Corporatocracy and our social condition
Corporatocracy is a recent term used to refer to an economic and political system controlled by corporations or corporate interests. It is most often used today as a term to describe the current economic situation in a particular country, especially the United States. This is different from corporatism, which is the organization of society into groups with common interests. Corporatocracy as a term is often used by observers across the political spectrum.
Economist Jeffrey Sachs described the United States as a corporatocracy in The Price of Civilization. He suggested that it arose from four trends: weak national parties and strong political representation of individual districts, the large U.S. military establishment after World War II, large corporations using money to finance election campaigns, and globalization tilting the balance of power away from workers.
This collective is what author C Wright Mills in 1956 called the 'power elite', wealthy individuals who hold prominent positions in corporatocracies. They control the process of determining a society's economic and political policies.
The concept has been used in explanations of bank bailouts, excessive pay for CEOs, as well as complaints such as the exploitation of national treasuries, people, and natural resources. It has been used by critics of globalization, sometimes in conjunction with criticism of the World Bank or unfair lending practices, as well as criticism of "free trade agreements."
A corporatocracy is a corporation-controlled system and there are no officially true corporatocracies in the world. No government comes forward to declare that the country is partially being run by powerful businesses. Possibly coined from the words 'corporations' and 'democracy', it is a disparaging term, used extensively by economic experts, political researchers, and liberal critics. It means that the system, by extension, the country, is controlled by huge financial corporations. That is to say, the government elected by the people exists of course, but what and how they plan things for the country depends on the corporations.
The prime reason behind this could be the huge amounts that these corporations contribute to the GDP of the country, owing to which the elected leaders may feel obligated to bow down to the financial community. Some of the major indications of corporatocracy in America are corporate taxes, income inequality, unrestricted stock buybacks, etc.
Edmund Phelps published an analysis in 2010 theorizing that the cause of income inequality is not free market capitalism, but instead is the result of the rise of corporatization. Corporatization, in his view, is the antithesis of free market capitalism. It is characterized by semi-monopolistic organizations and banks, big employer confederations, often acting with complicit state institutions in ways that discourage (or block) the natural workings of a free economy. The primary effects of corporatization are the consolidation of economic power and wealth, with end results being the attrition of entrepreneurial and free market dynamism.
His follow-up book, Mass Flourishing, further defines corporatization by the following attributes: power-sharing between government and large corporations (exemplified in the U.S. by widening government power in areas such as financial services, healthcare, energy, law enforcement/prison systems, and the military through regulation and outsourcing), an expansion of corporate lobbying and campaign support in exchange for government reciprocity, escalation in the growth and influence of financial and banking sectors, increased consolidation of the corporate landscape through merger and acquisition (with ensuing increases in corporate executive compensation), increased potential for corporate/government corruption and malfeasance, and a lack of entrepreneurial and small business development leading to lethargic and stagnant economic conditions.
Enormous corporations, the government, and international banks and financial institutions constitute the three pillars of corporatocracy. The goal of corporatocracy is to establish powerful political and legal connections so that business owners are free to pursue their activities (even illegal activities) without any fear of the law. For the government, it is way to use the excessive wealth and powerful influence of these corporations. Thus, it is a mutual advantage for both parties. The only one who suffers is the common man, who has nothing but his courage as his shield. Corporatocracy has been widely criticized since it may lead to economic exploitation, unfair lending practices, and dishonest use of national treasury and resources. Often, it is used in relation to situations when CEOs are excessively paid, corporate taxes are planned differently, and free trade agreements are signed.
Mark Arthur has written that the influence of neoliberalism has given rise to an "anti-corporatist" movement in opposition to it. This "anti-corporatist" movement is articulated around the need to re-claim the power that corporations and global institutions have stripped governments of. He says that Adam Smith's "rules for mindful markets" served as a basis for the anti-corporate movement, "following government's failure to restrain corporations from hurting or disturbing the happiness of the neighbor.
One of the major benefits of corporatocracy includes quick decisions. Since the government relies on the orders of executive powers, they do not take long to arrive at a conclusion about important matters. The corporations contribute significantly to the country's GDP, and with government assistance, they can grow rapidly, contributing to increased economic growth. Since the corporations are powerful enough, they can wield their influence on the law, speeding up the process of justice and simplifying complicated legal matters.
While a major part of the country benefits through economic growth, the labor sector suffers the most, since corporatocracy leads to a widening chasm between the rich and the working class. No ethics are followed, and the very concept of democracy is shunted aside. The government does not have the individual freedom to do what it feels is good for the country; the leaders have to follow the influential corporate magnates.
If corporatocracy can be used for the overall development of the country, it can be considered as a good system. For instance, if huge corporations can help secure justice to an innocent due to their power or exercise influence to do something advantageous for the country. The situation now, however, does not seem to remotely consider these options, leading to an increased income inequality and harsh criticism of corporatocracy.
Uttom Paul is a teacher