Illusions of Corporate Power: Revisiting the Relative Powers of Corporations and Governments

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Abstract

ABSTRACT

A common opinion is that power has shifted from states to companies. This article discusses quantitative and qualitative aspects of power possessed by companies and by states. A more adequate comparison than that between company sales and gross national product is the one between company value added and GNP. Also more adequate is the comparison between the public sector and company net profit. These rival measures take down company power to about a tenth of the sales measure. Also in qualitative terms the "exit power" of the company gives a low impact compared to governmental action and the article concludes that company power by common measures is overestimated. However, the aggregated long-term effect of the market economy on the development of society is most significant. But it is a mistake to use that judgment as an argument for the opinion that business executives are the major power holders in modern societies. Perceptions of power also have an impact on which expectations and commitments that can be judged as realistic and therefore the issue of power is central for the normative discussion about corporate social responsibility.

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