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Corporatocracy

Corporatocracy, in social theories that focus on conflicts and opposing interests within society, denotes a system of government that serves the interest of, and may be run by, corporations and involves ties between government and business. Where corporations, conglomerates, and/or government entities with private components, control the direction and governance of a country, including carrying out economic planning notwithstanding the ‘free market’ label.

Concept

The concept of corporatocracy is that corporations, to a significant extent “own” or have massive power over governments, including those governments nominally elected by the people, and that they exercise such power not by back-room conspiracies but by their enormous, concentrated economic power, and by legal in-the-open mechanisms (lobbyists, campaign contributions to office holders and candidates, threats to leave the state or country for another with less oversight and more subsidies etc). Oliver Stone captured “Wall Street, you know, you could say..runs the world. Wall Street, the pharmaceutical lobbies, the oil lobbies, they run our government”

• First, corporations provide financial support to competing political parties and major political party candidates. This allows the corporations to hedge their bets on the outcome of an election so that they are assured to have a winner who is indebted to them. As politicians are increasingly dependent on campaign contributions to become elected, their objectiveness on issues which concern corporate interests is compromised.
• Second, in many cases former corporate executives are appointed as powerful decision makers within government institutions. They are often charged with the regulation of their former or future employers. Government employees who collude with corporations often accept high-ranking positions within corporations once they have demonstrated their commitment to serve the corporate interest. These lucrative offers provide incentive for government employees to serve Lobby groups as well as provides their new employers with access to governmental decision makers. This is known as the ‘revolving door’ between corporations and the institutions established to regulate their behavior; and can lead to regulatory capture.
• Finally, the economic regime, while often called ‘free market,’ involves centralized economic planning and coordination by corporations, with governments playing the role of an assistant to such corporate central planning. Chomsky described this dimension, noting about international trade that “trade” is “a dubious term for a system in which some 40 percent of U.S. trade takes place within companies, centrally managed by the same highly visible hands that control planning, production and investment.” Chomsky also describes the economic regime of the corporatocracy or de factro corporate-run world, citing economists on the centralized coordination and planning underlying the economic sphere:

Herman Daly and Robert Goodland, two World Bank economists, circulated an interesting study: they point out that received economic theory—the standard theory on which decisions are supposed to be based—pictures a free market sea with tiny little islands of individual firms. These islands, of course, aren’t internally free—they’re centrally managed. But that’s okay, because these are just tiny little islands on the sea. We’re supposed to believe that these firms aren’t much different than a mom-and-pop store down the street. Daly and Goodland point out that by now the islands are approaching the scale of the sea. A large percentage of cross-border transactions are within a single firm, hardly ‘trade’ in any meaningful sense. What you have is centrally managed transactions, with a very visible hand—major corporate structures—directing it.

Arguments

There are currently no governments labeled by any governmental agencies as a corporatocracy. However, a large body of research including the work of many political progressives such as Naomi Klein in her book The Shock Doctrine: The Rise Of Disaster Capitalism and Noam Chomsky in his book Profit Over People: Neoliberalism & Global Order, has criticized many governments for being de facto corporatocracies because governments tend to obscure the degree to which corporate interests are entangled in their affairs. An objective standard for declaring a government a corporatocracy is misdirected from public discussion in-part because these facts are heavily propagandized. However most Western governments based on a capitalist system have been classified by evidential research as being corporatocracies because most media outlets, including Fox, MSNBC, CNN, ABC, NBC, and CBS, are controlled through corporate ownership and advertising; and, corporations are by far the main contributors to political candidates and causes. Corporate campaign contributions create a dependency of the politician on the corporation - in order to keep his power and wealth (i.e. to continue receiving support for re-election bids), by which they are obliged to “pay back” to the corporation using their political influence. And the domination of media outlets by a select few corporations also eliminates one of the primary systems of checks and balances of a democracy.

Many reporters and researchers have argued that corporations also exert their influence through the World Trade Organisation. Through this methodology, governments are more in control of their countries at a domestic level, while international corporations rule those nations at a more abstracted level through the control and flow of capital (often including natural resources and populations) across borders; thus creating a manageable and pliable “global corporatocracy” or hegemony. This global influence in turn has a great deal of power over the national and trans-national (e.g. the EU, NAFTA) governments, who rely and to a great extent, depend upon these practices.

