Fascism should more properly be called corporatism because it is the merger of state and corporate power.

-- Benito Mussolini

Lemons, not bananas

The quote from Mussolini above describes the propagandistic goals of Italian fascism quite well (i.e. the goals that the fascists wanted people to believe that they were aiming for). There seems to be some doubt as to the authenticity of the wording of this quote. Nevertheless, its content is in perfect accordance with the professed ideas of Italian fascism.

But -- and it’s a huge BUT -- the phrase "corporate power" denoted something entirely different in Italy during the fascist era than the phrase “corporate power” does in the US and the English-speaking world today.

A "corporation" poles apart, with medieval roots

"Corporatism" is merely the fascist theory of industrial organisation. Its ideas are in certain ways related to the theories of English Guild Socialism, a movement that could well have influenced Mussolini’s thinking (Benito Mussolini started out his political career as a fiery socialist). Corporatism can also be thought of as a streamlined version of the medieval guild system.

The central idea of corporatism is that all branches of industry should be organised in such a way that employers and workers can cooperate in harmony and mutual understanding. In this way disruptive strikes are avoided and production, wages, and profit will be maximised. In a fascist society everything is produced for the benefit of the State. Corporatism was thought to be equally beneficial to the State as it was to workers and employers, particularly as it was to be supervised by the State. The "corporation" (I’ll use quotes to distinguish the fascist "corporation" from the modern concept) was to consist of an elected body with representatives from both employers and workers. This body was empowered to decide on all matters relating to the workings of an industry.

Luckily, just a political program

Corporatism in Mussolini’s Italy was in reality just a political program and it was not put into practice in earnest. This may be just as well, because -- as many economists have pointed out -- the corporatism along the lines sketched by the fascists is in the long run certain to reduce productivity and increase prices, instead of the other way around. Because if the "corporation" wants to look after the best interests of its workers and employers, then raising prices and producing less would be much more efficient than to increase production. Over time the "corporations" will simply develop into powerful monopolies.

In constant conflict, but in overall harmony

Unfortunately, "harmony and understanding" doesn’t work in the marketplace or in labour relations. Real conflicts of interest remain real conflicts, no matter how much you try to redefine or euphemise them. They must be dealt with in a way that takes their reality into account. Keen competition, political disagreement, and labor conflicts are the way of life in our civilised world. But the way that these things are institutionalised in our societies makes it all work rather harmoniously nevertheless, surprising as it may seem.

Reference:

http://www.mises.org/etexts/mises/interventionism/section5.asp