The Influence of Corporate Power on Society and Economy - Research Proposal Example

The influence of corporate power on society and economy College Corporations around the world are established to maximize the revenues to their shareholders and to preserve the interest of the various stakeholders. Thus, profit maximization is the main and core aim of the corporations functioning all around the world. In fulfilling their main aims, they actively engaged in the destruction of the atmosphere, involved in trafficking of child laborers, abusing the child laborers from the third-world countries, lobbying with the governments and politicians to evade and twist the laws and regulations in their favor. Further, the corporations are also responsible for environmental damages, which have resulted in global warming. This research essay will analyze how corporations around the world are exerting their sway on the respective governments and societies, and the ways and means to prevent it and how to make them more socially accountable for their actions. The influence of corporate power on society and economy Research Proposal Title The influence of corporate power on society and economy Introduction Corporate authority and influence naturally are fostered along with commoditization. Corporate authority is employed to nourish policies that kindle commoditized economic development. As these governmental policies are prone to be tilting toward commoditization, corporations wield more or more power, thereby influencing corporate power at all levels towards supporting commoditization. Multinational companies are employing their power to persuade nations to minimize their tariffs, to remove the barriers to investments, to annul or eliminate the rules on repatriating profits out of countries in which they have invested and to lower the corporate tax rates and to offer incentives to foreign investors. The corporate laws around the world are being drafted in such a way that it facilitates to create an atmosphere which is favorable to amass capital and to incorporate and run companies. (Costanza, 1999, p.224). With the extraordinary powers which corporations are possessing with through regulations, nowadays they have started to wield their sway on not only governments but also on societies in which they operate. This research essay will analyze the manner and style with which the corporations are exerting their power on the governments and societies, how to prevent them and to make them more socially responsible to the various stakeholders to whom they have to be accountable. Objectives of the Research Proposal The main aim of this research essay is to demonstrate how regulatory capture, i.e. how the interest of the public is sacrificed to the advantage of a corporation and how corporations around the world are exerting influence on the government or regulators. Further, this research essay will discuss how corporations are employing lobbying as a mechanism to bend the regulations in their favor by disregarding the welfare of the society. The Problem Statement Corporations around the world now acting as a mechanism through which their representatives could cause irremediable loss to the society in the manner in which the corporations are incorporated and safeguarded by the laws. Now, the modern corporations are indulged in lobbying for twisting the regulations in their favor and to cause irreparable losses to the society through oil spills, causing damages to environments, and they are also responsible for global warming. Hence, time has come to decide whether we should eliminate the corporate form of business and whether the governments should increase or decrease its control over corporations. It is essential to refurbish the corporation’s original objective which is to serve the interest of the public and there is an urgent need for the reinstatement of governmental democratic authority over the corporation form of business. Thus, it is highly recommended that there should be realistic, concrete and practical reform which is the need of the hour to cleanse the contemporary corporate forms of business. Literature Review Corporation wields its authority over the government and the society, and it is said that there exists collusion between corporations and the governments as corporations around the world are able to twist the laws in their favour and when the public interest is forfeited for favoring a company due to influence wielded by such company, which is known as “regulatory capture.” Thus, in regulatory capture, the advantages that corporations enjoy surpass the costs to the regulator. According to Albino, Hu & Bar-Yam (2013), the global financial crisis started in 2007 blossomed the notion that failures by regulators can destabilize the fundamental market function and the economy. As per Financial Crisis Information Report of 2011, the global financial crisis of 2007 was mainly due to large-scale breakdown in financial rules and supervision, which demonstrated about the demoralization of the respective country’s financial markets. (Albino, Hu & Bar-Yam, 2013). In his book, Dan Skidmore-Hess details under the chapter “Obama’s corporate centrism”, how Citigroup and Goldman Sachs donated liberally for the Barack Obama’s 2008 election campaign. Both Citigroup and Goldman Sachs made