The politics of capitalism

What makes a company run? Sales. Sales of a product to the right customer. In the business environment today, politics plays a major role to dictate the environment that a company must operate in. A manager is then charged with the task of creating value for customers within the limits of the political sphere. Customers play the most important role in making a company either a success or a failure. Most of these customers are also voters, constituents of multiple representatives. These representatives are charged with the task of building a society that the majority of their constituents desire. A successful company therefore must also understand what their customers desire and operate within the boundaries the customers have set.

Companies that create false value such as Enron are the foundation for legislation that protects customers from company malpractice. The representatives that choose these laws must act above the influence of the wealth their society creates. When they do not, politics creates an environment that benefits powerful companies rather than the customers/constituents. This has happened multiple times in the US in the past, for example, the powerful food companies of the 1920’s needed to be broken up because their influence on society was far too great.

Today, lobbying has created a societal structure that allows for powerful companies to influence politics. The more wealthy the company, the stronger their lobbying influence. This has allowed companies to alter legislation making the business environment more favorable for them. While this can increase wealth in countries, it reduces the value of society because the politics operate in the interest of business rather than the people and creates externalities such as the environment. The separation of business and politics is vital to building a lasting society, and companies need to work within the limits of politics rather than attempt to bend politics to their will.


3 responses to “The politics of capitalism

  1. I find your post to be very interesting. You are certainly correct that wealthier companies have a greater lobbying influence, and that as a result, politicians act in favor of said lobbying company. Clearly, the constituents of an area do not benefit if they politicians they voted for are acting in the best interests of business and not the constituents themselves. For this problem to be solved, both businesses and government officials must stop this cycle. Politicians need financing for their campaigns, and that’s where businesses come into play. Businesses need favorable legislation, and that’s where politicians come into play. I have tried to envision our society where neither of these situations happens, but I can’t. How do you think this problem can be realistically solved?


  2. I agree with Taylor that your post is very interesting. I like how you started off by saying sales is what makes a company run. Consumers are the most important part of many companies because without them there would be no way for them to survive. Politics shape the way consumers purchase things and it is true that the larger companies have a greater influence in doing so. It’s unfortunate that smaller companies are not able to have a large influence on politics. I wonder if there is a way to change this.


  3. One of the reason’s Milton style shareholder maximization doesn’t work for me very well is that when he says “follow the rules of the game, those in law and in ethical custom,” he doesn’t address what you hi ton here: many firms are CHANGING the rules of the game. Enron is a great example. Ken Lay, especially, used his influence to get gas deregulated. Later Enron and Skiling pushed for their illiquid gas contracts to be able to be accounted for with mark to market by the SEC (I think) when mark-to-market is really only for contracts that have a liquid market.


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