Power and big business

KIRAN KARNIK

For well over a century, sovereign nations and their governments have decided and driven policies, especially in the arena of international relations. Friends and enemies, allies and rivals have been chosen based on the interest of the nation as perceived by the government. This paradigm is now going through a rapid change, especially in some parts of the world.

The most striking manifestation of this is in the US. For some decades, the power of private enterprise in policymaking has been visible. No less than a President (Eisenhower) himself, while in office, called this out, pointing to the “military-industrial complex” as a source of (undue) influence and interference. In US domestic policies, the gun lobby garnered strong support by allying with those who saw guns as protection for — and an extension of — individual freedom. The powerful gun lobby is able to forestall serious gun-control laws, despite hundreds of deaths due to shootings: 507 killed in mass shootings (involving at least four people being shot) in 2024, and a massive total of 47,000 deaths due to gun-related injuries in 2023.

Less visible, though clear to observers, has been the power of other industry lobbies in the US, especially those linked to the tobacco and pharmaceutical sectors. Thanks to media independence, civil society groups, and a culture of transparency in the US, many of the machinations and influences of these lobbies have come to light. Elsewhere, knowledge about the power of such groups to affect policymaking is far less, even though their ability to do so may be as much as in the US.

This, however, is not just a contemporary or new phenomenon. In the 18th and early 19th centuries, the East India Company practically dictated England’s policy regarding India. In fact, in its heyday, in many ways it was the de facto sovereign, controlling much of India before the British royalty. It had an army of over 200,000 soldiers — much larger than the British army! The Dutch East India Company had, at one time, a valuation calculated to be $7.4 trillion in present-day terms: an amount that exceeds the combined value of the two highest valued global companies today (Apple and Microsoft). While a like-for-like comparison in today’s currency is fraught, doubtless these companies by their sheer size and profits had the clout to not just influence policy, but dictate it. In fact, in many areas, they actually exercised the power of a government.

Looking at these and other instances from the past, it would seem that the government as an all-powerful institution was only a brief interregnum — possibly due to communist and socialist ideology — and power is now reverting to private hands in many countries. At one time, it was said of the US that General Motors and General Electric were more powerful than army generals. These companies are now but a shadow of what they once were, but the broader point about the influence of private enterprise remains, with the reins having passed on to global mega tech companies. In some cases, it is individual business leaders who seem to call the shots, rather than those democratically elected. Elon Musk is said to be as important in policy decisions as President Trump.

In India, there have long been rumours and gossip about the influence of one or the other businessperson or industrial conglomerate. The big business houses have always been assumed to have a great influence in government decisions. One might say that after the ideals and idealism of the 1950s, the policy shifted from self-reliance to Reliance! And now, many feel that there are additions. Though not explicitly stated, there is a sense that India is adopting the Korean model of development, where large industrial conglomerates (chaebols) get various forms of support — direct or indirect — from government, enabling their rapid growth, scale, and global competitiveness. These companies, of course, did their own bit too, especially by investing heavily in R&D and ensuring productivity, quality, and cost control — resulting in not only boosting exports by being globally competitive, but becoming world leaders in their field.

Irrespective of whether this is a replicable model or not in India’s context, the fact is that it gives great leverage to these companies and their bosses. China seemed to be heading in the same direction, till President Xi decided, a few years ago, to clip the wings of their leaders. It is possible that he sensed their growing power and was uneasy about it. In the past few years, he has been emphasizing the importance of ensuring greater equality. This too may hold lessons for India, especially in contrast to the US.

Around the world, a bigger role for the private sector is becoming the norm. Taking off from the French Foreign Legion of the past, private armies are being contracted by the State for defined tasks. It is but a matter of time before these companies like Blackwater (US) or Wagner (Russia) are privately contracted by any country (this is said to be already happening). In other areas too, including those considered strategic, the private sector is in the lead. Space is one example: with independent capability ranging from launch vehicles to satellites and space stations, industry — promoter-CEOs like Musk, Bezos or (in the UK) Branson being the very visible faces — is now ahead of the governmental space agencies like NASA. The same is happening in fields like artificial intelligence and electronics, led by OpenAI, Nvidia and others.

Capability in these and other cutting-edge areas gives the private sector tremendous leverage, enabling ambitious industry leaders to influence — possibly dictate — policy. This is likely to be a growing trend in the years ahead. What it portends for the ordinary citizen, freedom, and democratic governance are points which call for debate.

Kiran Karnik is a public policy analyst and author. His most recent book is ‘Decisive Decade: India 2030, Gazelle or Hippo’