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Structural power and political science in the post-crisis era
Abstract
This essay highlights productive ways in which scholars have reanimated the concept of structural power to explain puzzles in international and comparative politics. Past comparative scholarship stressed the dependence of the state on holders of capital, but it struggled to reconcile this supposed dependence with the frequent losses of business in political battles. International relation (IR) scholars were attentive to the power of large states, but mainstream IR neglected the ways in which the structure of global capitalism makes large companies international political players in their own right. To promote a unified conversation between international and comparative political economy, structural power is best conceptualized as a set of mutual dependencies between business and the state. A new generation of structural power research is more attentive to how the structure of capitalism creates opportunities for some companies (but not others) vis-a-vis the state, and the ways in which that structure creates leverage for some states (but not others) to play off companies against each other. Future research is likely to put agents - both states and large firms - in the foreground as political actors, rather than showing how the structure of capitalism advantages all business actors in the same way against non-business actors.
... Using the concept of structural power from business power theory (Culpepper, 2015), we argue that, while recent efforts by the government have recognised the need to make digital credit less harmful through regulation, the market-led ideology of the Kenyan government combined with the structural power of banks and Safaricom has limited the scope of legislation. Importantly, the story of digital credit regulation in Kenya is not one of regulatory capture, nor is there evidence that major market players exerted instrumental powerusually defined as lobbyingover the regulatory debates. ...
... The concept of structural power has been used to explain the influence of finance and financial actors in the absence of obvious efforts to shape policy, which is broadly associated with the use of instrumental power (Culpepper, 2015;. Instrumental power refers to efforts by businesses to shape policy, such as lobbying, through the deployment of organisational, informational, or financial resources (Culpepper, 2010). ...
... In contrast, structural power recognises that powerful actors working within capitalist environments do not need to directly influence regulation. In capitalist democracies, governments are reliant on private firms to pay them revenue in the form of tax, and the former therefore have a clear interest in ensuring that the latter maintains high levels of investment and employment (Culpepper, 2015). There is an incentive for capitalist democracies to create the conditions under which holders of capital will be willing to invest (Culpepper, 2015). ...
Digital credit – short-term microcredit distributed over a digital platform, such as a mobile phone – has become hugely popular in Kenya, with over six million Kenyans having taken out at least one digital loan over the last decade. While there is a small but growing body of literature on the problems associated with digital credit (such as its high costs and contributions to over-indebtedness), far less attention has been paid to the regulatory debates in Kenya or elsewhere. This article charts the rise of digital credit in Kenya and the process of regulating the sector, which culminated in the CBK (Amendment) Act, 2021. Due to its almost exclusive focus on previously unregulated lenders, the Act had limited efficacy: it did not affect most of the digital lending market, which is largely controlled by partnerships between banks and mobile network operators. Using concepts from business power theory, we argue that the shape of the legislation can be attributed to the market-led ideology of the Kenyan government and the structural power of the telecommunications giant Safaricom and its partner banks. This case provides important lessons for other countries, where fintechs in general and digital credit, in particular, are on the rise.
... Business is thus inherently influential without explicitly having to act because government's capacity to operate effectively and remain popular with the electorate is intrinsically linked with business performance and investment decisions. The core features of market economies give structural advantages to the business sector over other interest groups and encourages the adoption of business-friendly policies (Culpepper, 2015;Fairfield, 2015). ...
... Vogel claimed that business does not always get what it wants and policy makers often favour other interests over those of business actors (Vogel, 1987). Recent literature has largely addressed this critique and moved beyond the idea of business power as a constant -embracing a more nuanced view of business power as a set of business-state mutual dependencies that may favour business sometimes but the state at other times (Culpepper, 2015). Recent studies have made clear that the structural power of business is something that varies over time (Hacker and Pierson, 2002), across countries (Fairfield, 2015;Culpepper and Reinke, 2014), and across different business actors (Culpepper, 2015;Young, 2015). ...
... Recent literature has largely addressed this critique and moved beyond the idea of business power as a constant -embracing a more nuanced view of business power as a set of business-state mutual dependencies that may favour business sometimes but the state at other times (Culpepper, 2015). Recent studies have made clear that the structural power of business is something that varies over time (Hacker and Pierson, 2002), across countries (Fairfield, 2015;Culpepper and Reinke, 2014), and across different business actors (Culpepper, 2015;Young, 2015). ...
While existing literature has studied several fundamental aspects of LTC dynamics in Europe, my PhD thesis identifies three significant knowledge gaps. First, few studies systematically analyse how LTC markets evolve once initiated. Second, there is a striking lack of research that focuses on the role of private for-profit actors in the dynamics of LTC markets. Third, little existing research studies the interests and policy preferences of private for-profit actors in LTC. My PhD’s contribution is to address those significant knowledge gaps and advance existing literature beyond the current state-of-the-art. As such, the project is motivated by three research objectives that align with each knowledge gap. First, to analyse the explanatory factors that have shaped the evolution of LTC market dynamics, with a focus on the role of private for- profit actors (including financial investment funds such as private equity and real-estate investment trusts). Second, to examine the factors that drive private for-profit actors’ interest in LTC. Third, to outline and explain the policy preferences of private for-profit actors in LTC. To operationalise those objectives, the project implements a case study of Ireland’s nursing home market to answer three corresponding research questions: 1. What are the key mechanisms of change that explain the transformation of Ireland’s nursing home market? 2. What factors drive private for-profit actors’ interests in Ireland’s nursing home market and why? 3. What are the policy preferences of private for-profit actors in Ireland’s nursing home market and why? My PhD thesis is located at the intersection of social policy and political economy — and engages directly with the LTC marketisation literature. The overarching theoretical contribution of my PhD is to advance existing literature beyond the current state-of-the-art by bringing a political economy approach to the study of LTC market dynamics. Existing research is dominated by institutional and ideational theoretical approaches, which have deepened our understanding of the role of policies and pro-market ideas in shaping processes of change (Burau et al., 2017; Ranci and Pavolini, 2015). This project applies a novel political economy framework that adds to existing institutional and ideational approaches. Overall, my study is situated alongside emerging political economy approaches to LTC dynamics (Farris et al., 2024; Ledoux et al., 2021a; Mercille, 2024; Hoppania et al., 2022) that build on the work of seminal scholars in the field (Meagher and Szebehely, 2013; Estes, 1988; Phillipson, 1982; Gingrich, 2011). Methodologically, the thesis implements a case study design using a qualitative approach. In terms of data collection, in-depth interviews with senior managers at key stakeholders (e.g., private for-profit nursing home group CEO, private equity managing partner, real-estate fund chief investment officer, senior official at Department of Health), documents, government spending data, and nursing home beds data were used. The data were analysed using process tracing and abductive analysis methods.
... Thus, we extend the literature on ESG and tax avoidance by considering how risk emerging from ESG issues, rather than the risk-managing process (ESG performance; see Stuebs and Sun, 2010;Kölbel et al., 2017), determines tax avoidance practices. Another important difference is that while corporate disclosures are primarily directed to investors and analysts, the media can easily reach a wider public and a broader range of stakeholders (Culpepper, 2015). ...
... Thus, a company might pay closer attention to a reduction in tax avoidance as a legitimising tool when some ESG issues are brought to the public's attention, thus directing stakeholders' attention to a decrease in ESG performance. According to media agenda-setting theory, the media play a crucial role in increasing the salience of a particular issue due to their growing power and role as a source of information (Culpepper, 2015). Having the power to direct public opinion and beliefs (Scheufele and Tewksbury, 2007), the media can affect the reputations of a firm (Li et al., 2023) and its executives or directors (Zingales, 2000;Borden, 2007;Dyck et al., 2010). ...
Purpose
This study aims to investigate the role of negative media coverage of environmental, social and governance (ESG) issues in deterring tax avoidance. Inspired by media agenda-setting theory and legitimacy theory, this study hypothesises that an increase in ESG negative media coverage should cause a reputational drawback, leading companies to reduce tax avoidance to regain their legitimacy. Hence, this study examines a novel channel that links ESG and taxation.
Design/methodology/approach
This study uses panel regression analysis to examine the relationship between negative media coverage of ESG issues and tax avoidance among the largest European entities. This study considers different measures of tax avoidance and negative media coverage.
Findings
The results show that negative media coverage of ESG issues is negatively associated with tax avoidance, suggesting that media can act as an external monitor for corporate taxation.
Practical implications
The findings have implications for policymakers and regulators, which should consider tax transparency when dealing with ESG disclosure requirements. Tax disclosure should be integrated into ESG reporting.
Social implications
The study has social implications related to the media, which act as watchdogs for firms’ irresponsible practices. According to this study’s findings, increased media pressure has the power to induce a better alignment between declared ESG policies and tax strategies.
