Corporatocracy

Corporatocracy is an economic, political and judicial system controlled by corporations or corporate interests. 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. Corporations have a significant influence on the regulations and regulators that monitor them. During the Gilded Age in the United States, business leaders spent significant amounts of money ensuring that government did not regulate their activities. Former President Jimmy Carter claims the U.S. is now an oligarchy with unlimited political bribery.

Income analysis confirms that relative growth of income and wealth is not occurring among small and mid-sized entrepreneurs and business owners. The top 1% got nearly "one-quarter" of the income and own approximately 40% of the wealth. Some large U.S. corporations have used a strategy called tax inversion to change their headquarters to a non-U.S., location. The S&P 500 companies used 54% of their earnings ($2.4 trillion) to buy back their own stock between 2003 and 2012. This left little for investment in productive capabilities or higher income for employees.

Legal restrictions on buybacks were greatly eased in the early 1980s. The Gini coefficients of income and wealth have been rising in the U.S. since 1980, driven by an increasing concentration of wealth and power in the hands of a few at the top. This has created an environment for corporate crime and impunity, argues Brid Brid Brennan.

> *So, just so there's no doubt, let me explain what I'm talking about here before we get started. As with most political arrangements, the actual nature of a Corporate Republic might be hazy. I'll describe it as follows. A business-like style of governance in which all areas of society are privatized by a single or small number of firms. This state's ultimate purpose is to boost the wealth of its stockholders. The government recognizes its corporate status. So, first and foremost, let me explain why I believe this sort of nation is unreal. Various businesses in our own world have attained practically unparalleled levels of economic dominance, yet this still pales in contrast to the world's most powerful governments. Long before a firm could compete with the United States, for example, it would have been crushed by the weight of different antitrust regulations. These kinds of regulations have existed since the time of the Roman Empire and have now become a global norm of international trade. They're probably not going anywhere.*
>
>
> *But suppose for a minute if the balance of power altered radically and a company was able to purchase control of a country. Either a poor, corrupt state or a modern, developed nation. Now, I am not an economist, but I am aware that the global economy is extremely globalized. Any great nation or organization would be unable to operate without a steady infusion of resources, cash, and talent from across the world. A business taking over a country creates a terrible precedent, and I'm sure other large nations across the world would be more than eager to embarrass the new corporate state until it collapsed. Or, at the very least, tighten their own anti-monopoly legislation to keep it from spreading. Even if a company could get away with it, owning a country is probably a huge waste of money. Diversification is one of the riskiest corporate strategies, and there's no assurance a corporation could even manage a nation well, let alone profit from it. Colgate developed a frozen meal line in 1982, and sales of their toothpaste plummeted as a result. Take the difficulties of making and selling frozen meals and scale it by a few trillion, and you're fairly close to the challenge of administering a national government.*
>
>
> *So, while Weyland Corp might be able to purchase an island in the Pacific, by the time they built the required infrastructure, relocated all of their staff, and attempted to keep everything orderly, they'd most likely be bankrupt. While economic dominance over a country is unlikely, what if a business was able to develop its own private military, one powerful enough to compel the surrender of a large nation state? Private military firms certainly exist, and many of them continue to serve big militaries in various peacekeeping tasks, while some have even proven critical in winning civil conflicts. But the crucial point here is that in each case, these firms were up against a poorly equipped and trained opponent, and thus didn't require extremely strong and costly gear. Even the most formidable PMC would only withstand two minutes against a Russian armoured column or a US Navy battle group. Russia can afford to keep thousands of tanks, and the United States can run ten aircraft carriers without fear of losing money. A company, on the other hand, would have enormous trouble doing the same, even if they could somehow justify the expenditure to their stockholders. There's not much money to be made in turning up to the United Nations and declaring war on everyone. Nobody involved in the firm would agree to it. The final significant objection I have to a company acquiring control of a government is one of national identity and ideology.*
>
>
