Box 3.7 Parastate administration -- the Swiss way of corporatism

Intensive cooperation between government and private economic actors is known in most highly industrialised democracies. Organisations looking after the interest of enterprises, branches, professions and labour, negotiating their mutual interests with government, are known under the label of 'neo-corporatism'. However Swiss neo-corporatist institutions differ in several ways from those of other countries, and because of the following differences I prefer to speak of 'parastate administration':⁴⁵

• As early as the end of the nineteenth century, private organisations, especially those in agriculture, fulfilled legal tasks for the federal government, which at the time lacked a professional administration of its own. It can be said that Swiss government at all levels sought to avoid building up a large professional administration. Whenever possible, government preferred to use private organisations or create semi-private (para-state) organisations to carry out public policies. The most important example is agriculture, which has dozens of parastate organisations that propose and implement production regulations and organise the pricing, distribution and marketing of most agricultural products.⁴⁶ Other important parastate organisations are cantonal banks, electricity companies, regional development agencies, and the many professional organisations that regulate or run professional schools.
• Cooperation with parastate organisations became particularly important in the 1930s, when the federation tried to manage the economic crisis by a sort of branch protectionism. On the occasion of a constitutional reform in 1947, economic organisations were authorised to participate in the legislative process as well as in the implementation of matters of their concern. Consequently private economic actors became particularly powerful in their specific field of industrial policy. Thus the strong political influence of economic vested interests is not explained by the referendum alone.
• Compared with other countries, the influence of labour organisation in Switzerland is low, whilst cooperation between government and economic actors has led to a split Swiss economy: while export-oriented enterprises used favourable arrangements of international free trade or in an association treaty with the EC in 1972, domestic enterprises were protected from foreign competition by cartelisation and collective regulation or public non-tariff restrictions. In the future the Swiss economy will not be able to have it both ways. GATT policy has already placed limits on agricultural protectionism. Furthermore the European Economic Area might have an influence on the opening up of the Swiss market in many other areas of the economy.