Economics

​What Is Corporate Capitalism?

​In many developed nations today, large corporations dominate economic output and the labor markets.

Large corporations continue to dominate economic output and the labor market in many of the world's highly developed nations. The economic systems of these nations are based on private ownership of the factors of production and operation means for higher profits or revenues. The decision making and investments in these corporations are determined by the custodian and owners of the factors of production while prices and distribution of finished products are determined by the market demand and supply. The economic system characterized by private ownership, competitive market, wage labor, and a price system is referred to as capitalism or a 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 corporations are either owned by an individual or by a group of people who are liable to bankruptcy. Corporations in most developed nations have limited liability and are less regulated and accountable compared to a sole proprietorship. Corporations can also become public entities if they sell part of their business to the public in the form of shares to raise capital to finance its investments. However, the shareholders will appoint executives who will run the corporation on their behalf. The executives may run the corporation through hierarchical powers where most of the investor decisions are made by the top executives.

Characteristics of Corporate Capitalism

Corporate capitalism is characterized by industrialization and the dominance of big businesses, and policies which have allowed investors to invest with limited liability. The high rate of industrialization has led to greater use of technology and expanded means of transportation. The rise of big corporations led to immigration into the developed countries such as the US from the economically depressed countries including from Africa and the Middle East. The immigration into the big cities, especially the Northern cities of the United States like Chicago in the 1860s gave a sense of uncontrolled growth, inadequate housing, and deterioration of the standards of living. Corporate capitalism is also characterized by increased unionization of workers to collectively fight for their rights which include the right to proper working conditions and better pay for the work done.

Criticisms of Corporate Capitalism

Large corporations and businesses have greater influence and powers over the government policies in these environments, including the regulatory agencies and their policies. Thus, many of the government decisions and policies are seen as favoring such big corporations. The corporations are also likely to influence the politics of a country by sponsoring candidates who are likely to favor their policies and give them government tenders. Corporate capitalism is also responsible for social inequalities, unemployment, and repression of workers. Environmentalists have argued that corporate capitalism requires continual economic growth which inevitably leads to depletion of natural resources. It has interfered with the traditional way of life and brought about global poverty and collapse of small industries and companies.

Positive Effects

Despite the criticisms of the corporate capitalist system, a great deal of gains have been realized through this economic structure. When free market controls the production and prices, and the allocation of resources then growth in gross domestic product (GDP) is likely to be realized. Capitalist economies such as those of the United States, Canada, and Australia are likely to experience a higher income growth. Corporate capitalism also enhances economic freedom which in turn promotes a country’s political freedom.

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