> *Nations are often formed on lofty principles and ideals, and regardless of how effectively a country adheres to these, the fact that they are frequently entrenched in declarations and constitutions is a tremendous motivator. Throughout history, hundreds of millions of people have battled, bled, and died for abstract notions such as liberty, democracy, communism, and many more. But, by definition, a business exists exclusively to generate a profit for its stockholders, and I doubt anyone would be ready to put their life on the line so that their CEO might get a bit richer. How many of OMNI Consumer Products' employees would side with the firm over their nation if it declared war on the US tomorrow? Not enough to win, at the very least. So, now that I've done talking about how implausible it is for a megacorporation to ever take over a portion of the world, I should probably give an example of when exactly that happened. At its peak, the British East India Company reigned over most of the Indian subcontinent, had its own private army twice the size of the British military, and was worth billions of dollars, considerably more than even the most powerful modern multinationals. So does this indicate that everything I've said is incorrect? I don't think so; in fact, I believe the reverse is true. Despite its scale, the East India Company was only seldom lucrative, necessitating regular government intervention to keep it afloat.*
>
>
> *Corruption was pervasive, and its forces were often required to put down insurgencies. During the Indian Rebellion of 1857, which led to the company's demise, many of its own troops were among the first to mutiny. When the British Empire chose to take full control, the East India Company, despite its vast resources, was powerless to prevent it. But, for the sake of argument, suppose that some incredible new technology has enabled future businesses to accumulate unimaginable money, power, and private armies. It manages to seize control of a big nation or possibly the entire planet by some ingenious political and economic maneuvering that precisely sidesteps all of my concerns. I'm still not interested in this. It all comes back to my ideological argument. When creating an universe and plot, whether for games, movies, or literature, I want opposing sides to have conflicting views and principles. To put it lightly, the Tau Empire and Imperium of Man in Warhammer 40,000 have quite different beliefs about how the galaxy should be ruled. As a result, they make excellent antagonists.*
>
>
> *Why should I care which Megacorporation overcomes the others in The Mutant Chronicles, or MERCS? They all want the same thing and, except from a few minor differences, are nearly identical to one another. Finally, a Megacorporation is always acting in its own self-interest, which is always profit. This renders them spineless. The Rebel Alliance will suffer sacrifice and misery to free the galaxy at any cost, however the Interstellar Manufacturing Corporation will abandon taking over the Frontier the moment it affects the financial line, which isn't very threatening. Are there any exclusions? I can think of a couple. The Caldari State from Eve Online intrigues me since it is governed by a coalition rather than a single megacorporation. This answers many of my questions, yet also raises many more. How is this government governed, and how stable is this system?*
>
>
>
> *How do groups such as the armed forces function? These questions may have solutions, but I'm not well-versed in Eve mythology to provide them. There's also the Helghan Corporation from Killzone, however I'm slightly cheating here because the Helghan Corporation lost all pretense of being a firm the minute it became the Helghan Empire. So, while I don't believe Megacorporations create very credible governments, they may still be an engaging aspect in any environment. In my perspective, a megacorporation that operates behind the scenes, managing governments rather than attempting to dominate them, is not only more realistic, but also more intriguing. Weyland Yutani, Tyrell Corporation, and Iron Bank are all instances of successful Megacorporations. But that's just my opinion, which means it's an incontrovertible reality because I and I alone sit atop an invincible truth fortress. But if you still believe I'm incorrect, please let me know in the comments section below. Is it possible for a Megacorporation to function as a government? Is fighting for business as exciting as fighting for communism or Kaiser Wilhelm II? Is Omni Consumer Products poised to take over the United States?*
>
>

An economic, political, and judicial system known as a corporatocracy is one that is governed by companies or corporate interests.

The idea has been used to explain bank bailouts, exorbitant CEO pay, and complaints about the exploitation of people, natural resources, and national treasuries. The World Bank, unjust lending practices, and free trade agreements have all been criticized by those who oppose globalization, and they have occasionally been used in conjunction with one another. Another recurring motif in dystopian science fiction is corporate rule.

Using the term "corporatocracy" and other similar terms

According to historian Howard Zinn, the American government behaved exactly as Karl Marx envisioned capitalist nations during the Gilded Age: "pretending neutrality to maintain order, while supporting the interests of the rich."

According to economist Joseph Stiglitz, the weakening of American antitrust regulations by neoliberal reforms has significantly increased the market power of companies, contributing to rising income disparity and an underperforming economy in general. He claims that lessening the impact of money on American politics is important to boost the economy.

