The Rise of Corporatocracy: Is the Modern Corporation a Political Instrument?

Introduction

When we examine the influence and reach of the modern corporation, it becomes clear that these entities now wield an extensive power base. This power extends beyond mere economic dominance and permeates nearly every aspect of society. From market control to community influence, and even state and belief systems, we must acknowledge that the modern corporation has evolved into a powerful political force. This transformative shift raises critical questions about the nature of governance and whether we are indeed facing the rise of a corporatocracy.

The Political Nature of the Modern Corporation

The American economist John Kenneth Galbraith famously observed that when the modern corporation acquires significant power over markets, communities, the state, and even belief systems, it fundamentally becomes a political instrument—just like the state. This analysis challenges the traditional view that distinguishes between economic and political spheres. To deny the political character of the modern corporation is not only to ignore a crucial reality but also to obscure it, thereby misleading those who are instructed in error. This pouvoir (power), however, benefits the very institutions that seek to maintain this illusion of separation.

The Consequences of Neoclassical Economics

The neoclassical and neo-Keynesian economic models have long been criticized for their neglect of power dynamics. These theories often assume a market-driven, consumer-centric universe where the corporation is seen as a subordinate entity. However, Galbraith argues that this approach is fundamentally flawed. By ignoring the role of power, these economic theories fail to accurately reflect the real-world complex of power relations. As the concentration of power in corporations increases, so do the challenges faced by the public, and thus, the effectiveness of those theories diminishes.

The Impact on Economic Education and Policy

The failure of neoclassical economics to confront power dynamics has significant implications for economic education and policy-making. Younger minds, particularly those in universities and introductory economics courses, are often instilled with a distorted view of the economy as a purely technical and impartial system. This understanding is not merely incomplete; it is actively detrimental to critical thinking about governance and societal structures. By painting a picture of an economic landscape devoid of political influence, these theories inadvertently disarm the populace, making them less able to perceive or challenge their own governance.

The State as the 'Utilize Committee' of the Great Corporation

Galbraith's critique extends to the role of the state in this corporate-dominated landscape. He contends that the state often becomes a tool for large corporations, partly because of the entrenched economic theories that support this arrangement. The planning systems we have in place frequently serve to reinforce this dynamic, making the state appear as a mere facilitator for corporate interests. This relationship is often invisible to the public, as the dominant economic discourse hides the true nature of governance.

Conclusion

Ultimately, the economic theories widely accepted today play a significant role in maintaining the myth of corporate subordination. By framing the corporation as a passive player in a market-driven system, these theories contribute to a public that is largely unaware of the true nature of their governance. Galbraith's insights remind us that economics, at its core, must be a field that acknowledges and seeks to understand power dynamics. Only then can we hope to create a more informed and engaged public, capable of critically evaluating the forces that shape our world.