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.But advocates believe that corporatistsolidarity, professional pride and a profound sense of civic responsibilityoffset these disincentives.The same reasoning justifies state elite and corporatist intervention inother factor markets.Capital and land are all subject to rationing andP1: FCW0521857449c08Printer: cupusbwCUNY475B/Rosefielde0 521 85744 9November 3, 200613:9The Economic Roots of American Power165regulation.New capital formation and the reallocation of existing equip-ment are discouraged when they threaten corporations, professions, andworkers, even though this diminishes production potential and efficiency.Likewise, corporatism subverts profit maximizing.Corporatist enter-prises deploy their assets to benefit the community, not particular sub-groups like shareholders, managers, unions, and the government.Membersfeel entitled and obliged to influence corporate policies to the detriment ofoutside shareholders.They subordinate returns to equity to other purposes,overcompensating themselves, and can be extremely corrupt.These distor-tions diminish productivity.Supply costs aren’t minimized, demand isn’toptimally satisfied, and new capital formation is depressed by pessimisticinvestor expectations.Corporatists partially mitigate these losses by forming cartels, or usinglarge industrial banks to manage intercorporate competition.Markets aresegmented, and wages and prices regulated to benefit affiliated groups.Theseactions, it is claimed, promote stability and planning, creating healthy com-panies with deep pockets which fuel economic growth, despite the highcosts of corporatist innovation, and barriers to individual entrepreneur-ship.Strong corporatist firms, it is said, are better positioned to financeresearch, develop new products, and deliver them to the market, enhancingContinental European growth prospects.This belief is central to the corporatist vision because it implies thatviolations of competitive market principles are mitigated by rapid eco-nomic development.Corporations, cartels, professional associations andtrade unions are able to enjoy oligopoly rents, economic security, and gen-erous welfare benefits, without sacrificing future prosperity.No wonder then that Continental European politicians don’t fret aboutimproved entrepreneurship, work incentives and the curtailment of the wel-fare state as much as they should.The elites remain convinced that they canbeat rival economic systems and expand the scope of social democraticmanagement through the European Union because corporatist managedcompetition allows them to excel in the long run.The early postwar economic performance of Continental Europe sur-prised doubting Thomases.Whereas the continental elites talked glow-ingly about collectivism, the population was extremely individualistic andself-seeking, making it difficult to believe that members, and contendinggroups would really sacrifice for the greater good.Liberals anticipated thatcorporatism would diminish employment flexibility, severely impair laborproductivity, reduce work participation, cause acute unemployment, andrestrict exports.P1: FCW0521857449c08Printer: cupusbwCUNY475B/Rosefielde0 521 85744 9November 3, 200613:9166The Reconfiguration of National Wealth and PowerThey expected similar constraints on variable and fixed capital and newasset formation to impair production potential, and anticipated that inter-corporate collusion and state indicative planning would cause complacency,laziness, misinvestment and corruption.And of course, some believed thatstate ownership of the means of production, accounting for more than 20percent of assets in countries like Italy in the 1950s would depress productiv-ity, or worried that denationalization might lead to a spate of asset grabbingand asset stripping behavior of the kind which later destabilized Russia inthe nineties.Continental Europe’s initial postwar successes relieved these anxieties,but despite favorable developments like the emergence of the EuropeanUnion and the burgeoning of global free trade, things began to deterio-rate with growth decelerating, converging toward stagnation.According toone observer, “Ironically, Germany prospered mightily by looking to theUS for entrepreneurial inspiration.For the last quarter century it hasfallen increasingly under the spell of France and the French fantasy of aEuropean superstate that will rival America.Precisely during this periodof French hegemony, Germany has entered upon an accelerating economicdecline, already relative and soon to be absolute.” 17 In the transition out of the immediate post- World War II recovery, corporatist duty withered andfree-riding increased as people discovered that the state would pay them notto work if they were dismissed, couldn’t find a job, or chose early retire-ment.Unemployment rose into the double digits, persistently exceeding20 percent in Spain for these reasons and because corporate costs of dis-missal became so high that it was prohibitively expensive to keep positionsstaffed.Statesmen have responded by curbing the growth of public expenditures,cutting marginal tax rates, encouraging trade union accommodation to lib-eralized work rules, paring some nonfunded benefits, denationalizing mostindustries, welcoming investment from abroad and pushing ahead withEuropean integration, including monetary union.This triggered mergermania driving equities to astronomical heights, but failed to reaccelerateaggregate economic growth, spur entrepreneurship, establish ContinentalEuropean technological leadership, reduce open and concealed involuntaryunemployment, or improve rates of labor participation [ Pobierz całość w formacie PDF ]