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John Hyde, The Australian, August 28, 1987, p. 9.

Alien ideas change fashions in government as in clothing. In government however, the consequences of bad choice can be dire with none of the compensations of the mini skirt.

We dare not insulate ourselves from alien political ideas although most will not improve on the liberal democratic traditions. Neither is every new idea really new.

Corporatism (or corporativism), which the ACTU would like us to import from Sweden, is an old idea already found wanting after it was tested in Mussolini’s Italy.

Denis Mack-Smith, the author of Mussolini, writes:

One of fascism’s least uninteresting contributions to economic history is the corporative system by which it was intended to replace or transcend the out-of-date ideas of liberalism and socialism.

The corporations … were trade unions that included both employers and employees. The expectation was that each corporation, as well as regulating its individual trade, would minimise industrial strife and mobilise productive potential in the interests of the whole community …

This was an attractive suggestion, because a prolonged period of social peace would in theory enable Italy to maximise production and compete in international markets.

Such a harmony of interest could, in (Mussolini’s) view, survive only in a fascist system where the individual has no existence at all except, in so far as he is subordinated to the needs of the State, where it would be for the State to prescribe a just wage instead of relying on the laws of supply and demand.

At first, a limited number of fascist strikes were permitted to pressurise the captains of industry into accepting State control. Then, in 1926, Mussolini creates a special ministry of corporations and explained that a new corporative machinery, as well as fixing wages and conditions of work, would eventually regulate the whole economy.

On grand tour in Europe, several members of the ACTU conceived Australia Reconstructed. It now threatens us with prolonged industrial strife should we question its offspring’s lineage or otherwise belittle it.

There is a joke going the rounds that the mission, no doubt at great expense, purchased Mussolini’s lost diary. The joke is fair. Judge for yourself.

Australia Reconstructed advocates tripartite consultative and planning bodies and going into ecstasies about the successful consensus-based economies of Sweden and Austria.

But their consensus is not between individuals, but between unions, representatives of management and government — the same big three favoured by Mussolini.

Australia Reconstructed says:

A national agreement on industrial democracy between peak union and employer councils and the government would provide the basis for subsequent industry and enterprise-level agreements … employers and unions, as a matter of priority, must (my emphasis) then reach agreement … legislation will also be necessary to provide a system of industrial democracy.

The authority of the State is to be employed to impose the consensus of the great upon the small — like Italy in the 1920s and 30s.

Australia is already more corporatist than most nations. Recommendation No 2.1 reads: “Australia should maintain a centralised wage-fixing system.” Recommendation 2.9 calls for a six-month conditional price freeze. 2.10 for a price monitoring bureaucracy while 3.1 calls for a complex industry development plan, worked out between the big three but binding on everybody.

Among other things, the plan would determine investment: new product, process and enterprise development; management and work practices; and training.

The Foreign Investment Review Board is to target foreign money to industries recommended by industry councils. Soft loans for foreign companies must be co-ordinated by a “National Industrial Supplies Office”.

Among 72 recommendations, some are sensible but some, such as the proposal to risk workers’ superannuation monies to make soft (that is, low-interest and/or high-risk) loans, have already been widely ridiculed.

Two Australian Institute for Public Policy publications explain why Australia Reconstructed should not be taken seriously.

Authors Felicity Simpson and John Nurick both say that, on balance, Sweden has performed even worse than Australia; that any success is based on free trade; that, unlike Australia, the Swedes claim to set wages to suit the export sector; and that Australia Reconstructed attempts to reconstruct Australia without considering industry protection.

It is Monty Pythonish. I do not believe the Government will go along with much of it, yet it is frightening.

Denis Mack-Smith has this to say about how Italian corporatism worked out:

A plethoric corporate bureaucracy … was already by 1930 becoming a grave burden on the national economy.

Though lacking much substance, corporativism became a happy hunting ground for place-seeking academics who endlessly discussed its theory and practice.

They were helped when fascist economic theory was codified by Mussolini in the Charter of Labour … every business and factory would be obliged (in theory) to hire labour from lists provided by the government … preference had to be given to fascists.

The last sounds like a preference-to-unionists clause!

By 1934 …

an expensive and cumbersome corporative bureaucracy had become a powerful vested interest determined to perpetuate itself … it cost a lot of money and sometimes acted to clog the wheels of industry.

I answer the inevitable charge that, in comparing the ACTU’s preferred position with Italy’s corporatism rather than post-war Austria, Germany or Sweden, I am attempting to damn it by a needlessly unsavoury association in the following way.

The roots of corporatism are pre-war; corporatism, albeit in a much muted form, survived the war in Germany and Austria and the Axis sympathiser, Sweden. It is not reasonable to think these peoples are evil, therefore their countries’ leadership must have been elevated or corrupted by an evil system.

Corporatism, with its concentrated arbitrary power, was that system and Italy provides the clearest example of it.