Originality/value
This study contributes to the literature on the mechanisms that discourage tax avoidance and the literature on the relationship between ESG and taxation by shedding light on the role of media coverage.
... The financial sector and in particular the shadow banking system were successful in employing regulatory capture by either influencing policy initiatives to its own advantage or outrightly blocking them (Hacker and Pierson 2011;Culpepper 2015). Examples include reform proposals such as the financial transaction tax put forth by the EU Commission (Liikanen 2012) or the amendment of the Basel II regulatory framework, which was watered down considerably: after years of intense lobbying efforts, institutional investors managed to escape stricter oversight and capital requirements under Basel III that apply to too-big-to-fail systemic banks (Gabor 2018, 412). ...
... Hence, '[e]ndogenous crisis dynamics directed the political interventions in the crisis, which then […] crucially predetermined post-crisis regulation' (Murau 2017, 28). Furthermore, the interstate competition brought about by financial globalisation hampers effective regulatory reform and favours a regulatory race to the bottom (Thiemann 2014) -without the need of self-organisation and promotion of vested interests (Culpepper 2015). Hence, regulatory evasion also crucially shaped the genesis of UMP as a novel thwarting mechanism in the post-crisis period. ...
The global financial crisis (GFC) of 2008 has triggered profound changes in the macro-financial regulatory architecture. Ever since, the interplay between political, institutional, and macroeconomic developments has received increasing attention in political economy, as in the evolutionary macro-financial approach of institutional super-cycles with its concept of thwarting mechanisms. While these institutional structures aim to stabilise the macro-financial system, they may also contradict each other due to unintended side effects. This paper argues that the understanding of thwarting mechanisms can be enriched by further integrating it with political economy literature on finance within the post-GFC institutional setup. It conceptualises unconventional monetary policy as a novel thwarting mechanism and analyses the contradictory implications for overall macro-financial stability with a particular focus on aggregate demand. It suggests three reasons why this thwarting mechanism failed to restore sustained economic growth in the post-crisis decade: First, sustained large-scale asset purchases perpetuate the structural drivers of financial dominance in political power relations, entrenching the role of the shadow banking system within the macro-financial order and impairing the development of other thwarting mechanisms. Second, unconventional monetary policy maintains the tenets of the inflation targeting regime and thereby sustains neoliberal macroeconomic governance with restrained fiscal policy. Third, it exacerbates preexisting wealth and income inequality by redistributing wealth towards asset owners, undermines consumer demand, and thus contributes to stagnation tendencies. Thus, this paper suggests that the contradictions of this novel post-GFC thwarting mechanism contribute to weaken economic growth and thus fail to restore macro-financial stability.
... In particular, a key insight from recent scholarship in comparative political economy and industrial relations is that business power and the political preferences of business owners, employers and managerial organizations have become key to shaping policy outcomes across advanced political economies (Culpepper, 2010(Culpepper, , 2015(Culpepper, , 2021Busemeyer, 2012;Walker and Rea, 2014;Fairfield, 2015;Wright, 2017;Bohle and Regan, 2021;Morgan and Ibsen, 2021), in some cases at the expense of the power and influence of organized labour, which has been portrayed as having suffered considerable decline in the age of liberalization (Culpepper and Regan, 2014;Baccaro and Howell, 2017;Rathgeb and Tassinari, 2022). ...
... The high salience of the health risks associated with the Covid-19 pandemic in Italian public opinion makes this case a 'hard test' for our hypotheses about the influence of business power on policymakers, whilst the highly political visibility of the opposition between public opinion and unions' preferences on the one hand, and employers' preferences on the other, makes the case a crucial case to test the potential effects of business power or trade union power over policymaking (cf. Culpepper, 2015). ...
How do organized economic interests affect the governance of the coronavirus disease 2019 (Covid-19) pandemic? We investigate whether the structural and instrumental power of employer organizations and unions impact upon the stringency of containment measures implemented by governing authorities to tackle the Covid-19 pandemic, focusing on Italy during the first Covid-19 wave of early 2020 as a crucial case. Using Hausman-Taylor panel regression models and original indicators of regional stringency and of unions and employers' organizations' efforts to exercise instrumental power via public pressure on social media, we find that the intensity of public pressure by employer organizations is negatively correlated with the stringency of the policy responses implemented by regional authorities to tackle the Covid-19 pandemic, whilst union pressures only show a limited effect. Our findings demonstrate that business pressure and the interplay of economic and class interests are constitu-tive of the governance of a crucial social and public health phenomenon such as the Covid-19 pandemic.
... Among the most searing images of the period was that of police officers in Birmingham, Alabama-at the direction of the city's police chief, Theophilus Eugene (Bull) Connor-spraying firehoses against civil rights marchers, many of whom were children. As a result of this episode, footage of which was broadcast on national news networks, Connor became an easily identifiable symbol of Southern 18 Davis's argument points to a related approach that also contains similarities with ours: the model of "structural power" that originated with Nicos Poulantzas (1973) and which has experienced a resurgence among political scientists, albeit in a modified form, in recent years (Culpepper, 2015;Hacker & Pierson, 2002). Poulantzas argued that due in part to conflicts of interest across sectors, capitalists as a group are generally incapable of acting collectively to address issues of class-wide concern. ...
It is broadly accepted among political scientists, political sociologists, and social movement theorists that a unified group will have a higher probability of success than a group that experiences internal divisions or fragmentation. Similarly, it has been assumed that in a society with a relatively unified elite, the elite will experience disproportionately higher benefits relative to the larger population. We take issue with this claim. In the mid-twentieth century, large American corporations exhibited a relatively high level of unity but the relative economic benefits accruing to the elite were at historic lows. In more recent years, American big business has become increasingly fragmented, yet the economic benefits that these elites have received have reached historic highs, and the average American’s standard of living has stagnated. Drawing on Padgett and Ansell, we introduce the concept of inadvertent robust action to explain how a relatively fragmented, disorganized elite can reap benefits that exceed those that its more unified counterparts experienced in an earlier era. We conclude with a discussion of the conditions under which our formulation can be expected to hold.
... I use the example of Hungary to analyse financial nationalist policies in relation to three theories of international finance and financialization in order to outline the change in policy scope while exploring the quality of democratic oversight. These theories are the "structural power of finance" (Culpepper 2015;Strange 1996), "financialization of the state" (Karwowski 2019;Mader, Mertens, and van der Zwan 2019) and "financialization of daily life" (Martin 2002;Pellandini-Simányi, Hammer, and Vargha 2015;van der Zwan 2014). The analysis aims specifically at (1) assessing the state's increased autonomy in bank ownership decisions, (2) describing an overarching change in the conduct of monetary policy and (3) highlighting the capacity of financial nationalist policies to counteract the financialization of everyday life by reducing foreign exchange vulnerabilities of households. ...
Since the global financial crisis, for IPE scholars a core intellectual puzzle is to explain the rise of financial nationalist governments into power and their sustained capacity to pursue financial nationalism in an era when the interconnectedness of global financial markets surpasses any historical level. Financial nationalism is puzzling because of its capacity to redistribute gains from international financial transactions among a larger share of domestic society. This paper, using the example of Hungary, identifies financial nationalism's unexpected achievements through contrasting it with claims of three theories of financial power: structural power of finance, financialization of state institutions, and financialization of everyday life. Specifically, it documents the Hungarian government's achievement to increase domestic ownership of banks, to importantly enlarge the scope of central banking, and to significantly reduce the credit exposure of a large segment of the Hungarian population. At the same time, it also describes underemphasized critical conditions of financial nationalism's advancement, at each examined policy domain, namely the diminishing democratic oversight of major financial transformations. Finally, the Hungarian example does not suggest that financial nationalism inherently leads to democratic decline, only that its many impressive economic achievements should be understood within its political context.
... This is often exemplified by the power wielded by global finance (e.g. see Culpepper, 2015) and multinational corporations (MNCs -see Bohle and Regan, 2021) across various sectors and jurisdictions. Other influential contributions pointed to the convergence of ACDs under the combined pressures of a series of developments well beyond party competition, like economic deregulation, financialization (Deeg and O'Sullivan, 2009) and the liberalization of industrial relations (Regini, 2000). ...
What explains changes in the economic structures, institutions and policies of Advanced Capitalist Democracies (ACDs)? In this article, we suggest that the various answers to this question in the field of Comparative Political Economy (CPE) are essentially linked to two main approaches. The first approach emphasizes the role of electorates and political parties, their transformations, and their competition in shaping the evolution of ACDs. The second approach highlights the primacy of producer groups as the most powerful actors influencing the trajectory of ACDs. This review article introduces the debate between these two approaches and underscores its enduring relevance. It then discusses four recent important contributions that provide renewed perspectives on what remains a structuring cleavage in CPE, with implications for neighbouring fields in political science research. Through a systematic comparison of their analytical structure accross various dimensions, we show that their conception of the economy critically shapes their understanding of politics.
