http://en.wikipedia.org/wiki/CorporatocracyThe concept of corporatocracy, in crass terms, is that corporations, to a significant extent "own" or have massive power over governments, including those governments nominally elected by the people, and that they exercise such power not by back-room conspiracies but by their enormous, concentrated economic power, and by legal in-the-open mechanisms (lobbyists, campaign contributions to office holders and candidates, threats to leave the state or country for another with less oversight and more subsidies etc). Oliver Stone captured "Wall Street, you know, you could say..runs the world. Wall Street, the pharmaceutical lobbies, the oil lobbies, they run our government"<2>
First, corporations provide financial support to competing political parties and major political party candidates. This allows the corporations to hedge their bets on the outcome of an election so that they are assured to have a winner who is indebted to them. As politicians are increasingly dependent on campaign contributions to become elected, their objectiveness on issues which concern corporate interests is compromised.
Second, in many cases former corporate executives are appointed as powerful decision makers within government institutions. They are often charged with the regulation of their former or future employers. Government employees who collude with corporations often accept high ranking positions within corporations once they have demonstrated their commitment to serve the corporate interest. These lucrative offers provide incentive for government employees to serve Lobby groups as well as provides their new employers with access to governmental decision makers. This is known as the 'revolving door' between corporations and the institutions established to regulate their behavior; and can lead to regulatory capture.
Finally, the economic regime, while often called 'free market,' involves centralized economic planning and coordination by corporations, with governments playing the role of an assistant to such corporate central planning. Chomsky described this dimension, noting about international trade that "trade" is "a dubious term for a system in which some 40 percent of U.S. trade takes place within companies, centrally managed by the same highly visible hands that control planning, production and investment.