Article by Sichang Li

Photo by Maria Gavrilova on Unsplash

The appearance and services provided by these social corporations make people’s lives more convenient. For instance, we can use Facebook to socialize with others in a more fancy way rather than just calling them by phone, and we can go shopping online through Amazon’s app instead of going into stores. Moreover, they also dramatically promote the country’s economic progress by importing products or developing transnational corporations. However, the continuous expansion of corporations leads to a thought-provoking social issue: Has the power caught by corporations surpassed reasonable boundaries and affected various levels of society?

We can understand ‘the corporation’ as a ‘social institution’ (Bakan 2005). It means a corporation is not only an economic entity but also occupies a significant position in social structure and culture. Corporate power literally contains autonomy, property rights, social responsibility, and political participation rights. Excessive power will inevitably cause problems like Facebook’s data privacy scandal. The exposure of the Cambridge Analytica scandal in 2018 brought intense criticism to Facebook for its lapses in data privacy management. It was revealed that the personal data of 87 million users had been accessed without consent and used for targeted political ads, influencing significant elections such as the U.S. presidential race.

The origins of corporate power can be traced back to the late Middle Ages and then the Industrial Revolution. which promoted the form of capitalism and market economy. During the long time of capital accumulation, corporation power continued to form, expand, and even penetrate other social fields. A critical factor in expanding corporate power is the principle of ‘limited liability’(Bakan 2005). What’s more, the free market and globalization also accelerate the expansion of corporate power as well. A Free market means less government intervention in corporations. So a free market has a low barrier for firms to enter the market; it also increases competition and innovations between enterprises to let them grow. Turning to globalization, with the increase of global trade and investment, multinational corporations’ cross-border operations in resources, capital, and production chains have made them the main drivers of the worldwide economy. At the same time, global governance has shifted from traditional state-led models to more diverse forms, with multinational corporations playing an increasingly important role in this process (Bartley 2018).

Under reasonable regulation and social responsibility frameworks, corporate power positively affects society, although it often causes conflict because of the potential risk of abuse. Apart from the promoting effect on the economy mentioned above, corporate power can also offer positive social and environmental impacts in many ways. Corporate Social Responsibility (CSR)  encourages companies to invest in sustainable projects, such as reducing carbon emissions. Secondly, transnational companies can improve labor rights, product safety, and environmental protection by establishing strict supply chain standards. Moreover, enterprises can use innovative technology models such as green energy and circular economies to minimize ecological harm while promoting economic sustainability. Furthermore, enterprises encourage communication and knowledge between various cultures in their global operations. For example, international brands have enhanced cultural understanding in different countries through culturally inclusive marketing strategies.

However, the dilatation of corporate power will threaten social equality and stability. This means that they have enormous economic control and have effects on the political and cultural fields, for instance, multinational corporations can ensure their profits by lobbying and influencing policies and shaping consumer culture and social values through marketing. If the power of the company is not constrained, it may pose a threat to the democratic system and the public interest of society (Bakan 2005). What’s more, Bakan also emphasizes that the legal and economic influence of corporations allows them to operate freely in global markets while lacking professional and ethical responsibility including environmental pollution and labor exploitation. For example, Shell’s Environmental Pollution in Nigeria, which told the company’s oil extraction has led to frequent oil spills, damaging the ecosystem and causing serious impacts on the health of local residents and the issue of exploitation in the clothing industry supply chain, which shown by some corporations compress costs by outsourcing production to factories in low-income countries with low wages, long hours of work, and harsh working conditions.

The emergence of social problems will inevitably trigger protests and reflections from the people and even the government. The government regulates corporate power by establishing laws and regulations. European Union issued the General Data Protection Regulation and EU Competition Law to protect citizens’ privacy and against monopolies caused by excessive corporate power. It is worth mentioning that non-governmental organizations (NGOs) and social movements play important roles in disclosing the abuse of corporation power. Greenpeace and other NGOs have repeatedly publicly criticized multinational companies such as Nestle for their destructive behavior in water resources.

In conclusion, corporate power brings both improvement and challenges to society. A range of social issues push people’s thinking progress and development of society. Finding a balance between innovation, efficiency, and social justice is essential.

References:

Bakan, J. (2005). In The Corporation: The Pathological Pursuit of Profit and Power. 10-28

Bartley, Tim.(2018). Transnational Corporations and Global Governance. 145-165

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