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The Corporatist Approach and the History of U.S. Foreign Policy

May 20, 2010


 

The Corporatist Approach and the History of U.S. Foreign Policy

The Marshall Plan: America, Britain and the Reconstruction of Western Europe, 1947-1952. By Michael J. Hogan. (Cambridge: Cambridge University Press, 1987. 445 pages + index)

Savage Capitalism and the Myth of Democracy: Latin America in the Third Millennium. By Michael Hogan. (Bangor: Booklocker.com, 2009. 216 pages)

America‘s Half-Century: United States Foreign Policy in the Cold War and After. By Thomas McCormick. (Baltimore: Johns Hopkins University Press, 1995.  258 pages + index)

Oil, Banks, and Politics: The United States and Postrevolutionary Mexico, 1917-1924. By Linda B. Hall. (Austin: University of Texas Press, 1995.  180 pages + index)

Modern Manors: Welfare Capitalism Since the New Deal. By Sanford M. Jacoby. (Princeton: Princeton University Press, 1997. 332 pages + index)

 

The origin of the corporatist approach to the study of American foreign relations has its roots in the work of William Appleman Williams and other revisionist historians of the left-leaning “Wisconsin school.” This group of historians developed a more critical analysis of U.S Cold War policy during and after the conflict in Vietnam. Essentially, they posited that the nature of Western capitalist regimes was to extract the raw material and labor from peripheral nations to support the core, imperialist nations (i.e. Europe and the U.S.).[1] These historians set themselves against the traditional “orthodox” U.S. historians, such as George Kennan who defended this policy as being fundamentally anti-communist, rather than exploitative.

Meanwhile, the revisionist historians continued to focus on the ideological and economic influences on policy makers in the domestic sphere. As debates between the traditionalists and the revisionists waned, this economic interpretation of policy was carried over to a group who dubbed themselves the “post-revisionists,” attempting to provide balance to the critique of Cold War strategy. Development of this particular method led to the study of various bureaucratic offices, financial institutions, businesses and associations outside the government sphere. Michael J. Hogan labeled this new approach “corporatism,” which he claimed had the potential to bridge the gap between revisionist and traditionalist positions as well as addressing more directly the role of non-state actors, linking their influence to both the domestic and the foreign policy arenas.

Hogan defined corporatism as a “system that is founded on officially recognized functional groups, such as organized labor, businesses, and agriculture…this collaboration creates a pattern of interpenetration and power sharing that makes it difficult to determine where one sector leaves off and the other begins.” Hogan himself takes a positivist view of this process, seeing it as a move toward greater efficiency in formulating and executing state policy.[2] This is a bone of contention for other scholars, including John Lewis Gaddis, who is skeptical of what he views as a purposefully vague framework that can be conveniently used to support the traditional, triumphalist view of American policy.[3] Other scholars, exemplified by historian Thomas McCormick, have carried forward the critical standpoint of Williams and Wallerstein, while embracing the corporatist framework in their analysis.[4]

While Charles Maier called for a new framework beyond postrevisionism to subsume the corporatist model, other historians such as Michael Wala have praised the current state of scholarship in this direction, stating that the corporatist approach of American foreign relations “has proven to provide an excellent framework particularly in those areas of foreign relations in which the influences on the decision-making process and the process itself are closely scrutinized.”[5]

In that vein, Michael J. Hogan’s Marshall Plan is considered the seminal work on corporatist model of U.S. foreign policy. Hogan explains that at its core, a “corporative collaboration,” between the US government and private institutions charted the course of American diplomacy post-World War II. Rather than a strictly diplomatic Cold War model, Hogan demonstrates that the Marshall plan was a hybrid of the earlier interwar experience which combined “an American brand of corporative neo-capitalism that went beyond the laissez-faire political economy of classical theory but stopped short of a statist syndicalism.” (p. 3) Hogan asserts that the Marshall plan continued and solidified the trend of corporate involvement with US foreign policy initiatives, which fundamentally altered the shape of American diplomacy and “for all practical purposes sought to restructure the world economy along lines similar to the corporative order that was emerging in the United States.” (p.3)

