Political Theory

Re: Corporatism Vs. Capitalism

James Greene — Wed, 25 Mar 2009 02:22:58 GMT

How about antitrust laws? I have heard that these actually stifle competition. Surely a symptom of corporatism where interference in the free market creates more monopolistic institutions that otherwise would not exist at such magnitude in a truly free market. There is a book I have been meaning to read called Antitrust: The Case for Repeal. Any thoughts on this?

Re: Corporatism Vs. Capitalism

Stranger — Sun, 22 Mar 2009 04:18:17 GMT

James Greene:

This is very interesting. Is this not a result of a free market? Or, as you say, is there a set of regulations and/or laws that have created such a system of immense executive pay at the expense of the real capitalists? Any further reading on this topic that you could point me in the direction of?

I have always found it incredible that corporate CEOs quite normally receive bonuses of multiple millions of dollars every year. I have a hard time believing that anyone is worth that much.

Here is one article. It doesn't go in depth into the close ties between politicians and the executive class, that's a story that's being written as we speak.

Re: Corporatism Vs. Capitalism

garegin — Sun, 22 Mar 2009 00:40:51 GMT

"Because Congo is laissez faire?"

ok, bangladesh. (im being a devil's advocate here, because in reality a lot of poverty is caused by embargos/tariffs

Re: Corporatism Vs. Capitalism

MatthewF — Sat, 21 Mar 2009 23:40:11 GMT

DBratton:

I think the difference stems from how the two sides view the legitimacy of profit. To a (true) Capitalist, profit obtained through free trade is legitimate but profit obtained through government favors is not. But the socialists don't see that distinction. To them all profit is illegitimate.

RayLopez:

business decisions that may or may not be correct (e.g., half of all corporate mergers and acquisitions end in failure).

Here's the key insight: Most people I know aren't hardcore socialists yet buy into the lie that we are living in a capitalist society and that it is the root of our social ills. It is because of a misunderstanding of the nature of profit, specifically that the other side of the coin involves LOSS.

If profit is the great evil, then certainly loss must be a blessing...

The fact that so many businesses fail should be proof positive of the power of the marketplace to enforce consumer preferences.

Re: Corporatism Vs. Capitalism

DBratton — Sat, 21 Mar 2009 23:16:24 GMT

James Greene:
why it is that so many socialists, communists, left wing liberals and so forth fail to see the difference between the two and wrongly label capitalism

I think the difference stems from how the two sides view the legitimacy of profit. To a (true) Capitalist, profit obtained through free trade is legitimate but profit obtained through government favors is not. But the socialists don't see that distinction. To them all profit is illegitimate.

I see Corporatism as just another name for Mercantilism, with Mercantilism being defined as the use of force, usually by the state, to produce particular winners and losers in the market. The left view the question in terms of profit and tend to see Mercantilism/Corporatism as just a species of Capitalism; whereas I view the question in terms of force and consider Socialism to be a species of Mercantilism.

Re: Corporatism Vs. Capitalism

ama gi — Sat, 21 Mar 2009 22:52:35 GMT

Of course monopolies are bad.

bbnet:

Monopolies aren't bad if they are supported by and created through the free market.

But then they are not monopolies; they are legitimate, successful businesses that happen to have a larger market share.

Re: Corporatism Vs. Capitalism

James Greene — Sat, 21 Mar 2009 22:24:53 GMT

Stranger:

I think we could define corporatism as a system of legal privilege that protects the structure of a corporation against capitalists. For example in the USA shareholders have little power over the major industries other than as someone a dividend must be paid to. The executives in the corporate hierarchy control the corporation, the capital-owners control nothing. This is how it has come to be that executives pay themselves immense salaries, bonuses and other income out of money the rightfully belongs to capitalists.

This is also why American corporations are largely ruined.

This is very interesting. Is this not a result of a free market? Or, as you say, is there a set of regulations and/or laws that have created such a system of immense executive pay at the expense of the real capitalists? Any further reading on this topic that you could point me in the direction of?

I have always found it incredible that corporate CEOs quite normally receive bonuses of multiple millions of dollars every year. I have a hard time believing that anyone is worth that much.

Re: Corporatism Vs. Capitalism

Stranger — Sat, 21 Mar 2009 15:59:31 GMT

RayLopez:
I'm not sure I answered your question, but Google Kenneth Arrow and the Theory of the Firm. A lot of work was done after WWII in this area and it remains a hot topic. For example, if monopolies have economies of scale, why doesn't one firm rule the world (Microsoft anyone?)?

Here is a fine exemplar of the profundity and insight of neoclassical economics. Why doesn't one firm rule the world? That's what Marx said would happen!

Re: Corporatism Vs. Capitalism

RayLopez — Sat, 21 Mar 2009 15:53:18 GMT

You might want to research the "theory of the firm". What this says is that at a non-perfect competition level, which is a lot of the real economy, you actually have imperfect competition which can lead to game theory outcomes (monopoly being an example). Monopoly actually can give, due to economies of scale, greater output and lower prices than atomized perfect competition. But--and this goes to corporatism--at the most fundamental level a corporation is not unlike a communist entity (as anybody who has worked for a corporation knows) because internal pricing is not present--a lot of what a corporation does internally is not governed by prices--but by non-price sensitive behavior, such as rent seeking (e.g., brown nose corporate boffins) and business decisions that may or may not be correct (e.g., half of all corporate mergers and acquisitions end in failure). However, hopefully corporations do compete with each other at the external level when dealing with the public (this goes to the free market), and barriers to entry are low enough so that if a corporation is so out of touch with their customers the corporation will go bust and/or new corporations will take their place (pace Washington DC). I'm not sure I answered your question, but Google Kenneth Arrow and the Theory of the Firm. A lot of work was done after WWII in this area and it remains a hot topic. For example, if monopolies have economies of scale, why doesn't one firm rule the world (Microsoft anyone?)?

Re: Corporatism Vs. Capitalism

scineram — Sat, 21 Mar 2009 15:35:18 GMT

Because Congo is laissez faire?

Re: Corporatism Vs. Capitalism

garegin — Sat, 21 Mar 2009 04:40:32 GMT

you want the answer? because what people call it. the 19th century system was called laissez faire and people saw the wide discontent. so they drew a simplistic conclusion. free markets=mass misery. the root of the problem is lack of reasoning ability. look sweden is socdem and they have better living standarts than congo. hence mixed economy is better than laissez faire.

Re: Corporatism Vs. Capitalism

fakename — Sat, 21 Mar 2009 03:55:23 GMT

why do liberals believe that it is capitalism and not corporatism that exists today?

Why did the romans think that romulus was descended from a god? They see corporations allied with government and since they are already trained to believe some marxist or social democratic theory about how businessmen corrupt government or how government is just the manifestation of business, they see what they want to see.

We on the other hand understand the true theory and so we know what the data really says.

Re: Corporatism Vs. Capitalism

James Greene — Sat, 21 Mar 2009 00:24:49 GMT

bbnet:

Monopolies aren't bad if they are supported by and created through the free market.

Agreed

Re: Corporatism Vs. Capitalism

bbnet — Sat, 21 Mar 2009 00:15:18 GMT

Monopolies aren't bad if they are supported by and created through the free market.

Re: Corporatism Vs. Capitalism

hayekianxyz — Fri, 20 Mar 2009 23:30:17 GMT

James Greene:
What do you think are some of the key differences between Corporatism and Capitalism?

Stranger gave an excellent definition. But the point I'd like to make is that provided you can show government intervention in regards to regulation business and any other features of corporatism, and to the extent that the intervention in question exists the means of production are in the control of the state. Which is the definition of socialism.