The most common contradiction of the term “corporatocracy” and its use in the lexicon is the theorem that corporations are primarily superficial entities possessing no real political power. Instead, it is the people behind those corporations that hold the power who act upon their own individual political ideologies. In this sense, a corporatocracy is nothing more than a market segmentation where the class which owns the means for producing wealth is fighting for their own individual-self interests. The direct challenge to this theorem is the fact that a corporation is by definition a ‘collection’ which is built of private (and more often public) wealth funneled into a vertical hierarchy without the requirement of any democratic controls and designed for the singular cause of maximizing roi (return on investment: i.e. the expansion of the control of capital). And this entity (or institution) has legally been ruled through almost all court systems to be considered a single ‘person’ and given the inalienable human rights thereto required by most constitutions for human beings. This means that corporations have the ability to use direct democratic channels reserved for citizens (and denied to all other institutions including: religious organizations, non-profits, and universities); and are also represented and protected as an individual within the courts when facing public scrutiny and regulation.

Wealth

It is also primarily significant that the wealthiest 1 percent globally now own almost 40 percent of the world’s capital, and that most of these same people have significant ties to the richest and most influential corporations.

Democracy vs. Corporatocracy

Alex Carey, the late Australian lecturer in industrial relations, sociology and psychology, wrote that “The twentieth century has been characterized by three developments of great political importance: the growth of democracy, the growth of corporate power, and the growth of corporate propaganda as a means of protecting corporate power against democracy.” The Program on Corporations, Law and Democracy states that “Giant corporations govern, even though they are mentioned nowhere in our Constitution or Bill of Rights. So when corporations govern, democracy is nowhere to be found.” Lisa Graves, Executive Director of the Center for Media and Democracy and former Chief Counsel to the Senate Judiciary Committee and Deputy Assistant Attorney General has stated that recent court rulings on increasing corporate power “expand the influence of corporations at the expense of the rights of individuals, and..will not stand the test of time” Addressing the Harvard Divinity School’s Theological Opportunities Program, Mary Zepernick has argued that “There are two historical streams in U.S. history ..one is about the decentralization of power, public decision-making, self-governance – about democracy; the other is about the concentration of power, private decision-making, governance by the few and the corporation as their governing institution.” According to Christine E. Sleeter:

A challenge for teachers who support teaching for and about democracy is doing so while being pressed into directives rooted in corporatocracy, a political manifestation of neoliberalism. The accountability movement today, particularly No Child Left Behind, is rooted in much more firmly in corporatocracy than democracy. Democratically minded teachers face two tasks: negotiating increasingly undemocratic systems in order to find space for democratic teaching, and critically examining what democracy is, including gaps between its ideals and actual practice.

Buying politicians controversy

Those who dismiss the idea of a corporatocracy often say the only way it is possible is if it were legal to buy a politician’s vote. In such a way, the corporation would, in fact, have a direct vote on major policy matters. However, many legitimate democracies have made vote buying illegal. However, under the terms of at-will employment, corporations can require their employees to vote a certain way in exchange for (continued) employment.

However, those who believe there may be corporatocracies argue that no one individual, and perhaps no other groups of individuals, would have that much power, money or influence. Further, they argue the decisions on what to push for and who to support are made by a relatively few from inside the corporation. Therefore, while thousands of people may make up a corporation, only a few have the power to speak for the corporation and advocate issues on behalf of the corporation. That provides those corporations with a substantial amount of power, leading to a corporatocracy.

Further, they argue that it does not take an overt effort to buy a politician’s vote. Making a substantial donation to a certain politician’s campaign could be seen as sending a signal to that politician that the money is there if they vote in a way the corporation desires. Conversely, the money could be donated to an opponent if the vote does not go the corporation’s way.

A politician’s entrance into a mainstream political party and selection as a political candidate depend on having views that are in-line with the party, which is largely supported by donations from corporations. In other words, the politicians are pre-screened to some extent, often towards corporate-friendly views. Furthermore, much of the policy analysis in Western countries is carried out in privately funded back offices. This means that policies are under the umbrella of corporations at the design and validation stages. Accusations of foregone conclusions in policy analysis are commonplace. On the flipside, analysis can reveal negative consequences for businesses, which are often negative consequences to the public as well. The definition of democracy in many minds has evolved so much in this direction that when non-corporate-friendly views make their way into government, corruption and/or flawed democracy is a common accusation. For example, the coalition of several populist parties in Venezuela led to the fair election of Hugo Chavez.

Usage

U.S. President Dwight D. Eisenhower himself argued against the strengthening corporatocracy in the form of a military-industrial complex that sets national and international financial, economic, political and military policies due to a permanent war economy. In his 2004 book Confessions of an Economic Hit Man, John Perkins writes; “corporations, banks, and governments (collectively the corporatocracy)”. The concept of a government run by corporations or instances where governments are actually weaker (politically, financially, and militarily) than corporations is a theme often used in both political fiction and science fiction. In these instances the dominant corporate entity is usually dubbed a megacorporation, such as the Shin-Ra Electric Power Company in Final Fantasy VII.

See: Wikipedia: Corporatocracy