What do the companies in these three groups have in common?And the answer is:
Group A: American Motors, Brown Shoe, Studebaker, Collins Radio, Detroit Steel, Zenith Electronics and National Sugar Refining.
Group B: Boeing, Campbell Soup, Deere, General Motors, IBM, Kellogg, Procter and Gamble and Whirlpool.
Group C: Facebook, eBay, Home Depot, Microsoft, Google, Netflix, Office Depot and Target.
All of the companies in Group A were in the Fortune 500 in 1955, but not in 2016.It turns out that nearly 9 of every 10 Fortune 500 companies in 1955 are gone, merged, or contracted. Only 12% (and fewer than 1 in 8) of the Fortune 500 companies in 1955 were still on the list 61 years later in 2016, and more than 88% of the companies from 1955 have either gone bankrupt, merged with (or were acquired by) another firm, or they still exist but have fallen from the top Fortune 500 companies.
All of the companies in Group B were in the Fortune 500 in both 1955 and 2016.
All of the companies in Group C were in the Fortune 500 in 2015, but not 1956.
But we so often told about all powerful big corporations are, how the control markets and can force consumer to buy whatever products they sell. John Kenneth Galbraith is perhaps the most (in)famous economist who argued along these lines. He argued that in the industrial sectors of the economy, which are composed of the largest corporations - think Fortune 500 companies, the principal function of market relations is, not to constrain the power of the corporate behemoths, but to serve as an instrument for the implementation of their power. Moreover, the power of these corporations extends into commercial culture and politics, allowing them to exercise considerable influence upon popular social attitudes and value judgements. That this power is exercised in the shortsighted interest of expanding commodity production and the status of the few - the 1% - is, in Galbraith's view, both inconsistent with democracy and a barrier to achieving the quality of life that the "new industrial state" with its affluence could provide to the many. Galbraith argued that we find ourselves living in a structured state controlled by these large and all powerful corporations. Control over demand and consumers is exercised via the use of advertising which creates a never ending consumer "need" for products, where no such "need" had existed before. In addition, as Princeton University Press said in its advertising for a new edition of Galbraith's "The New Industrial State",
The goal of these companies is not the betterment of society, but immortality through an uninterrupted stream of earnings.If all this is true why is it that so few have survived from 1955 to 2016?
Another hypothesis is that there’s been a lot of market disruption, churning, and Schumpeterian creative destruction over the last six decades. This suggests that no matter what some economists, and competition policy authorities, may want you to think, corporations are not all powerful and consumers are not just feeble minded puppets having their strings pulled by evil corporate executives. Yes, market competition and consumer sovereignty could actually be a thing.