Alternatives to Developmentalist Approach

Instructor: NHEM Boraden

Corporatism Developmentalism did not occur

Corporatism

Developmentalist approach offered false hope as many countries still remain poor and some reverted back to poverty after a brief prosperity.

This false empirical evidence also led to the emergence of many alternative theories to the developmentalist approach which seek to explain why many countries are still poor and non-democratic.

The first approach was corporatism. There are many branches of corporatism, related to either Latin America or Western Europe. This approach studies the relations between business, labor, and the state.

It is the “third way” between liberalism (emphasizing business), and Marxism (emphasizing labor). This third way emphasizes the role of the state in mediating the relations between the other two actors.

Corporatism defined

Corporatism derive from the term “corps”, meaning that something as a whole.

Corporatism may be defined as “a structure of national sociopolitical organization in which major societal units (armed forces, religious bodies, employers, labor) are integrated into, and usually subordinated to, the state”.

This is dictatorial in character, but it is different from socialism in that it does not take the working class as the main institution who rules society. In corporatism, the state itself is subordinated to nothing.

Corporatism as a new approach

Corporatism started to flourish in the 1960s and 1970s when traditional theories that focus on check and balance, separation of power, or interest groups competition cannot adequately explain new political phenomenon.

For example, traditional theories find it hard to explain why labor strikes are so frequent in France but very rare in Germany, although the two countries share similar characteristics.

Corporatism

According to Philippe Schmitter, corporatism can be defined as “a system of interest representation in which the constituent units are organized into a limited number of singular compulsory, noncompetitive, hierarchally ordered and functionally differentiated categories, recognized or licensed, (if not created) by the state and granted a deliberate representational monopoly within their respective categories in exchange for observing certain controls on their selection of leaders and articulation of demands and supports”.

The state, in short, acts as something like a father figure to the other units that must organize themselves and work under the direction of the state.

This approach, therefore, is often confused with the fascist and totalitarian regimes in the interwar period.

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Corporatism and its history

According to Wiarda, this can be summarized into three distinct characteristics: Strong directing state

Freedom of actions of interest groups are restricted

All interest groups are incorporated into the state institutions.

The above definitions might not be overarching, but it does give clear differentiations from pluralism: variety of actors, no or very limited government control, state is not the only actor that matters…

In the western origin of the concept, it can be traced back to biblical and ancient Greek time. The state was considered as an organic whole who controlled and regulated the professions which were organized into separate corporate units under the state.

Corporatism defined

There is no class struggle in corporatism. The business and labor are expected to work together to avoid strike and keep the economy going. Disagreement is bad for business.

Fascism takes this further to mean that socialism is threatening because it advocates the breakdown of society through class struggle.

Corporatism criticizes democracy as fragmented society. Without the leadership of the state, society will be weak because it is not united.

Corporatism and its Fascist variant

Under Germany and Italy, during WWII, corporatism was meant to be something that is equivalent to the total mobilization of the state.

In this variant, known as Fascism or totalitarianism, the state controls everything and everyone must obey the state under all circumstances.

In WWII in Italy and Germany, when this tendency was combined with the cult of the personality of Hitler and Mussolini, it creates a regime that does not listen to the people’s wish but instead followed an abstract visions of Hitler and Mussolini.

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Fascism

Origin of the term “Corporatism”

Corporatism was usually associated with Mussolini’s political-economic system in Italy of the National Socialists in Germany. It is therefore carries negative connotation associated with Fascism.

But corporatism in general is not Fascism. Fascism is only one form of corporatism. Nevertheless, this negative connotation makes it hard for a truly objective social science study.

Corporatism is not associated with “corporations” which is private business.

Corporatism and its history

The French Revolution of 1789 and the Russian Revolution of 1917 brought about two new systems, liberal-individualism and socialism, respectively. But the upheaval that accompanied these events only motivated more people to seek the alternatives.

Corporatism, with its focus on social harmony, became the most favorite alternatives in the twentieth century.

However, the first forms of corporatism were closely associated with fascism when combined with the cult of personality.

Ex: Mussolini’s Italy, Hitler’s Germany, Salazar’s Portugal, Franco’s Spain

Corporatism and its history

The system proliferated to countries such as Bulgaria, Poland, Turkey, Austria, Yugoslavia, the Baltic states… But in these cases, corporatism was used only to advance their dictatorial control rather than functional representation. These are the states that gave corporatism as bad name.

However, these states differed from other European corporate states who adhered to the true corporatist ideology. All the social institution that are subordinated to the state do not totally subject themselves, but they subordinate themselves to gain a voice in policy-making.

In the former cases, corporatism arose out of the need to manage the labor-business relations within the state structure to avoid large-scale disruption to the economy. The degree to which the government maintains control over the arbitration system defines the degree of its corporatist element.

Corporatism as a political culture approach

The first branch of corporatism took the form of a political culture theory.

A country is a corporatist country mainly because it has been so historically and that has developed into a culture. In this culture, people respect the state.

For example, for historical reasons, the Latin America and Southern Europe are traditionally corporatist societies.

