Business Pressure In Politics Essay ⋆ Political Science Essay Examples ⋆ EssayEmpire

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In any capitalist system the issue of business pressure in politics is central to the viability of the market economy and to the viability of governments as institutions capable of making decisions in the public interest. The issue is particularly pressing in the most important political constellation in the modern world, capitalist democracy; that is, in social systems that claim to combine capitalist economics (allocation through the market and private ownership of productive resources) with democratic government. In capitalist democracy, if business pressure subverts the capacity of government to rule in the public interest, then the claim to democracy is hollow. Conversely, if democratic politics creates hostility to business, then the viability of the market order is endangered.

Three Views Of Business Pressure

Three views of the role of business pressure have dominated debate for more than a generation. First, a structural account of business power holds that the very existence of corporate property and business control of investment decisions means that democratic government is always powerfully constrained by corporate preferences. Business thus does not have to exert overt “pressure” to exercise great influence. The most powerful statement of this view comes from American political scientist Charles Lindblom (2002). Second, a view heavily influenced by the pluralist tradition holds that, while business can be powerful, to exercise this power, it must compete successfully with other interests, this success varies, and the effectiveness of business pressure thus varies, by historical period, sector, and issue. The most influential modern statement of this view comes from David Vogel (1989). Finally, a pessimistic view of the capacity of business to exercise influence in the market economy dates from the work of economic historian, Joseph Schumpeter, in his classic, Capitalism, Socialism, and Democracy (1943). On this view, the rationalizing culture of democracy constantly undermines the legitimacy of business authority, surrounding it with critics and creating an increasingly hostile cultural environment.

Changing Modes Of Business Lobbying

What is without doubt is that the modes of business pressure in politics have changed greatly in recent decades. Three developments are particularly important. First, business increasingly has to formally organize to exert pressure over the political process; informal elite lobbying through private, personal contact is much less important than it was a generation ago. This is reflected in the increasingly professional character of business lobby groups, such as the business roundtable in the United States, an organizational form now widely copied across the capitalist democracies. Second, business pressure has to be conducted under conditions of increasing formal regulation. The most striking instance is the growing regulation of business contributions to party and election finance. As business money has assumed increasing importance to campaigning politicians, the conditions under which it can be solicited have been subjected to more and more stringent formal controls. The third change in the last generation is the rise of the large, single corporation as a sophisticated political actor. The biggest corporations typically have interests that are too complex to be easily accommodated by traditional collectively organized forms of business pressure, such as trade associations. They also typically have the resources to build in-house expertise and lobbying capacity. The rise of public affairs or government relations departments within large firms is thus one of the most distinctive recent developments in the world of business pressure.

The rise of the giant firm as a political actor is connected to another development of the past generation: the multinational organization of business as a political actor. Business has long crossed national borders, but the surge of globalization in the past generation also has prompted a surge in the globalization of business pressure. The best known examples are multinational institutions designed to provide both a forum for business to identify its interests, and a means of turning the consciousness of common interests into political pressure. For example, the European Round Table of Industrialists now speaks for the business elite in the European Union. Dutch political economist Bastian Van Apeldoorn (2000) has shown that it was central to the creation of the common European currency, the euro. The Transatlantic Business Dialogue, more ambitiously still, organizes a group of the thirty or so of the largest U.S. and European corporations. And since 1971, the World Economic Forum has provided an even more ambitious setting for the global distillation of business interests. The forum is best known for its annual meeting in Davos, but its more important work is conducted in numerous working parties and meetings that join together the global business elite throughout the year.

The Problems Of Business Lobbying

Business pressure in the politics of capitalist democracies remains profoundly important—a statement to which even the most committed pluralist could assent. But business faces great problems, of which three are particularly pressing. First, it faces acute problems of collective action. Firms are simultaneously divided by the competitive pressures of a market economy and yet driven by the need to cooperate for the purpose of exercising political pressure. The globalization of business life has made collective action both more necessary and more difficult and has made more acute the tension between global outlook and interests and national jurisdictions. Second, business faces numerous new competitors and critics in civil society: environmental and consumer organizations, critics of its employment practices, and intellectual critics of the very foundation of business life in parts of the media and the higher education system. Finally, the great global financial crisis that began in 2007 in the United States damaged the claims of key parts of the business order, in the financial sector, to be able to conduct its affairs prudently, greatly increased state control and ownership of many enterprises, and raised large questions about the scale of reward enjoyed by many in the business elite. For the first time in a generation, business has found itself on the defensive politically across much of the advanced capitalist world. Nevertheless, the largest business corporations have formidable resources to organize that defense.

Bibliography:

Graz, Jean-Christophe. “How Powerful Are Transnational Elite Clubs? The Social Myth of the World Economic Forum.” New Political Economy 8, no. 3 (2003): 321–340.
Lindblom, Charles. Politics and Markets: The World’s Political-Economic Systems. New York: Basic Books, 1977.
The Market System: What It Is, How It Works, and What to Make of It. New Haven, Conn.:Yale University Press, 2002.
Schumpeter, Joseph. 1943. Capitalism, Socialism, and Democracy. London: Allen and Unwin 1976.
Van Apeldoorn, Bastian. “Transnational Class Agency and European Governance: The Case of the European Round Table of Industrialists.” New Political Economy 5, no. 2 (2000): 157–181.
Vogel, David. Lobbying the Corporation: Citizen Challenges to Business Authority. New York: Basic Books, 1978.
National Styles of Regulation: Environmental Policy in Great Britain and the United States. Ithaca, N.Y.: Cornell University Press, 1986.
Fluctuating Fortunes: The Political Power of Business in America. New York: Basic Books, 1989.
Kindred Strangers: The Uneasy Relationship between Politics and Business in America. Princeton, N.J.: Princeton University Press, 1996.