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The Influence of Corporations on the Global Economic System

Large corporations are often vehicles for expressing the opinions and supporting the interests of their owners and senior executives. Although they are a key part of the operation of the global economic system, and have a legitimate interest in ensuring that legislation and government policy does not conflict with the reasonable needs of producers and traders, for example by improving infrastructure, or by reducing bureaucracy. The interaction of corporations (and their owners) with government and society is complex. On one hand corporations have been extraordinary successful in supplying the world with affordable and desirable products that benefit us all, in providing services, like banking, that we rely on, and their owners frequently use their wealth, as Bill Gates has, to benefit global societies. So corporations benefit society in many ways, but they have immense power, but that power needs to be subject to law and regulation, and to alignment with the public interest.

However, the interests of corporations can at times be at variance with the needs of the society they operate in. The examples are obvious, governments may decide to tax or otherwise discourage the consumption of certain products, such as sugar or tobacco, or CO2 generating products like large cars, or coal-fired power stations, but the affected corporations will do all they can to maintain sales of these products, even where they are clearly against the public interest.

Corporations have learnt that lobbying of national assemblies, particularly the US Congress, is a cost effective way of enhancing their profitability. As corporations are motivated by the need to maximize profits, it is on their interests to reduce or remove regulations, particularly those which seek to impose the full environmental costs of manufacturing on the producer, by making them pay in full for clearing up pollution, compensating those affected by their operations and products, including employees affected by poor working conditions and a lack of safety protection.

© Andrew Palmer, 2016, not for reproduction

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