Capitalism versus Corporatism
Updated: Oct 20, 2020
Bernie Sanders and other progressives claim big corporations corrupt the economy. They say corporations are in cahoots with the government and it needs to end. So, to end this unhealthy relationship, they claim more government in the form of Socialism can solve the problem of the already overarching government distorting capitalist markets.
What these socialist touting politicians fail to understand is that the issues they blame on Capitalism are actually issues of Corporatism.
What is Capitalism?
Capitalism is an economic system that says you and I have the right to own property and goods, and to carry out transactions that fit in line with the law of supply and demand. In a true capitalist economy, individuals are given the opportunity to compete as buyers or sellers of goods and services without the intervention of the government (except for rules that make for a fair playing field).
Corporatism on the other hand is a collectivist society much like Socialism. With Socialism, the government is the sole provider of many services and thus controls everything and everyone. In a corporate economy, just a few corporations essentially control the market.
The way Corporatism works is that as corporations grow larger, they begin outsourcing jobs and can then offer products at a cheaper rate than a local, privately owned business. As small businesses can’t compete with low prices offered by giant corporations, they soon go out of business. Corporations monopolize the market by providing the same goods at lower costs, until only few corporations are left. Once small, local businesses are out of the way, corporations are free to raise their prices, because they know consumers have no other option but to buy from them. Corporatism and Socialism go hand in hand because just as a few corporations control the market and the consumer, when the government is the only provider of goods and services, they too control the market and consumer.
In order for Corporatism to work, there has to be a lack of options available to consumers, whereas in a capitalist society, individuals and small businesses drive down prices simply through competition and a free market.
Sadly, the United States does not live in a true capitalist society. Our market is controlled by a mix of corporations in bed with politicians, government and Wall Street.
For example, if the United States operated in a true capitalist fashion, bailouts on Wall Street would have never happened. As the corporations went under due to reckless policies, other businesses would have quickly taken their place as the demand for the services provided would still be there.
Corporatism is responsible for many of the issues we face today. Access to bailout money is a product of Corporatism, not Capitalism. In a capitalist society the government is not involved in transactions. Rather, the government is involved to break up monopolies, which is ironic given that giant corporations’ function similar to monopolies.
When companies like Amazon get tax exemptions, it’s not a failure of Capitalism, but rather a product of Corporatism.
Put simply, Corporatism destroys free market economies and creates corporate monopolies through regulatory power of a strong central government.
Corporatism is a function of Socialism. Yet progressive politicians like Bernie Sanders, Elizabeth Warren and Alexandria Ocasio-Cortez all say big corporations are effectively destroying this country. So, tell me again why they’re advocating for more Socialism if Corporatism, a product of Socialism, is currently the issue?