Tuesday, 20 October 2009

The Giant Corporation: The New Government?

It just suddenly struck me that if the evolution of big corporations (like, REALLY big - think ConAgra, DuPont and Mitsubishi, who have a stake in almost everything from broilers, cattle, crops, flour, automobiles, chemicals, tobacco to shipping) and the reality of their monopoly status is anything to go by, I think we are truly seeing a new form of governance emerging. Actually, if the traditional definition of a state is slightly tweaked, giant corporations won't merely be new forms of governance; they WILL be the new governments.

The Persistence of Realism

Realist literature emphasizing the unexpired role of the state will always draw our attention back to how different states, all essentially representations of governance and power, have robustly existed to this present day. In the process, their intellectual underpinnings have been battered by inquiry and skepticism in the light of capitalism and globalisation, but they have pulled through with little scratches. States still exert their authority on people in our modern day and age (perhaps even more so than ever) and in a remarkable way their physical evolution appears ever so insignificant, despite some changes that people who are only scratching at the surface exclaim about.

For example, some will assert that states have less physical control over people now that violence has lost its trendiness. Let's not consider third world countries for obvious reasons, but even in developed states, their control over populations is still as gripping as ever through non-physical means, such as policy driven by economics - your livelihood is now in the hands of bureaucrats who have ties and interests in certain industries. This is somewhat indirect control, but still as powerful as ever. Still, others may look at the global world today and point out that many global players now have the power to influence a powerful country like the US because of interconnectedness through trade and globalisation. But, do recall that it is precisely a system like this that the US wants and every country that is playing the global trade game today often had no choice but to join in, in the process having their traditions and cultures infiltrated by Americanisation (Ikenberry, 2002). This once again points to the realist nature of state self-interest.

The evolution process of states is remarkably sly and efficient. States waged war a few centuries ago to get power and expand territories because physical power through technological weaponry was the key. Monarchies rose as a result and colonialism became popular as undeveloped countries could be exploited for their resources. Later, the laws established by the international community after World War II outlawed violence and discrimination while upholding human rights and rule of law (paving the way for the spread of democracy while demolishing monarchies, colonialists, autocracies and dictatorships). States didn't sit still on that; to survive they embraced the new ideal - capitalism - and created new routes for conquest by seemingly focusing on economics rather than politics, while at the same time blocking off the surveillance of human rights by using the rule of law as a disguise for legitimacy. Legitimacy creates the moral support for a state to engage in its political dealings - The US was now free to impose itself on undemocratic countries as they were perceived as evil.

It is like how we think that a company that plants its own trees in order to produce paper is being environmentally considerate and therefore not 'bad', when in fact the mass production of the same types of trees in one plot of land (monoculture) is extremely detrimental to the ecosystem and we let it go unchallenged.

And even then, to think of states as now focusing on economics rather than politics seems to fall short of the defining nature of politics and power. I think it is actually more correct to say that economics is now the new form of politics that governments have come to employ in order to further their own interests.

The Growth of the Political Corporation

State and liberty are directly opposed, so they say. Capitalists, liberal economists and right-wing intellectuals will assert the undermining of the state when the free market prevails. When the history of agriculture and cattle farming is observed, such production has evolved from one where the unit of production is the self-reliant family - each family produced its own food from seed to plate with little surplus and with little purchase of capital - to one that consisted of many firms breaking up the production process and a lot of specialisation between a century to half a century ago (which would be argued to be a good example of a properly working free market) to one that is now shaped like an hourglass in our contemporary society - thousands of farmers at the top (production) and millions of consumers at the bottom, with only about four behemoth corporations in the middle controlling the entire process. The power relations are incredibly skewed in favour of these big corporations - one can pretend to imagine how competitive such a market can be. They have plenty of leverage in their hands.

