$ THE ANATOMY OF A CORPORATOCRACY
BY N.S <> #1 06/14/2023Corporatocracy is defined as a socioeconomic and political system characterized by the rule of private corporations (Oxford Dictionary, 2012). Such a system entails the capitalist mode of production and, along with it, the persistence of the profit motive. The definition here given shall inform the various senses in which the term corporate tyranny is used. The first use of the term relates to tyranny in the political, economic, and social realms—in short, a corporatocracy. Another sense in which the word is used refers to the tyranny in the workplace, a tyranny of the interests of the employers and shareholders ( e.g., the executive department), in stark opposition to the interests of the employees at the bottom.
>The following post shall elucidate the meaning hitherto implied by such terms, that the tyranny of corporations within its legal borders and its influence in the realm of political decision-making is a natural consequence of the predominant capitalist mode of production. The post shall argue that while the interests of the workers and the corporate elite are in conflict with one another, as evidenced by the structure of modern corporations, such a relationship is reinforced by the consolidation of economic power through the procurement of political power in government; nevertheless, only by gradually adopting a model of worker democracy through worker cooperatives can such tyranny be reduced
In discussing corporate tyranny in both senses of the term, what is important to consider is the driving force behind such. The tyranny within the workplace and the tyranny affected by private corporations in the public sphere are the explicit manifestations of the profit motive inherent to capitalism. The profit motive is the motive of any entity in society, whether it be a businessman, consumer, or blue-collar worker, to benefit from the fruits of their labor (Schwartz, 1977). However, the term more commonly refers to its corporate context, that is, the motive that encouraged corporations to maximize their profits with a view to their shareholders' interests and to minimize any costs incurred (such as labor) by any means necessary. Thus, the profit motive is what motivates the current global economic system and is an important factor in influencing the manifestation of political tyranny from within the confines of a corporation to society as a whole.
Beginning with the discussion of corporate tyranny in the workplace, what must be stressed of great importance is the relationship between employer and employee. What is often discussed in detail is the inherent conflict of interest that resides in both the employer and the employee (Ashwin, 2003). The worker works for a given wage, usually to gain their means of subsistence. On the other, the employer (in the form of the business owner or perhaps a managerial class) works to extract profit from the business while also considering the investments of the respective shareholders, which possess a stake in the company. In capitalism, the very crude form in which this typically manifests is the neglect of the employer with regard to the interest of his employee. He cares for the interest of his workers in so far as such a concern is related to how much profit such an interaction can yield. In this sense, the worker is rendered a mere tool of production, for their well-being is only satisfied to such an extent that the worker can return the next day and yield profit for the business. The worker has no choice: they will have to work, or they risk instability in applying for other jobs in the same market or others. Thus, this fundamental conflict of interest persists.
The worker, the employed, in this sense, becomes a mere appendage to the business, a tool to be employed in the production process. Even if democracy exists in the political realm, the workplace (in the traditional structure of corporations) has no democracy, or if it does have democracy, it is, at any rate, a democracy limited by the mere existence of the shareholders and the board of directors. In a typical corporation, shareholders who have a stake in the company elect a board of directors, a group of individuals who has power in terms of decision-making, and in electing a Chief Executive Officer (CEO) (Robert et al., 2011). The shareholders, those who wish to profit, ultimately have the power to decide or influence certain decisions made about the corporation, whether in terms of company reputation, policy, downsizing, financial decisions, corporate restructuring, and future business endeavors, with little or no regard for the insights of the employees who are employed to carry out their respective positions, in strict observance with company policies (Wolff, 2012, p.74).