... Como mencioné antes, la literatura sobre empresarios y política también se refiere a una segunda forma de poder empresarial: el poder instrumental. Este tipo de poder se refiere a la serie de atributos y recursos que permiten a los grupos de interés empresarial (es decir, asociaciones empresariales, conglomerados económicos o grupos de empresas) y a las empresas participar en el proceso de toma de decisiones e influir en tipo de políticas adoptadas (Culpepper, 2015). Este concepto hace referencia a varios mecanismos de influencia política: redes, participación en comités de consulta, conexiones político-partidistas, capacidad organizacional, recursos económicos y recursos de cabildeo. ...
Este libro analiza la relación entre la riqueza en recursos naturales, la política de asignación y el limitado papel de los impuestos en la redistribución, así como la movilización progresiva de recursos. Basándose en la economía política de los regímenes tributarios, examina las condiciones específicas de la fiscalidad en América Latina, que rigen también en gran parte del Sur Global y en más de cien países especializados en la extracción y exportación de materias primas. Con el foco puesto en América Latina, este libro adopta un enfoque heterodoxo dentro de la economía política, donde los problemas que actualmente se padecen en términos de fiscalidad existen desde hace ya un siglo y donde la gran acumulación de riqueza contrasta con una pobreza extrema. Con una orientación analítica, el libro relaciona cuestiones centrales de la fiscalidad con patrones de economía política regional y abre así el debate con investigadores en materia fiscal de otras regiones del mundo pertenecientes al Sur Global.
... Moreover, while there is a large acknowledgment of the presence and potential for influence, there has been less exploration of how businesses use regime complexity to influence international regulation in these issue areas. The high relevance studies such as Bach (2017) and Newell and Taylor (2018) demonstrate that private business actors deserve specific individual consideration as they do not behave like every other interest group (Culpepper, 2015). Therefore, this first analysis has unearthed a conceptual gap within IRC theory. ...
Business actors play increasingly important roles in global governance and international regulation. This paper considers how regime complexity influences the roles of businesses and impacts opportunities for business influence on international regulatory regimes. We conducted a scoping literature review of 243 articles from the International Regime Complexity (IRC) theory literature to explore if and how complexity affects the roles of businesses and their influence on international regulation. We found that complexity presents opportunities for businesses to regime shift and exploit knowledge asymmetry in order to influence international regulation. Further, IRC theory illustrates how the roles of businesses interact and leverage one another in order to create better opportunities for influence in specific international regulatory regimes. This paper contributes to IRC theory by building on the existing non-state actor discussions and offering specific theorization of business behavior, thus starting to bridge the gap between the empirical and theoretical understanding. Second, it contributes to existing discussions in business and politics literature by developing existing knowledge on the roles of businesses in global governance to better reflect the added dimension of complexity.
... Contudo, estudos sugerem que o exercício de poder estrutural é multifacetado e contingente (Dafe;Rethel, 2022). Isto é, atores financeiros nem sempre são capazes de pressionar os Estados em favor de todos os seus interesses, pois -a depender do contexto regulatório e da estrutura dos mercados -Estados também são capazes de inviabilizar suas atividades (Culpepper, 2015). Nesse sentido, na melhor das hipóteses, possuem alguma vantagem 10 em um processo contínuo de negociação de interesses com Estados. ...
O artigo joga luz às formas de exercício de poder por atores financeiros sobre a ação estatal no Brasil, mapeando os distintos imbricamentos público-privados concentrados no Banco Central do Brasil. O interesse em tais intersecções e interdependências intensificou-se após a crise financeira de 2008, desmistificando análises tradicionais que tratavam Estados e mercados financeiros como domínios estanques. A pesquisa apresenta a literatura emergente sobre o tema, argumentando que, no contexto brasileiro, dois tipos de vínculos têm sido mais explorados: a complementaridade entre interesses e macroinstituições, e as conexões pessoais no sistema financeiro. Buscando contribuir com esses esforços, o artigo joga luz a um terceiro tipo de imbricamento, chamado infraestrutural, que começa a ser discutido internacionalmente. Por fim, o trabalho classifica três dimensões infraestruturais das finanças no Brasil, visando orientar futuras pesquisas sobre as minúcias institucionais, técnicas e políticas do poder infraestrutural.
... The last stream of literature wants to identify the different causes of the emergence of such a policy. The corporate welfare policy can come from specific political coalitions (Maggor, 2021), structural power (Culpepper, 2015) or institutions. Compared to the evolutionist literature which focus more on the political capabilities of the State to design and implement strong conditionality (Kattel & Mazzucato, 2018), political economists identifies the causes of the policy in the social, economic and political institutions. ...
The aim of this article is to demonstrate that the "Corporate Welfare" policies are embedded in a complex, dynamic and unstable mode of regulation. Based on qualitative and quantitative evidences from France since the 2008 financial crisis, we identify the five canonical institutional forms derived from the Régulation Theory that are coherent with industrial policies in favour of corporation without any counterparts. We consider that the deindustrialisation, the wage moderation, the fragmentation of national value chains is at the beginning of a race to the bottom of the public policy to compensate the profit loss. Behind the transfer of funds, we show that there is also a transfer of power to corporations, especially on the social welfare system. Finally, we will consider that this system is compatible as long as public debt creditors accepts to finance the difference between the quick transfers to corporations and the slow reduction of public expenditures, and second, that household have political and financial capacity to support this system.
... Le risque est toutefois d'inférer de leurs ressources économiques et technologiques, voire de leurs connexions dans le champ politico-bureaucratique américain (pour le cas de Google, voir Thibout, 2021), une capacité illimitée et automatique d'expansion de leurs activités à travers le monde, indifférente aux contextes nationaux qu'elles rencontrent. Cette hypothèse fait écho à la controverse entre la prééminence du « pouvoir structurel » et celle du « pouvoir instrumental » des multinationales (Lagneau-Ymonet, 2023 ;Benquet et al., 2020), qui anime depuis les années 1970 une partie de la littérature en économie politique internationale et comparative (Culpepper, 2015). Ces débats laissent en suspens la question de l'adaptation des firmes multinationales à des univers sociaux nationaux, marqués par des logiques, des règles et une histoire propres, et dont on ne peut postuler, hors de toute enquête, l'indifférenciation et la neutralité quant à l'expansion internationale d'entreprises, aussi dominantes puissent-elles paraître. ...
Si le pouvoir des multinationales, et des GAFAM en particulier, apparaît comme l’un des faits politiques et économiques majeurs de notre époque, s’exerce-t-il sans frictions au contact des espaces de pouvoir nationaux qu’elles rencontrent au gré de leur internationalisation ? Cet article entend contribuer à y répondre, en analysant l’implantation de Google en France à travers le prisme de ses recrutements. Fondée sur des entretiens, l’exploitation d’archives et une analyse prosopographique, cette enquête permet de rendre compte des efforts d’adaptation produits par une multinationale du numérique pour pénétrer le marché français, alors que la firme est précocement l’objet de mobilisations hostiles et d’une mise en problème politique. L’objectif de l’article est d’analyser ce processus d’adaptation, qui passe par le recrutement de salariés et de dirigeants aux propriétés hybrides, situés à l’interface entre Google et le champ du pouvoir national. Les ancrages nationaux de ces recrues en général, et des représentants d’intérêts en particulier, aménagent des espaces de négociation où se jouent l’entrée de la firme dans le travail gouvernemental et la reconnaissance de sa légitimité à s’insérer dans certains secteurs d’action publique.
... According to her, power should be "de-faced" and reconceptualized as 13 Tallberg et al. (2018). 14 For introductions to these special issues, see in particular (Fuchs and Lederer 2007;Culpepper 2015). 15 Rollings (2021). ...
Using archival material from states, international organizations, and business actors, this paper explores how the Association for the Promotion and Protection of Private Foreign Investments (APPI), a transnational business interest association (BIA), liaised with different international institutions to lobby for better foreign investment protection. We zoom in on the United Nations, the Organization for Economic Co-operation and Development, and the World Bank to examine how APPI influenced the global institutional landscape during its heydays from 1958 until 1974. We show that business actors, particularly oil and banking corporations, created APPI as a nimble, efficient alliance that could move faster than existing BIAs. We further demonstrate how companies “forum shop” between different BIAs, and how APPI injected its ideas into the policymaking process, using the framework of the three faces of power. By shedding light on the role private business actors played in foreign investor protection, the paper contributes to a better understanding of the emergence of global economic governance in the second half of the 20th century.
