Corporate Giants and the Power Structure

Abstract

IDEALLY, IF NOT in reality, ours is a pluralistic society. Our concept of freedom is that power be decentralized, that influence over the process of decision-making be diffused.1 It is this, of course, which explains our devotion to a political and economic system characterized by small units of control, functioning in fragmented structures. As norms for public policy, perfect competition and pure democracy have survived largely because they are models in which the discretionary authority of individuals and groups is sharply delimited. Now it is eminently clear that atomized political and economic structures are incompatible with a modern industrial society. Does this mean that bigness and a pluralistic distribution of power are mutually exclusive? Are giant business enterprises which are pursuing their private interests steadily gaining a greater proportion of power both in the private and public sectors of the economy? Is the American economy truly pluralist or is it more nearly a pluralism of elites, of which the corporate giants are one? These questions have been examined by a large and growing number of analysts. In popular and academic publications there has been comment on the political, social, legal, and economic aspects of the problem of corporate giantism and its place in a free society. By and large, however, economists have dominated the discussion and set the boundaries within which it has been conducted. The emphasis, as a result, has been put upon the impact of the large-scale business unit on the allocation of resources, the level and distribution of income, and the rate of economic development. While these are rather well-defined areas for analysis, they may be handled with different theoretical models. If, on the one hand, the theorist reasons from static assumptions--constant consumer preferences, resources, and technology he is most likely to conclude that the behavior of largesized enterprises, particularly where they have significant market power, will cause a less-than-optimum allocation of resources, a lower level and greater inequality in the distribution of income, and a slower rate of economic progress. This reasoning, firmly grounded on the classical theory of markets, is embedded in the voluminous monographs of the President's Temporary National Economic Committee of 1939-40.