Even if such power is distributed somewhat through the managerial positions, which manage the lower end of the corporation, it cannot be said that the corporation is any more democratic. The presence of such managers does not dilute power from its concentration but merely serves to obfuscate the relationship between the executive leaders on the top and the employees at the bottom. In view of this, a typical corporation can be considered undemocratic. From this, it follows that a corporation can be considered a tyranny, power is centered on one person (CEO), or it can be considered an aristocracy, power being concentrated among a few. Regardless of what name to call such, it all remains the same; the fact that such a corporation lacks any democratic input from its employees in its decision-making would make such decisions that pose risks to the financial and sometimes medical well-being of its employees so long as it maximizes whatever profit may be yielded (Wolff, 20120, p.77).
Moving towards the second sense in which the term corporate tyranny refers, what is important here is the explicit influence (and, therefore, power) exerted by private corporations in political decision-making. Such influence shape how legislation is passed, legislation which is conducive or at least harmless to the interests of private corporations. In the Philippines, for instance, since 2019, local corporations have been able to donate to a political candidate, party, or for any partisan purpose:
"To make reasonable donations, including those for the public welfare, or for hospital charitable, cultural, scientific, civic, or similar purposes: Provided, That no foreign corporation shall give donations in aid of any political party or candidate or for purposes of partisan political activity;" (Herbosa, 2019; emphasis added)
Such freedoms afforded to corporations bridge the gap between economic power and political power, with the latter reinforcing the former. The law stated may have thus been already taken advantage of in the recent elections last May 2022, with candidates such as Ferdinand Marcos Jr. spending about P623,230,176.68 in campaign expenses, being sourced from a variety of sources (Mercado, 2022). The power of corporations, which was previously reasoned to have an undemocratic or limited democratic structure, extends to the political realm, wherein decisions concerning the state are deliberated. Here, the paper goes a step further: it argues that corporate power, in the form of capital, manifests in the social and political realm through corporate grants, monetary lending, propaganda through the mass media—in short, lobbying (Hermann & Chomksy, 2011; Drutman, 2015).
If then corporations have their own particular interests (that is, in transforming capital into more capital), interests which may coincide with the interests of certain political entities, it follows that they will use some of their means to aid such entities in attaining political power such that, once elected into a position of power, political power may be utilized to reinforce the economic power of the lobbying corporation. One can recall, for instance, when the U.S., following the financial crisis of 2008, had financially accounted for the failure of the banks, using taxpayer money in what was historically known as a "bailout." The U.S. not only gives power to such corporations but aids them in their own failure, for it believes that the fundamental economic alliance between capitalist enterprises reinforces the political hegemony of the ruling class. What follows therefrom is a reciprocal process; greater economic power can translate to political power and vice versa, or as Engels (2010) succinctly puts it:
"Wealth here employs its power indirectly, but all the more surely. It does this in two ways: by plain corruption of officials, of which America is the classic example, and by an alliance between the government and the stock exchange, which is effected all the more easily the higher the state debt mounts and the more the joint-stock companies concentrate in their hands not only transport but also production itself, and themselves have their own center in the stock exchange."
Resulting from such tyranny, both within the workplace and the power resulting from a tyranny that extends to the political realm, are certain effects which, if not regulated by the state, will inevitably yield consequences unfavorable to the interests of society as a whole. If corporations, which are largely unaccounted for as a result of the neoliberal injunction of deregulation, will commit to any internal decisions with a view to profit, any consequence resulting therefrom is of no consequence unless it affects their rate of profit. It has long been an obvious trait of businesses that the only reason they are concerned with provisions concerning inclusiveness, for instance, or with mitigating climate change, is because such an explicit stance taken creates a brand image that is favorable to the prevailing political context in which businesses are largely situated. In short, caring about such issues yield more profit or makes sure that companies appeal to their target consumer base. If corporations, who have power both within such structures and outside, pursue such a motive to its logical extreme, consequences such as climate change, for instance, may exacerbate.
Major contributors to climate change, according to CDP (2017), are 100 active fossil fuel companies, which are linked to 71% of greenhouse gas emissions since 1988. These companies are, historically speaking, a product of the neoliberal economic policies which have deregulated companies, including fossil fuel enterprises (Lukacs, 2017; Monbiot, 2016; Carrington, 2017). If climate change is a very serious issue, one that threatens the very existence of the human species, as indeed everyone already knows, then it is of the utmost importance to tackle it earnestly and do everything that can be done to ameliorate it.