... While for reasons of simplicity Korpi assumed that actors' perception of the balance of power will approximate the actual balance of power with repeated observation (Korpi 1974), there is an unexplored field of empirical investigation focusing on actors' perceptions, the frequency and devices they use to make their assessments, the performative actions they take to impose perceptions of their own power, and situations where the real and perceived power of actors are out of sync. Surely, other approaches will be gradually developed to explore the effectiveness of unused power resources, potentially with inspiration from the literature on the structural power of business (Culpepper 2015). ...
This article argues that a renewed version of power resources theory can make an important contribution to analysing developments in contemporary capitalist economies. Workers and power remain important for contemporary developments. The concept of power resources helps us study both workers and their power by focusing on the interplay between power resources and the preferences of different actors as well as interests and strategies. The article further takes issue with predominant theories in political economy, such as those focusing on skills and technological change or those emphasising growth model, arguing that both place too little emphasis on power.
... Investments that are necessary for the wellfunctioning of a capitalist economy are indeed largely at the discretion of private capital holders. In such context, policymakers are strongly incentivized to maintain private sector profitability and protect business activities given their broad impact and repercussions on the political economysomething which is often achieved without the necessity for business actors to directly exert pressures on policymakers (Culpepper, 2015). Most contemporary perspectives treat structural and instrumental business power as independent variables rather than constant. ...
Business power is thought to increase over time when private actors are involved in the provision of public goods and services. This paper argues that this is partially true—and that in certain circumstances, state actors can even swiftly regain control of sectors previously ceded to private interests. When the latter fulfill some public functions on behalf or as delegates of the state, policymakers face ever greater pressures to sustain a relationship flawed by principal-agent problems—allowing business actors to derive appreciable political benefits. However, these conditions do not hold true after deregulation—when state actors retreat from a sector and attempt to direct the newly created market through licensing, norms, and standard setting. We demonstrate that deregulation sets the stage for a more competitive environment, making it harder for private interests to cooperate. This, in turn, can allow policymakers to enhance regulatory capacities and seize opportunities to highlight the shortcomings of private provision. After establishing this argument theoretically, we illustrate its implications through the comparative historical analysis of the health insurance sector in two European countries—Belgium and France. Despite their initial similarities, they experience contrasting developments regarding the welfare state’s dependency on private insurers for the provision of crucial collective goods.
... The perception that policymakers may be 'captured' by special interests and that this will then bias policy outcomes is a constant concern (Schattschneider 1960; Lowery et al. 2015). The ability to hijack policymaking in this sense is generally ascribed to business interests, first because of their generally higher availability of resources to hire lobbyists to represent their interests in policymaking (Dür and Mateo 2016), and secondly, because of their structural power in the economy, which politicians acknowledge and second because of electoral incentives (Culpepper 2015). ...
Despite the growing interest for lobbying in public opinion research, little is known about citizen’s attitudes towards interest groups, especially after legislation making lobbying transparent is passed. Using data from a pre-registered survey experiment conducted with a panel of 569 participants from the Republic of Ireland, this study shows that when exposed to information about lobbying conducted by Non-Governmental Organisations (NGOs) and business organisations, citizens do not improve their evaluations of interest groups. Surprisingly, against the general expectations found in the transparency literature, information about lobbying does not trigger positive changes in attitudes. A post hoc analysis of the participants’ reactions to the transparency treatment reveals that citizens may have little interest or understanding of political activities such as lobbying. The study, however, also reveals that lobbying transparency does not backfire producing unexpected negative effects. This adds a new perspective to the recent debate on how public opinion responds to interest group behaviour.
... Instrumental power can reinforce and be reinforced by structural power (Trampusch and Fastenrath, 2021). Structural power stems from the privileged position of the business sector in capitalist economies (Lindblom, 1977;Culpepper, 2015). Governments' reliance on the contribution business makes to economic growth, i.e. through investment, the provision of jobs, the provision of services, housing, the production of food and manufactured goods, can pressure politicians to regulate in favour of business even without their active involvement. ...
Previous literature on the nexus between land, finance and business power has not systematically analysed the role of the liquidity of businesses’ assets. Combining process tracing with a comparative design, this study contributes a perspective on the role of standardized assets for business power. It investigates land acquisition tax reforms asking why institutional landowners’ structural and instrumental power was successful in Sweden but not in Germany. In Germany, a reform was passed in 2021 which disadvantages the private market institutional landowners compared to their public counterparts. This study argues that the standardization of landed property as liquid stock enabled publicly listed property companies to unite with other stock market actors, increasing their power resources and allowing them to successfully promote their interests due to the liquidity demands of their assets. This stands in contrast to the poorer reception of the liquidity of private market actors in their land-related transactions.
... Strukturelle Macht problematisiert die prägende Position von Kapitalbesitzenden-und verwaltenden im Kapitalismus. Weil sie Investitionsentscheidungen fällen, die das Wohlergehen der nationalen Ökonomie beeinträchtigen, so die Argumentation, richten sich Politiker*innen oft implizit an den Interessen von Investoren und Geschäftsleuten aus (Braun 2022;Culpepper 2015). Doch auch andere Akteure können strukturell mächtig sein, also über Macht, die sich aus ihrer strukturellen Position in einem Feld herleitet, verfügen. ...
Die deutschen Gewerkschaften sind massiv von den Auswirkungen der Digitalisierung der Arbeitswelt betroffen. Ihre Organisations- und Durchsetzungsfähigkeit wird ebenso strapaziert wie ihr Anspruch auf eine möglichst umfassende Repräsentation der lohnabhängig Beschäftigten und Arbeitenden. Vor diesem Hintergrund diskutieren die Beiträger*innen die theoretischen Möglichkeiten und praktischen Erfahrungen mit der Digitalisierung von Gegenmacht aus gewerkschaftlicher und sozialwissenschaftlicher Perspektive. Dazu gehören u.a. Formen des Arbeitskampfes im digitalen Sektor und neue, widerständige Praktiken im Internet oder in der digitalen Infrastruktur von Unternehmen und Konzernen.
... As a discipline centered on the study of power, and perhaps structural power more concretely (Culpepper 2015), we ask: what were the rhetorical responses to George Floyd's life and murder by political science departments? Here, we are most interested in learning how rhetorical responses may or may not reveal how discursive power is deployed to frame both the problem of racism and responses to that problem. ...
As a discipline centered on power, political science provides an important window into potential responses to episodes of heightened attention to long-standing racial violence and inequality in the United States. During the summer of 2020, political science departments, like many other entities, issued public statements in response to the brutal murder of George Floyd and the long and ongoing history of deadly violence against Black people at the hands of law enforcement. This paper examines these statements, providing a descriptive analysis of themes raised and types of commitments to action. Rhetorical responses to racism constitute important sites for understanding how discursive power is deployed. Ultimately, we observe that proposed solutions contained in statements are not commensurate with the structural understanding of racism encapsulated in statements. These statements suggest that the status quo prevails even among those who study power. We document limited commitments to addressing racism in political statements.
... Strukturelle Macht problematisiert die prägende Position von Kapitalbesitzenden-und verwaltenden im Kapitalismus. Weil sie Investitionsentscheidungen fällen, die das Wohlergehen der nationalen Ökonomie beeinträchtigen, so die Argumentation, richten sich Politiker*innen oft implizit an den Interessen von Investoren und Geschäftsleuten aus (Braun 2022;Culpepper 2015). Doch auch andere Akteure können strukturell mächtig sein, also über Macht, die sich aus ihrer strukturellen Position in einem Feld herleitet, verfügen. ...
... Corporations are powerful political actors in capitalist societies (Gilens & Page, 2014). Political analysts have long been concerned with the power of business to veto or weaken policies that impose costs on firms but benefit the public (Busemeyer & Thelen, 2020;Culpepper, 2015;Hacker & Pierson, 2002). At the same time, evidence from a range of issue areas, including environmental protection, social security, and health care, shows how business can also support policy reform (Culpepper, 2016;Falkner, 2008;Rivera et al., 2009;Swenson, 2018). ...
Firms often oppose costly public policy reforms—but under what conditions may they come to support such reforms? Previous scholarship has taken a predominantly static approach to the analysis of business positions. Here, we advance a dynamic theory of change in business policy positions that explains how business may shift from opposing to supporting new regulation over the course of multiple rounds of policymaking. We identify three sets of drivers and causal mechanisms behind business repositioning related to political, policy, and market change. We argue that political mechanisms can shift opposition to “strategic support” for reform, whereas policy and market mechanisms may shift opposition or strategic support toward “sincere support.” We examine the reconfiguration of business interests and policy positions in the context of three decades of US climate politics, focusing on the oil and gas, electricity, and auto sectors. Our dynamic theory of business positions moves beyond the dualism that views business as either opposing or supporting public interest regulation. We thus advance our understanding of why initial business opposition can incrementally turn into strategic or sincere support for policy reform.