For Hogan, the corporatism of the Marshall Plan was based on operating links between private economic groups and government authorities. By forging such links, Hogan argues that “American Marshall Planners hoped to build a transnational alliance behind the ERP [European Recovery Plan], equip participating countries with American production skills, fashion American patterns of labor-management teamwork…maximize[ing] the chances for economic integration and social peace” (p. 136) The productivity teams, dollar boards, investment groups, and advisory panels, according to Hogan, “attest to the broad front on which the American leaders operated…to head off the dangerous division of the ‘free world’ into rival economic blocs” (p. 257) Thus, Hogan asserts, the “neo-capitalist” order could be maintained that would be equal to the Soviet challenge by blending both “traders’ and planners’ approaches, combining market incentives with administrative coordinators and using them to integrate economies and boost productivity.” (p. 378)

Hogan traces the thread of partnership between private central bank institutions, oil, financial, and radio consortiums and U.S. policy makers, linking them “backward to the technocorporatism of the National Civic Federation and the associationalism of Herbert Hoover…and forward to the ‘corporate commonwealth’ of the Eisenhower years.”(p.13) Combined with the social welfare and open market proponents of New Deal ideology, Hogan argues that a core bloc of capital-intensive firms and their allies among labor, agricultural, financial, and professional groups successfully remade the economy of Western Europe in the American image. Hogan further asserts that the American achievements with the Marshall Plan emboldened U.S. policy makers and their corporate partners that similar initiatives could also help to achieve American political and strategic objectives elsewhere. (p.429-432) Thus, American and European colleagues cooperating in a “transnational system of elite management” that arose out of the Marshall Plan constituted what Geir Lundstad has named an “empire by invitation” and what Charles Maier identifies as a “consensual American hegemony.”[6]

In sum, Hogan offers a constructive view of American corporate involvement in the formulation of policy. Hogan’s encyclopedic account of the national actors involved in the Marshall Plan has earned this text the place as a premiere reference work on the subject. While the Plan itself may be considered a more benign incarnation of the projection of U.S. corporate power, Hogan misses some opportunities to qualify his description of American non-government actors with some of their less constructive actions. For instance, in Hogan’s mention of the U.S. participation in the inception of the Bank for International Settlements (BIS) in Switzerland during the interwar period as an example of collaboration between American policymakers and private financial institutions, he fails to note that the BIS became an essential financial institution to the Nazis, who used it to clear plundered gold in exchange for unblocked currency that was used to purchase and manufacture war materials.[7]

From the corporate side, Hogan mainly focuses on the interdepartmental communications and deliberations between national actors. We are offered only a modicum of substantive analysis of the functional, private enterprise actors in the equation. While Hogan brings to the table a comprehensive list of committees and organizations set up by U.S. officials, he consistently neglects to elaborate to any great degree on the businesses and investment houses that actually contributed to the Marshall Plan. Even when discussing influential business figures at length, such as W. Averell Harriman, Hogan also provides scant detail of how these individuals or their firms benefited from such deals. Although it is important to note that this is a common problem within the realm of literature that employs the corporatist framework for U.S. foreign policy, without a complete picture of the corporations that were involved in particular policy initiatives, including their strategies and past activity, we miss a fundamental component of Hogan’s thesis. There is little mention of JP Morgan, Chase Bank, Ford Motor Company, General Motors, Standard Oil of New Jersey, ITT, or IBM, all of which were dominant businesses in Europe at the end of World War II.[8] Considering the wealth and influence of such organizations, the text leaves one to wonder if the U.S. legislators and the committees they set up retained the dominant position in policy making decisions in the face of these powerful interests when formulating the Marshall Plan.

The gap in addressing the outcomes of corporatist strategies in detail where they were deployed, such as Latin America, has been seized upon by other writers. Ironically, one such historian shares the namesake with the author above, Michael Hogan. Not to be confused with Michael J. Hogan, this unrelated author has produced a revisionist-inspired text called Savage Capitalism, which attempts to give an eyewitness analysis of U.S. corporatist policy. The text consists of a compiled series of essays written during the past decade that recount Hogan’s research and experience as an educator in Latin America. He specifically focuses on the neoliberal policies of the IMF, World Bank, and U.S. corporations, as well as the intertwining legacy of American military interventions in the various regions.