Corporatism as an institutionalist approach

The second branch of corporatism took the form of an institutional theory.

A country is a corporatist country not necessarily because it is influenced by history or culture, but it may be influenced by how the political institutions are designed at a crucial period.

For example, Singapore became what it is today may not be because of its culture but because at the beginning (at the time of its independence).

The US, however, is a good case for debate between the two theories.

Contributions of Corporatism in Comparative Politics

1. The developmentalist approach used the liberal-Marxist dichotomy, which means that if a regime is not liberal, then it must be dictatorship or Marxist. This approach cannot explain the structure of Scandinavian countries as well as countries like Germany who are corporatist.

2. Corporatism revives many institutions that were dismissed by the pluralist and developmentalist approaches as unimportant. In the latter, only political party is the main actor who can represent their interest in the state. Corporatism argues that the relationship is more complex and the state decides which groups, in addition to political parties, can represent their interest formally in the state’s apparatus.

Contributions of Corporatism in Comparative Politics

3. Corporatism has two main variation. The first was “statist corporatism” with the state playing a dominant role (like in Latin America and the Iberian peninsular). The second was “societal corporatism” with the state playing a less dominant role. The explanation of the divergence is cultural and historical: Catholicism and the influence of central planning.

4. Instead of moving from authoritarian to liberal-democracy directly, a country might experience a set of steps: traditional, ideological, manifest, and neo-corporatism. According to Wiarda, the last step is an alternative path towards development.

Strong states are not necessarily authoritarian!

Corporatism after WWII

After the fascist turn in the interwar years, corporatism returned to many countries in Asia and Latin America.

In almost all of these countries, it has been argued that a strong state (i.e. statist corporatism) is necessary for a transition from underdevelopment as it stabilizes the labor-business relationship to contribute to economic development.

After the economy stabilized, the system began to move gradually toward societal or neo-corporatism. The state still directs the economy, but individual initiatives are more encouraged than before.

It is for this reason that countries like Singapore and Japan, despite strong state grip on the economy and active trade policy, are not counted as authoritarian. Latin American countries, on the other hand, met with less smooth transition.

Corporatism today

In some countries, corporatism took the form of tribal, clans, or family politics where the concept of state itself depends on all these particular units.

The political system in some countries can be explained by how religious ideas dictates the relationship between units of a society and the state.

Today, corporatism is simply used to denote a specific form of state-society relations, a special form of that interactions. Each countries has its special form.

Corporatism after WWII

Today, corporatism is facing a variety of challenges.

In the developing world, statist corporatism is facing a challenge from globalization and development aid tied with the conditions to liberalize the economy, thus destroying the pre-existing corporatist structure.

In the developed world (societal or neo-corporatism), foreign acquisition of major firms poses the question as to which state controls a certain company (ex: automobile industry). Second, the rise of supranational institution like the EU also poses a challenge to the role of the state in mediating the labor-business relations.

Bureaucratic Authoritarianism

Bureaucratic-Authoritarianism

Traditionally, coup d'état has been thought of as something caused by some particular dictator.

Therefore, if that dictator felt from power, then there will be hope for democracy. As an example, when the Russian military failed in a 1991 coup, Yeltsin could work toward the first free election in Russia after a very long time.

If, on the other hand, a coup was initiated by many people or by institutions, then individual leaders do not matter. A change in leader will not trigger a change in political system.

The concept was first proposed by Guillermo O’Donnell. He studied Argentina, Brazil, and Chile and argued that there is possibilities of coup initiated by the institutions.

Bureaucratic-Authoritarianism

O’Donnell argued that Latin America in the 1970s and 1980s was dominated by import substitution industrialization policy which brought a lot of hope.

The policy, however, failed and most people became disillusioned. He argued that the military institution and the civil society favored a strong, disciplined regime with military-like rule.

O’Donnell argued that this civil-military coalition was faced with a choice: stop the growth and change economic policy OR to continue growth by reducing wage. They chose the latter.

In this case, the middle class asked for more repression against the working class. The rise of the middle class does not lead to democracy.

Bureaucratic-Authoritarianism

His PhD dissertation was rejected at Yale. But later he published the book anyway. In the book he predicted that Chile was on the next list of a coup because the import-substitute industrialization almost exhausted.

O’Donnell rose to fame in 1973 when there was a coup in Chile as he predicted and the society as a whole supported that regime.

Bureaucratic-Authoritarianism: Challenges

1. O’Donnell did not explain clearly why import substitution failed. He simply claimed that it has reached saturation and then failed. But he did not explain why it succeeded in South Korea but not in Argentina.

2. O’Donnell was not clear as to why the failure of import substitution led to military regime. O’Donnell was not very clear why a military-like rule is necessary for an alternative economic policy.

3. Later O’Donnell argued that it is the crisis of import substitution that lead to the transition to democracy in Argentina. This is contradictory: did the crisis of import substitution lead to authoritarianism or democracy?

Economic events leading to the Argentine coup of 1966

Inflation: Who is better than who?

