the corporative model

I argued in an earlier post that, as a result of their religious outlook, people in a Prot society tend to look at each other as competitors, even adversaries. This is what gives Prot societies that distinguishing characteristic of a lonely individualism where each man seems to be an island. In a Cath society, by contrast, people look at each other as companions or friends, they like to be in company and they are at their best when they act in group.

Prot societies tend to be impersonal societies, where people seem not to know each other, even when they are neighbours. Catholic societies, on the contrary, are very personal societies where everybody knows everybody else or, at least, has heard abou him or her.

The impersonalism of Prot societies compared to the personalism of Catholic ones has strong economic implications. The most important of them is that whereas the natural economic system of a Prot society is competitive liberalism or capitalism, that of a Cath society is corporativism. The key economic institution of a Prot society is the free market with its impersonal outcomes of price and production whereas in a Cath society it is an authority with its personal decisions regarding entry, price and output.

The corporative or cartel model, typical of Cath societies, as compared to the competitive model, typical of Prot societies, suggests that, in each sector of the economy prices will be higher and output will be lower in a Cath society than in a Prot society, ceteris paribus. This is also true, though, in labour markets where wages will be higher and employment lower. Overall, one cannot conclude from here that the standard of living of the Cath society will be lower than that of the Prot society. What we can say is that total output (or GDP as it is currently measured) and employment will be lower in the Cath as compared to the Prot society. This is what gives Cath societies the appearance of being less productive than Prot societies.

It is only appearance, though. The personalism of Cath societies means that people value the companionship of other people more highly than in Prot societies. Actually, people in Cath societies work less, according to the comparison above, because they enjoy spending more time with other people (family, friends, etc), even though the value of this good is not included in current GDP calculations.

Furthermore, the personalism of Cath societies and the personalization of economic outcomes (such as prices, production, employment and wages) in the corporative authority enables people in Cath societies to responsibilize the authority for situations of economic hardship and ask for direct, personal help. The function of the corporative authority is as much that of taking overall economic decisions regarding price, output and entry into the sector, as it is that of protecting the members of the corporation from economic risks such as those associated with unemployment and bankruptcy. By contrast, in a Prot society when people are left unemployed or bankrupt by the impersonal process of the market no such protection by his peers is available. Thus, were the value of the good "protection" against economic risks such as unemployment and bankruptcy included in current calculations of GDP and there would be no reason to believe that total output of the Cath is lower than that of a Prot society, other things being equal.

Finally, when it comes to mobilize a sector of economic activity for some national or collective goal, the competitive, atomistic model of the Prot society is very inefficient. By contrast, the corporative model is quite efficient at that. The corporative model of Cath societies might be less prone to innovation and to the assumption of economic risks when compared to the competitive model of Prot societies, but that is part and parcel of the more conservative nature of Cath societies.