HK, Corporations, and Democracy

So while reading Wolf and Stiglitz on multinational corporations, I came across a few interesting points.

One of the propositions that Wolf criticizes in this chapter is the claim that "corporates dominate politics"; meaning, transnational corporations are so powerful today as to subvert democracy. Wolf claims that this concern is simply absurd because it incorrectly defines democracy. According to Wolf, the critics of corporations wrongly "think of a democracy as a system allowing an active body of homogeneous citizens to reach collective decisions on all the matters that concern them, through deliberation and, ultimately, voting" (Wolf 244-245). Although this is probably the kind of democracy that most people have in mind, Wolf asserts that this 'democracy of the Greek polis' is highly inefficient and only brings about "exaggeration, misrepresentation or downright deceit" (245). 

Instead, he argues that the governance that we now live is 'pluralist democracy' in which "organizations with the largest interests and the great ability to eliminate free riders dominate" (245), corporations being one of those interests. Based on this claim, Wolf concludes that "corporations have influence...BUT the view that they run contemporary state is nonsense" (245). 

This last sentence actually made me question the validity of it. As we discussed in last week's class, HK has a very interesting political system: 'One Country, Two Systems'. Although officially under Chinese government, HK is run by a chief executive (not to be confused with mayor or governor). Interestingly, this chief executive -though candidates are pre-selected by the Chinese government- is elected by an electoral college composed of business tycoons that represent different constituencies. (If interested in learning more information on this, watch the video attached below. VlogBrothers make succinct but decent recaps of current events). It is not really hard to imagine that an individual chosen by group of business owners will necessarily represent corporate interests.

So HK in my opinion is a pretty solid example to weaken Wolf's point. However, if I were to have one on one with Wolf, he might argue that HK is a special case. As he thoroughly explains in page 246, countries more than often have dominance over corporations (i.e.  EU's decision to prevent General Electric from purchasing Honeywell in 2001). 

However, wealthy multinational corporations still tend to have more resources and influence and thus have comparative advantage in better representing their position, particularly in poor developing countries. As Stiglitz rightfully points out in chapter 7, LDCs find themselves with no choice but to succumb to the corporate interests. For instance, "[in] Thailand and Peru, corporations threatened to move elsewhere if environmental regulations were enforced; in Peru, one mining company went so far as to pressure government not to test children living near their mining operations to see if they had been exposed to health hazards" (Stiglitz, 195). 

In other words, Wolf is right in asserting that corporations are not as powerful as governments of US and other wealthy nations. However, they do have power and resources to control the LDCs' governments that are desperate for foreign investment. The point is, it might not be as nonsensical as Wolf assumes to argue that corporations do run contemporary states in some degree.