Nature and Origin of Corporate Dominance

¶ … Corporation Changed from Early 19th to 21st Century?

Corporate Change Over Two Centuries

Corporations today manifest a singularity of focus on earnings that enables them to slice unencumbered through consideration for outcomes that do not directly impact profit margins. In the book, The Corporation, Joel Bakan asserts that:

"The corporation's legally defined mandate is to pursue, relentlessly and without exception, its own self -- interest, regardless of the harmful consequences it might cause to others" (Bakan, 2005, p. 9)

Bakan argues that the institutional imperatives of corporations, coupled with their seemingly boundless capacity to become more powerful fosters a pathological orientation to doing business that poses grave economic, political, and social danger. Bakan's theory will serve as the primary touchstone in this exploration of the influence of corporate power on politics and the economy.

The first section of this paper centers on a discussion about the ways in which the economic forces of capitalism and the market society undergird the present power surge of corporations, and lay the groundwork for radical economic change -- some of which seems reminiscent of feudal economic arrangements. A discussion about the mutuality of political power and corporate power is the focus of the second section. This discussion is grounded in Steven Lukes' seminal theories of power, and ideas about the co-opting of government, touching on examples from Canadian history, such as the staples political economy theory. The paper will conclude with a discussion of Herbert Marcuse's pivotal theory: the capacity of consumerism to define what society should desire and strive for over other objectives

Capitalism and the Market Society

Driven to increasingly larger size and influence, corporations treat social responsibility as a set piece: a discrete initiative that results in positive media coverage but that in no way hinders the overarching corporate goal of raising stock prices for shareholders. Free market economists like Milton Friedman advocate for an idealized market based on supply and demand, unencumbered by government control. Put simply, a free market is characterized by a voluntary agreement between two parties who seek to trade goods or services, and mutually agree on price without external intervention. In the free market frame, sellers need not make apologies for greed. Indeed, free market economists are often quoted -- typically with pejorative intent -- as stating "greed is good." And perhaps from an economic point-of-view, to the extent that greed functions as an elemental acquisitive force in trade and development, greed can be cast in a favorable light. For this discrete definition of greed, society does not demand apologies from economists. However, greed that is unanchored by moral values gives tacit -- if not overt -- approval to corporations that seek to maximize profit "regardless of the harmful consequences" (Bakan, 2005, p. 9). In Bakan's corporate purpose statement, we are faced with a collective corporate sentiment that does not embrace as business success the economic development it provides while engaged in making a profit. Nor does this sentiment indicate an interest in "the workers" or give any indication that altruistic values might be attached to the corporate business enterprise. Proponents of a free market share an ideology that undermines corporate interest in social and economic benefit for the common good, and can drive corporations to continually seek ways to increase their power base.

Economic forces undergird the present power surge of corporations and lay the groundwork for radical economic change -- some of which seems reminiscent of feudal economic arrangements. The transformative power of the monetization of land, labor, and capital is evident over the past several centuries, and much of the early thinking about these changes derived from the writings of Adam Smith in the Wealth of Nations. Smith conceptualized human nature as having a particularly robust "desire for betterment," which more modern economists refer to as the profit motive. Through his theory of moral sentiments, Smith asserted that:

The rich...are led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interest of the society...(Smith, 1759, Part IV, Chapter 1).

When reading Smith, it is important to keep top-of-mind that many of the forces that impact the "invisible hand" today, such as marketing, large-scale industry, financial and credit services, were not in place during Smith's time. Many modern theorists suggest that the fundamental economic dynamics that Smith described have changed substantively since the book was written. Indeed, the mechanisms that ensure the system of wealth building will trend ever upward have become more robust -- and economic evidence abounds to support the notion that wealth building capacity is not widely distributed across society. In Smith's theory of moral sentiments, the seeds of the modern so-called "trickle down theory" postulated by supply-side economists can be seen -- a theory that asserts the supply side (production) of goods and services is fundamental to economic growth.

Terry Slater (2012) writes in The Rise and Spread of Capitalism that as the resident system moved from feudalism to capitalism, people began to experience freedom of choice across many life contexts -- a dynamic that would eventually lead to "consumer sovereignty" and greater prosperity. Slater's theories about geographic and economic dynamics point to the creation of social processes and cultural contexts that act as catalysts for the accumulation of capital in certain locations.