Sociologist C Wright Mills said that the heads of the largest corporations, along with the military and political establishment, make up a "power elite" that governs the United States in his 1956 book The Power Elite.

In his book The Price of Civilization, economist Jeffrey Sachs referred to the United States as a corporatocracy. He hypothesized that it resulted from four trends: the weak national parties and strong political representation of individual districts; the sizeable post-World War II military establishment in the United States; the funding of political campaigns by large corporations; and the shifting of the global power balance away from workers.

In 2013, economist Edmund Phelps criticized the economic system of the United States and other western nations in recent decades as being what he calls "the new corporatism." He characterizes this system as one in which the state is overly involved in the economy and is charged with "protecting everyone against everyone else," but at the same time, large corporations have a lot of influence on the government, with lobbyists' suggestions being "welcome, especially if they come from big business."

American politics are influenced by business.

The Senate's bosses—corporate interests represented by enormous money bags—loom over legislators.

### Corruption

As business executives lavished money on preventing government regulation of their operations, corruption was rife in the United States throughout the Gilded Age.

### Influence of corporations on legislation

Corporations have a big impact on the laws and the authorities who enforce them. For instance, Senator Elizabeth Warren described in December 2014 how late changes to an omnibus spending measure that was necessary to support the government resulted in weaker banking regulations. The change made it simpler to permit taxpayer-funded bailouts of banking "swaps companies," which were previously forbidden by the Dodd-Frank banking laws. She specifically mentioned Citigroup, one of the biggest institutions, which was involved in changing the law. She also discussed how Wall Street bankers and government officials who had previously worked there thwarted bicameral legislation that would have split up the biggest banks. She reiteratively cited President Theodore Roosevelt's cautions over the "basic foundations of Democracy" being challenged by strong corporate entities.

Former President Jimmy Carter claimed in a 2015 interview that the Citizens United v. FEC decision, which effectively eliminated limits on contributions to political candidates, has turned the United States into "an oligarchy with unrestricted political bribery." Wall Street invested a record $2 billion in an effort to sway the 2016 US elections.

Professor of law at the University of British Columbia and author of the bestseller The Corporation: The Pathological Pursuit of Profit and Power, Joel Bakan, writes:

Any justification for their behavior—whether it's to aid employees, enhance the environment, or enable customers to save money—is prohibited by the law. As private persons, they are able to carry out these actions with their own funds. However, because they are corporate officers and stewards of other people's money, they lack the legal authority to pursue these objectives as ends in and of themselves. Instead, they must do so in order to further the corporation's own interests, which generally entail maximising shareholder wealth. Therefore, corporate social responsibility is unlawful—at least when it is sincere.

The Corporation: The Pathological Pursuit of Profit and Power by Joel Bakan

signs of corporatism as they are perceived in the United States

### portion of income

Based on total compensation as well as salaries and wages, labor's percentage of GDP has decreased from 1970 to 2013 on average. This suggests that capital's proportion is rising.

Regarding income disparity, the 2014 income analysis of University of California, Berkeley economist Emmanuel Saez indicates that only the top.1 percent of the income distribution, who make $2,000,000 or more every year, are experiencing relative growth of income and wealth.

Additionally, corporate dominance can widen the income gap. Joseph Stiglitz, the 2011 Nobel Prize winner in economics, stated in May 2011: "Much of today's inequality is due to manipulation of the financial system, enabled by changes in the rules that have been bought and paid for by the financial industry itself—one of its best investments ever. The government lent money to financial institutions at almost zero percent interest and provided generous bailouts on favorable terms when all else failed. Regulators turned a blind eye to a lack of oversight.

Total compensation and its constituent earnings and salaries have been falling since 1970 when compared to GDP. This suggests a change in the source of income from labor to capital.

According to Larry Summers' estimation from 2007, the bottom 80% of families were only receiving $664 billion, or about $7,000 per family, less in income than they would have under a 1979 income distribution. Given that highly leveraged homeowners suffered a far higher drop in their net worth during the crisis, not getting this income may have caused many families to raise their debt burden, which was a crucial factor in the 2007–2009 subprime mortgage crisis. Furthermore, because lower income households often spend a greater percentage of their income than do higher income families, transferring more money to wealthy families could limit economic growth.

