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University of Guelph
Political Science
POLS 3470
Tim Mau

POLS 3470 Week 2 Reading ‘The Study of business and Politics’ by David Vogel Introduction In 1959, Robert Dahl made the conclusion that management textbooks and journals all but ignore politics and public policy. However, much has changed in the past 35 years. There is now a substantial body of literature on the relationship between government and business in the US. Although much has been written, the full scholarly potential of this subject has yet to be realized. The intellectual gap between the study of politics and business and the study of business in politics has yet to be bridged. In this sense, Dahls paradox remains half true. The contemporary triumph of capitalism has made corporations the most important non- governmental institutions not only in Western democracies, but globally. It is critical we understand how these institutions interact with each other because we are now dependent on business and government to address a wide variety of critical issues, such as the environment, healthcare, and technology. Part one of this essay examines: the principle areas of contemporary research on business-governmental relations. Part two of this essay: demonstrate the importance of placing the politics of business in both a historical and comparative framework and in integrating research on politics in management Part three of the essay: develops an agenda for future research on the interaction of business and government Current research – the increase in research on business-government relations over the last quarter-century stems from:  The ongoing debate over business power  The increase in business political activity itself  The increased availability of data on corporate campaign finance  The expansion of the political agenda to include more policy areas that affect business  The changing pattern of interest-group representation  The globalization of American economy  The heightening of public expectation of business The Power of Business One important strain of contemporary research on the politics of business stems from the debate about the distribution of power in America that began during the late 60‟s and early 70‟s. Business was not simply another interest group, but was unique in its needs and interest dominated those of all other institutions and organizations in American society, including government. Drawing on both Marxism and the tradition of power elite research inspired by C Wright Mills, critics argued that the close social and ideological ties between economic and political elite, the dependence of the state on “business confidence” and the ability of business to define and thus limit the terms of public debate made a mockery of American pluralism. In 1977, the debate over sources of business power in capitalist societies was revitalized in the publication of Charles Lindbloms „Politics and Markets‟. It was the most influential study of business-governmental relations published in the US during the last 2 decades, putting the analysis is business political dominance back on center stage. More recently, scholars have attempted to move beyond generalizations about the nature of business influence in capitalist democracies and have attempted to specify the circumstances under which particular firms, sectors, and business inter-industry coalitions are able to influence political outcomes. Business Political Activity The study of business by political scientists has been affected by the significant changes in business political activity that have occurred since 1970s. In a study published 30 years ago by Bauer, Pool and Dexter, they concluded the low level of business participation in national politics. Business lobbyists in their opinion had few resources and tended to be ill informed. Consequently, business appeared to have little impact on the passage or content of trade legislation. A common critique of pluralism during the 1960s was that the real sources of business political influence were hidden from the public view. Business exercised power primarily by defining the terms of political debate and controlling the political agenda. Business was so influential precisely because the real exercise of its power was hidden. However, during the 1970s the political activity of American business at the federal level increased substantially. Corporations became highly visible in the political process:  They hired a large number of lobbyists and lawyers attempting to influence the political agenda and policy outcomes · They opened Washington offices · Established and funded political action committees (PAC‟s) · Expanded the size of their governmental relations staff · Developed sophisticated strategies for influencing public opinion  Learned how to mobilize the “grass roots” Business political mobilization has now become a permanent feature of contemporary American politics. By making the exercise of power more overt, business has certainly made it easier for scholars to both describe and measure it. The result has been numerous studies of the patterns of political activity and influence of individual companies, trade associations, and inter-firm coalitions and organizations. Campaign Finance  The increased availability of detailed information on corporate campaign spending has strongly influenced the business of business-government relations over the last 2 decades. Thanks to changes in federal campaign contribution laws, the 1970s marked the first time in American history that scholars had access to detailed information on business contributions to candidates and political parties. PAC‟s have transformed the manner and extent to which business political activity is studied.  The availability of detailed data on funds raised and spent by corporate PAC‟s has led to studies on the impact of campaign spending on legislation and variations on the level of political activity among particular firms and industries. PAC data have been employed to produce sophisticated quantitative studies on the significance of regional, sectorial, and ideological differences among firms. During the last 15 years, more articles have been published on corporate PACs than any other aspect of business political activity. The Expansion of the Political Agenda A fourth development shaping the study of business-government relations is the expansion of the national political agenda. 