The state is not an effect of capitalism, but because the state exists capitalists will exploit it because the state is the only institution that can pass regulations. Were this not the case, Starbucks would lobby McDonalds, and McDonalds would lobby Coca Cola who were lobbying Microsoft. None of these companies are allowed the use of force, but because of this unique trait - the ability to regulate - it would be the end of any capitalist who had the capacity not to make use of this privilege so long as they had competitors who were willing to do so. These conflicts of interest are foundational to the system in place.
Supposing I am the CEO of a rich corporation and I have $1,000,000 to spend developing my business,
One of my options is to spend that money doing R&D, improving the product, employing highly trained staff, bringing our a better version, or something related which amounts to offering a better service to the consumer. I could also try to advertise it to people I hope will be willing to buy it.
Supposing as a consequence of whatever one of these things I choose to do, then my revenues rise by $1,200,000 then, ok, great! My customers are happier and I have made $200,000
But...
Supposing I can use the $1,000,000 to lobby the state, and they will pass preferential regulations to favour my company, or they will give me other kickbacks or benefits worth - lets say- $1,500,000, then this poisons the whole economy because now I have MORE incentive to engage in bribery and corruption than on pleasing my customers.
I would do this, not because I was evil, but because I was rational. In fact, if I failed to do it I might well be competed out of the market by an actor who did not. Poorer or less established companies cannot do what I just did and so they are a disadvantage against the giants in industry so long as there is a state and the state can be lobbied.
By this process of "unnatural selection" the most successful firms become, not those who are able to best serve their customers, but those who are best able to play the system to get privileges from the government. And it's not necessarily for the evil of all would-be congressmen or parliamentarians either! Even a somewhat integerous politician, who wants to hold office to push through the "least-bad" legislations can only get away with so much before industries begin to back a more complicit candidate to replace them. They really will go to any lengths to retain their special privileges, however unjust, because their livelihoods depend on them.
Perhaps the only solution is making it impossible for politicians to dish out public funds to special interest groups from the public purse, but for this to even be achievable people must be aware of this problem of incentives.
If someone in a business commits a crime they don't get arrested for it because they have this thing called a corporation which takes the blame.
The corporation gets sued, which means the customers pay more and potentially the employees get paid less.
Making the corporation culpable instead of the individuals responsible for making the decisions
removes the moral hazard from the individuals implicated in the unlawful or anti-social behaviour. That's why we see corporation getting away with doing all these horrible things: oil spills, bad bank loans, environmental hazards,
If the individuals personally responsible were at risk of losing their own assets, including their houses - the way an individual who gets sued or fined is - we would ind them far less likely to take these risks.
