As the 20th century neared, former Pope Leo XIII, grieving for humanity’s choice between atheistic socialism and venal liberalism, commissioned Catholic intellectuals to devise a better solution. Named “corporatism” and set forth in the 1891 encyclical Rerum Novarum, Leo’s interwar successor, Pope Pius XI, recounted that it “laid down for all mankind the surest rules to solve aright that difficult problem of human relations called ‘the social question.’”
Corporatism (which should be distinguished from the tripartite bargaining structures that emerged in many countries in the 1970s under the name “neocorporatism”) became the most influential, ethically motivated intervention into economics in modern history. The Catholic social doctrine until the late 20th century, corporatism still shapes constitutions, laws and attitudes throughout the world. It can be distilled into four tenets:
‧ Equality is a cruel illusion: People are happiest if rightly placed in a hierarchy legitimized by Catholic teachings.
‧ Competition is spiritually demeaning. Associations — committees of Catholic business owners, labor leaders and officials — must set quotas, prices and wages within vertically connected swathes of the economy called corporations. A typical corporatist economy may contain 30 or so corporations — foods, heavy industry, textiles, chemicals — each encompassing raw materials, production, distribution and retailing firms. International trade and new firms are undesirable because they undermine associations’ power.
‧ Private property is legitimatized by owners’ obedience to the Catholic Church and association, but delegitimized by competition.
‧ The principle of subsidiarity devolves authority unneeded at higher levels to the lowest feasible level in the hierarchy.
Former Italian leader Benito Mussolini established the first corporatist economy, albeit substituting “fascist” for “Catholic” throughout. State holding companies controlled key listed firms directly and associations controlled the rest, reconciling totalitarianism with nominally private ownership.
Italy, its foreign trade peremptorily suppressed, escaped the trade wars of the Great Depression.
In 1931, Pius XI took credit, saying: “Anyone who gives even slight attention to the matter will easily see … the obvious advantages in the system … The various classes work together peacefully; socialist organizations and their activities are repressed.”
He added that Leo XIII’s “Catholic principles on the social question have … passed little by little into the patrimony of all human society … not only in non-Catholic books and journals, but also in legislative halls and courts of justice.”
Corporatism spread to country after country. In 1932, it was embraced by clerico-fascist Austria, under former Austrian chancellor Engelbert Dollfuss. Falangist Spain under former Spanish leader Francisco Franco and Portugal under former prime minister Antonio de Oliveira Salazar followed. Interwar Poland, Greece, Albania, Bulgaria, Estonia, Latvia and Lithuania also adopted forms of corporatism. So did Adolf Hitler’s Germany, though in a greatly modified form.
Vichy France embraced Catholic corporatism, as did German protectorates over Belgium and the Czech lands, as well as nominally independent Slovakia under former Slovakian president Jozef Tiso.