Modern corporatism is unsustainable---erodes democracy and national trust

Ask voters about American politics, and they typically respond that it is ever more polarized, fragmented, divisive, and hyperpartisan. A recent report indicated that 78 percent of voters are unhappy with increasing partisan divisions. Beyond the issue of polarization, there is also a problem of performance. Satisfaction with American political institutions is decreasing. The dominant popular feeling toward the federal government is frustration—a sentiment now shared by 57 percent of Americans according to a March 2019 Pew survey. Surveys of public trust in the government tell a similar story, continuing the decades-long decline from the height of public trust in the early 1960s. Yet, at the same time, sizable majorities support increased federal spending on education, infrastructure, Medicare, and scientific research; thus the sentiment of frustration seems clearly tied to the government’s ineffectiveness in these areas, not simply ideological opposition to government in general.

Political fragmentation and distrust, whatever the cause, are often interpreted as signs of a decaying democratic system. But the usual response to this situation—another round of hand-wringing about civility—inevitably accomplishes nothing. Today’s combination of dissatisfaction and fragmentation should instead point to a different diagnosis. It is evident that there is no institution within which the country’s disparate interests can negotiate their differences with real consequences for political decision-making. For now, the United States still enjoys a tacit agreement on core issues such as pursuing economic prosperity, social mobility, and the sense of national and social integrity. But few would point to Congress as a place where important interest groups, like business and labor, hash out and negotiate their interests with reference to the common good. Instead, since lobbying occurs behind the scenes, representatives have little incentive to negotiate among competing interests in public. For the long-term health of the American regime, this lack of a trusted deliberative body is very disturbing.

Although American citizens usually identify with several groups—their occupation, religion, educational background, and social and cultural preferences—those groups must pursue political influence in a financially driven, competitive system of associations, interest groups, and lobbying organizations. While voters are corralled into geographical representation and the two-party system, financially driven, group-based lobbying on behalf of particular industries flourishes. At the level of lobbying, corporate organization and political activity is easy wherever money flows freely; accordingly, many of our group interests go unrepresented. Our system is one of dilapidated corporatism—corporatism for me but not for thee.

The chart below illustrates America’s broken pseudo-corporatist system. The chart highlights the disjunction between corporate political spending by industry and the portion of American employees those industries support. While measuring an industry’s lobbying activity against its total number of employees is an admittedly simple metric subject to multiple qualifications, the results are nevertheless revealing of big-picture trends. Larger numbers on the left indicate a disproportionate share of lobbying expenditure per employee; numbers on the right indicate industry share of total U.S. employment (note, union lobbies are included within the appropriate industry).

As the chart shows, it is generally the bigger industries by employment share that are less represented through lobbying. By contrast, some business groups vastly overspend on lobbying relative to the percentage of the American workforce they support. Indeed, some appear to have a business model driven by directing profits in large part toward lobbying. The gambling industry employs a small number of people but lobbies aggressively (and spends primarily on GOP candidates).

The pharmaceutical industry, to take another example, has the second smallest employment share, at a meager 0.25 percent of total employment, yet accounts for 12.6 percent of all lobbying expenditures in the United States. It is perhaps not surprising that Big Pharma is the least favorably viewed industry in America, as well, with a net favorability rating of –31, according to Gallup. Pfizer, Amgen, and Roche Holdings each spent more than $10 million on lobbying in 2019, and industry associations spent much more. Other industries with disproportional expenditures on lobbying include air transport, oil and gas, telecommunications, and internet companies. Although electric utilities spend heavily on lobbying, they employ a significant number of citizens, and the electrical industry is a public good deserving of significant representation in any system. (The data do not include private donations by business leaders in particular sectors.) Overall, the simple average of lobbying expenditure across industries is $103.60 per employee. Apart from electric utilities, none of the top ten industries that spend more than this amount make up even 0.5 percent of the total American workforce.

