5.2 Can Corporate Control Fix the World?
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5.2 Can Corporate Control Fix the World?
If today’s democratic systems are facing difficult times and autocratic systems
struggle, too, would more corporate control be able to solve our problems? In fact,
this is often claimed, and companies keep demanding more control. This is probably
what the free trade and service agreements, which have recently been negotiated
under secrecy, are about: governments will give up some of their power and hand it
over to corporations.
So, would it be better to let multi-national corporations run the world? In fact,
companies are often more efficient than governments in accomplishing specific tasks
that can be well monetized. However, if we look at a map displaying what companies
control what regions of the world, it doesn’t look less fragmented than the map illustrating the hypothetical “clash of cultures”. So, we can’t expect that more corporate
control will cause more agreement in the world. We may just see more “economic
wars”.
There are other issues, too.
6 While large corporations have certainly a lot of power
to move things ahead, they often show surprisingly low innovation rates and tend
to obstruct innovations of others.
7 There are many examples where even the value
of own inventions hasn’t been realized. For instance, Xerox did not see the value
of the Windows software they invented. The value of the mp3 music file format
was totally underestimated, and nobody expected that text messaging would become
important. To compensate for their innovation weakness, large corporations buy
innovative small and medium-size companies. Nevertheless, they often fail to stay on
top for a long time. Within a period of just 10 years, 40–50% of top 500 companies
are predicted to disappear. Given such high takeover and “death” rates, societies
would be extremely unstable if run by corporations. Compared to this, countries and
cities persist for hundreds of years, exactly because they are governed in a more
participatory way, unlike corporations.
In summary, there is little evidence that more corporate control would solve the
problems of the world. I don’t deny that many companies have laudable goals. The
use of self-driving cars, for example, intends to eliminate accidents, which have
killed a lot of people in the past. Moreover, by means of personalized medicine,
genetic engineering and biological enhancements, companies try to overcome death
altogether. However, none of these ambitious goals have been accomplished yet. I
might start to believe in corporate control of our globe, if we had a perfect world
everywhere within a 100 km radius of the Silicon Valley, but we are far from this.
In the Silicon Valley, there is a lot of light, but lots of shadow, too. In the past, not a
6 Monopolies often produce efficiently, but they are known to imply a “too big to fail” problem.
Unfortunately, they are the form of economic production which is most vulnerable to disruptions
(due to their lack of diversity). Besides this, they might misuse their power (e.g. by selling over-priced
products, which leads to an inefficient resource allocation on the side of the consumers).
7 Is Google with its approximately 50 software platforms and 100 secret Google X projects an
exception to the typical lack of innovation of big companies? Probably not, as it earns most of its
money on personalized ads.
87
5.2 Can Corporate Control Fix the World?
If today’s democratic systems are facing difficult times and autocratic systems
struggle, too, would more corporate control be able to solve our problems? In fact,
this is often claimed, and companies keep demanding more control. This is probably
what the free trade and service agreements, which have recently been negotiated
under secrecy, are about: governments will give up some of their power and hand it
over to corporations.
So, would it be better to let multi-national corporations run the world? In fact,
companies are often more efficient than governments in accomplishing specific tasks
that can be well monetized. However, if we look at a map displaying what companies
control what regions of the world, it doesn’t look less fragmented than the map illustrating the hypothetical “clash of cultures”. So, we can’t expect that more corporate
control will cause more agreement in the world. We may just see more “economic
wars”.
There are other issues, too.
6 While large corporations have certainly a lot of power
to move things ahead, they often show surprisingly low innovation rates and tend
to obstruct innovations of others.
7 There are many examples where even the value
of own inventions hasn’t been realized. For instance, Xerox did not see the value
of the Windows software they invented. The value of the mp3 music file format
was totally underestimated, and nobody expected that text messaging would become
important. To compensate for their innovation weakness, large corporations buy
innovative small and medium-size companies. Nevertheless, they often fail to stay on
top for a long time. Within a period of just 10 years, 40–50% of top 500 companies
are predicted to disappear. Given such high takeover and “death” rates, societies
would be extremely unstable if run by corporations. Compared to this, countries and
cities persist for hundreds of years, exactly because they are governed in a more
participatory way, unlike corporations.
In summary, there is little evidence that more corporate control would solve the
problems of the world. I don’t deny that many companies have laudable goals. The
use of self-driving cars, for example, intends to eliminate accidents, which have
killed a lot of people in the past. Moreover, by means of personalized medicine,
genetic engineering and biological enhancements, companies try to overcome death
altogether. However, none of these ambitious goals have been accomplished yet. I
might start to believe in corporate control of our globe, if we had a perfect world
everywhere within a 100 km radius of the Silicon Valley, but we are far from this.
In the Silicon Valley, there is a lot of light, but lots of shadow, too. In the past, not a
6 Monopolies often produce efficiently, but they are known to imply a “too big to fail” problem.
Unfortunately, they are the form of economic production which is most vulnerable to disruptions
(due to their lack of diversity). Besides this, they might misuse their power (e.g. by selling over-priced
products, which leads to an inefficient resource allocation on the side of the consumers).
7 Is Google with its approximately 50 software platforms and 100 secret Google X projects an
exception to the typical lack of innovation of big companies? Probably not, as it earns most of its
money on personalized ads.