Corporate capitalism
Encyclopedia
Corporate capitalism is a term used in social science and economics to describe a capitalist
marketplace characterized by the dominance of hierarchical, bureaucratic corporation
s, which are legally required to pursue profit
.
A large proportion of the economy
and labour market falls within joint stock company
or corporate control. In the developed world, corporations dominate the marketplace, comprising 50 percent or more of all businesses. Those businesses which are not corporations contain the same bureaucratic structure of corporations, but there is usually a sole owner or group of owners who are liable to bankruptcy
and criminal charges relating to their business. Corporations have limited liability
and remain less regulated and accountable than sole proprietorships.
Corporations are usually called public entities when parts of their business can be bought in the form of shares on the stock market
. This is done as a way of raising capital
to finance the investments of the corporation. The shareholders appoint the executives of the corporation, who are the ones running the corporation via a hierarchical chain of power, where the bulk of investor decisions are made at the top, and have effects on those beneath them.
Corporate capitalism has been criticized for the amount of power and influence corporations and large business interest groups have over government policy, including the policies of regulatory agencies and influencing political campaigns. Many social scientists have criticized corporations for failing to act in the interests of the people, and their existence seems to circumvent the principles of democracy
, which assumes equal power relations between individuals in a society.
Thomas Jefferson
, one of the founders of the United States democratic system, said "I hope we shall crush ... in its birth the aristocracy of our moneyed corporations, which dare already to challenge our government to a trial of strength and bid defiance to the laws of our country". Franklin D. Roosevelt
, in an April 29, 1938 message to Congress, warned that the growth of private power could lead to fascism:
Dwight D. Eisenhower
criticized the notion of the confluence of corporate power and de facto fascism, but nevertheless brought attention to the "conjunction of an immense military establishment and a large arms industry" in his 1961 Farewell Address to the Nation
, and stressed "the need to maintain balance in and among national programs -- balance between the private and the public economy, balance between cost and hoped for advantage."
Capitalism
Capitalism is an economic system that became dominant in the Western world following the demise of feudalism. There is no consensus on the precise definition nor on how the term should be used as a historical category...
marketplace characterized by the dominance of hierarchical, bureaucratic corporation
Corporation
A corporation is created under the laws of a state as a separate legal entity that has privileges and liabilities that are distinct from those of its members. There are many different forms of corporations, most of which are used to conduct business. Early corporations were established by charter...
s, which are legally required to pursue profit
Profit (economics)
In economics, the term profit has two related but distinct meanings. Normal profit represents the total opportunity costs of a venture to an entrepreneur or investor, whilst economic profit In economics, the term profit has two related but distinct meanings. Normal profit represents the total...
.
A large proportion of the economy
Economy
An economy consists of the economic system of a country or other area; the labor, capital and land resources; and the manufacturing, trade, distribution, and consumption of goods and services of that area...
and labour market falls within joint stock company
Joint stock company
A joint-stock company is a type of corporation or partnership involving two or more individuals that own shares of stock in the company...
or corporate control. In the developed world, corporations dominate the marketplace, comprising 50 percent or more of all businesses. Those businesses which are not corporations contain the same bureaucratic structure of corporations, but there is usually a sole owner or group of owners who are liable to bankruptcy
Bankruptcy
Bankruptcy is a legal status of an insolvent person or an organisation, that is, one that cannot repay the debts owed to creditors. In most jurisdictions bankruptcy is imposed by a court order, often initiated by the debtor....
and criminal charges relating to their business. Corporations have limited liability
Limited liability
Limited liability is a concept where by a person's financial liability is limited to a fixed sum, most commonly the value of a person's investment in a company or partnership with limited liability. If a company with limited liability is sued, then the plaintiffs are suing the company, not its...
and remain less regulated and accountable than sole proprietorships.
Corporations are usually called public entities when parts of their business can be bought in the form of shares on the stock market
Stock market
A stock market or equity market is a public entity for the trading of company stock and derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded privately.The size of the world stock market was estimated at about $36.6 trillion...
. This is done as a way of raising capital
Capital (economics)
In economics, capital, capital goods, or real capital refers to already-produced durable goods used in production of goods or services. The capital goods are not significantly consumed, though they may depreciate in the production process...
to finance the investments of the corporation. The shareholders appoint the executives of the corporation, who are the ones running the corporation via a hierarchical chain of power, where the bulk of investor decisions are made at the top, and have effects on those beneath them.
