The Problem with Corporatism in California (and Beyond)

Why We Have Dysfunctional Governance

In just four years time, the Olympic Games are coming to Los Angeles. Now, there’s a prospect! After seeing the lengths to which the Chinese and Russians went in 2008 and 2014 respectively to potemkinize their societies for foreign visitors, one wonders what the City of Angels is going to whip out of the hat in 2028. Whatever it is going to be, they had better get cracking, because the Golden State is not faring well.

Deep in his presidential campaign for November 2028, will Gavin Newsom have pulled his finger out by then, or will he be too embroiled in a street fight with a Vance or a Gabbard over the biggest political prize the Republic has to offer? Of course, outsourcing Olympic events to satellite settlements and reachable locations across Southern California will be to no avail, because whatever ails Los Angeles has metastasized across the entire state.

We don’t need to delve into a list of the symptoms. They are well known to anyone reading this post. The homeless industrial complex, net out-migration, mass illegal in-migration, open drug scenes, rising violent crime, collapsing educational outcomes, rocketing costs of living, mounting tax burdens, polarizing wealth inequalities, disappearing middle class, latifundization, techno-feudalism, social demoralization, civil order breakdowns. This social nightmare might be visited only upon tranches of the population and experienced unevenly across the state’s demographic landscape, but they are real. Nevertheless, we need to look deeper than these problems. They are only symptoms of a cause.

So what is the cause? Too complicated to exhaust in this post, but what we can do is to take the first steps to understanding the political aspect of the problem. That problem is corporatism.

Put out of your mind any idea of the ‘corporate state’, where government is simply captured by big business, banks, or some other entity of finance capital. Those things are in the mix, but they are not corporatism. Corporatism is a practical architecture of governance that formalizes the involvement of organized interest-groups in political decision-making. This should not be confused with mere interest-group pluralism, where lobbyists petition, advise, and pressure elected officials and public administrators to make favourable decisions. In contrast, corporatist governance actually hands over decision-making and executive functions to interest groups directly, with formal democratic government stepping back into a hands-off or ‘arms length’ position, usually retaining control of finance but ceding executive delivery to the interest-groups.

We really have to get to grips with the reality that many of the public services that have previously been delivered by government departments accountable directly to elected representatives are now delivered by NGOs, non-profits, charities, etc., over which there is no discipline or control exercised either by the electoral process or the market-mechanism. These entities are most commonly funded from the public purse, obtain access to this purse by bidding for contracts from the city, and then all-too-often contribute subsequently to the re-election campaigns of the same elected officials who awarded the contracts. No problems envisaged there then!

Understanding corporatism and its growing role in western societies in general is absolutely essential at the current conjuncture, because so much of what we are witnessing in terms of political, economic, and social disfunction can be traced back to corporatist decision-making structures that have grown around our governance superstructure like so much limescale on a kettle element. These structures bypass and obviate our democratic institutions and processes that usually enable versatile and effective political responses to strategic crises, at least in the long run.

The disasterous case of San Fransisco is illustrative. A longstanding visual in and around the political scene of the Bay Area, Tony Hall ascribes the problems plaguing that beleaguered city to “the usage of non-profits, non-profits that are indiscriminate and answerable to nobody”. After a very long career in public administration reaching back to the 1960s, Hall has drawn attention to the 60 non-profits that handle what has been euphemized as the ‘homelessness’ problem in San Fran. With 5,000+ non-profits now exercising governance functions in the city, and a budget that has grown five-fold over the last two decades from just under $3 billion to the current $15 billion, while the population has fallen in the same period, we have so ask ourselves some serious questions about who is actually governing and how responsive to the needs and dissatisfactions of the population those governing entities actually are (See video below).

When you get into it, this concept of corporatism really does encapsulate so much of what we are experiencing in the United States and beyond, in terms of how our governments have become so deaf and unresponsive to the needs of the various populations to the extent that it is almost impossible for them to act in accord with the wishes of the generality, even if they wanted to.

This corporatism concept is a very useful place from which to begin to comprehend what needs to be done, in order to move forward.

Understanding and identifying corporatism is also important for recognizing how our macro-political problems are sometimes incorrectly misdiagnosed in a way that will only lead us into comforting, familiar, but ineffective, analyses and conclusions. For example, dysfunctional organisation is too often laid incorrectly at the door of ‘socialism’, an error that is neither perspicacious nor helpful. Whatever you might think of socialism, either as concept or historical reality, corporatism is worse. Neither fish nor fowl, corporatism is sneaky. It has no colour. Like natural gas, it has no odour. It has no hagiographic figures nor any great texts, and it has no doctrines or principles to absorb. It is no ideology, and it is no political system, but a structure of decision-making power that emerges practically when given conditions arise within the capitalist mode of production.

What one finds in the history of long wave business cycles – e.g. Kondratieff waves – is that periodic crises in capital accumulation engender a retreat from decreasingly effective laissez faire arrangements in the prevailing model of political economy. The state has to intervene at the level of the macroeconomy, in order to secure the accumulation circuits of capital, and thus stave off systemic crisis and collapse. The state has to establish the appropriate organisational framework to enable this process. Corporatism is a recurrent form that this takes, with the added bonus that it short-circuits the ability of an increasingly dissatisfied and disaffected population from affecting the process by removing decision-making out of the democratic space. This is what happened after the Crash of 1929 and the Great Depression of the 1930s, in the declining Keynesianism of the late-1960s to early-70s, and it has taken shape over the last decade in the wake of 2008.

Of course, corporatism takes on different forms depending on historical and social context, so this particular manifestation of corporatist tendencies is particular to our time and place. It does not align perfectly with previous emanations of the corporatist orchestration of decision-making that we have witnessed across the North Atlantic over the last century or so. Consequently, corporatism has also taken a particular form at present in California that is distinct from corporatist manifestations in other parts of the transatlantic sphere. But a common denominator is discernible, and it will be an objective of subsequent posts in this newsletter to explore, identify, analyse, and explain the various differentia specifica, as well as to flesh out the genus proximum.

Based ontologically on the category of the group, rather than either the individual or the universal, corporatism has had a strained relationship with democratic and liberal principles since its appearance in the nineteenth century. This means that we need to elevate and restore the concept into public discussion from its current obscurity. In so doing, we will be able to explain much of what we are witnessing in our currently ineffective, persistently dysfunctional, and increasingly authoritarian governance regimes, as well as provide a baseline for constructing an alternative, articulate, and viable democratic politics for the coming decades.