The solution seems clear: deal with the companies that are contributing to climate change in a significant way, such as fossil fuel companies, and expedite the transition to renewable energy. However, such a solution, at any rate, is simply impossible to be fully realized, not only because governments around the world are currently "bailing out" such companies but also because the companies themselves have influence in political decision-making to secure themselves their rigid position in the class hierarchy. Guided by the profit motive, a radical change in how companies operate is going to be altered if such a change is profitable. Most of these solutions do not seem to be profitable, at least in the short term (Kienzler, 2023).
Transitioning to a more eco-friendly energy industry requires a lot of capital investment to fund such—in short, investors need to see that there is profit to be made in securing the well-being of the species. It seems from this, therefore, that profiting is more important than the well-being of the planet and the species. However, this is an inherent trait of the system, the motive to profit is the driver of global capitalism. If then the problem is systemic, then the system must be changed. Nevertheless, changing the system implies intermediary steps to get there, starting from the level of the corporation. Individual corporations must first have to change in order to influence or contribute to the general climate of change if it is to influence or bring about the systemic factors which can bring about a systemic change. Therefore, what can be proposed is a solution, an alternative to the prevailing mode of production, which is capitalist in nature but serves as a transition to a society not built on the profit motive but rather on the interests of the collective.
By democratizing the workplace through engendering the implementation of worker cooperatives (and cooperatives in general), can such democratic decision-making, such power both political and economic, falls into the hands of the masses and not merely be concentrated in the hands of the ruling class. However, before such a solution can be discussed, some counterarguments need to be considered.
The objections that can be raised are numerous, but only a few shall be considered. In terms of corporate tyranny within the workplace, while the inherent structure of such is undemocratic, it may be argued that such a lack of democracy is for the sake of efficiency. If a company allows democracy to shape its decisions, it will have to account for every decision the company makes, possibly both on a micro and macro scale. This will decrease efficiency in the long run, yielding a lower rate of profit for marginally empowering the workplace through democracy; in short, the democratization of the workplace defeats the purpose of efficiency, and therefore progress is sacrificed for the sake of democracy. However, this objection is uninformed in the empirical observations of the institution of workplaces democracies in developed countries. According to Logue et al. (2005), worker-owned and managed firms are generally not less productive than conventional corporate firms. They are at least equal and may exceed the productivity of conventional firms. Furthermore, the performance of worker-owned enterprises varies in some industries, sometimes outcompeting their conventional counterparts; they are at least generally on par with them (Fakhfakh et al., 2012; Monteiro et al., 2018).
This claim of inefficiency, therefore, must be critically examined, for the efficiency of a given firm is significantly dependent on certain factors and does not imply that conventional corporations are generally more productive than worker-owned and managed firms.
Another objection to be considered is the role of corporations in the political decision-making of the state. There are two ways this objection can be considered: either it is asserted that corporations should have the right to influence political decisions through their funding, for it is well within their right, or to assert that corporations are not a significant influence ojn politics in general. The proponents of both views assume implicitly that such decisions of the state are not merely influenced by the democratic decision-making of voters but by other entities, regardless if such influences are significant. The foregoing view is untenable in light of the facts stated heretofore. The right of local corporations to finance political decision-making is definitely a right granted by the state, according to the Revised Corporation Code of the Philippines (Herbosa, 2019). However, the fact that such freedom is granted to corporations does not imply that it cannot be abused to the extent that it compromises the democratic institutions which form the foundation of a democratic republic.
Therefore, appealing to such a logic still requires the proponents of this view to propose a way in which such a right can be regulated so as not to be abused by corporations. In terms of the second view, such an assertion is factually incorrect. In the U.S., for instance, major corporations have historically influenced the political climate and the policy solutions proposed for certain issues, such as climate change for instance, in view of the interests of such corporations (Kennedy, 2017; Herman & Chomsky, 2011). Therefore, the proponents of the view that corporations have a limited or insignificant influence on political decision-making lack any sufficient empirical evidence to support such a claim and are thereby untenable.
