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Understanding Corporatocracy and its Effects With Examples

Understanding Corporatocracy With Examples
Corporatocracy can be defined as a system that is indirectly controlled by huge corporations, under the guise of democracy. The Buzzle article below will help you understand corporatocracy with examples.
Buzzle Staff
Last Updated: Jun 3, 2018
In the income analysis of 2014, at the University of Berkeley, economist Emmanuel Saez asserts that income inequality is one of the prime characteristics of a corporatocracy, since a relative growth in income had occurred only among the elite group of citizens.
A corporatocracy is a corporation-controlled system. Prior to reading any further though, we would like to mention upfront that there are no officially true corporatocracies in the world. No government comes forward to declare that the country is partially being run by powerful businesses. Possibly coined from the words 'corporations' and 'democracy', it is a disparaging term, used extensively by economic experts, political researchers, and liberal critics. It means that the system, by extension, the country, is controlled by huge financial corporations. That is to say, the government elected by the people exists of course, but what and how they plan things for the country depends on the corporations.
The prime reason behind this could be the huge amounts that these corporations contribute to the GDP of the country, owing to which the elected leaders may feel obligated to bow down to the financial community. Some of the major indications of corporatocracy in America are corporate taxes, income inequality, unrestricted stock buybacks, etc.
An Introduction to Corporatocracy
  • As mentioned earlier, corporatocracy functions on the foundation of a collaboration between the government and corporate entities.
  • This is one of the ways it works: A large, powerful corporation assists a political candidate to secure the post he desires. If he does, he will morally be obligated to the corporation forever. Thereafter, whenever the corporation requires legal and political help, the elected leader will have to comply.
  • Another instance may be when the governor of a state undertakes certain public help activities with sponsorships from private parties, let's say, in this case, a tobacco manufacturing company. Tomorrow, it is quite possible that the governor may not even be able to pass a tobacco tax bill, for fear that the powerful company may be offended, or its power would threaten his position in politics, etc.
  • No one can prove that any country is a corporatocracy―it is, so far, a term used pejoratively to spark contempt against an unfair government.
  • Many state that the term should not be used at all, for they believe that corporations do not have power. This is far from the reality, because even though the elected government seems to be in control in a true democracy, they are influenced by the strength and power of the corporations.
  • People who believe that corporatocracy exists state that only a few important individuals, like shareholders or directors have the powerful influence over the government, and the entire corporation is not to be blamed for this.
  • The ones who believe that corporatocracy does not exist argue that its existence is possible only if the government makes it mandatory for the corporation to purchase votes, which is of course, a forbidden clause in all democracies.
The Goal of Corporatocracy
  • Enormous corporations, the government, and international banks and financial institutions constitute the three pillars of corporatocracy.
  • The goal of corporatocracy is to establish powerful political and legal connections so that business owners are free to pursue their activities (even illegal activities) without any fear of the law.
  • For the government, it is way to use the excessive wealth and powerful influence of these corporations.
  • Thus, it is a mutual advantage for both parties. The only one who suffers is the common man, who has nothing but his courage as his shield.
  • Corporatocracy has been widely criticized since it may lead to economic exploitation, unfair lending practices, and dishonest use of national treasury and resources.
  • Often, it is used in relation to situations when CEOs are excessively paid, corporate taxes are planned differently, and free trade agreements are signed.
Campaign Support
You know you exist in a corporatocracy when you observe that corporations begin supporting government campaigns. This is done so that the government reciprocates when the corporations need them.

Financial Influence
There is an enormous growth in the financial and banking sectors of the country. They are given a lot of benefits and opportunities, and the financial sector has a marked influence all over.

Increased Acquisitions
Corporations seem to acquire business over business; there is an increase in the mergers and acquisitions. The corporate landscape is subject to a potential expansion, leading to increased compensation and global benefit.

Increased Corruption
Increase in corrupt practices is possibly a commonly observed characteristic of a corporatocracy. Corporations may very well bribe government leaders to get their job done.

Stagnant Economy
While the corporate behemoths grow richer and richer, the smaller businesses remain stagnant. This leads to imbalanced economic conditions and inequality. As the income of the rich keeps increasing, the wages of the common man remain stagnant.

Power Over the Financial Sector
There is a mutual sharing of power between the government and large corporations. The government exercises influence in the financial sector, while the financial community exercises control in the government.
A couple of pros and cons of this system are enlisted below:
  • One of the major benefits of corporatocracy include quick decisions. Since the government relies on the orders of executive powers, they do not take long to arrive at a conclusion about important matters.
  • The corporations contribute significantly to the country's GDP, and with government assistance, they can grow rapidly, contributing to increased economic growth.
  • Since the corporations are powerful enough, they can wield their influence on the law, speeding up the process of justice and simplifying complicated legal matters.
  • While a major part of the country benefits through economic growth, the labor sector suffers the most, since corporatocracy leads to a widening chasm between the rich and the working class.
  • No ethics are followed, and the very concept of democracy is shunted aside.
  • The government does not have the individual freedom to do what it feels is good for the country; the leaders have to follow the influential corporate magnates.
Actual Corporatocracy
  1. The British East India Company
    It was an English joint-stock company that was mainly formed to increase trade relations with the Indian subcontinent. However, it went on to build the foundation of the British Empire in India; the Company started controlling the Indian kings and eventually formed a corporate government wherein the local rulers were forced to follow the orders of the British Raj.
  2. The French East India Company
    It was a commercial entity that was formed in the 17th century to establish trade relations with the countries of the Eastern Hemisphere. Eventually, the Company formed colonies in India and established a corporate government system.
  3. The Dutch East India Company
    Considered to be the first multinational corporation in the world, the Dutch East India Company was also established with the sole purpose of expanding its company stock and negotiating beneficial trade practices. It was the most powerful company of its era, and established a corporate system that followed Company rules and regulations.
Fictional Corporatocracy
  1. Omni Consumer Products
    It is a fictional corporation in the RoboCop franchise. The concept of corporatocracy is depicted in the films; all of them have OCP exercising control to convert Michigan into a completely corporate government.
  2. Jennifer Government
    It is a 2003 Max Berry novel, that exhibits corporatocracy. The novel centers around the limited power of the government and the simultaneously powerful control of the corporate entities.
  3. Rollerball
    It is a science fiction film that is centered in Houston, where huge corporations control the law and order in the state―right from housing, food, to communication, taxes, etc.
If corporatocracy can be used for the overall development of the country, it can be considered as a good system. For instance, if huge corporations can help secure justice to an innocent due to their power or exercise influence to do something advantageous for the country. The situation now, however, does not seem to remotely consider these options, leading to an increased income inequality and harsh criticism of corporatocracy.