Corporate capitalism has been criticized for the amount of power and influence corporations and large business interest groups have over government policy, including the policies of regulatory agencies and influencing political campaigns. Many social scientists have criticized corporations for failing to act in the interests of the people, and their existence seems to circumvent the principles of democracy
Democracy
Democracy is generally defined as a form of government in which all adult citizens have an equal say in the decisions that affect their lives. Ideally, this includes equal participation in the proposal, development and passage of legislation into law...
, which assumes equal power relations between individuals in a society.
Thomas Jefferson
Thomas Jefferson
Thomas Jefferson was the principal author of the United States Declaration of Independence and the Statute of Virginia for Religious Freedom , the third President of the United States and founder of the University of Virginia...
, one of the founders of the United States democratic system, said "I hope we shall crush ... in its birth the aristocracy of our moneyed corporations, which dare already to challenge our government to a trial of strength and bid defiance to the laws of our country". Franklin D. Roosevelt
Franklin D. Roosevelt
Franklin Delano Roosevelt , also known by his initials, FDR, was the 32nd President of the United States and a central figure in world events during the mid-20th century, leading the United States during a time of worldwide economic crisis and world war...
, in an April 29, 1938 message to Congress, warned that the growth of private power could lead to fascism:
[T]he liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it becomes stronger than their democratic state itself. That, in its essence, is fascism—ownership of government by an individual, by a group, or by any other controlling private power.
[...] Statistics of the Bureau of Internal Revenue reveal the following amazing figures for 1935: "Ownership of corporate assets: Of all corporations reporting from every part of the Nation, one-tenth of 1 percent of them owned 52 percent of the assets of all of them."
Dwight D. Eisenhower
Dwight D. Eisenhower
Dwight David "Ike" Eisenhower was the 34th President of the United States, from 1953 until 1961. He was a five-star general in the United States Army...
criticized the notion of the confluence of corporate power and de facto fascism, but nevertheless brought attention to the "conjunction of an immense military establishment and a large arms industry" in his 1961 Farewell Address to the Nation
Eisenhower's farewell address
Eisenhower's farewell address was the final public speech of Dwight D. Eisenhower as President of the United States, delivered in a television broadcast on January 17, 1961...
, and stressed "the need to maintain balance in and among national programs -- balance between the private and the public economy, balance between cost and hoped for advantage."
See also
- Capitalist mode of productionCapitalist mode of productionIn Marx's critique of political economy, the capitalist mode of production is the production system of capitalist societies, which began in Europe in the 16th century, grew rapidly in Western Europe from the end of the 18th century, and later extended to most of the world...
- CentralizationCentralizationCentralisation, or centralization , is the process by which the activities of an organisation, particularly those regarding planning and decision-making, become concentrated within a particular location and/or group....
- Criticism of capitalism
- Economic democracyEconomic democracyEconomic democracy is a socioeconomic philosophy that suggests a shift in decision-making power from a small minority of corporate shareholders to a larger majority of public stakeholders...
- Inverted totalitarianismInverted totalitarianismInverted totalitarianism is a term coined by political philosopher Sheldon Wolin to describe an "ideal type" government. Wolin uses the term to describe the government of the United States as it has evolved since World War II...
- NeoliberalismNeoliberalismNeoliberalism is a market-driven approach to economic and social policy based on neoclassical theories of economics that emphasizes the efficiency of private enterprise, liberalized trade and relatively open markets, and therefore seeks to maximize the role of the private sector in determining the...
- OligarchyOligarchyOligarchy is a form of power structure in which power effectively rests with an elite class distinguished by royalty, wealth, family ties, commercial, and/or military legitimacy...
- PlutocracyPlutocracyPlutocracy is rule by the wealthy, or power provided by wealth. The combination of both plutocracy and oligarchy is called plutarchy. The word plutocracy is derived from the Ancient Greek root ploutos, meaning wealth and kratos, meaning to rule or to govern.-Usage:The term plutocracy is generally...
- Private propertyPrivate propertyPrivate property is the right of persons and firms to obtain, own, control, employ, dispose of, and bequeath land, capital, and other forms of property. Private property is distinguishable from public property, which refers to assets owned by a state, community or government rather than by...
- When Corporations Rule the WorldWhen Corporations Rule the WorldWhen Corporations Rule the World is an anti-globalization book by David Korten. Korten examines the evolution of corporations in the United States and argues that corporate libertarians have 'twisted' the ideas of free market economist Adam Smith's view of the role of private companies.Korten...