Market fundamentalists, who believe that unhindered market forces will generate optimal socioeconomic outcomes while market management will invariably generate perverse outcomes, fail to recognize that large corporations are engaged in nothing other than the "management" of very large chunks of the economy. Corporate "governance" is no different than government "governance".
In 2008, for e.g., Exxon Mobil's gross earnings were $408 billion, while the GDP of Venezuela was $403 billion. Exxon's managers "manage" more economic resources than does the nation of Venezuela. Yet market fundamentalists believe that Exxon is a 'virtuous' free enterprise business subject to market forces, where the nation of Venezuela is an 'evil' government managed economy.
If Exxon's managers are not deliberately "managing" their $408 billion corporate economy, then what are they being paid to do? How is managing a $408 billion "private economy" any different than managing a $403 billion "national economy"? If anything, Exxon's managers exert even tighter managerial control than does Venezuela's government. How can anybody think managing a $400 billion economy is a "free market" activity?
Scale matters. When corporations are larger than nations, then corporations are no longer free market actors subject to market discipline but are in fact managed economies enjoying market power. If a corporation is destroying your nation by transferring your jobs to other countries and gaming your tax system, that is more like an act of war by an enemy nation than it is the behavior of one of many "friendly" companies competing within your national economy.
In fact both the President and cabinet of Venezuela, and the CEO and board of Exxon, are hired "bureaucrats", not free enterprise owner-operators. Venezuela's government purportedly acts in the interests of its stakeholders, the people of Venezuela. Exxon's governors purportedly act in the interest of their shareholders. Like most large corporations, Exxon's managers take 10 to 100 times as much personal income out of the company as Venezuela's governors take out of their country.
Many corporate bureaucrats are far worse parasites on their companies than most politicians are on their countries. The money taken by corporate managers as personal income comes directly out of the dividends paid to the company's owners, its shareholders. Corporate pay is set by management decisions, not by "free markets" as is the case with real competitive businesses.
If a small business owner's bad decision costs his company $50K in losses, that loss comes directly out of the owner's profits, which is his personal income from his business. If a government manager or a corporate manager's bad decision costs his country or his company a $50 million loss, the manager not only still gets 100% of his annual salary and benefits, but in the case of the corporate manager, he will probably get a bonus too for 'limiting the losses'.
Bureaucrat decisions are not subject to market discipline because, unlike free enterprise business owners, the bureaucrats do not personally pay for their mistakes (though they certainly claim credit and expect to personally benefit from their successes). This is the criticism market fundamentalists level against government bureaucracies, that they are inherently inefficient because their decisions are not disciplined by market forces. But the same criticism applies equally to corporate bureaucracies, because the decision makers are never forced by "the market" to personally pay the full cost of their mistakes. If the decision maker is not punished, there is no "discipline".
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