While claiming objectivity, Hogan states that “One cannot live in Latin America for any length of time, and still retain one’s soul, without failing to be impressed by the damage” of such policies. (p. 3) Hogan has an exceedingly dim view on the corporatist brand of U.S. policy, particularly its emphasis on free trade. In the author’s words, free trade is “a misnomer…there is nothing free about it. It merely means that the dominant economic power in the relationship requires the poorer trading partner to sell its raw product at the cheapest possible price to him, so that he can refine and package it and sell it back to the poorer partner and to the rest of the world at the highest profit to himself.” (p. 12) Hogan further reiterates the Wallersteinian periphery-core analysis by asserting that U.S. corporations drive policy to “use all the political, economic and (if necessary) military force” to keep markets open and maintain a free trade environment. (p. 12)

While Hogan claims to draw upon a large reservoir of experience on the ground in Latin American countries, there is more criticism than historical analysis in his broad based critique of U.S. policy in the various regions. Throughout the first three chapters, Hogan makes reference to various free trade policies, such as NAFTA and GATT, commodity prices, and poverty indices without producing any footnotes as to where an interested researcher may follow up upon. The issue of missing citations is partially addressed by several short sections in the central portion of the book, in which he cites a range of poverty, education, immigration, and trade statistics; on the other hand, these references are insubstantial compared to more traditional academic analyses like The Marshall Plan.

Savage Capitalism is at its best when Hogan retells his personal experience, as he does in the later chapters retelling his visits to Nicaragua and Guatemala. Problematically, his analysis still lacks citation when he is attempting to connect his experience to the problems of poverty, illiteracy, corruption, and the corporate exploitation he is describing. This issue becomes far more acute for the text overall, as it does not contain a bibliography. Other striking personal accounts of his interactions with Guatemalan gang members and participating in anti-free trade protests inside the U.S. provide the text with a significant degree of depth; nevertheless, Hogan fundamentally fails to provide the objectivity he claims to be seeking in his introduction. In every one of the fourteen chapters in the book, the author strays from historical analysis into the role of armchair policy maker. While it is clearly apparent that he has witnessed gross injustice and exploitation during his travels, Hogan has misplaced his intention to provide a neutral account. The work illustrates a wide divide between the detached, relativistic approach of U.S. foreign policy academics, and the emotionally invested, on-the-ground, journalistic accounts like Savage Capitalism. The most unfortunate aspects of this work and similar accounts are twofold: works of such a polemical nature with few citations often have a difficult time being accepted by the academic community, even if they contain viewpoints worth exploring. Secondly, the wider audience that is sympathetic to the book’s premise are receiving unsatisfactory example of scholarship, which can actually hurt the causes the author is passionate about. Hence, the problem is methodological rather than ideological. This issue could be at least partially addressed with the presence of more rigorous citations and a clearer delineation between personal conclusions and historical context.

From an ideological perspective, America’s Half Century by Thomas McCormick has a similar critical orientation as Savage Capitalism. Utilizing both the Wallersteinian world systems framework and the corporatist model, McCormick examines the linkage between American domestic and foreign policy over the latter half of the 20th century. This analysis revolves around a description of how the world capitalist system facilitated American hegemony. Conscious of differentiating his work from orthodox appraisals of U.S. strategy, McCormick emphasizes that it was neither necessary nor unavoidable. He notes, “hegemony does not simply happen, individuals and groups of people make it happen” (p. 7)