... Interest groups with a bad sociopolitical reputation but with otherwise strong instrumental resources might be able to resist reforms hurting their interests (think for example about the gun lobby in the USA). Moreover, the literature on the structural sources of business power suggests that actors can be influential even if they do not engage in activities to influence policymakers (Busemeyer and Thelen 2020;Culpepper 2015;Dowding 2021). Consequently, a negative public image may not be enough to trigger efforts to influence policy. ...
This article argues that differences in sociopolitical reputation can explain why interest groups fail or succeed in influencing policymakers and that therefore sociopolitical reputation is a useful addition to the conceptual toolbox of interest groups scholars. Focusing on pharmacies and their associations in Greece and Portugal between 2005 and 2021, this article uses the concept of sociopolitical reputation to explain why reform attempts to reduce pharmaceutical spending and increase competition in the pharmacy sector were successful in Portugal but not in Greece, even though pharmacists are a much stronger interest group in Portugal than in Greece and even though both countries were under significant exogenous pressure to introduce structural reforms in the wake of the Eurozone crisis.
... Such pressure was particularly relevant at the regional level. Policymakers can be expected to be influenced by the preferences of business organisations regarding 1 6 th International Scientific Conference ITEMA 2022 Conference Proceedings lockdown stringency, both to preserve business confidence and future investments and to prevent them from mobilising their resources through lobbying or public media campaigns (Culpepper, 2015;Fairfield, 2015). ...
The diffusion of the pandemic and the severity of COVID-19-related measures were very uneven across regions; however, the intensity of the restrictions was not always tightly linked with the strength of the pandemic. Economic interests and business power might have played a role in defining political responses at the local level, which are in turn able to shape the intensity of work-related mobility. This article aims at investigating whether regional variations in the stringency of COVID-19-related measures have actual impacts on work-related mobility and whether there is an independent effect of the pressure exerted by unions and businesses, assuming mobility to be governed concurrently by stringency, pandemic intensity, and pressure. Through the analysis of original regional-level indicators of stringency and public pressure, we demonstrate that trade unions’ pressure is associated with a decrease in work-related mobility during the first COVID-19 wave in Italy.
... In the decade since the global financial crisis there has been a renewed emphasis on theorizing about, and measuring, the impact of system structure on national and supranational outcomes, and the ways in which global structures emerge from -and are affected by -intrastate developments and international interactions, via a complex adaptive evolutionary process (Oatley, 2011;Oatley et al., 2013;Oatley, 2019;Winecoff, 2017a). Perhaps unsurprisingly, given the way in which the American subprime crisis spread globally, much of this research has focused on how structural position in the global system is related to power and influence, repeatedly finding that highly-central states (particularly the United States) and market actors (particularly American capital) are disproportionately privileged in ways that generate negative externalities for others (Ba, 2020(Ba, , 2018Culpepper, 2015;Emmenegger, 2015;Farrell and Newman, 2014;Fichtner, 2017;Starrs, 2013;Winecoff, 2015). ...
Global financial cycles are of increasing concern for scholars and policymakers. Recent research has identified these cycles as originating in American markets, at least in part due to policy innovations in the United States. We articulate a previously unidentified, but powerful, mechanism that conditions growth (and growth volatility) in the global economy: expansions in the American financial cycle disproportionately affect global credit conditions, leading to a higher incidence of gross capital inflow surges that subsequently create a boom-bust growth dynamic in recipient economies. We evaluate this argument with an extensive empirical examination of 102 countries from 1975-2011 and find substantial support for the argument: US financial market developments produce capital flow cycles that challenge the ability of policymakers to stabilize their macroeconomies. We disaggre-gate capital flows, and show that interbank lending is the most important driver of these results, which are highly robust to alternative specifications. Domestic policy tools alone may be insufficiently powerful to counteract volatility induced by these capital waves emanating from the core of the global financial system.
This article aims to introduce the structural and instrumental power of real estate companies in China, using Evergrande as an example, and provide possible regulation designs that can modify the Three Red Lines regulation policy. China's real estate sector has played a significant role in the country's development, and Evergrande is a prominent real estate corporation in China. The real estate sector in China possesses robust structural and instrumental dynamics. To eliminate the financial crisis in the real estate industry, the Chinese government has introduced three red line policies to increase supervision of real estate companies. Evergrande has experienced serious financial difficulties due to regulatory upgrades, which have had numerous detrimental effects on society. This article discusses the impact of the Three Red Lines policy introduced by the Chinese government on the real estate industry. Additionally, it suggests many solutions that could help with monitoring in this regard.
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This article reviews recent insights from the blooming Comparative Political Economy (CPE) literature on climate change with the aim to demonstrate the importance of integrating climate change into the field of CPE and to highlight the contributions of CPE to our understanding of the social and political obstacles to effective climate policies. In addition, we advance two key points to bring the CPE literature forward. To tighten the dialogue between the “electoral politics” and “interest group politics” approaches, we propose understanding climate politics as a triadic conflict between losers of climate change, losers of public climate action (PCA), and winners of PCA. Second, we argue that the scope of CPE studies needs expansion. While existing CPE literature predominantly focuses on climate change mitigation, it is essential to consider climate change adaptation due to its significant distributive implications at the macro‐ and micro‐levels of societies.
The Brussels effect has become a major tool for analysing the global exemplary impact of the European Union (EU) rules in academia and policy‐making. It is entering uncharted territory. Heightened corporate lobbying and third‐country influence test the EU's regulatory capacity and the stringency of its standards while shifting political tides challenge the EU's aspirations as a global rule‐maker. Threats from Donald Trump and tech firm executives abound. To capture such dynamics, the article outlays a pioneering reconceptualisation of this effect, drawing from the political economy concepts of instrumental and structural/hybrid power. This reconceptualisation equips the Brussels effect framework with analytical tools needed to tackle contemporary governance challenges while encompassing advocacy efforts that undermine the background conditions of this effect. Reconceptualising the Brussels effect also helps us to address the shifting world political dynamics while adjoining it with broader debates on power and polycentric governance.
Studies of lobbying typically look at the extent to which interest groups realize political goals on issues they actively lobby for. Little is known, however, about the extent to which interest groups attain their political goals without making an active lobbying effort. In this paper, we analyze potential biases in perceived preference attainment at different levels of lobbying activity, including analyses among organizations which do not, or hardly, lobby. Empirically, we rely on a cross‐national survey conducted among interest group leaders in 8 polities in Europe during the Covid‐19 pandemic. Our dataset includes information about issue mobilization and perceived preference attainment on Covid‐19 policies and non‐Covid‐related policies. We find that larger organizations enjoy higher levels of perceived preference attainment, even when they lobby little. In the Covid‐19 case, we also see biases in favor of business groups and economically more important sectors. These results document a form of structural power, where decision‐making automatically favors some economically important interests.
Open banking was heralded as the key to promoting competition in UK retail banking markets. After a slow start the post-pandemic uptake of open banking tools suggested that a second financial services revolution was indeed underway. Yet by 2024 there were also clear signs that the so-called silent revolution had failed. The aim of this paper is to explain why. Using Culpepper’s (2010) concept of ‘noisy politics’ we argue that against the background of disillusionment with incumbent banks a more incisive, pro-reform statecraft emerged during the design of open banking (2015-18); under these conditions incumbent bank power waned. However, the return to ‘quiet politics’ – compounded by the political uncertainty surrounding Brexit and the delegation of authority to technocratic institutions – allowed incumbent banks to slow the implementation process (2018-23) and reorient their strategy towards acquisitions and partnerships with technologically agile fintech firms. In so doing bank power reasserted itself, stymieing the progress of open banking reform.
The central role of economic elites in shaping public policy in Latin America has become increasingly clear. Yet most of the recent literature on the subject focuses on democratic contexts. This paper analyses pension privatisation in Chile as a case study for improving our understanding of business–state interaction in authoritarian contexts. Globally, the 1981 pension reform carried out during the Pinochet dictatorship became an example for pension privatisation elsewhere. Analysis of the policy-making process, based on novel empirical material, shows that from 1973 financial groups accumulated growing power which enabled them to first (a) defeat their opponents within the economic elite, (b) overpower their rivals within the state and, finally, (c) force Pinochet into passing pension privatisation legislation. Our results stress the need to include the study of different actors’ power resources – along with ideological issues and the regime structure – in attempts to understand the outcome of policy processes in authoritarian contexts.
