Corporatism Is Not Capitalism

Understanding the Difference

The terms capitalism and corporatism are often used interchangeably, creating confusion about what type of system truly governs our lives. The dominant narrative suggests that we live in a capitalist society, where free markets and competition drive progress, innovation, and opportunity. But the reality is more complex. What we are witnessing is not true capitalism but rather corporatism masquerading as capitalism—a system where large corporations wield disproportionate power and control, often to the detriment of smaller businesses and individuals.

What Is Capitalism?

At its core, capitalism is an economic system based on private ownership of capital goods, with production, pricing, and distribution driven by competition in free markets. In a capitalist society:

• Individuals and businesses own property and resources.
• Markets are free from excessive government control.
• Competition encourages innovation, improves efficiency, and ideally results in better goods and services for consumers.

The foundational principle of capitalism is that competition promotes a dynamic economy where the best ideas and businesses succeed. It thrives on the notion of a “level playing field,” where anyone can participate and succeed based on their merits.

What Is Corporatism?

Corporatism, on the other hand, involves the close relationship between large corporations and the government, where corporate interests often take precedence over those of the broader public or smaller businesses. In a corporatist system:

• Large corporations have significant influence over government policies.
• The relationship between corporations and the state creates an uneven playing field, where corporate interests are prioritized.
• Government regulations, subsidies, and policies are often designed to benefit large corporations rather than promoting fair competition.

Corporatism is less about free competition and more about maintaining the power and dominance of a select few corporations, often through political and financial means.

The Symbiosis of Government and Corporations

In the U.S. and much of the world, large corporations have an outsized influence over government decisions. This influence is exercised through lobbying, campaign contributions, and the “revolving door” phenomenon, where corporate executives move into government roles and vice versa. The result is a system where government policies are often shaped to benefit corporate interests.

Examples of this can be seen in various sectors:

• Healthcare: Large pharmaceutical companies have significant control over drug pricing and regulations.
• Technology: Tech giants like Google, Facebook, and Amazon dominate their markets, often with little fear of government regulation due to their influence in shaping policies.
• Finance: Banks that are “too big to fail” receive government bailouts during crises, while smaller financial institutions face the full brunt of market forces.

In these instances, what is often presented as “market-driven” outcomes is actually the result of a carefully controlled system where corporations and the government work together to ensure the survival and profitability of large businesses at the expense of smaller competitors and consumers.

How Corporatism Masquerades as Capitalism

The reason corporatism is often mistaken for capitalism is largely due to the narrative that promotes it. The ideals of capitalism—entrepreneurship, individualism, and free markets—are deeply ingrained in the American consciousness. By cloaking corporatism in the language of capitalism, this system maintains its legitimacy in the eyes of the public.

However, the reality is that corporatism undermines the very foundations of capitalism:

• Monopolistic Practices: Corporations merge and acquire competitors, reducing competition and creating monopolies. These monopolies dictate prices and control markets, stifling innovation and choice.
• Government Favoritism: Corporations that spend billions on lobbying can secure favorable legislation and tax policies, further entrenching their power. Small businesses, which are the backbone of a true capitalist economy, are left to struggle under less favorable conditions.
• Crony Capitalism: This term describes a system where success in business depends more on close relationships with government officials than on market competition. Companies that benefit from these relationships receive subsidies, bailouts, and regulatory loopholes that protect their interests.

Global Implications of Corporatism

This phenomenon is not limited to the U.S. Corporatism has global reach, especially through multinational corporations that dominate international trade, labor markets, and supply chains. International organizations like the World Trade Organization (WTO) and International Monetary Fund (IMF) often promote policies that benefit large corporations at the expense of smaller, local economies.

The global nature of corporatism makes it difficult to reverse, as nations become increasingly dependent on multinational corporations for economic growth and stability. Governments that attempt to break free from corporatist policies often face significant economic backlash or pressure from international bodies.

The Long-Term Consequences

Corporatism leads to the consolidation of power in fewer hands, undermining the competitive spirit that capitalism is supposed to promote. It creates a system where:

• Innovation slows because competition is stifled.
• Wealth inequality increases as large corporations amass more resources, leaving small businesses and workers behind.
• Political influence is skewed in favor of those with the financial means to shape policy, further entrenching corporate power.

In the long run, this corporatist system threatens not just the economy but also democracy itself, as corporate interests begin to override the will of the people.

Conclusion: A System in Disguise

The distinction between capitalism and corporatism is crucial for understanding the system we currently live under. While we are often told that we live in a capitalist society, the reality is that large corporations and their relationship with government have created a corporatist system. This system masquerades as capitalism, promoting a narrative that appeals to our belief in free markets and individual opportunity while, in reality, protecting corporate power and suppressing competition.

Understanding this distinction is the first step in addressing the imbalances it creates. Only by recognizing corporatism for what it is can we begin to advocate for a more genuine form of capitalism—one where competition is fair, markets are open, and individuals, not corporations, are the true drivers of progress.

Read More:

For those interested in exploring the distinction between corporatism and capitalism further, and understanding how corporatist systems operate, here are some valuable resources:

1. “The Deep State: The Fall of the Constitution and the Rise of a Shadow Government” by Mike Lofgren
   An exploration of how corporate and government interests intertwine to create a system that often prioritizes corporations over individuals.
2. “The Revolving Door: Why Politicians Become Lobbyists, and Lobbyists Become Politicians” by David Swanson
   This book explains how corporate executives and government officials switch roles, allowing corporations to exert outsized influence on policy.
3. “The Curse of Bigness: Antitrust in the New Gilded Age” by Tim Wu
   A discussion on monopolies and how large corporations stifle competition, directly contradicting the principles of true capitalism.
4. “The Myth of Capitalism: Monopolies and the Death of Competition” by Jonathan Tepper
   A comprehensive look at how monopolies dominate industries and what this means for the future of competition and free markets.
5. OpenSecrets.org
   This website tracks corporate lobbying and campaign contributions, revealing the deep connections between government policies and corporate interests.
6. “Globalization and Its Discontents” by Joseph E. Stiglitz
   Nobel Prize-winning economist Joseph Stiglitz explains how global financial institutions often promote policies that favor multinational corporations, hurting smaller economies.
7. “The Shock Doctrine: The Rise of Disaster Capitalism” by Naomi Klein
   This book details how corporations, often with government cooperation, use crises to expand their influence and power.
8. “The Age of Surveillance Capitalism: The Fight for a Human Future at the New Frontier of Power” by Shoshana Zuboff
   A deep dive into how tech giants like Google and Facebook exploit personal data while influencing government regulations to maintain control.
9. “Overcharged: Why Americans Pay Too Much for Health Care” by Charles Silver and David Hyman
   This book covers how large healthcare corporations manipulate the system, driving up prices and controlling the healthcare market.
10. “Capitalism Against Capitalism” by Michel Albert
    This book outlines how corporatism, especially in the U.S., diverges from traditional capitalist principles and promotes monopolistic behavior.
11. “The Crisis of Democracy” by Michel Crozier, Samuel P. Huntington, and Joji Watanuki
    A report that examines the intersection of corporate power and democratic governance, showing how corporatism has taken hold in modern politics.
12. ProPublica
    An investigative journalism outlet that frequently publishes reports on corporate influence in politics and other sectors of society.
13. Institute for Local Self-Reliance
    A nonprofit organization producing research on how monopolistic corporations harm small businesses and local economies, advocating for decentralized economic structures.