a political war to overthrow any initiatives to disintegrate banking institutions in USA during Obama’s term. (Cox, 2012, p.2). Further , US based big corporations like Apple Inc , Google Inc , Microsoft Corporation ,EMC Corporation are keeping too much cash in their foreign subsidiaries instead of repatriating the same back into USA as they have to a corporate tax of 35% on it thereby hampering the creation of new employment and expanding their activities in USA. Further, these powerful corporations are being engaged in strong lobbying to reduce the corporate tax rates so that they repatriate those balances back into USA. It is claimed that Apple Inc is having around $ 100 billion cash reserves parked in their overseas jurisdictions, and they have to pay $ 35billion as taxes to US government if they repatriate these cash reserves back into USA. (Linebaugh, 2013). Other than American companies, many foreign companies hire lobbyists to manipulate American government’s policy and spending patterns in the USA. For instance, in 2005, about 700 foreign companies engaged the US based lobbying firms to safeguard their interest. It is alleged that foreign-based companies spend hundreds of millions of dollars per annum on lobbying mainly to establish a conducive business and trade atmosphere. Major UK based pharmaceutical company, GlaxoSmithKline is spending huge amounts on lobbying in the USA, mainly to manipulate Medicare laws. It is to be noted that the Coalition of Pharmaceutical interest, which is known as PhRMA, expended $65 million between 1998 and 2004 on lobbying in USA. (Schmidt et al, p.266). Many corporations would favour that the general public should be unaware of their initiatives to influence laws that enhance worker safety or that minimizes pollution. Thus, companies engage their trade associations to assume some public stand on these issues, facilitating the lobbyist engaged by the corporation to establish personal rapport with the decision-makers and such contacts are not always easily visible to the media and general public. (Godwin, Ainsworth & Godwin 2012). Joel Bakan in his book “The Corporation “critically argues that how cost-benefit analysis being used in the automobile industry in USA where safety of the car owners is flouted to keep the cost of a car to the lowest and how corporations maximize their margins by employing sweatshop labour force from under developed nations like Bangladesh, Sub-Saharan African regions and Pakistan. Further, the influential oil majors such as Exxon, BP have the track record for flouting environmental and safety regulations through their infamous oil spills and spending millions of dollars on lobbying. Bakan also discusses about how corporations around the world involved in continuous lobbying to amend the regulations that limit their activities. When the President Roosevelt introduced the New Deal program in 1934, the majority of the corporations in USA did not like it. It was exposed by a Congressional Committee that there was enough proof of a conspiracy to overthrow President Roosevelt by major corporations of USA. It was suspected that the plot to overthrow Roosevelt included envoys of USA’s giant corporations like JPMorgan, Goodyear Tyre, and DuPont. Bakan discusses in his book about how big corporations are engaged in the lobbying with the government and getting success in introducing deregulations in their favor. (Burk, 1990, p.x). If corporations act recklessly, the real perpetrator for the same is the relevant governments and their so-called pro-corporate laws. (Sklar, 1988, p.93). Research Methodology. This research essay will mainly employ secondary resources to prove the research question. The secondary resources are not only cost effective but also time saving. Thus, references will be sourced from the books written by eminent authors, peer viewed journal articles, past empirical studies and article available from the internet. Secondary sources offer accurate and detailed information on the research topic as it offers what the authors have found on the subject already. References Albino, D K., Hu, A., & Bar-Yam, Y. (2013).Corporations and Regulators: The Game of Influence in Regulatory Capture. Cambridge: Cambridge University Press. Bakan, J. (2014). The Corporation. London: Constable & Robinson Ltd. Burk,R F. (1990). The Corporate State and the Broker State. The Du Ponts and American National. Harvard: Harvard University Press Costanza, R. (1999). Privileged Goods: Commoditization and its Impact on Environment and Society. New York: CRC Press. Cox, R W. (2012). Corporate Power and Globalization in US Foreign Policy. New York: Routledge Financial Crisis Inquiry Commission. (2011). The Financial Crisis Inquiry Report. Washington: GPO Godwin, R K., Ainsworth, S., & Godwin, E K. (2912). Lobbying and Policy Making. New York: CQ Press. Linebaugh, K. (2013). Firms Keep Stockpiles of “Foreign Cash” in U.S. Retrieved February 6, 2014 from http://online.wsj.com/news/articles/SB10001424127887323301104578255663224471212 Schmidt, S., Shelley, M., Bardes, B., Maxwell, W., Crain, E., & Santos, A. (2009). American Government and Politics Today –Texas Edition, 2008-2009. New York: Cengage Learning. Sklar,M J. (1988). The Corporate Reconstruction of American Capitalism. Cambridge: Cambridge University Press. Read More