Corporations – Command Economies

It’s extremely illogical if nothing else that the same people who fervently defend corporations are those who deride communism. In communism a small localized elite establish policy for an economy (that of a nation). This policy is then handed down and expected to be carried out, with punishments for those who do not do so.

In a corporation a small localized elite establish policy for that corporation. This policy is then handed down and expected to be carried out, with punishments for those who do not do so.

Alright then, so what are the *differences* between corporations and communism, which lead some people to celebrations of the former and demonizations of the latter?

Argument #1: Corporations are less powerful than communist states and therefore less threatening.

This is true in the case of many corporations, but not all. Many corporations now have a higher GDP than that of most nations. And given the tremendous privileges given to corporations under the law, their size and power are very much unchecked, unlike that of nations. No rational human being can say that in today’s world communism is more threatening than corporations (and corporatism, the political system of power than corporations wield).

Argument #2: Corporations compete against each other which leads to gains in productivity, unlike communist nations.

That’s false on both sides. Communist nations do compete against other nations in terms of economic performance. The Soviet Union for example was a failure of economics. Most giant corporations do not so much compete against other corporations as compete against local governments, with respect to repressing any laws that favor workers and allowing low costs for resource extraction. Having defeated the local government, profit naturally ensues, in the same sense that if I was to go to a neighbor’s house, extort him into giving me his family’s money in exchange for a kickback, profit to me would necessarily ensue. This would then be described as a “free market transaction”. That is to say, I am free to extort and run a “successful corporation” which is “more productive” than the competition. If others go out of business as a result that’s merely “competition” which weeds out companies that are “inefficient”.

But to be fair, corporations also compete against other corporations. They mainly do so through marketing and advertising, since their products are tremendously uniform (not that they are beyond hyping any minor difference in the product). This marketing and advertising establishes utterly irrational links, having nothing to do with the product. Hence the “Be Like Mike” campaign that helped Nike sell shoes. While Michael Jordan would probably have performed considerably worse if wearing sandals instead of shoes, the type of shoe he wore had more to do with who was paying him more money (and most improving his image and marketability) than anything else. Hence Michael Jordan himself would have “Been Like Mike” had he been wearing Adidas’s.

So, obviously, this competition does not result in gains in productivity, unless you consider irrational advertising to be in some way productive. It certainly doesn’t help Nike produce more shoes at a lower cost, and the price of Nike shoes reflects that.

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