The last objection is closely related to the previous objection in terms of freedoms granted to corporations. Corporations in most liberal democratic countries are given certain economic freedoms, which ensures the proper functioning of a capitalist economy through the implementation of a free market. The free market, operating with the guidance of the "invisible hand," is able to generate wealth through the associations of each individual with each other in their society, motivated by their self-interests to flourish as citizens of the state (Schwartz, 1977). This is necessary for the development of capitalism. The state, according to such an economic system, must not interfere or must limit its interference with the market, allowing the market to self-regulate itself and "trickle down" wealth to each individual in the lower thresholds of society. However, this objection misses a fundamental point: that is, the fact that such a "free market" does not exist since every market presupposes certain regulations made by the state.
In truth, currently, no actual free market exists in any modern society existing today (Reich, 2020). The market always requires interventions and regulations for it to function properly. What is debated in the sphere of politics is not the absence or presence of state interference in the market but rather to what extent the state interferes. The neoliberal view is that only limited interference must happen to allow markets to perform their function; the rest should be a self-imposed regulation by the market itself. On the other hand, liberal theorists argue that only by regulating the market through social safety nets can some of the economic inequality present in contemporary society be resolved (Eatwell & Wright, 1999, pp. 85-87).
Therefrom, the proponents of the free market view ignore the fact that corporations, in arguing for their independence from state institutions, are already intertwined with the government. For instance, one call recall that the U.S. had bailed out banks in the 2008 financial crisis, while the Philippine government, in light of the recent COVID-19 pandemic, had decreed higher interests through the central bank in regulating inflation (Bangko Sentral ng Pilipinas, 2022). In short, corporations are not independent of the state but are rather heavily dependent on its support for the security of its class interests and the consolidation of its economic power, which in turn reinforces the economic power of corporatists in government.
What then must be done to combat this force, this alliance between corporations and government, the ruling class? It must be combatted both economically and politically, for the economic changes made are significant in acquiring political power and, in such a procurement, using political power in the consolidation of economic power. In short, to utilize the initial reciprocal process for the masses to attain power. Democracy in the realm of the state is insufficient; there must be democracy in the workplace, wherefore democracy exists in the workplace, there is also political power. In order for the dissolution of capitalism to be meaningfully carried out, it must first begin by using its own means to dissolve it. It has to put up with the system; it has to first gain power and influence gradually before it takes up any revolutionary course of action.
In all actuality, the existence of worker democracies are themselves revolutionary, for they wield revolutionary potential in transferring power from undemocratic corporate entities to worker-owned enterprises, resulting in the co-opting of political and economic power in the hands of the workers, the proletariat. However, it must first be understood what is meant in defining a worker cooperative.
A worker cooperative, distinct from other cooperative firms, is a cooperative that is owned and managed by its workers (Hansen et al., 1997). To what extent the workers own and manage the cooperative depends on each particular cooperative, with varying degrees of differences between such. Some worker cooperatives will have all their workers own the firm but elect a board to deliberate decisions concerning the firm. At the same time, others will have full worker control over everything. In terms of ownership, either workers own all or workers own the majority while having some external shoulders that do not have any controlling shares, meaning that control is still within the hands of the workers. The principle here is so long as one is a worker in the firm, each will have the power to vote on decisions concerning the business. This type of cooperative is distinct from other cooperatives, such as consumer and producer cooperatives.
