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David Brooks on Goverment-Corporate Relations--Skeel

Inspired by the Obama Administration’s awkward dance with BP over the oil spill, David Brooks divides the nations of the world into two categories in this column today: those that treat oil companies and other large corporations as private corporations (“democratic capitalism”), and those that directly own and control the companies (“state capitalism”).

Brooks’ columns are always interesting, but this time his love for the number two—for dividing everything into two camps—leads him astray. The category he calls democratic capitalism merges very two different approaches, corporatist governance in which the state regulates and collaborates with large corporations; and a more decentralized approach (smaller corporations and industry competition). The U.S. has traditionally tended to favor the decentralized approach, whereas many European countries favor corporatism.
One of the most remarkable developments in the two years has been the extent to which we’ve moved in a corporatist direction. With a few small exceptions—such as the so-called Volcker rule limiting banks’ propriety trading—the entire financial reform package has a corporatist cast. The Obama administration’s new plan to pressure BP to set aside a fund for those injured by the oil spill has the same corporatist quality. It’s more evidence of the shift toward European-style governance.


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