Introduction
People often inquire whether corporatism — a concept I describe as the collaboration among economic classes, occupational groups, or both, within a nationalist framework, drawing inspiration from Sorel's syndicalism — is feasible for America (or the contemporary United States). It's hard to imagine a society noted for its extreme individualism and bourgeois excess adopting a model that favors peaceful collaboration over fierce competition. Despite often being portrayed unfairly, as I believe corporatism isn't just the ideal route for America to fulfill its destiny, but also has a history spanning over a hundred years. The roots of American corporatism can be traced back to the 19th century, particularly to figures like Henry Carey who, in his 1851 work The Harmony of Interests: Agricultural, Manufacturing & Commercial, advocated for policies that foster unity between employers and employees, and between farmers and laborers. Currently, I aim to shed light on the period when America came closest to ccorporatism: during the era of the National Recovery Administration (NRA). My primary reference is The National Recovery Administration: An Analysis and Appraisal by Leverett S. Lyon and others, published in 1935 while the NRA was active.
FDR’s NRA: American Corporatism
Shortly after his inauguration in early 1933, President Franklin Delano Roosevelt established the NRA and chose Hugh S. Johnson, a figure known for his admiration of Mussolini, to lead the agency, essentially a federal-level vertical trade union. According to biographer George Whitney Martin, Johnson even circulated Italian fascist literature among NRA administrators and later expressed opposition to America's participation in World War II. As a fervent American nationalist and World War I veteran, Johnson eagerly took on the leadership role, only to be dismissed by FDR due to mounting internal pressure. The decision by FDR and Johnson to explore fascist economic models, albeit briefly, was driven by the rapid recovery of Germany and Italy from the Depression through their corporatist policies, although Italy's strategies were less effective due to its early and forced isolation. Michael Lind has pointed out that the NRA represented a natural evolution of American policy ideas, tracing back from Lincoln through Coolidge and even Hoover, who had laid the groundwork for the NRA's creation before losing office in 1933.
Hugh S. Johnson, known for his fascist sympathies, to overseeing the NRA
The NRA aimed to fulfill three key objectives:
Act as a mediator in industrial relations by finding a balance between the needs of workers and capitalists.
Stimulate sufficient economic growth to overcome the effects of the Great Depression.
Eliminate harsh, inefficient competition in favor of fostering industrial collaboration.
My primary focus will be on the aspect of class collaboration within the NRA, which was relatively straightforward in its approach. The Labor Department, led by Frances Perkins, and the Commerce Department, under the leadership of Daniel C. Roper, respectively appointed the Labor Advisory Board (LAB) and the Industrial Advisory Board (IAB). Johnson personally selected the Consumer Advisory Board (CAB) to ensure consumer interests were considered in economic policies. LAB, IAB, and CAB, collectively referred to as the "three advisory boards," consisted of specialists and advocates with direct connections to the nation's trade unions and chambers of commerce. Together, these boards selected the Advisory Council, which played a role in the National Industrial Recovery Board chaired by Johnson. The Advisory Council was also tasked with appointing "Deputy Administrators," bureaucratic positions designed to translate negotiation outcomes into clear, comprehensible documents, with each position focusing on a specific occupation.
The structure of the NRA
In essence, trade unions and employers would propose regulatory policies (codes) to the advisory board that represented their interests. Workers sought codes that benefited them, such as improved wages and working conditions, while employers sought codes that advantaged them, such as reduced competition. The three advisory boards, via the Advisory Council, would then engage in "indirect representative bargaining," where they negotiated, deliberated, and sought to balance the conflicting interests of workers and the business class. After reaching an agreement, the outcomes of these negotiations would be forwarded to the Deputy Administrators for implementation and enforcement. For instance, if the Advisory Council decided to increase wages but relax a safety regulation in the automotive sector, this decision would be passed on to the appropriate Deputy Administrator, who would then implement the changes and ensure adherence by all relevant parties.
The divisional structure of the NRA
A notable outcome of this system, and a key distinction between the American and German approaches to corporatism, was the empowerment of local trade unions by the NRA. It often required or facilitated local-level collective bargaining, making it legally simpler for unions to build upon existing codes. In contrast, the German Labor Front (DAF), established by Adolf Hitler, replaced and effectively outlawed all trade unions. I will explore this further shortly. However, a similarity between the NRA and the DAF lies in their use of indirect representative bargaining. In Germany, Robert Ley, the leader of the DAF, appointed various positions within the country's sole labor organization, including "labor trustees" who determined wages and benefits. This aspect was discussed by the fascist blogger Zoltanous in the analysis of National Socialism's anti-capitalist stance.