Bureaucratic-Authoritarianism: Assessments

1. B-A is good as a concept because it tells us that coup d'état is not always a one-person act. Sometimes, the institutions and society support the coup.

2. The theory of economic determinism was simply wrong.

3. Yet, O’Donnell pointed out the fact that the was social and economic problems in Latin America. In this crisis, the elites and the middle class supported the military to protect their interests at the expense of the mass (which is the working class).

Rational Choice Theory

Rational Choice

Ration choice theory postulates that people decide rationally (hence the name) based on cost-benefit calculations.

People will calculate the cost and benefit of alternative actions and then decide to choose the one with the highest net benefit.

Whether the outcome is successful does not tell us about rationality, rational choice is about a process of decision. Outside influence can affect the outcome, but rationality will increase the likelihood of success.

If we use rational choice theory in comparative politics, then we argue that election choice, parliamentary voting, interest groups politics, and even coup d'état all depend on how decision-makers calculate the cost an benefit associated with each action.

Rational Choice (2)

Rational choice theory assumes that people make

decision within constraints. Constraints comes from two

main sources: scarcity (ability is limited) and

institutional or organizational (such as law, traditions,

norms…)

For example, if the military chooses to take over the

government, they face a variety of constraints such as

legality, legitimacy, people’s protest, international

outrage…

Rational Choice (3)

Ration choice theory maintains that after the

calculation, and before you decide, you will also think

about the other will react. This is called “strategic

actions” meaning that your actions depends on what you

expect from others.

For example, such decision can be seen in the decision to

vote in the legislator, military intervention (what are the

possible outrage?), civil protest (what’s the government’s

likely response?)…

That also explain why the “tragedy of the commons”

occurs.

An example of Rational choice: How the military calculates whether to initiate a coup or to allow democratic transition

Benefits and Costs of Rational Choice Theory in CP

1. It can be used to build testable hypotheses and theories.

2. It is simple, common sense, and should be applicable to all cases and to everyone.

3. Rational choice explains some of the most important events such as “path dependency”. Once a country goes down a certain system, it is very hard for them to reverse it. Not that it is impossible, but it is not rational to do so. Ex: QWERTY system.

There are also some problems, however:

1. Capacity to calculate is limited.

2. Information is not sufficient.

3. Multiple equilibriums: unitary decisions or free-riding

4. Stressful situations make decisions harder.

Therefore, its predictive capacity might be limited.

Dependency Theory

Dependency Theory: History

Dependency theory was born out of the Cold War. It was the ideological expression of that period of struggle.

With the end of the Cold War, many assume that dependency theory will also lose its favor.

Yet, the unprecedented rise of capitalism raised the concern that major corporations will do anything it can to maximize the efficiency of capital. Efficiency became the sole criteria.

This time, it was not about state against state (US vs. Soviet Union). This time it was the domination of major corporation who care solely about efficiency at the expense of democracy, labor and human rights, and the environment.

Dependency Theory: concept

The end of the Cold War also put an end to the question of whether we should end capitalism. Instead, people turn to ask how can we control capitalism for greater benefit of all.

Dependency theory distinguishes two terms: 1. Dependency which denotes the fact that some countries are big and some are small, the latter are more dependent than the former on the international system. 2. Dependencia which denotes the social and political grievances that were expressed as a result of Dependency.

Here is the core of the theory: to understand changes in the Third Worlds (also called Periphery) one must see it as a function of the power of economic imperialism generated by superpower (also called Core).

Dependency Theory: concept

Many people see this approach as part of the larger World System Theory, based in large part on Marxism and the declining rate of profit which brings about the class exploitation.

The theory postulates that there is Dual Economy: economic activity from the outside world (companies of major power) and the traditional economy.

Normally, the external or modern economy will try to maximize the efficiency of capital (since it is linked to the economy of the superpower)m enriching a small number of people who serve in that sector.

At the same time, masses of poor people belong to the traditional sector with less power and were exploited by the rich (following Marxist explanation).

Dependency Theory: concept

Because the affluent or the rich are very small in number, they had to find ways to maintain their positions and privileges. The surest way to do that is to control the government.

This gave rise to a proliferation of various B-A in Latin America where the military government born out of coup d'états found their alliance with the minority rich.

Therefore, dependency theory provides a good explanation as to why so many Third World countries are authoritarian with one military regime or another. This persistence of authoritarianism, according to dependency theory, has a strong connection with the economic activities and interests of the capitalist superpowers.

Dependency Theory: concept

Dependency works on many levels:

Rules and regulations required by the major corporations before they invest in any country. Dependency theorists saw this as a way to impose on small countries.

The IMF and the World are accused of working as “superstructure” of the capitalist superpowers. The main criticism was the IMF’s focus on “structural adjustment” that some criticized as too damaging for the target country without taking into account the cultural difference between countries. The IMF and the World Bank prefer “a one-size-fits-all” principles.

The theory argued that Dependency is a fact of life and if something was established, it was sometimes not impossible, but it is just that it is not rational to change it.

Ex: QWERTY keyboard, persistence of authoritarianism.