Is Big Business detrimental to society?
Nowadays most of the products that we enjoy using, come from ‘big business’ companies. We drive cars, (German ones if we are lucky enough), we have iPods and flat Sony screens, we buy cheaply from Tesco and Sainsbury and etc. and etc. And vast majority of firms in a real world operate under imperfect competition.(J.Sloman,K.Hindle & D.Garratt) If we may apply the Pareto principal, it becomes clear that 80 per cent of the market is controlled by 20 per cent of the companies. Some businesses just have to be big in order to be profitable and achieve the economic scale (R.Husam). But what is the other side of coin?
When business or an industry is presented just buy one or two large companies that creates monopoly or oligopoly. Companies can go further by creating cartels. And all this makes high barriers to entry for new players; moreover ‘big companies’ like Tesco for example drives out many small stores from the market.
However companies like Microsoft argue that part of their enormous revenues that have been gained through monopoly even though natural one, help them to reinvest more in R&D. It is believed that large firms usually superior engines of technological progress and that society would be better off if firms within R&D-intensive industries were consolidated. (W.M.Cohenand & S.Klepper)
Indeed the turnover of some large multinationals corporations is greater than the national income of many small countries. (Fortune Global 500) Of course that gives them a great power and influence on the society and over the government. ‘Big Businesses’ and their lobbies are well presented in Washington and most of the Americans agree that they have ‘too much power’ on influencing trade, tax, foreign and labor policies. Moreover we hear more often now, about corruption and bribery of politicians and large corporations. (The Economist)
As to social responsibilities companies often sacrifice their profit in social interest. But it is not always the ‘good intention’ that leads to this kind of activities but more often is financial benefits that companies get, like tax cuts or government’s subsidies for instance. (F.L.Reinhardt, R.N.Stavins & R.H.K. Vietor). Or sometimes, large corporations use social activities, by partnering with UNESCO for instance, as a part of their marketing strategy. Prior research has described such purchase-contingent donations to a social cause as an “embedded premium”. (T. Henderson & N.Arora) It is appropriate to quote M.Friedman in this case: “ The social responsibility of business is to increase profit”
The issue of whether ‘big business’ is beneficial or detrimental to society is one that has been the focus of much debate of late, in the context of a recession that has called into question so many of the previously assumed institutions of society. Indeed, it could be suggested that prior to the recession, big business — including big banks — were considered to be extremely positive features of what was then conceived of as a booming, flourishing society. Jobs were created, money exchanged hands and the economy was stimulated. Big business allowed fluid movement of peoples, currency, ideas and development between countries and societies, and they provided a means of import and export that allowed society to flourish in many ways. Indeed, as Cassis (1997) considers, it is the concept of big business that allowed Britain and other countries to industrialise in the first place and ultimately become the modern, flourishing, business driven societies that we were before the recession it.
When the recession hit, there was an almost immediate perception amongst the public, the media — and even politicians that the culture of big business, in which large, multinational companies felt in some way invincible, and above the practical and moral laws and constraints of others — was blamed for the ills that followed the crash, and were seen as in many ways responsible for the collapse of the successful and prosperous society that individuals, governments and countries had become accustomed to. There are now numerous perspectives, arguments and discussions that can be cited as evidence to suggest that big business is, indeed, detrimental to society. There is a sense that the culture of big business is rotten, and selfish it its lack of regard for ordinary people. Carney wrote that ‘Corporate America Loves Republicans and Democrats — Republicans and Democrats love Big Business’ (Carney, 2011). This conveys the perception that has been such a feature of the recent discontent displayed towards big businesses: that they and the government combine to make some kind of elite club, from which normal people are denied access, or concern. There have been a number of other instances that have contributed to this feeling — and to a growing and more apparent consensus that big business is seen as detrimental to society.
The question of whether ‘big business’ is detrimental to society, then, relies entirely on what ‘society’ is considered to be at any one time. During a time when consumer culture was the framework of modern, Western society, big business was in many ways the driver that allowed this to happen; at times of austerity, when there is a will to revert to ‘simpler’ times, perhaps, big business is vilified. This issue is extremely complex, and time dependent.
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