These corporations got to where they are through mergers and acquisitions, in the process carrying out horizontal and vertical integration. It is hard to topple these big corporations because they have resources to waste in order to distort the market in their favour (and, as an afterthought, physical damage to them is not an option since war has been deemed illegal and being cut off from the goods they supply you might kill you). Their place in society has been cemented by their involvement with populations of people through the provision of services. In effect, they have so many dealings in a complex, inter-related web of production such that they have profoundly infiltrated the lives of people and have become indispensable, and interestingly this is much like states do.

This is where it begins to hit me that there is little that distinguishes a giant, integrated and monopolistic corporation from a state - both are revenue-collecting, bureaucratic, conquest-driven, coercive and politically powerful forms of governing/dominating a population. The political power of monopolies and governments require little elaboration. With political power, monopolies and governments have the capacity to reduce the liberties of people through coercion. Monopolistic corporations seek to gain ground and get bigger, as much as governments have been doing through imperialism, colonialism and war in the past. Both giant corporations and governments are characteristically administrative, impersonal and bureaucratic. Most importantly, corporations and governments both seek revenue from the people they 'serve', one through the sale of products and the other through taxation. It is this exchange of services for money that creates a social contract between the service-provider and the people, and in effect a form of state accountability and legitimacy is established. Conquest and taxation has historically been the precedent for states to gain basic legitimacy for existence in the eyes of their own citizens (Tilly, 1975).

At this moment, such a link between a corporation and governance may still seem unclear, but given the free rein that big corporations are increasingly bestowed with now (much of which is, admittedly, earned), there seems little to stop these corporations from casting their nets further and even taking over government functions once the time is right. Already, Big-Four-ish corporations are attempting to control more than just what they initially started out to do. Having more hands in different sectors of the market serves to facilitate the corporation's ability to control and establish power. As Hefferman (1998) argues, "economic power, not efficiency, predicts survival", directly refuting the assertion that it is efficiency which enables a firm to stay afloat in the competitive market. Even if this hypothesis is true though, I wouldn't expect it to happen any time soon - such a new world order would require a thorough remoulding of people's understanding of government before it can be accepted as politics. But we have seen it happen before when people replaced their chiefs with emperors, their emperors with dictators, their dictators with autocrats, and their autocrats with diplomats. Every one of these leaders have been politicians. The new guy might just be the corporate rat - and 'rat' might even be old.


Have we then created the robot that actually destroys its master when we allow corporations to assume political power? The objective and rational free market may breed a new form of statism if corporations rise to the level of government. Or is this merely another evolutionary path for states to prevail, as we have seen through the ages the rise of monarchies, autocracies, democracies and now corporations depending on what is fashionable (and provides access to political power) at that moment in time?

The important takeaway for me at least is that the corporation could very well completely replace the government one day, and that would be normal. Some might even hail it as 'progress'. It's not the Microsofts and McDonalds'es we're looking at, but rather the ones who can creep right into the very fabric of society such that everything you wear, eat and do has something to do with them. That's what makes corporations like Cargill and ConAgra scary - they're obscure and almost unheard of, but they mastermind the production of many of the things we purchase, from where the crops and cattle are grown to the shipment, transport and logistics, right down to the smallest chemical additives and ingredients in our food. Maybe in the future, the CEO of Singapore Dominance Pte. Ltd. could really be our prime minister, or the head of some Big-4 company could be the hegemonic president of the world. It would probably be some dude who broke down trade walls across the globe and has his fingers in many pies. In that hypothetical future, we would allow some corporate person to make policy decisions for us - who better than a shrewd business man in an economic world huh? It's just the emperor wearing new clothes.

Still, there is something universal (and thus intellectually beautiful) about how it unfolds. At the very heart of it, human nature drives each outcome. States are a spectre of the collective will of power-hungry people.


Hefferman, W. D. (1998). Agriculture and monopoly capital, Monthly Review: An Independent Socialist Magazine, 50(3), 46-61.

Ikenberry, G. J. (ed.) (2002). American Unipolarity: The Sources of Persistence and Decline" in America Unrivalled: The Future of the Balance of Power, Ithaca: Cornell University Press, pp. 285-310.

Tilly, C. (1975). The Formation of National States in Western Europe, Princeton, N.J.: Princeton University Press.

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