In The Emergence of Market Society, Don Slater and Fran Tonkiss (2001), review the historical evolution of the construct of market society, theorizing that markets are social institutions and not just formal economic models. Slater and Tonkiss (2001) base their theory on contemporary ideas grounded in society, such as social action, order, and relationships. Using frameworks from the social sciences, the authors cobble together cultural, political, and social theory in a manner that distinctly represents the contemporary market. The Slater and Tonkiss (2005) model provides a foundation for understanding the blurring of lines between economic, social, and political life that produced the market society, and the economic mechanics that have evolved to into modern capitalist business structures and environments.

The Mutuality of Political Power and Corporate Power

The concept of business co-opting government is pivotal to comprehending the relationship between contemporary economics and political power. Corporations have shown their willingness to trample anyone and anything that gets in their way -- and, increasingly, politicians are willing to assist with the process. Writing on the sources of corporate power, Ted Nace (2003) listed the following:

[T] he power that large corporations derive from their political action committees, their lobbyists, their lawyers, their control over millions of jobs…the 'revolving door' that moves corporate people in and out of government agencies, the corporate ownership of media conglomerates… [and] the obscure Supreme Court decisions that 'discovered' corporate rights hidden in the language of the Constitution (p.12).

The revolving door between government positions and high-paying employment in private industry has been a difficult, if not impossible, door to shut. With their deep pockets, corporations have been able to increase lobbying to unprecedented levels, pour massive contributions into political campaigns, and conduct public relations campaigns that whitewash their unregulated impact on the environment and society. Corporate power is linked to political outcomes, to the manner in which corporations obfuscate their power and influence, and to the way that corporate power can reshape the judicial and legislative balance of power.

Robert A.G. Monks wrote that society is toe-to-toe with a "situation of great precariousness" in which it is "dangerously close to the co-option of government by business" (Bernasek, 2013). Robert Reich, former U.S. Secretary of Labor in the Clinton administration and U.S. Senator Bernie Sanders of Vermont assert that the U.S. has arrived at this point today. The phenomenon is certainly not particular to modern society; history provides many examples of government being co-opted by the wealthy long before the emergence of the modern corporation. One has only to look as far as Canadian history at the Staples political economy theory to understand the machinations that bring about co-optation. The writings on Harold Innis and the Staple theory illustrate how the search for and exploitation of extracted materials in Canada led to the creation of supportive institutions and shaped the regional and national political culture. The dovetailing of politics and economics is clearly illustrated in this example.

In Power: A Radical View, Steven Lukes (1975) defined two different types of power that he has derived from Spinoza: the capacity to impact the surrounding world and to dominate other beings -- the second power being a subset of the first. Lukes (2005) postulated that there are three dimensions of power that he refers to as: the one-dimensional view, the two-dimensional view, and the three dimensional view. Lukes (1975) seminal work describes a unique conceptualization of power along these three dimensions that are fundamentally related to decision-making and behavior. He defines the first dimension as "the study of concrete, observable behavior" (p. 17, emphasis in original). Thus, the first dimension is seen to be the analysis of observable conflicts over concrete political issues that occur between organized interests. The second dimension addresses the dynamics that keep potentially controversial issues from yielding "observable conflicts" (Lukes, 1975, p. 23). In other words, if behavior that is absent decision-making occurs, some potential issues are never made actual -- they just don't happen or don't appear. In as much as political analysis examines variables that constrain the agenda but are not necessarily overt -- in fact, may be hidden -- the third dimension deals with an ideological matter.

Is it not the supreme and most insidious exercise of power to prevent people, to whatever degree, from having grievances by shaping their perceptions, cognitions and preferences in such a way that they accept their role in the existing order of things, either because they can see or imagine no alternative to it, or because they see it as natural and unchangeable, or because they value it as divinely ordained and beneficial? (Lukes, 1975, 28)

The topics of behavior and decision-making are relevant to the relation between consumers and corporations, and between politicians and corporations -- both aspects of which inform the phenomenon of corporate abuse as conceptualized by Bakan (2005).