Recently I had an exchange of views with someone who seemed to fear large, multi-national corporations more than government. John Kenneth Galbraith seems to suffer the same fear, according to this
review of his latest book,
The Economics of Innocent Fraud. The reviewer, Daniel Ben-Ami, recaps Galbraith's fear:
For Galbraith, the all-powerful role of companies defines contemporary society. As he argues in his latest work: "Central to my argument here is the dominant role in the modern economic society of the corporation and of the passage of power in that entity from owners, the stockholders, now more graciously called investors, to the management. Such is the dynamic of corporate life. Management must prevail." (2) He rejects the view that consumers are sovereign. Instead he says it is producers, in the guise of corporate management, who truly control the economy.
Galbraith goes on to argue that corporations dominate the state; that government institutions are forced to obey the narrow interests of companies. From here it is a small step to his argument that the recent Iraq war was fought for the military establishment and weapons industries. Younger authors are more likely to point to energy firms such as Halliburton, but the view is the same.
Ben-Ami's response to that line of reasoning echoes my own:
But Galbraith misjudges the power of the state relative to the corporation. During his seven decades as an economist, the state has come to play an increasingly central role in economic life. State spending accounts for a high proportion of gross domestic product (GDP) in all the developed economies. The state is also highly active, through a wide variety of institutions such as central banks and financial regulators, in maintaining economic activity. In fact, today's corporations could almost be seen as an arm of an ever-growing state.
Moreover, the extent to which large corporations have a lot of influence on laws and regulations is an argument for restricting laws and regulations to those that protect us from force and fraud. Show me a heavily regulated industry and I'll show you an industry that's sheltered from competition.