Rather than leading to the emergence of a problem, some processes contribute to limiting their scope and impeding agenda-setting. These “nonproblems” are situations that could have led to social mobilizations or public intervention but end up neither being publicized nor subject to strong policy. We use occupational health in France to illustrate these mechanisms. The social invisibility of work-related ill-health is linked to the joint contribution of two processes. Firstly, from the perspective of research on ignorance and undone science, scientific knowledge is under-developed compared to other public health issues. And even available knowledge is rarely used by policy-makers. Secondly, policies use underestimated numbers from the occupational diseases compensation system. This specific configuration of knowledge/ignorance and official counting plays a central role in the production of occupational health issues as a nonproblem. Their invisibility contributes to the production of inertia and public inaction that characterize public policy in this field.
In the last few years, legitimacy has proven to be a fundamental power resource for the business class. Building on the idea of “discursive power,” investigations have demonstrated that when the business class successfully shapes public discourses and public opinion, its power increases. With this article, we contribute to this research by showing that businesses’ success in building discursive power, as expressed in individual trust in private companies, is limited by individual- and macro-level factors associated with class inequality, class politics, and power. Using data from 15 Latin American countries (2005–2015), we show that in the period studied, the propensity to trust private companies was significantly lower among those in underprivileged class positions (e.g., working-class people or the informal self-employed) and among those who identify with the political left and have less confidence in political institutions. At the macro level, trust in companies was lower in countries ruled by the left or in countries where inequality rose or where citizens’ trust in political institutions improved. At the end of this article, we identify three patterns of business legitimacy in Latin America and show how our results contribute to the recent research on trust, class, and power.
Housing is a critical part of every state’s infrastructure. However, in most advanced economies the state no longer builds very much of it, leaving it instead to private housebuilders. Because of their control over the supply of land, and the barriers to entry into the housebuilding industry, private housebuilders have potentially major structural power over the state. At the same time, private housebuilders are also tied to their land, and face other barriers to exit, thus limiting their ability to relocate capital elsewhere. Drawing on a range of secondary data sources, including earnings calls transcripts, annual reports and government policy documents, this paper demonstrates how the three largest volume housebuilders in England leveraged their structural power to shape the mortgage market support schemes that were introduced in the aftermath of the Global Financial Crisis. These schemes have since underpinned their exceptional levels of profitability. We conclude, though, that far from being an absolute resource, this structural power was only enabled by the prevailing neoliberal, home-owning Anglo-liberal ‘growth model’ in which these housebuilders were embedded.
Context: Little is known about the political, institutional, and social contexts contributing to a decline in food and beverage industry power and influence over fiscal (soda taxes) and regulatory (sales/advertising restrictions and food labels) policy. This article addresses this issue by exploring why Mexico and Chile eventually saw such a decline in the food and beverage industry's influence whereas Brazil was not as successful. I argue that in Mexico and Chile, these outcomes are explained by shifts in presidential, congressional, and bureaucratic interests in pursuing policies that went against industry preferences.
Methods: This article took a qualitative methodological approach to comparative historical research.
Findings: Policymakers' interest in pursuing stronger food and beverage regulations were shaped by economic and public health concerns, new electoral contexts, epidemiological information, and normative beliefs. In Mexico, the infiltration of nutrition researchers within government facilitated this process. In contrast, Brazil's government was divided about pursuing regulatory policies, with presidents favoring partnerships with industry to implement a popular anti-hunger program; industry's power endured there with limited progress in policy reforms.
Conclusion: Governments can eventually overcome industry power and policy influence, but it depends on a whole government commitment to reform.
Among the defining features of the contemporary global economy are the digital disruption of economic sectors and the accompanying political and regulatory conflicts. Across the world, multinational technology firms have mobilized consumers as a key ally in these conflicts, a critical element of the platform power they wield. In this article, I examine how non-consumer identities can limit the exercise of platform power by such firms. By synthesizing the concept of platform power with research on political consumerism and national identity, I argue that activating national identity can generate opposition to policies favorable to multinational technology firms and, in turn, curtail their ability to appeal to public support. Empirically, this article uses an online, nationally representative survey fielded in Canada. I explore the determinants of support for global regulatory cooperation and the domestic policy status quo, as well as the causal effect of consumer and national identity framing using vignette experiments across three issue areas: banking, telecommunications, and taxation. The findings reveal that activating consumer identities consistently shifts support but the effect of national identity is more variable. This article thus contributes to scholarship on the digital economic transformation and the exercise of business power in the global economy.
Recent research has documented a significant and rising presence of corporations in politics. In this letter, we ask to what extent corporations in Denmark have increased their political activity and access to political arenas during the last two decades. The analysis draws on two surveys among large corporations conducted in 2001 and 2022. This allows us to compare the extent to which corporations use tactics such as targeting the news media as well as their reported levels of contact to public authorities. We find that corporations today are engaged in broader questions and use a wider set of strategies than around the turn of the century, but also that their contacts to public administrative authorities have decreased and that a larger share of corporations are only active through collective organisations. This provides an important corrective to the existing image of a uniform rise in the political activities of private corporations.
The ecological transformation of the economy is frequently approached politically with market-based policy, in particular derisking, which attempts to steer private financial actors into ecological and climate sustainability by taking on risks. To understand the effects of such approaches, I point to the relational and concrete dynamics that unfold between states and finance. Conceptually, I propose analyzing the investment chains that surround these programs, and the conditionalities that constitute its relations, which I read as manifestations of infrastructural power. I argue that conditionalities are the qualifier of the transformative potential of market-based policy programs. The proposed “micro-financial” analysis allows to unpack the inherent limitations of derisking-based governance approaches. These approaches come with a dependence on financial intermediaries, which results in weak conditionality and enforcement. Concretely, I analyze how under BlueInvest, a pilot within the European Green Deal (EGD), the European Commission (EC) mandates the European Investment Fund (EIF) to harness venture capital (VC) funds in order to foster the blue economy. I show how, as a consequence of investors’ intermediary position in derisking-based operations and the EIF’s profitability orientation, policymakers come to depend on venture capitalists, hindering strong and effective conditionality and hardwiring limited sustainability effects into the investment chain.
The concept of the ‘commercial determinants of health’ (CDOH) has been developed by public health researchers as a way to describe the political economy of corporations and the impact of their practices on health, social inequalities and climate change. In this analysis, we assess the conceptual work that has developed this field and the influence of the more established ‘social determinants of health’ models. We highlight the dominance of epidemiologic and biomedical concepts on understandings of structure and agency in the CDOH literature and argue that the terminology of ‘risk factors’, ‘drivers’ and ‘pathways’ reflects an agent-centred approach. We suggest that, as a result, there is a tendency to overlook the importance of political institutions in shaping the exercise of corporate power. Our analysis seeks to ‘bring institutions in’ to CDOH research, using the empirical cases of Health in All Policies and Better Regulation in the European Union to highlight how institutional contexts shape political legitimacy and accountability, and in turn the strategies of corporate actors. Institutionalist approaches, we argue, have the potential to develop and expand understandings of CDOH by opening the black box between agency and structure.
The article aims to analyse how the business power of actors in the Argentine automotive industry influenced the foreign trade policies relevant to the sector between 2002 and 2015. The research methods employed combine documentary sources, interviews with key informants and descriptive statistics. The overall findings show how automakers achieved considerable power in the first stage of the period, obtaining clear benefits in terms of foreign trade policy. However, macroeconomic and political changes in Argentina after 2008 had a negative impact on their business power, leading to their enjoying a reduced number of trade policy concessions.
European financial regulation consistently gives governments privileged access to private investors, reflecting the anchor role assigned to sovereign securities as safe and liquid assets for the financial system. Legislative reforms after the financial crisis of 2008 further expanded the preferential treatment of sovereign securities as zero-risk claims, introduced portfolio requirements in favour of public debt, and constrained market speculation against governments. These sovereign privileges appear counterproductive for fiscal discipline and financial stability: they encourage excessive public debt issuance and make financial institutions holding government bonds – in particular from euro area countries with a variable risk profile – vulnerable to fiscal turbulence. Governments seem to have a conflict of interest. On the one hand, they are prudential regulators of financial risk-taking, on the other hand, they tend to overlook the financial sector’s exposure to sovereign risk. This article considers four theories of the state-finance nexus and their solutions to this conflict of interest. The money view, the franchise view, and the modern financial repression view draw on the state’s monetary and regulatory powers over finance to confirm sovereign safety. Their positions fundamentally contrast with the neoliberal view, which relies on free markets to enforce sustainable public finances. The article concludes that sovereign privileges present a fundamental dilemma for European financial governance with a neoliberal orientation: they oblige private investors to hold public debt, while weakening the role of markets in promoting fiscal discipline as the very foundation of sovereign safety.
