Wednesday, March 10, 2010

Myth of Corporate Power

Much has been written about corporate power and the need of a strong and active government to counter it. Gailbraith was big on the idea. Blogs continue to have rantings about corporate power.

What power could a corporation – a business, large or small – possibly have? Just the powers a society’s constitution and laws permit any person or group of persons to exert by spending their own money. In a properly-ordered free society where individuals have liberty over their persons and possessions this power is in no way coercive.

If it is coercive, that is a government failure, not a failure of the market or business. In any group of people, there are some who would bully others to get their own way. The first and most important role of government is to protect individuals from coercion by others. Don’t blame the bully if the government doesn’t do its job, or if the government extracts bribes from the bully to overlook the bullying.

Money confers power of a kind: the power to acquire goods, services, and fixed assets through voluntary exchange with others – other corporations or individuals. This power, however, is possessed by anyone with even the smallest amount of money and doesn’t give the power to coerce anyone. Money merely provides the ability to acquire things by giving people more money than the things are worth to the sellers.

What’s wrong with that? Or is the problem that the sellers are making decisions the one doing the objecting does not like? Is the one complaining about corporate power really complaining about the power of the myriad sellers? Perhaps the complainer believes neither should have the power liberty grants them. Usually the complainer doesn’t believe in liberty, believing instead that people (other than themselves) are easily duped and defrauded into accepting money to do the rich man’s bidding; or the complainers don’t think people (other than themselves) ought to be at liberty because free people don’t make “the right” decisions.

What Power?
Surely the first goal of power is to ensure survival. How much power can someone or something have if it can’t even use that power to survive? Can the power of money ensure the corporation survives? Hardly. Digital Equipment, LTV, Gulf and Western, Braniff, Getty Oil, American Motors, General Motors, Chrysler: all billion-dollar companies; all have failed. For decades, General Motors was the largest corporation on the planet! Today the government has taken over to forestall bankruptcy. Of the 100 largest American corporations listed by Fortune in 1980, only 24 were among the top 100 just 25 years later. The other 76 were acquired, dropped below the top 100, or simply went out of business.

No. Corporate power cannot ensure survival. Not even for the extremely big.

Interference in Legislation (lobbying)
Ah, but a big corporation can have power over government through its use of money or by influencing the votes of the many corporate workers. OK. But no one can influence or bribe the government to do something the government is not permitted to do. DUH.

That’s one of the reasons why the U.S. Constitution was written (and ratified): to limit the powers and permitted acts of the federal government and legislature.

Government limitations of liberty and attempts to guide or correct or “rationalize” the extended order of human cooperation (that spontaneously emerging, self-organizing thing often called “the free market”) invite, no – actively encourage – misuse of wealth to gain government protection, reduce government limitations to the liberty of the wealthy, or encourage government to hinder competitors.

Were the government to do its proper job and quit meddling with business and wealth, business and wealth would cease involvement in the government’s coercive decisions.

When government has, and exercises, the power to protect, promote, punish, or save any entity or group of entities, those entities will do what they can to get the government to protect them from competition or the consequences of their own folly.

Politicians Get Rich off of Bribes from Businesses
‘When buying and selling are controlled by legislation, the first things to be bought and sold are legislators.’
– P.J. O’Rourke Parliament of Whores

Is it any wonder that, when Congress attempts to limit the power of money in politics and government, the result is more money flowing to influence legislation and elections? Congressmen are as greedy as anyone else: if permitted, they will use their power to enrich and sustain themselves at the expense of their competitors. Congress passing limits to lobbying expenditures and financing of elections is like foxes designing security for the hen house.

The best (and perhaps only) way to stop corporations and the wealthy from exerting power by buying legislators is to eliminate government power over business, commerce, and wealth. Nobody wastes money lobbying Congress to do something Congress does not have the power to do.

Hired Thugs
Wealth can be used to hire a private armed force for enforcing a corporation’s desires, that is to coerce others. However, to meet its first responsibility – protection of individual liberty - the government must establish and maintain its monopoly on legitimate violence and punish or eliminate all illegitimate use of violence. If a Big Business is using physical coercion or the threat of violence, the problem is one of government, not of corporate power. Either the government is not doing its job, or the business has actually become government, taking on governmental powers.

When government is doing its proper job, capitalists or the wealthy or big business (or whatever your favorite hobgoblin) cannot run roughshod over anyone's liberty.

Only Adults can be Free
Money can be used to bribe or tempt people but the power of money cannot coerce free adults. In a society of children, or in a society in which individual liberty and private ownership of the means of production are not adequately protected, wealth can have pernicious powers. But that is a problem of proper government, not of corporate power.

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