30 years ago most firms were affected by relatively few federal policies. Throughout much of American history, setting tariff rates has been among the most important – and contentious – federal policies affecting business. Trade policy now represents only one of the many areas of federal policy in which business firms have an important stake. Especially significant has been the major expansion of government regulation, especially in the areas of health, safety, and the environment. Consequently, government regulation of business has emerged as an important areas of study within political science, and there have been substantial changes in the nature and scope of government regulation, long one of the more stable areas of public policy. A number of other policy areas which directly affect business include: · Tax  Energy  Technological policy Consequentially, political scientists have produced a considerable literature on how these public policies both affect and are affected by business. Interest Group Representation The increased interaction between business and government as well as the expansion of business political activity that occurred during the 70s were part of a much broader transformation of American politics. The number of interest groups increased, the political agenda expanded and became unstable, and interest groups developed new strategies to influence public policy. Studies on the changing role and nature of interest groups in American politics as well as on the dynamics of the political agenda have contributed to our understanding not only of the nature and significance of business political activity but also of the broader changes in the dynamic of business-government relations. The literature on public interest lobbies has illuminated the important role of these organizations in effecting public policies toward business. Comparative Public Economy Due in part of the increasing salience of economic issues within both international and domestic politics, this field expanded significantly during the 70s. The globalization of the American economy in the last quarter-century, accompanied by its international competitiveness, has provoked a debate about the relative strength and weaknesses of the American state. It has engendered a number of cross-national studies of the political organization of business, which include a focus on the US. Changing Public Expectations The final strain on contemporary research on business and public policy derives from management education. The second half of the 60s was characterized by changes in the social and political environment of business. Large corporations were under intense public criticism. They were accused of:  Promoting or condoning racial discrimination  Neglecting inner cities  Supporting repressive regimes from Latin America to South Africa  Despoiling the environment  Profiting from the war in Vietnam Critics of business organized Product boycotts, protested at annual meetings filed shareholder resolutions, and published exposes of corporate policies and practices. And at the same time, the newly formed public interest movement pressed for more government regulation. These developments caught most managers by surprise. The standards by which the public evaluated business appeared to have suddenly changed, and managers were unsure how to respond. How could companies reconcile the pursuit of their economic objectives with these new social and political demands? The result was the creation of a new area of management research and teaching: the interdisciplinary field of “business, government, and society” and the related field of business ethics (social responsibility). Approaches to Business Government Relations Three topics are addressed in these essays: 1. The distinctiveness of American business government relations 2. The contemporary political and social environment of business 3. The nature of business political power Three important themes underlying these essays: 1. The importance of placing the study in the appropriate historical context 2. The value of comparative research – must also examine parallel developments in other capitalist counties 3. The importance of interdisciplinary research. One third of these studies were written for management audiences. Demonstrating the value of the link between the study of business by political scientists with the study of business. America in Comparative Perspective  Corporate executives were particularly hostile against the role of government in the 1970‟s. Not only was the US in the midst of a severe economic downturn post war period, the substantial increase in democratic representation following the 1974 Congressional elections led to fears of “veto-proof” congress.  Distrust and suspicion of public authority has been a recurrent feature of American business ideology since at least the 1940s. This reflects two feature of the US political economy: the limited role of the federal government in shaping the pattern of American economic development and the relative openness of the American political system to demands from nonbusiness constituencies.  One important dimension of American exceptionalism: the persistence of an “adversary relationship” between business and government. Compared to other capitalist nations, there has been relatively less cooperation and more mistrust between economic and political elites in the US.  Compared to their counterparts in other capitalist nations, firms in America remain less dependent on and consequently more independent of government. In this sense, American business is still “freer” than in any other major industrial nation.  An “adversary culture” characterizes the political relationships among firms themselves. Various mechanisms of class or intercoroporate unity to reinforce their portrait of powerful and unified business elite.  The priority that Amer
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