Structural power is a critical variable that merits more extensive and more explicit attention in Latin American political economy and in comparative politics more broadly. Assessing structural power in conjunction with its counter- part, instrumental power, can provide strong leverage for explaining variation in policy outcomes that affect business interests. However, structural power must be carefully defined and operationalized in order to capture its core attributes and nuances. This task requires wedding the concept’s “structural” underpinnings with policymakers’ perceptions and anticipated reactions. Moreover, the relation- ship between structural power and instrumental power must be carefully theorized. While these concepts encompass distinct channels through which business exerts influence, the two types of power may be mutually reinforcing. I argue that business interests shape policy outcomes when either their structural power or their instrumental power is strong, yet business influence will be more extensive and more consistent when structural power and instrumental power are both strong. However, electoral incentives, and more importantly, popular mobilization, can counteract business power. I illustrate these theoretical points with a case study of Chile’s 2014 tax reform proposal, a major policy initiative with important distributive consequences that received international press attention.
How much authority can sovereign states exercise over international banking in times of financial globalization? While most literature on international finance is rather pessimistic, this article argues that in case of US law enforcement, this pessimistic view is increasingly erroneous. The reason is that US authorities can take advantage of international banks’ structural dependence on access to the dollar-based financial system to force banks into punitive agreements or to plead guilty in case of criminal offenses. Using the conflict between the USA and Swiss banks over tax evasion by US persons, this article demonstrates that banks in the liberal economic system can no longer survive without access to the US-controlled, dollar-based financial system, thus giving the USA structural power over banks. In addition, it is shown that US structural power can be used strategically during negotiation processes to apply pressure on banks. Finally, while the use of this structural power was originally restricted to smaller banks, whose collapse would not endanger the world economy, US authorities have recently learnt to manage market expectations in a way that allows them to also target banks that were previously considered “too big to jail.”
What is the impact of business interest groups on the formulation of public social policies? This paper reviews the literature in political science, history, and sociology on this question. It identifies two strands: one analyzes the political power and influence of business, the other the preferences and interests of business. Since the 1990s, researchers have shifted their attention from questions of power to questions of preferences. While this shift has produced important insights into the sources of the policy preferences of business, it came with a neglect of issues of power. This paper takes a first step towards re-integrating a power-analytical perspective into the study of the role of business in welfare state politics. It shows how a focus on variation in business power can help to explain both why business interest groups accepted social protection during some periods in the past and why they have become increasingly assertive and averse to social policies since the 1970s.
Mark Crowley reviews this paper on the NEP-HIS blog:
https://nephist.wordpress.com/
Since the global financial crisis, scholars of international political economy (IPE) have increasingly relied on the concept of ‘regulatory capture’ to explain the weakness of regulatory oversight and, hence, regulatory failures. Yet despite the widespread use of the concept of regulatory capture, its precise mechanisms are not well understood. This paper empirically investigates this hypothesis by examining one important institution of global financial governance that has been subjected to intense private sector lobbying at the transnational level: the Basel Committee on Banking Supervision. Using extensive archival material as well as interviews with participants in the generation of the Basel II Capital Accord, I argue that while private sector lobbyists had unprecedented access to the regulatory policymaking process, this access did not always translate into influence. Furthermore, when influence was present, it sometimes had the effect of increasing regulatory stringency, rather than weakening regulation. As such, I argue that our understanding of the process of transnational policy formation would benefit from a more nuanced understanding of the contingency of private sector ‘influence’ over the regulatory process, rather than the extensive, all-or-nothing depiction of regulatory ‘capture’ that currently prevails within the IPE literature.
During the 2008 election season, politicians from both sides of the aisle promised to rid government of lobbyistsâ undue influence. For the authors of Lobbying and Policy Change, the most extensive study ever done on the topic, these promises ring hollowânot because politicians fail to keep them but because lobbies are far less influential than political rhetoric suggests. Based on a comprehensive examination of ninety-eight issues, this volume demonstrates that sixty percent of recent lobbying campaigns failed to change policy despite millions of dollars spent trying. Why? The authors find that resources explain less than five percent of the difference between successful and unsuccessful efforts. Moreover, they show, these attempts must overcome an entrenched Washington system with a tremendous bias in favor of the status quo. Though elected officials and existing policies carry more weight, lobbies have an impact too, and when advocates for a given issue finally succeed, policy tends to change significantly. The authors argue, however, that the lobbying community so strongly reflects elite interests that it will not fundamentally alter the balance of power unless its makeup shifts dramatically in favor of average Americansâ concerns.
A central research question in international political economy concerns the influence of financial markets on government policy outcomes. To what extent does international capital mobility limit government policy choices? I evaluate the relationship between international financial markets and government policy outcomes, with a focus on the government bond market in developed democracies. Evidence includes interviews with financial market participants and a cross-sectional time-series analysis of the determinants of interest rates. This evaluation suggests that governments of developed democracies face strong but narrowly defined financial market pressures. Financial market participants are concerned with a few macroeconomic policy indicators, including inflation rates and government deficit/GDP ratios, but not with micropolicy indicators, such as the distribution of government spending across functional categories. In these areas, governments retain policymaking autonomy. I conclude by exploring the role of financial market influences within domestic politics and offering suggestions for further research.
Adopting new and much more comprehensive concepts of both power and politics, the author develops a theoretical framework to show who really governs the world economy. He goes on to explore some of the non-state authorities, from mafias to the 'Big Six' accounting firms and international bureaucrats, whose power over who gets what in the world encroaches on that of national governments. The book is a signpost, pointing to some promising new directions for the future development of research and teaching in international political economy.
Some of the liveliest debates about methodology in the social sciences center on comparative research. This essay concentrates on comparative politics, a field often defined by reference to the use of a particular “comparative method,” but it also bears on sociology, where there is active controversy about methodological issues. I use the term “methodology” to refer to the means scholars employ to increase confidence that the inferences they make about the social and political world are valid. The most important of these are inferences about causal relationships, where the object of a methodology is to increase confidence in assertions that one variable or event (x) exerts a causal effect on another (y). One of the curious features of contemporary debates is that they pay more attention to methodology than to issues of ontology. “Ontology” refers to the character of the world as it actually is. Accordingly, I use the term to refer to the fundamental assumptions scholars make about the nature of the social and political world and especially about the nature of causal relationships within that world. If a methodology consists of techniques for making observations about causal relations, an ontology consists of premises about the deep causal structures of the world from which analysis begins and without which theories about the social world would not make sense. At a fundamental level, it is how we imagine the social world to be.
Inequality and taxation are fundamental problems of modern times. How and when can democracies tax economic elites? This book develops a theoretical framework that refines and integrates the classic concepts of business’s instrumental (political) power and structural (investment) power to explain the scope and fate of tax initiatives targeting economic elites in Latin America after economic liberalization. In Chile, business’s multiple sources of instrumental power, including cohesion and ties to right parties, kept substantial tax increases off the agenda. In Argentina, weaker business power facilitated significant reform, although specific sectors, including finance and agriculture, occasionally had instrumental and/or structural power to defend their interests. In Bolivia, popular mobilization counterbalanced the power of economic elites, who were much stronger than in Argentina but weaker than in Chile. The book’s in-depth, medium-N case analysis and close attention to policymaking processes contribute insights on business power and prospects for redistribution in unequal democracies.
Behind every financial crisis lurks a "political bubble"--policy biases that foster market behaviors leading to financial instability. Rather than tilting against risky behavior, political bubbles--arising from a potent combination of beliefs, institutions, and interests--aid, abet, and amplify risk. Demonstrating how political bubbles helped create the real estate-generated financial bubble and the 2008 financial crisis, this book argues that similar government oversights in the aftermath of the crisis undermined Washington's response to the "popped" financial bubble, and shows how such patterns have occurred repeatedly throughout US history. The authors show that just as financial bubbles are an unfortunate mix of mistaken beliefs, market imperfections, and greed, political bubbles are the product of rigid ideologies, unresponsive and ineffective government institutions, and special interests. Financial market innovations--including adjustable-rate mortgages, mortgage-backed securities, and credit default swaps--become subject to legislated leniency and regulatory failure, increasing hazardous practices. The authors shed important light on the politics that blinds regulators to the economic weaknesses that create the conditions for economic bubbles and recommend simple, focused rules that should help avoid such crises in the future. The first full accounting of how politics produces financial ruptures,Political Bubblesoffers timely lessons that all sectors would do well to heed.
