Posted by: Middleclass Search | September 19, 2012

Corporate Capitalism

To some people, corporate capitalism is the only form of capitalism and to even suggest another definition is considered a step toward socialism. In reality, many current corporations practice a form of corporate socialism whereby the government provides them with subsidies and special considerations that make them profitable. This has led many CEOs to become experts at manipulating the rules and regulations of our economic and political system rather than experts in solving problems of the services or products that their companies produce. This approach may work in the short term, but eventually it tends to make corporations inefficient and hastens their demise. Protecting corporations has become so ingrained in our political system that there are those who believe that even the founding fathers would approve today’s type of corporate capitalism. 

The problems with corporate capitalism are many.  First, corporate management’s compensation is based on short term profit which may or may not be good for the company in the long run. Second, the trend towards profit has brought many financial managers to CEO positions resulting in companies whose emphasis is on finance as opposed to its original mission, manufacturing, retailing, etc. This has changed many corporations from producers of products and services into quasi financial institutions. Third, profits are largely made in the gray areas of the laws and regulations. In a global environment, corporations owe no special loyalty to nations—and some translate this as no loyalty to their workers and at times even to their customers. Fourth, given the current political environment it is easier to hire a lobbyist to provide a loophole for solving a problem than to hire experts to fix the problem. Fifth, given a free reign, some corporations will damage/destroy natural resources for future generations and pollute the environment for existing citizens.

Corporations are doing what businesses do; trying to survive and prosper. Corporations have been described as sharks and if allowed to go unchecked they will gobble up everything around them. Government regulations work to restrain the sharks. Only a few great white sharks want to consume everything and it is the same with corporations and individuals. It’s these few that are hurting the middle-class.

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