MNEs, innovation, capitalism, and democracy

Eva Dantas and Elisa Giuliani

Chapter 3 in The New Role of the State for Transformative Innovation, 2026, pp 44-61 from Edward Elgar Publishing

Abstract: The relationship between capitalism and democracy has become increasingly relevant due to recent economic crises, the rise of populism, and the pervasive effects of globalisation, financialisation, and deregulation. These forces have weakened liberal democracies, while multinational enterprises (MNEs) have gained significant power, challenging the state's ability to oversee capitalist activities. In advanced capitalist democracies, MNEs deploy structural, instrumental, and discursive-ideational power to shape policies and influence political processes, often to the detriment of democratic governance. This chapter explores how MNEs interact with the state to pursue their corporate and innovation strategies, and how these interactions affect democracy. The discussion emphasises the need for reforms to rein in the influence of MNEs, including stronger competition laws, transparency in lobbying, campaign finance regulations, and counteracting MNEs’ control over public opinion. Achieving ’democracy-conforming capitalism’ requires both substantive and procedural policy directionality, reinforcing the role of the state and civil society in countering business power and ensuring that democratic principles are upheld in economic governance.

Keywords: Capitalism; Democracy; Multinational Enterprises; Business Power; Governance; Political Economy (search for similar items in EconPapers)
Date: 2026
ISBN: 9781839100253
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