It's long been suspected but increasingly psychology and experimentation have proven that the corrupting impact of power is immediate, universal, and almost impossible to resist. So why are dictatorships and corporations more likely to collapse while democracies tend to reform? Because power corrupts and democracies have the most effective methods for controlling and limiting the corruption that result from abusing power.įirst, let's deal with power corrupting people. Governments that are not democracies, by contrast, don't seem to last nearly as long. Indeed, the major industrial democracies have track records that far exceed that of any company - they deliver growth and stability through periods of enormous change. There are lots of reasons for this that don't bear upon how business should be conducted, but there may be some very salient ideas. Companies are more likely to collapse or be acquired than manage change effectively.ĭemocracies, by contrast, seem to endure for a very very long time. Brand names like AT&T may endure, but the AT&T of today has little in common with the AT&T on 10, 20 or 30 years ago.
Overall, the life span of most companies is amazingly short. And, unfortunately, the short-run can last for distressingly long period of time. In the short run, markets can be irrational and results truly bizarre if not actually counterproductive.
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At a macro level, over long periods of time, I believe that markets are largely rational and that the principles of free markets drive the best results and growth.
People who spend a lot of time thinking about business often find themselves thinking about two important very unrelated subjects: psychology and economics.
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