T.C.O.W. 1: Is Capitalism the justification for Corporatism..

[HappySqurriel]

richardhutnik said:

HappySqurriel said:

Rath said:

HappySqurriel said:
I would personally argue that "Democratic Socialism" is far more likely to lead to corporatism than free market capitalism ...

In a free market (laissez faire) system the rules are supposed to be equitable for all participants in the system and the market is supposed to determine who is successful of not. In this system there is no advantage for businesses to get "into bed" with the government because there is nothing the government can do to benefit them.

In contrast, in a social democracy the government is always arbitrarily deciding what has "merit" or what is "damaging" which often determines who is successful or a failure. With this in mind there is a significant incentive for businesses to manipulate the government.

As an example, in a social democracy a company that manufactures electric automobiles can become far more profitable if they can manipulate the processes of the government to pay for R&D, provide buying incentives for customers, and introduce legislation that creates fines on their competition.

While I agree that political influence of corporations does rely on the government regulating things - true free-market capitalism would kill the planet, kill people and screw workers. It's a really bad idea to allow corporations to have completely free rein.

Personally I don't think the problem in America is with the capitalism - it's with the system of government. Capitalism doesn't require that the corporations have to have the ability to make donations and fund campaigns to bribe politicians into voting for things that favour them.

I don't see why "true free-market capitalism would kill the planet, kill people and screw workers" ...

For the most part, companies (regardless of whether they're large corporations or small businesses) are driven to act in ways that their clients/customers, investors, and employees desire; and this is rarely in a way that is excessively damaging in the long run.

If you had an individual owner of a company, who had kids who he was concerned about, and worried about the futute, then he would think in the long-run.  However, in the current corporate structure, where the owners (shareholders) end up thinking in terms of quarterly maximizing of profits, and the executives of the company get golden parachutes, there is no connect to long-term, just quarterly maximizing of profits.  There is room for R&D, for example, which is factor into things.  But anything that denies maximizing of profits, gets avoided.

You have executives who opperate under the premise of "I play by the rules" they will say.  Well they then join industry organizations who then will lobby the government to change the rules, so they can produce more negative externalities they don't have to pay for.  They will also push for tort reform, which will limit the amount of liabilities they have in courts.

Honestly, the short term thinking of corporations could easily be explained by excessive government involvement in the economy ... Since the government has the power to bail out powerful and connected corporations no matter how poorly their business was run, corporations don't have to consider long term viability of their company because buying influence with the government ensures they will survive no matter how poorly they are run.

On top of that, it isn't difficult to ensure that corporations are responsible for all externalities they produce, and the board of directors are accountable for all laws broken by the corporation, and to follow through with this. In most cases it is pretty straightforward to calculate the cost of reversing the harm caused by coporations, and appropriate penalties can be assessed by a court of law. If a corporation trys to buy influence from a judge or elected official the board of directors should be charged with a crime and should go to jail.

It doesn't take that many companies going bankrupt from being short sighted, that man companies seeing multi-billion dollar penalties for being irresponsible, or that many boards going to jail for breaking the law to get the vast majority of corporations to act responsibly