The Third Reich’s corporate state
Similar to other corporatist systems observed in Salazar's Portugal and the Japanese Empire, the NRA supported the formation of business cartels. Michael Lind and Robert D. Atkinson argue in their book Big Is Beautiful: Debunking The Myth of Small Business that if the goals are to rapidly expand productive capacities, increase consumer spending, and gain public support by improving labor conditions, then large firms capable of generating significant profits are preferable. Lind and Atkinson draw heavily on the ideas of Austrian economist Joseph Schumpeter, who challenged Marx's views by suggesting that monopolies and cartels act like large investment pools. With the appropriate incentives, these entities can channel excess financial resources into innovative projects and products. Moreover, large corporations are in a position to offer their employees living wages and superior working conditions, whereas small businesses tend to be more exploitative. Supporting monopolies and cartels makes sense if the aim is to create a worker's paradise with full employment while maintaining hierarchical entrepreneurship. This approach is reflected in the NRA's industry cartelization, a strategy also employed by the Germans under Hjalmar Schacht, as detailed in Adam Tooze's The Wages of Destruction. This has parallels with Fichte's idea of a "closed commercial state," where the state holds stakes in successful private monopolies and cartels, encouraging them to deliver the best products at the most favorable prices, an idea that later influenced the creation of the volkswagen.
Source: Adam Tooze, The Wages of Destruction
Through the establishment of over 500 codes, the NRA effectively turned the United States into a de facto centrally planned economy. These codes aimed to boost efficiency and employment, enhance wages and working conditions, prevent price undercutting and unfair competition, and promote collective bargaining. Despite business owners reporting significant profits — over $2.4 billion annually in after-tax profits from 1932 to 1935 — they criticized the new regulations as overly burdensome. Consumers, on the other hand, lamented the rise in prices. Nonetheless, the initiative garnered substantial support from the working class by empowering unions and boosting private consumer spending, which under different circumstances could have led the country out of the Great Depression.
What lessons can be drawn from the NRA's experience? Firstly, it demonstrates that in its current form, liberal democracy poses a challenge to the establishment of a corporate state. The scope of what FDR. could achieve with the NRA was significantly constrained by constitutional limitations on his power. In 1935, the Supreme Court unanimously declared the NRA unconstitutional, effectively ending the corporatist experiment. While I agree with FDR's subsequent efforts to "pack the court," I view his quick capitulation to the Supreme Court as a sign of weakness, especially in comparison to a more assertive leader like Andrew Jackson, who famously challenged the Supreme Court on several occasions in pursuit of American interests. For the United States to evolve into a corporate state, it would need to adopt a more progressive stance towards the outdated Constitution. A future corporate state should incorporate a vertically organized trade union system similar to the NRA's indirect representative bargaining approach. Additionally, as suggested by Gladden Pappin in American Affairs, it should include corporative representation in the Senate, with members representing occupations rather than states, to ensure consistent legislative support for such a framework.
Another issue with the NRA, as well as the broader situation in America at that time, was the lack of a powerful central government. The rapid recovery of Germany from the Great Depression under the Nazis was largely due to its ability to use force to direct mass efforts towards national objectives, a strategy FDR couldn't fully adopt because of constitutional restrictions on his authority. The NRA's participation was entirely optional, despite feeble efforts to encourage involvement through social persuasion. As the American historian John Garraty has noted:
“The two movements [F.D.R.’s America and Hitler’s Germany] nevertheless reacted to the Great Depression in similar ways, distinct from those of other industrial nations. Of the two the Nazis were the more successful in curing the economic ills of the 1930s. They reduced unemployment and stimulated industrial production faster than the Americans did and, considering their resources, handled their monetary and trade problems more successfully, certainly more imaginatively. This was partly because the Nazis employed deficit financing on a larger scale and partly because their totalitarian system better lent itself to the mobilization of society, both by force and by persuasion. By 1936 the depression was substantially over in Germany, far from finished in the United States.”
— John Garraty quoted in How Hitler Tackled Unemployment And Revived Germany’s Economy by Mark Weber
Studying the New Deal offers valuable lessons in creating a corporate state, but it also highlights the importance of recognizing and addressing the shortcomings amplified by the inherent issues in liberal democracy.
For further exploration on related topics, consider the following: