Corporate Power and Economic Performance

Abstract

Economic power is the ability to go beyond supply and demand to determine in one’s own favor the parameters within which exchanges are made. Public power in the economy is exercised by the nation-state to determine and enforce the rules by which we must live. Public power in a democracy is responsible because it is directly accountable. So public power is hedged in; private power is not. Public power is conspicuous and works in the hot glare of publicity, but private power is inconspicuous and works in the shadows. The inconspicuous exercise of private power in modern capitalism weakens the substance of economic individualism but does not destroy its principal form. Consumer sovereignty, at least in form, remains intact. Such inconspicuous economic power sets the limits of individual choice rather than makes the choice for the individual. So private power is exercised behind the scenes. Private power is inherently irresponsible. The essential characteristic of private economic power in the capitalist world is that it is inconspicuous. Its exercise seldom causes overt resentment. Private power is there, but unnoticed. It is one of the dirty little secrets of modern capitalism. And the more secret it is, the more powerful it is. Nothing enhances private power so much as the denial of its existence.1