants, in preference to persons of their own professions or trades. Those discerning citizens are well aware that the mechanic and manufacturing arts furnish the materials of mercantile enterprise and industry. Many of them, indeed, are immediately connected with the operations of commerce. They know that the merchant is their natural patron and friend; and they are aware, that however great the confidence they may justly feel in their own good sense, their interests can be more effectually promoted by the merchant than by themselves. They are sensible that their habits in life have not been such as to give them those acquired endowments, without which, in a deliberative assembly, the greatest natural abilities are for the most part useless; and that the influence and weight, and superior acquirements of the merchants render them more equal to a contest with any spirit which might happen to infuse itself into the public councils, unfriendly to the manufacturing and trading interests. These considerations, and many others that might be mentioned prove, and experience confirms it, that artisans and manufacturers will commonly be disposed to bestow their votes upon merchants and those whom they recommend. We must therefore consider merchants as the natural representatives of all these classes of the community.”

Hamilton thought that the different Professions and Social Ranks needed somebody else to delegate at the behest of them from a much higher level of political authority. In the context of the Federal government, he was expecting that there would be a group of people determined to go beyond the special interests of different Professions and Social Ranks and delegate on behalf of the Totality at the House of Representatives. The best possible candidates of his time were the “landholders” (those with Property), “merchants” (those from the different Economic Sectors of the US economy), and the “learned professions” (namely, the lawyers). He thought that they would try to become the most neutral and least conflicted, making them the most likely to govern in the interests of the Totality outside of the House of Representatives. But even then, Hamilton still had his own doubts about these three groups:

“But where is the danger that the interests and feelings of the different classes of citizens will not be understood or attended to by these three descriptions of men?

Will not the landholder know and feel whatever will promote or insure the interest of landed property? And will he not, from his own interest in that species of property, be sufficiently prone to resist every attempt to prejudice or encumber it?

Will not the merchant understand and be disposed to cultivate, as far as may be proper, the interests of the mechanic and manufacturing arts, to which his commerce is so nearly allied?

Will not the man of the learned profession, who will feel a neutrality to the rivalships between the different branches of industry, be likely to prove an impartial arbiter between them, ready to promote either, so far as it shall appear to him conducive to the general interests of the society?”

One has to wonder whether Hamilton, when writing Federalist Paper No. 35, was counting on the American people as a Totality to transcend the petty differences of their own Professions and Social Ranks and to seek Solidarity as Americans first and foremost. Under the Work-Standard, the notion of “Class,” of basing people’s status in a nation around how much Kapital they have, will be superseded by the idea of basing people’s status on how much Arbeit they did. The distinction between the Social Ranks is reflected not on the basis of wealth in service to the Self but solely on that of achievement in service to the Totality.  

“There is no part of the administration of government that requires extensive information and a thorough knowledge of the principles of political economy, so much as the business of taxation. The man who understands those principles best will be least likely to resort to oppressive expedients, or sacrifice any particular class of citizens to the procurement of revenue. It might be demonstrated that the most productive system of finance will always be the least burdensome. There can be no doubt that in order to a judicious exercise of the power of taxation, it is necessary that the person in whose hands it should be acquainted with the general genius, habits, and modes of thinking of the people at large, and with the resources of the country. And this is all that can be reasonably meant by a knowledge of the interests and feelings of the people. In any other sense the proposition has either no meaning, or an absurd one. And in that sense let every considerate citizen judge for himself where the requisite qualification is most likely to be found.”

The question that deserves to be asked with regard to Corporate States should be the political-economic governance of different Professions and Social Ranks within any conception of Corporatist economy. Does everyone from every Profession and Social Rank tend to vote favorably of their own Profession or Social Rank? Is it impossible for people from the same Profession and Social Rank to instead to support people from another Profession or Social Rank? Would Class Collaboration fall apart if the people from a particular Profession and Social Rank are divided over any given issue affecting the Totality?

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