In the Philippines, a prevalent coop is a credit union, which are banks that are owned by its members and are generally not for profit. The aim of all cooperatives is the satisfaction of the mutual needs of its members. Of course, cooperatives aim to profit from their enterprise since they operate under the capitalist mode of production. However, the profit motive is not the overarching motive in the business but the satisfaction of the interests of all. Since workers have democracy, even if they pursue the motive to profit, such a profit yielded concerning how it is distributed can be deliberated by the workers. This means that workers have a say, have power in the decisions made by the company and in the distribution of their profits. In this sense, a worker cooperative tends to have less inequality within firms (Burdin, 2015).
From this, it follows that more democracy in the workplace implies that workers tend less likely to leave voluntarily, put in more effort, and have increased trust levels (Blasi et al., 2016; Frohlich et al., 1998; Mellizo et al., 2014; Sabatini et al., 2014). Furthermore, as has already been stated, worker cooperatives have similar levels of productivity to conventional firms (Fakhfakh et al., 2011; Monteiro Straume, 2018). All these are benefits of worker cooperatives and seem to be in defiance of the prevailing mode of production since the prime motive is not merely to profit but to profit in view of satisfying the interests of each member of the cooperative.
Though worker cooperatives still are a minority, when compared with large transnational corporations, they pose as an alternative to the traditional corporate structure. By introducing such a democratic corporate structure, workers within the firm can have a say in how the business is run, and thereby decrease not only their alienation from the product of their labor but also their exploitation, for in granting them democratic control, they have a vote in regulating all aspects of their working conditions. Thus, the rate of exploitation, compared to traditional corporations, is much lower. This ought to be the future of capitalism, a transitionary state which bridges the capitalist mode of production, with a regulated market, to the principles of socialism outlined by Marx and theorists after him. It is a step toward the abolition of private property, the commodity form, social classes, and the state itself.
However, one objection may arise: if the profit motive remains, is not such a firm bourgeois? If workers own it, is the risk that from the ranks of the workers, corporate tyrants emerge, thereby devolving back into a corporation? That is, at any rate, an important objection to consider. However, it is a problem that is not inherent in the structure of worker cooperatives themselves but in the prevailing policies which surround its formation. This can be mitigated. If the reader accepts the arguments made hitherto concerning the interdependence between economic and political power, then they may recognize the succeeding argument: that as workers attain democracy in their own respective workplaces, and such firms multiply, they gain power in the economic realm, which they, in turn, inevitable transform into political power through their own capital.
They then use such power to make it easier for worker cooperatives to form and harder for such firms to devolve into tyrannical corporations, for as long as political power guarantees economic power, such a structure, if it is the will of the workers, could remain without retaining the decadent corporate structure. Marx (1987; 2000, 2010) was correct in stating that:
"The essential conditions for the existence and for the sway of the bourgeois class is the formation and augmentation of capital; the condition for capital is wage-labor. Wage labor rests exclusively on competition between the laborers. The advance of industry, whose involuntary promoter is the bourgeoisie, replaces the isolation of the laborers, due to competition, by the revolutionary combination, due to association. The development of Modern Industry, therefore, cuts from under its feet the very foundation on which the bourgeoisie produces and appropriates products. What the bourgeoisie, therefore, produces, above all, are its own grave-diggers. Its fall and the victory of the proletariat are equally inevitable."
Only in the formation of such sectors, such territories of democracy, can the proletariat gain the power to which they can transform, wielding the means of capitalism, to acquire political power to secure more capital. This they use for revolutionary purposes: in this sense, they effectively use the means of capitalism to destroy it. Capitalism contains within it the seeds of its dissolution. It is only when one begins to wonder at the specter of a world to come, can such action be fueled amidst the ambiguity of social life.
Through participation in the democratic process, attaining rights gradually but slowly, and the consolidation of the gradual development of cooperatives in all respects, including worker-owned and controlled firms, can the prospect for an emancipated future be realized, and thus struggle in this sphere is to use the virile drive of capitalism against itself. In starting to discuss such issues, in the realm of culture, the struggle may have already thus started. Thus, the task of politics must now be to show that the present is but a chain in continual motion, that the present is but a transient state, and in positing a possibility, to affirm its attainability through the contingency of the future.
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