Corporation is a form of business ownership where a group of investors
join together to pursuer conventional goal, profit and wealth (The
Corporation Film, 2004). In a capitalism society, competition is a threat
to all business entities. Concentrating more capitals, investments, cash
flows and other important variables give bigger business firms the power
and ability to eliminate smaller competitors by using different kind of
strategies. According to the latest consensus business reports, only 5 to
10 percent of the small business firms survive in the 21st century.
In the United States, the biggest corporation in terms of sale is Wal-
Mart (Macionis, eight edition, page 322). It has $104.9 in total assets,
and with sales of $256 billion in 2004, which is equal to the tax revenues
of half the states combined. Wal-Mart also provided more employment
than the state governments of California, Texas, Colorado, New York and
Florida combined.
According to the statistic above, corporations play very important roles
in our society today, especially in the economy. Corporations not only
provide good and services to the society, but also contribute employments
to the citizens. Although their initial motivations are to make money
without any obligations to create employment, nor contribution to
societies, corporations certainly enrich the U. S. economies.
The major goal of a corporation is to make profits, own private
properties, with characteristics of “unconcern for the feelings of others,
inability to maintain enduring relation, reckless disregards for the safety
of others, deceitfulness, incapacity to experience guilty, and failure to
conform to social norms with respect to lawful behaviors” (The
Corporation, 2004). By contrast, without revenues and profits, no
business entities are able operate. Big business firms, such as
corporations, shut down will cost unemployment rates to arise, aggregate
demand to decrease, resulting a recession in the economy, or even worst,
developing a stagnation as in the late 1970s to the early 1980s.
Understanding the “opportunity cost” and scarce materials in our planet,
corporate entrepreneurs have tendencies to minimize their “cost of
production” and maximize their outputs or profits. It’s the nature of
their jobs to benefit the stock market and in returns, collecting financial
rewards for their stockholders, disregard their responsibility to the
society and ignore cultural norms, including create harms to the public
environment. For example, the pollution of gasoline creates carbon
dioxides, which are harmful to human’s respiratory system, leading to lung
cancer. Considering that “externality” exists, corporations leave the
existence of environmental damages from pollution unsolved. Yet the
politicians have not established appropriate policies to resolve this
dilemma. On the other hand, without gasoline, our entire production
processes will be significantly diminished. The inconveniences of
transportation will sluggish the “circular flow” by limiting the distribution
of goods and services, gross domestic product falls, national income
decrease, taxes reduce, employment decline, once more, resulting an
economic recession.
In a capitalist economy, competitions are positively encouraged. However
small business is difficult to survive as they have much less power against
corporations. Corporations have the ability to offer big discounts to
consumers, which endangers small business’ sale activities, forcing them to
run out of business. For example, since corporations such as Blockbuster
Videos and Hollywood Video enter the video rentals market, many of the
smaller and independent video stores are shut down. These corporations
concentrate more powers, such as cash capitals, giving them the advantage
to advertise and purchase huge inventories at wholesale prices where small
businesses are not able to perform. Although “monopoly” is an illegal
activity, corporations have the power to apply “oligopoly”. This testifies
that “free market” is not always practiced in a capitalist economy.
Distribution of World Income illustrates that 20 percent of humanity
occupy 70 percent of the global income, and the poorest 20 percent of
worldwide population only achieve 2 percent of those incomes (based on
Sivard 1998 and The World Bank 1993). People in these sixty “Third
World” countries are in extensive poverty and have the lowest
productivity comparing to the rest of the populations (Macionis, fourth
edition, pages 189-211). Using this constructive information, corporations
emerge from one country to another country, constructing globalization, to
provide employments in poor societies, also at the same time, decrease
their cost of production (inexpensive labor costs), which I believed this is
benefiting both parties.
According to the “Modernization Theory” (Rostow, 1978; Bauer 1981;
Berger 1986), global corporations enter these poor countries to gain
access to scarce resources, cheap labors and huge markets, but at the
same time, they also stimulate the economic growth in these nations by
providing tax revenues, capital investment, employments and advanced
technologies (Macionis, fourth edition, page 279). For example, because
the economic and political corruption from the central government of the
late “Ching Dynasty” (1644-1911), the citizens of China suffered poverty,
hardly survived from starvation. The People’s Republic of China (October
1st, 1949 to current), a communist society, later came along, opened the
forbidden doors to foreign countries in the 1980s. Global corporations
captured this golden opportunity and emerged into this poor country with
a population of 1200 millions, almost 25 percent of all human beings
worldwide, to gain access to a vast market and provide employments at
inexpensive labors as China entered the World Trade Association in the
21st century. Since then, with foreign capital investments, advanced
technologies, and self-improvements, China’s economic systems have
accelerated in all dimensions with low inflation over the last 20 decades,
providing wealth and high standard of livings to its citizens.
Without poverty, there’s no wealth, and poor countries seem to be poorer
as rich nations accomplished wealthier. There’s never a best solution to
answer “global stratification” since there are only so many raw materials
in our planet to support so many people. A poor nation continues to be
poor if no changes are being made. In order for a nation to have economic
growth and increase its standard of living, I believe it begins with its
political changes, education improvements, and other important variables
that motivate its entire society for changing! Success belongs to those
who kept trying!
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