TITLE:
Corporations’ Role in the Erosion of Democracy: Shareholder Value, Rising Inequalities, and Polarization
AUTHORS:
Bernard Arogyaswamy
KEYWORDS:
Democracy and Inequalities, Shareholder Value, Corporations and Democracy, Offshoring, Industry Concentration
JOURNAL NAME:
Open Journal of Business and Management,
Vol.13 No.5,
September
18,
2025
ABSTRACT: Democratic erosion is occurring worldwide, even in developed nations such as the United States. In the literature, income and wealth inequalities are viewed as the main contributors to the declining trust in democracy. Corporations’ unwavering focus on shareholder value as their overarching goal has played a major role in exacerbating inequalities in the United States over the past fifty years. Offshoring has been a source of cost reduction by slashing labor costs, and new technologies have also reduced firms’ dependence on domestic labor, thus depressing wage growth. Mergers and acquisitions have increased industry concentration giving firms greater power and profits, enriching shareholders, and expanding the gap between top executives’ remuneration and median wages. Financialization has increased the incomes and wealth of the top ten percent at the expense of the rest. Lobbying has influenced government policies regarding antitrust, technology transfer, taxes, unions, and other elements which have boosted corporate profits. Hypotheses are developed for each of the factors contributing to increases in shareholder value and inequalities. Polarizing factors such as immigration, culture wars, and the media are discussed, and hypotheses are formulated. As gaps in income and wealth expand and are exacerbated by the polarizing factors, businesses could be the losers in the long term. Authoritarianism fueled by populism could result in heightened uncertainties. Typically, autocrats favor firms which serve their interests and bolster their power base, a form of crony capitalism. If business does not act to reverse democratic decline, they may end up sacrificing both freedom and shareholder value.