What is Corporate Capitalism?

Large companies continue to dominate economic production and the labor market in many of the world’s highly developed nations. The economic systems of these nations are based on the private ownership of the factors of production and the operating means for greater profits or revenues. The decision-making process and the investments in these companies are determined by the custodian bank and the owners of the factors of production, while the prices and distribution of the finished products are determined by the supply and demand of the market. The economic system characterized by private property, the competitive market, wage labor and a price system is called capitalism or capitalist market economy.

Corporate capitalism

Corporate capitalism is a capitalist market economy dominated by hierarchical and bureaucratic corporations that control the factors of production and the amount of profits they generate. These companies are owned by an individual or a group of people who are subject to bankruptcy. Companies in more developed countries have limited responsibility and are less regulated and responsible than a sole proprietorship. Companies can also become public bodies if they sell part of their business to the public in the form of shares to raise capital to finance their investments. However, the shareholders will appoint the executives who will manage the company on their behalf.

Characteristics of corporate capitalism

Corporate capitalism is characterized by the industrialization and the dominant position of large companies and by the policies that have allowed investors to invest with limited responsibility. The high rate of industrialization has led to greater use of technology and greater means of transport. The rise of large corporations has led to immigration to developed countries like the United States from economically depressed countries, including from Africa and the Middle East. Immigration in the big cities, particularly in the northern cities of the United States such as Chicago in the 1860s, gave a sense of uncontrolled growth, inadequate housing and deteriorating living standards.

Critics of corporate capitalism

Large companies and businesses have greater influence and powers over government policies in these environments, including regulatory agencies and their policies. Therefore, many government decisions and policies are seen as favorable to such large companies. Corporations are also likely to influence a country’s policy by sponsoring candidates who could favor their policies and give them governmental offers. Corporate capitalism is also responsible for social inequalities, unemployment and the repression of workers. Environmentalists have argued that corporate capitalism requires continuous economic growth that inevitably leads to the depletion of natural resources.

Positive effects

Despite the criticisms of the corporate capitalist system, thanks to this economic structure many advantages have been realized. When the free market controls production and prices, and the allocation of resources, it is likely that gross domestic product (GDP) growth will occur. Capitalist economies like those of the United States, Canada and Australia are likely to have higher income growth. Corporate capitalism also increases economic freedom which in turn promotes the political freedom of a country.

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