These non-state actors, including academics, businessmen and lawyers, were focused on utilizing an Open Door policy to incorporate nations into industrialized blocs. McCormick explains that the main intention was “the integration of the Third World periphery and semiperiphery into the industrial cores, and the integration of all” (p. 106) Essentially, the author describes the viewpoint of U.S. leaders and their corporate allies as occupying an aggressive position which required the monopolization of foreign markets as the principle method of achieving piece and tranquility; consequently, they saw the Soviet Union, as well as revolutionary nationalism, as a direct threat to such goals. McCormick credits William Appleman Williams with constructing this Open Door thesis, conceding it to be “imperative of American access to an open, unitary free world economy.” (p. 248) McCormick demonstrates that unprecedented amounts of investment capital, bank loans, engineering, and manufactured goods flowed from the United States into the peripheral zones of the Third World. The author contends that utilizing this policy of market penetration, America modeled itself after the eighteenth and nineteenth century imperial Britain of Adam Smith. McCormick states that the imperial-styled market penetration were, “the envisioned goals…material rewards and physical security for both the United States and the world as a whole.” (p. 48)

The author pinpoints the late 1950’s as the highpoint of American hegemony, but by the 1970s was in decline due to a “national moral ‘malaise’ and decreased efficacy of the nation as global policeman.” (p. 239) In this environment, McCormick explains that American corporations, particularly financial institutions, could still push foreign policy by denying long term lending to nations that were unfriendly to the U.S., as was the case in Chile from 1970-73. McCormick argues that in its competition with the Soviet Union, the U.S. assumed “détente would mean Russian acceptance of the status quo in the periphery” of “sub-Imperialism,” or economic hegemony in their respective spheres of influence. (p. 185-6) Continuing his description of U.S. decline into the 1980s and 1990s, McCormick contends the geopolitical environment was still an attractive setting for the U.S projection of corporate power. Despite its loss of dominance in heavy industry, the mainstay of American supremacy in the first half of the 20th century, McCormick argues that U.S. “goods, services, and dollars proved to be the tugboat that pulled core and semiperipheral economies along its wake” in later decades. (p. 193)

As with Savage Capitalism, America’s Half Century lacks footnotes, although it does contain a lengthy bibliographic essay. This is an issue, as with the aforementioned work, contains broad generalizations in several sections. Methodologically, the McCormick’s work is more similar to The Marshall Plan, being firmly anchored in U.S diplomatic history. More of a synthetic narrative than a polemic, McCormick’s revisionist perspective is a decent counterpoint to the more orthodox work of Michael J. Hogan.

In the study of the role of non-state actors, particularly businesses on U.S. foreign policy, not all works revolve around the Cold War. Linda B. Hall’s Oil, Banks and Politics is also a respectable example of the highly varied field of corporatism. Examining the role of American financial institutions, oil companies, and legislators in policy toward Mexico in the 1920s, Hall demonstrates that there were conflicting interests among these various groups which did not lead to a unified strategy. The banks, for their part, were interested in debt repayments, which could be facilitated by revenue from Mexico’s vast oil reserves. This ran counter to the priorities of the American oil companies, who wanted to maximize profit for themselves by monopolizing Mexico’s oil industry. This left government actors to produce incoherent policy at times, whose primary outcome threatened the institutionalization of the fledgling post-revolutionary Mexican government.

Taking a revisionist position, Hall’s work is a critique on U.S. corporate influenced foreign policy, which she describes as an inherently exploitative relationship that left the Mexican people with bitterness and a sense of heightened protectiveness for its natural resources. Hall argues, “Had the demands of the United States in regard to Mexican recognition and Mexican oil . . . been less coercive and more flexible, it is possible that the outcome might have been considerably different. As it happened, oil became the emblem of Mexican economic nationalism, and it remains so to this day.” (p. 180) Hall enriches the corporatist perspective to borrow from the framework of Theda Skocpol, arguing that the Mexican sense of sovereignty and resistance to U.S. business was a direct result of its revolution. Hall contends that, “Mexican political actors repeatedly framed their responses to U.S. pressures in terms of the preservation of Mexican sovereignty. (p. 7)

Ultimately, the text fits well into the model of the other books discussed in this essay, illustrating the essential connections between state actors and non-state associations and institutions in formulating policy. Hall’s work is similar to the approach of Andrew P.N. Erdmann, who has also focused on the interwar years as a framework for a non-Cold War corporatist analysis.[9] While Hall’s work is more descriptive and less methodological, the depth of archival research in American, Mexican, and British sources helps Oil, Banks and Politics retain its value as an adequate explanation of the interaction between elites and government officials within the corporatist framework.

