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1
A Corporate Class
conspire, v. Collude; act in unison or agreement and in secret towards a harmful, deceitful or illegal purpose.
WORDNET1
. . . lately, the term [conspiracy theory] has been hijacked. A range of commentators has been using the phrase to confer instant illegitimacy on any argument with which they disagree. Want to close off the terms of the debate? Call something a conspiracy theory.
ZACHARY ROTH2
Klaus Schwab, who presided over the World Economic Forum (WEF) for almost 30 years, argued in 1999 that the âsovereign state has become obsoleteâ and that the preference of the chief executives of large corporations is for national governments to become subservient to corporate and financial interests.3 The WEF is an exclusive private club for the chief executives of the worldâs largest corporations who meet annually at the Swiss ski resort of Davos to set the âpolitical, economic and business agendaâ for the rest of the world. Membership is by invitation only and is restricted to corporations that have over US$1 billion in sales and banks that control over US$1 billion in capital.4
The WEF also has numerous other more specialized meetings during the year to network, hold private discussions, share information and ideas, foster alliances and plan strategies for achieving common corporate goals. A âclub atmosphereâ is deliberately cultivated and a âprivileged, informal framework for intensive business networkingâ is maintained. The WEF invites top policy-makers to its meetings so that members can have high-level access to government ministers, prime ministers and presidents.5
The WEF is clear about its agenda-setting role: âOne of our initiatives in this respect is the Centre for the Global Agenda (CGA), which will serve as a catalyst in defining, monitoring and driving the global agenda. It will act as a hub of networks and alliances on important global issues and will play a key role in the worldâs international system.â6
The purpose of the WEF, and the many other like-minded coalitions that corporations have formed during recent decades, is to ensure that corporate interests are advanced over other interests and to undermine the democratic process for deciding government priorities and policies.
Corporations have always had a certain amount of power through their ability to make decisions concerning production and employment. As they have grown in size and number, that economic power has become significant and has been used to exert political influence. Individual corporations frequently influence the political process on matters of immediate financial interest to themselves through donations and lobbying, and the threat of transferring their activities abroad. They also play a major role in setting the political and the public agenda through their use of public relations, lobbying and funding of third parties, such as media, think tanks and business organizations.7
However, corporations have not been content with the degree of economic power and political influence that they can wield individually. Since the mid 20th century, they have conspired to increase their power, consolidating their political influence to pressurize governments into making decisions in their favour.
During the 1970s, faced with declining profits and a proliferation of public interest groups that challenged the authority of business and sought government controls over business activities, corporate leaders created whole networks of business groups to mobilize political support and to reassert business dominance.
Confidence in free enterprise was in decline. The first wave of modern environmentalists blamed development and the growth of industrial activities for environmental degradation. Their warnings captured popular attention, resonating, as they did, with the experiences of communities facing obvious pollution in their neighbourhoods. Worst of all, from a business point of view, governments were responding with new environmental legislation.8
Governments worldwide responded with new forms of comprehensive environmental legislation such as clean air acts and clean water acts, and the establishment of environmental regulatory agencies. These new environmental laws were part of a general trend in legislation aimed at regulating corporate activities and constraining unwanted business activities. In the US, for example:
. . . from 1969 through 1972, virtually the entire American business community experienced a series of political setbacks without parallel in the post-war period. In the space of only four years, Congress enacted a significant tax reform bill, four major environmental laws, an occupational safety and health act, and a series of additional consumer protection statutes. The government also created a number of important new regulatory agencies, including the Environmental Protection Agency (EPA), the Occupational Safety and Health Administration (OSHA) and the Consumer Product Safety Commission (CPSC), investing them with broad powers over a wide range of business decisions.9
Public respect for business was at an all time low and âfor the first time since the Great Depression, the legitimacy of big business was being called into question by large sectors of the public.â10 A Harris poll found that between 1967 and 1977, at a time when the counter-culture movement brought with it a proliferation of public interest groups â including environmental and consumer groups â the percentage of people who had âgreat confidenceâ in major companies fell from 55 to 16 per cent.11
In various business meetings, corporate executives lamented their decline in influence. For example, Carter Bales, director of McKinsey and Company, New York, stated: âAround the world, there have been challenges to the authority of each corporate actor â a breaking down, if you will, of their legitimacyâ. And the president of the National Federation of Independent Business, Wilson Johnson, claimed âweâre losing the war against government usurpation of our economic freedom.â12
In response to government regulations, brought on by the activities of environmentalists and public interest groups, businesses began to cooperate in a way that was unprecedented, building coalitions and alliances, and putting aside competitive rivalries.
Broad coalitions of business people sought to affect âa reorientation of American politicsâ. In the US, the Chamber of Commerce and the National Association of Manufacturers (NAM) were resurrected and rejuvenated, and new organizations such as the Business Roundtable (for large corporations) and the Small Business Legislative Council (for small businesses) were formed to lobby governments.13 Corporations and allied foundations also poured huge financial resources into a network of dozens of think tanks aimed at devising and advocating policies that would shift power from government to business (see Chapter 2).
This political mobilization of business interests could be observed in other countries, too. In Australia, for example, corporations âsubstantially increased their level of resources and commitment to monitoring and influencing the political environmentâ. They ensured that their senior executives were effective political operatives in their dealings with politicians and bureaucrats. They hired consulting firms to help with government submissions and established government relations units within their companies with direct access to the chief executive officer (CEO). Also, as in the US, âconcerted efforts were made to improve and centralize business representation at the national levelâ in order to mobilize and increase their power.14
Since the 1970s, corporate coalitions have moved from defending their economic freedom from the demands and interventions of labour unions and governments, to being far more aggressive in their goals. They now seek to expand their freedom, destroy unions and take over key areas of government policy-making and service provision. Their progressive accomplishment of this has meant that as time goes by, democratic power is undermined and thwarted, while corporate power grows.
The political mobilization of business interests meant that corporations began to act as a class rather than a collection of competing companies with some common interests. The class consciousness of top corporate executives was facilitated by the growth of inter-corporate networks of ownership and interlocking directorates of large corporations, which gave rise to a growing number of corporate executives who occupied positions on the boards of several companies. These corporate executives became politically active on behalf of business, in general, rather than individual companies. They provided the leadership for business coalitions and associations and were employed at the top levels of the largest corporations.15
In his book The Inner Circle, written during the 1980s, Michael Useem claimed that while âa sense of class affinity based on company stewardship can hardly be said to be new, the strength of the bond has increased and a select circle of those in corporate power are now far more willing to work towards goals that serve all large companiesâ. His study of the US and UK found that even at that time, large corporations were becoming more and more interrelated through shared directors and common institutional investors.16
Various studies have shown that interlocking directorates have grown even more in the ensuing decades and have become more global. In addition, the size of corporate boards has decreased, while the proportion of outsiders on each board has increased, with CEOs and executives from other companies therefore dominating the composition of many boards.17 Some interlocking directorates in key corporations mentioned in this book are shown in Figure 1.1.
The inner circle of corporate executives facilitated the formation of many business associations and coalitions that sought a more general political agenda than traditional trade associations â one that was not industry or region specific. The new associations present a united f...