### Corporate tax rates in effect

Since 2000, the effective tax rates for corporations in the US have decreased dramatically.

A technique known as tax inversion has been employed by certain sizable American firms to relocate their headquarters overseas. country to lower their tax obligations. Since 1982, around 46 businesses have reincorporated there, with 15 of those happening since 2012. In 2015, six more intended to do the same.

### salary hikes versus stock buybacks

The relaxation of constraints on corporations' capacity to buy back shares, which increased income disparity, was one sign of growing corporate power. William Lazonick attributed less economic investment and a commensurate effect on prosperity and income inequality to record corporate stock buybacks in an article published in the Harvard Business Review in September 2014. The 449 S&P 500 businesses utilized 54% of their earnings between 2003 and 2012 to repurchase their own stock. 37% more was distributed to investors as dividends. These three made up 91% of the profits. This reduced the amount of money available for investments in productive capacity or greater wages for workers, pushing more revenue toward capital than labor. He attributed the achievement of earnings per share goals to CEO compensation plans, which mainly rely on stock options, stock awards, and bonuses. As the number of shares outstanding declines, EPS rises. In the early 1980s, legal limits on buybacks were significantly loosened. He suggests altering these incentives to reduce buybacks.

S&P 500 businesses increased their stock buyback payouts by 29% year over year to $534.9 billion in the 12 months leading up to March 31, 2014. According to Goldman Sachs, American businesses would raise share buybacks to $701 billion in 2015, up 18% from 2014. For context, it was expected that non-residential fixed investment would total around $2.1 trillion in 2014.

### concentration of industries

The largest five American banks' share of total banking assets from 1997 to 2011

According to Brid Brennan of the Transnational Institute, "TNCs are dangerous to democracy not only because of their size, enormous wealth, and assets, but also because of their concentration, ability to influence, and frequently infiltration of governments, and ability to act as a genuine international social class in order to defend their commercial interests against the common good.

Banking is one example of a concentrated industry. About 30% of U.S. banking assets were held by the top 5 U.S. banks in 1998; this number increased to 45% by 2008; 48% by 2010, then decreased to 47% in 2011.

The Economist also described how since 1980, the corporate financial and banking sector in the U.S. has become more profitable, leading to higher Gini coefficients: "Financial services' share of GDP in America, doubled to 8% between 1980 and 2000; over the same period, their profits rose from about 10% to 35% of total corporate profits, before collapsing in 2007-09." Bankers are also receiving higher salaries.

## Social Corporatism

A version of economic tripartite corporatism known as "social corporatism" is built on a social partnership between the interests of capital and labor. It entails government-mediated collective bargaining between labor and employer representatives. Social corporatism has generated some debate on the political left, where it has been attacked for eschewing the idea of class struggle. The Communist International referred to social democracy as social fascism in the 1930s. Others on the left contend that social corporatism has advanced by giving the labor movement legitimacy. The foundation of the system was a twin compromise with market and state as one component and capital and labor as the other.