As many of the approaches detailed here are “outside-in” descriptions of corporatist U.S. policy, it is also helpful to look at the “inside-out” appraisals of this methodology, which lends itself naturally to literature that looks in detail at corporate policy. Sanford Jacoby has produced a work worthy of this type of framework called Modern Manors, which looks specifically at corporate-styled welfare capitalism as a historically and geographically specific phenomenon. Reading from more of the positivist (although not necessarily orthodox) school of thought, Jacoby sees corporate projections of power to be “an impressive if imperfect system, one whose notions of order, community, and paternal responsibility recalled the preindustrial household economy. The firms pursuing welfare capitalism were, in effect, industrial manors.” (p. 4)

Jacoby utilizes three separate case studies of corporate firms to illustrate a wider picture of the evolution of industrial and governmental relations throughout the 20th century. Jacoby concedes that this type of corporate domination of the American workforce is not entirely rosy, stating “As in the 1920s, the workforce increasingly is split between the ‘have-nots’ and the ‘haves,’ who will spend most of their careers working in modern manors like S.C. Johnson or Microsoft.”(p. 9) The primary thrust of the text is a description of how major industries united to exert the greatest possible influence on policy in the 1920s and 1930s. Under the Special Conference Committee (SCC), executives from ten of America’s leading companies formed a committee to coordinate labor relations and responses to changes in legislation. The set of principles at the heart of such efforts were summed up by John D. Rockefeller, Jr.: “the only solidarity natural in industry is the solidarity which unites all those in the same business establishment,” referring to the continual growth and maintenance of profit. (p. 21)

As the “keystone of economic security in American society,” Jacoby asserts that the welfare capitalism of large corporate firms has triumphed largely on the world stage. (p. 266) Despite the challenges of the Great Depression, World War II, and the rapid technological change of the last four decades, the preeminence of corporate power has eclipsed the strength of both unions, as well, as Jacoby muses, government legislators. Arguably, a close analysis of Modern Manors demonstrates that corporations wielded enormous influence on governmental actors throughout the 20th century as various administrations consistently turned to the business community for assistance for both major domestic and foreign problems. Jacoby contends that corporate power expanded with the growth of consulting firms and partnerships with academia and the military. These combined to create what Jacoby describes as “a nexus of ties among government, corporations, and behavioral scientists” that pushed policy, particularly during and after the Cold War. (p. 226)

The main strength of Jacoby’s work is its heavy reliance on primary sources derived from the internal policy formulations of major corporations. While only a small portion of the text is actually focused on the link between corporate activity and foreign policy, it provides a highly informed window inside the workings of actors that were deeply engaged in such policy. That said, a deeper analysis of the implications of such a wide penetration of non-state actors into the legislative process that Modern Manors demonstrates would have been welcome. It causes Jacoby’s conclusion of the ceding of authority from legislators to corporations as less than a positive development to be oddly out of sync with what is essentially a highly technical account.

The divergence of Jacoby’s work to all of the others featured here exhibit the rich variety available in the field. As historian Philipe C. Schmitter posited, there are a growing number of versions of corporatism, each illustrating a different aspect depending on foreign and domestic variables.[10] Many other texts from disparate vantage points would be worthy of an appraisal within the corporatist framework. This methodology, for example, applies to the work of Ellis W. Hawley, who defines corporatism more in terms of bureaucracy and associationalism within U.S. presidential administrations, which is significantly divergent compared to the position of David Painter, who sees corporatism as the playing out of a delicate balance of both and public and private interests, that is influenced more strongly by non-state actors.[11] Both of these works are far different from that of Edwin Black, who is more focused on the ideological rather than the political implications of the effect of businesses and business associations on U.S. foreign policy.[12]

Michael J. Hogan sees this variety as a strength in countering the critique of historical “fuzziness,” by John Lewis Gaddis.[13] Nevertheless, Gaddis has a valid point in his contention that the corporatist approach possesses a loose enough framework as to leave space for an enormous array of varying viewpoints. This essay attempts to isolate at least four major categories: The traditionalist approach of The Marshall Plan, a more personal, journalistic account of Savage Capitalism, the revisionist-inspired works of McCormick and Hall, and the technical, internal view of corporate governance presented by Jacoby. Each has positive and negative attributes, but taken together, they deserve the appraisal put forth by Michael J. Hogan of “restore[ing] the connection between more traditional diplomatic historians and their colleagues in other fields…to rejoin the larger community of scholars who are unraveling the history of modern America.”[14]


[1] Charles Maier, The Cold War in Europe (Princeton: Markus Weiner, 1991), p.21.

