IN THE PREVIOUS two chapters we discussed how states and markets shape people's behaviour. We now turn to the business firm, which is the basic unit of production in capitalism but also an important vehicle of regulation. It occupies a privileged position in market societies because the resources needed to produce economic goods and services are privately owned. This means that private decisions taken by firms have social consequences. They regulate the flow of economic commodities available for purchase through their decisions about what, and how much, to produce. Firms also directly regulate the working life of their employees although workers’ experience of such ‘discipline’ varies enormously. This is because the ‘firm’ itself comes in many shapes and sizes, including sole traders, partnerships and corporations. The incorporated firm is now the dominant form of business organisation and many have evolved into large-scale enterprises.

The large corporation has played a significant role in the growth of the global economy and the transformation of market societies. In this chapter we examine the historic character and evolution of the business firm and the mechanisms which enabled the rise of the corporation. This includes considering different theoretical perspectives that seek to understand the nature of the firm as a key economic institution and its role in social and economic life. We examine how the firm regulates the workplace ‘internal’ to itself as well as the broader economic, social and political environment. We therefore examine key organisational aspects of the business firm that stem from the contradictory nature of control and cooperation in the production process. In turn, we also consider the firm in its global context and the ways in which the corporation exercises power socially and politically.