A type of economic tripartite corporatism known as social corporatism, or social democratic corporatism, is based on a social partnership between the interests of capital and labor. It involves collective bargaining between employers' and workers' representatives, which is mediated by the national government. The social market economies of Western Europe exhibit social corporatism to a lesser extent. Regulating the dispute between capital and labor by requiring them to engage in mutual discussions that are mediated by the government is regarded as a compromise. Social corporatism emerged in the post-World War II era, influenced by Christian democrats and social democrats in Western European nations like Austria, Germany, the Netherlands, Denmark, Finland, Norway, and Sweden. It is typically supported by nationalist and/or social-democratic political parties. In diverse forms and to differing degrees, social corporatism has also been implemented in a number of Western European nations. The most extensive system of collective bargaining is found in the Nordic nations, where employers' groups and official organizations both represent trade unions at the national level. This creates what is known as the Nordic model, which also includes the welfare state programs of these nations. In Austria and Germany, two countries that are a part of Rhine capitalism, there are less comprehensive models. Social corporatism has generated some debate on the political left. It has been attacked for eschewing the idea of class conflict in favor of class cooperation and compromise, for legalizing privately owned businesses, and for endorsing a regulated form of capitalism. Others on the left respond to these criticisms by asserting that social corporatism has been progressive in giving institutional legitimacy to the labor movement, which acknowledges the existence of an ongoing class conflict between the bourgeoisie and the proletariat but seeks to provide moderate rather than revolutionary resolutions to disputes arising from the conflict. Social corporatism is viewed as a class compromise within the context of ongoing class conflict by proponents. The Communist International referred to social democracy as "social fascism" in the 1930s because it believed that, in addition to sharing a corporatist economic system, social democracy was a barrier to the development of communism and socialism. Social corporatism started to take shape in Norway and Sweden in the 1930s, and it was finally consolidated in the 1960s and 1970s. The foundation of the system was a twin compromise that included market and state as one component and capital and labor as the other. In Austria, social corporatism emerged under the post-World War II coalition administration of the Austrian People's Party and the Social Democratic Party of Austria. In order to avoid the bitter class strife that afflicted Austria in the 1930s, social corporatism safeguards private property in Austria in exchange for granting the labor movement political respect and economic influence. J. Liberal corporatism is mostly self-organized between labor and management, with merely a supporting role for government, according to Barkley Rosser and Marina V. Rosser. Leading examples of these systems can be found, for instance, in small, racially homogeneous nations with a long history of social democratic or labor party rule, like Sweden's Nordic neighbors. Frederic Pryor discovered Norway and Sweden to be the most corporatist countries in 1988 using a scale of 0.0 to 2.0 and subjectively assigning values based on six prior studies. They were followed by Austria at 1.8, the Netherlands at 1.5, Finland, Denmark, and Belgium at 1.3 each, and Switzerland and West Germany at 1.0.

## Difference Between Capitalism and Corporatism

The social and economic system known as capitalism upholds individual rights, such as the right to property ownership and the possession of assets for one's own use. Contrarily, corporatism is a system of economics that was developed as an alternative to socialism with the goal of achieving social justice and equality without taking away peoples' right to own property. It emphasizes the beneficial function of government in guaranteeing social justice and limiting social unrest as individuals pursue their own interests. The individual or a group of individuals is the main player in a capitalist economy. With the exception of laws and regulations that preserve an even playing field, they are allowed an equal opportunity to compete as buyers or sellers of products or property in a free market. Individuals engage in independent trade of products and services. Aggression has no place in a capitalist society. The political community, on the other hand, is at the center of a corporatist economy since it must realize its full potential in order to help members of society find happiness and self-fulfillment. Individuals have limitless opportunity to build their own riches and acquire as many homes and possessions as they can afford under capitalism. As a result, there is disparity, which may eventually spur people to seek to increase their wealth in order to catch up with others. However, people must respect each other's rights and refrain from using compulsion. Aggression against another person is prohibited in all forms. As opposed to socialism, corporatism is a collectivist system. However, corporatism does not formally nationalize private property; rather, it does it in practice. In directing society and the economy, it combines capitalism and socialism. As a result, it prioritizes and supports state-sponsored major initiatives while allowing private firms to function within certain bounds. The government defends the development of public enterprises by arguing that certain initiatives that are necessary to the people in the private sector do not have takers since the projects are enormous and call for a sizeable investment that the businesspeople cannot afford. Through collective bargaining, when representatives of management and the labor union meet to discuss the concerns, capitalism finds solutions to labor-related problems. Contrarily, corporatism unites labor and management into sizable corporations or interest groups in order to discuss matters like labor through their representatives. Politicians now advocate for both corporatism and capitalism, which are still in use and even coexist.

1. While corporatism is a political and economic system that promotes social justice and equality for all people, capitalism is an economic system that respects individual rights.
2. The important figure in a corporatist society is the political community, which must strive for the individual's self-fulfillment and happiness, whereas the key role in a capitalist society is the individual, who must work for his or her own well-being.
3. Corporatism is a collectivist society, whereas capitalism is an individualist one.
4. In capitalism, labor disputes are settled through collective bargaining, whereas in corporatism, such disputes are settled through negotiation.
5. Today, both corporatism and capitalism are still prevalent.