[2] Michael J. Hogan, “Corporatism: A Positive Appraisal,” Diplomatic History 10, (October 1986): p. 363-72.

[3] John Lewis Gaddis, “The Corporatist Synthesis: A Skeptical View” Diplomatic History 10, (October 1986): p. 357-62.

[4] Thomas J. McCormick, “Drift or Mastery? A Corporatist Synthesis for American Diplomatic History,” Reviews in American History 10 (December 1982): p. 318-30.

[5] Charles Maier, “American Visions and British Interests: Hogan’s Marshall Plan,” Reviews in American History 18 (March 1990): p. 102. Michael Wala, The Council on Foreign Relations and American Foreign Policy in the Early Cold War (Toronto: Berghan, 1994), p.220.

[6] Geir Lundestad, “Empire by Invitation? The United States and Western Europe, 1945-1952,” SHAFR Newsletter 15 (September 1984): p. 1-21; and Charles Maier, “The Politics of Productivity,” p. 630.

[7] Independent Commission of Experts, Switzerland, Switzerland, National Socialism and the Second World War (Zürich: Pendo Verlag GmbH, 2002), p. 181-83, 239, 424, 520.

[8] Reinhold Billstein, et. al.,Working for the Enemy: Ford, General Motors and Forced Labor in Germany During the Second World War (New York: Berghahn, 2000). The argument of this text revolves around the premise that Ford and GM controlled a majority of Third Reich War industries through their subsidiaries, Ford-Werke & Opel, and maintained in contact and control with them throughout the war via managers loyal to the company. Both companies regained ownership at the end of the war. See also Edwin Black, IBM and the Holocaust: The Strategic Alliance between Nazi Germany and America’s Most Powerful Corporation (New York: Crown Publishing, 2001) Edwin Black argues in his exhaustively sourced monograph that International Business Machines’ (IBM) largest client was Germany throughout the 1930s and 40s and played a crucial role in Nazi war production by organizing inventories, production schedules, combat records, and census data – specifically for concentration camp slave labor and genocide. Additionally, Charles Higham contends that International Telephone and Telegraph (ITT) also monopolized Germany’s information technology business, supplying them the majority of their phones, radios, and telegraph technology, in Trading with the Enemy: An Expose of the Nazi-American Money Plot 1933-1949. (New York: Delacorte Press 1983, 2007). Finally, for a description of U.S. financial institutional penetration into European markets during the interwar and World War II period, see Jason Weixelbaum, “Following the Money: An Exploration of the Relationship between American Finance and Nazi Germany.” jasonweixelbaum.wordpress.com.

[9] Andrew P.N. Erdmann, “Mining for the Corporatist Synthesis: Gold in American Foreign Economic Policy, 1931-36,” Diplomatic History 17 (Spring 1993): p. 171-200

[10] Philippe C. Schmitter, “Still the Century of Corporatism?” Review of Politics 36 (January 1974): p.85-131.

[11] For Hawley’s opinion of corporatism, see Martin L. Fausold  and George T. Mazuzan, eds., The Hoover Presidency (New York: State of New York University Press, 1974), p. 101-119. See also David Painter, “Oil and the Marshall Plan,” The Business History Review 58 (Autumn 1984): p. 359-83.

[12] See Edwin Black, Nazi Nexus: America’s Corporate Connections to Hitler’s Holocaust (New York: Dialog Press, 2009)

[13] Michael J. Hogan and Thomas G. Paterson, eds. Explaining the History of American Foreign Relations (Cambridge: Cambridge University Press 2004), p. 147.

[14] Ibid. p. 148.

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