In short, some of the least popular industries in the United States have a lobbying power far out of proportion to the employment base they support. Some industries are not lobbying because they’re profitable; rather, they have incorporated lobbying into their business models. The picture worsens when we consider that lobbying by business groups is not per se lobbying for employees. According to the Center for Responsive Politics, lobbying activity by labor organizations amounted to only 1.4 percent of total U.S. lobbying expenses in 2019; lobbying by business organizations accounted for almost 87 percent of the total.

Even if we unrealistically assume that business group lobbying generally benefited employees, our analysis reveals an alarming fact: 13.5 percent of the American workforce has virtually no lobbyist representation in Washington at all. With numbers like these, it is no surprise that, in a 2018 Pew survey, 65 percent of Americans think new laws could control the influence of money in politics; and a 2016 Gallup survey indicated 63 percent of Americans were dissatisfied with the influence of major corporations on U.S. politics. Perhaps most strikingly, the 2018 survey from Pew showed that 68 percent of Democrats and even 50 percent of Republicans want “significant changes” to the “design and structure” of American government.

Forms of fracturing and segmentation are not new in themselves. In the nineteenth and early twentieth centuries, “the social question”—the question of how to mediate the relationship between labor and capital—dominated political discussion. Then, too, seemingly unresolvable social fissures and a sense of dislocation from political processes required far-reaching reforms. Today new forms of class war, such as that between the working class and the managerial-professional class, have emerged alongside deepening political polarization. These major tensions, in addition to specific tensions between industrial sectors, find no natural place to work themselves out in American politics except through the electoral successes of populist leaders who are in turn often quickly hamstrung by representative assemblies.

Pundits on the left occasionally call for shifting toward proportional parliamentary representation, even though such proposals rarely gain traction and many countries with such systems face similar problems. Others call for generic reductions on corporate spending in politics, or stronger public financing of campaigns. Voices on the right, meanwhile, continue to call for rolling back the administrative state or decentralizing power, neither of which addresses the need for public negotiation among divergent national interests. Worse yet, many on the right continue to defend massive corporate expenditures in politics, even though such activity bears almost no relation to the “original understanding” of the Constitution they otherwise claim to support.

In the late nineteenth and early twentieth centuries, concern about similar dislocations spurred political theorists to propose a manner of organizing political and economic interests formally, through bodies dedicated to expression and negotiation of major social interests. Theorists as diverse as Emile Durkheim and Joseph Schumpeter called the system “corporatism,” not out of reference to privately organized corporations in the contemporary sense but as a description of the attempt to organize major social interests “corporately” into membership bodies. The system common to anglophone countries, by contrast, came to be known to political scientists as “pluralism”—not in the sense of promoting the diversity of lifestyles, but of giving free rein to private associations to organize themselves and seek to influence politics. The corporatists concluded that a laissez-faire approach had led to social disharmony and political tension. On the economic front, corporatists suggested (as many progressives do today) that business activity should be organized around corporations involving both workers and owners. More generally, large groups reflecting real social and political interests would be the main political actors in society.

The corporatist political framework seeks to define and organize every major stakeholder in the social contract, beginning with productive economic sectors, but also including the professional classes that contribute to society—doctors, lawyers, professors, scientists, and clergy. The purpose of such efforts is to give political recognition to vocational and group identity, through a process of negotiation rather than adversarial competition. Vocational and group representation was not thought to be a replacement for geographical representation, but a supplement to it. As liberal democracies become ever more fractured socially, economically, and politically, it is time to consider how American society might benefit from corporatist forms of representation, and what reforms along those lines might look like.

The Classification Problem

The American public is more segmented—economically, socially, and politically—than ever before. Companies collect massive amounts of data on consumers. And while they use, or purport to use, that information to “enhance customer experience,” they have also amassed a detailed sociological picture of their customers. Political campaigns have done the same, combining consumer data harvesting with political advertising. The result has been a form of microtargeting that threatens the core of modern democracy: the sense of coming together around a shared purpose. Instead, microtargeted political advertising seeks to match the candidate to whatever marketers suspect are voters’ most relevant commitments and interests. Targeted advertisements help “construct” candidates in the image of each of us, however minutely segmented we are.