I examine the challenges of conceptualization and measurement of structural power when the differential power of industries or individual firms are in question. While ascertaining structural power’s operation at this level can be very challenging, I point to some issues of conceptualization and measurement that can enhance our analytic leverage at the initial stages of the research process. Specifically I propose a more refined language of “structural prominence” to differentiate between the expected causes of structural power from its hypothesized effects. Using a variety of data I show that researchers have some simple tools at their disposal but must pay careful attention to basic logical inferential limitations when examining structural power arguments. Through an examination of firms’ reactions to policy proposals in US securities regulation I find positive evidence for structural power operating in initial policy proposals. When I examine levels of preference attainment in the policymaking process itself, structural power appears to be playing a weaker and more conditional role. I also find that the preference attainment of firms is greatest when structural and instrumental forces operate in conjunction, a finding supportive of recent research in this area.
How did the most severe global financial crisis since the 1930s affect the organization of the world political economy? Was Anglo-American structural power in finance eroded? I employ network methodologies that have been recently extended for use with weighted and directed networks to shed light on these questions. I draw from complexity science and political economy to link these empirics to prior theories of structural power, which I refine in several ways. This approach provides unique explanations for developments in global banking since the crisis, including expected outcomes that did
What is the relationship between globalization and the political power of business? Much of the existing literature focuses on the ability of mobile capital to threaten exit in order to press for more business friendly rules. In this article, we refine arguments about exit options in global markets by arguing that the relative exit options available to business and other actors are neither fixed, nor exogenous consequences of some generically conceived process of globalization. Instead, they themselves are the result of struggles between actors with different interests and political opportunities. Since exit options play a crucial role in determining the relative structural power of business vis-à-vis other actors, we dub the power to shape exit options
The 2008 bailout is often taken as evidence of the domination of the US political system by large financial institutions. In fact, the bailout demonstrated the vulnerability of US banks to government pressure. Large banks in the United States could not defy regulators, because their future income depended on the US market. In Britain, by contrast, one bank succeeded in scuttling the preferred governmental solution of an industry-wide recapitalization, because most of its revenue came from outside the United Kingdom. This was an exercise of structural power, but one that most contemporary scholarship on business power ignores or misclassifies, since it limits structural power to the automatic adjustment of policy to the possibility of disinvestment. We show that structural power can be exercised strategically, that it is distinct from instrumental power based on lobbying, and that it explains consequential variations in bailout design in the United Kingdom, the United States, France, and Germany.
Multinational firms unavoidably exert influence over politics through power that is generated by both structure and process. While both political economy and management scholars address international firms, neither field has an adequate understanding of the reciprocal relationship between multinational firms and geopolitical systems. The links between multinational firms form a distinct type of international system for the private sector – one that is simultaneously enmeshed in geopolitics and international markets even as it is also autonomous from them. The scholarly literature on the power of business in politics has demonstrated how influence derives from instrumental agency as well as structural influence, but it has taken an unnecessarily restrictive view of politics and an overly materialist theory of power. Politics are about much more than government policies. In this paper I propose an analytical framework for understanding the multinational firm as a set of relationships. I then apply one key element of that approach – the relationships among firms as a direct source of geopolitical outcomes – to the natural gas trade of Eurasia in three eras that span nearly 40 years. I conclude that the influence of business on a broader understanding of politics – and not just policies – should be central to the study of international and comparative political economy.
This essay seeks to clarify, develop, and apply concepts of power and hegemony which are often latent within the literature in the field of international political economy. Clarification is vital, both for debate between rival perspectives and for attempts to go beyond them. We see power as having related material and normative, behavioral and structural dimensions. These distinctions are elaborated to help explain aspects of the changing nature of present-day capitalism, with particular reference to aspects of transformation in the 1980s and beyond. Partly building upon Robert Cox's analysis of social forces and world orders, and Antonio Gramsci's theory of hegemony, we seek to explain some of the conditions under which a more "transnational" regime of accumulation and an associated hegemony of transnational capital might develop. Such a hegemony could never be complete because of counter-hegemonic forces and contradictory elements in the internationalization of capital. Some requirements for an alternative counter-hegemonic historic bloc are sketched, with suggestions for a research agenda.
It is now widely accepted that the classic arguments regarding the "structural power" of business are too "structuralist." Subsequent research has focused on a widening array of independent variables that shape the variability of such power. This paper extends this research tradition, arguing that structural power theory has given insufficient attention to governmental actors, typically the targets of such power. The paper argues that ideas and the ideational processes through which government and state leaders construct threat perceptions regarding structural power can be important in mediating such power. The literature on power typically argues that power shapes ideas and disciplines target subjects. This paper revises this logic by arguing that the ideas of target subjects can also shape power. The paper's arguments then are essentially constructivist, but the paper extends such arguments by insisting on a greater role for agency than is often found in constructivist reasoning.
Keith Dowding argues that business is systematically lucky in a capitalist society because it often gets what it wants without trying due to the way society is structured. But what ought to count here is not only how society is structured but why it is structured in certain ways and this means grappling with the dynamics of the structure–agency dialectic. Dowding overestimates the degree to which business is systematically lucky and underestimates the degree to which it is powerful because he fails to recognise the way in which business can shape the structures whose existence allows it to get what it wants without trying. We examine the position of two very different groups: British farmers and US bankers. British farmers were systematically lucky in the post-war years in the sense that they benefited from events outside their control. The US banking sector was lucky in 2008 because it was ‘too big to fail’. But the banks had previously used their power to shape this outcome.
I explore empirically a central claim of the structural dependence thesis, namely, that capitalists' ability to disinvest fundamentally conditions policy choices in democratic capitalist systems. Utilizing time-series data for 16 affluent democracies from 1965 to 1984, I find that, indeed, low rates of business investment are associated with reductions in corporate tax burdens and that these reductions are more pronounced in periods of economic crisis. Moreover, low rates of capital formation engender cuts in personal income taxes during periods of economic stress. However, I also find that the magnitude of responsiveness of taxation to low rates of investment is relatively small and that analyses of the political context of investment and taxation indicate that governments have choices. The responsiveness of corporate tax burdens to capital formation may, under some governments, be part of a policy mix designed to maintain adequate investment and to address the demands of core constituencies.
A central claim of both Marxist and neoclassical political theory is that under capitalism all governments must respect and protect the essential claims of those who own the productive wealth of society. This is the theory of “structural dependence of the state on capital.” Using a formal model, the internal logic and the robustness of the theory is examined. We conclude that in a static sense the theory is false: virtually any distribution of consumption between wage earners and owners of capital is compatible with continual private investment once an appropriate set of taxes and transfers is in place. Yet the state may be structurally dependent in a dynamic sense. Policies that, once in place, redistribute income without reducing investment do reduce investment during the period in which they are anticipated but not yet implemented.
This article argues that the degree of capital market integration between states meets even the restrictive criteria established by structural realists for consideration as a structural feature of international politics; that is to say, the degree of international capital mobility systematically constrains state behavior by rewarding some actions and punishing others. Key terms are defined, and a heuristic model of the “capital mobility hypothesis” is introduced. Evidence from both U.S.-Japanese and intra-European monetary relations appears to corroborate the model. However, since the distribution of costs generated by monetary independence under conditions of relatively mobile capital can be asymmetrical, caution is warranted when generalizing about the effects of heightened capital mobility on individual states' monetary autonomy.
A number of scholars have highlighted the role of employers in shaping the develop- ment of the welfare state. Yet the results of this research have often been ambiguous or disputed because of insufficient attention to theoretical, conceptual, and method- ological problems in the study of political influence. This article considers three of these problems in turn: the failure to distinguish and investigate multiple mecha- nisms of exercising influence, the misspecification of preferences, and the inference of influence from ex post correlation between actor preferences and outcomes. We demonstrate the importance of each through a reexamination of the early develop- ment of the American welfare state. The striking feature we suggest is neither busi- ness dominance nor weakness but marked variation in influence over time and across institutional settings.
Most people believe that large corporations wield enormous political power when they lobby for policies as a cohesive bloc. With this controversial book, Mark A. Smith sets conventional wisdom on its head. In a systematic analysis of postwar lawmaking, Smith reveals that business loses in legislative battles unless it has public backing. This surprising conclusion holds because the types of issues that lead businesses to band together-such as tax rates, air pollution, and product liability-also receive the most media attention. The ensuing debates give citizens the information they need to hold their representatives accountable and make elections a choice between contrasting policy programs. Rather than succumbing to corporate America, Smith argues, representatives paradoxically become more responsive to their constituents when facing a united corporate front. Corporations gain the most influence over legislation when they work with organizations such as think tanks to shape Americans' beliefs about what government should and should not do.
The concept of power remains elusive despite the recent and prolific outpourings of case studies on community power. Its elusiveness is dramatically demonstrated by the regularity of disagreement as to the locus of community power between the sociologists and the political scientists. Sociologically oriented researchers have consistently found that power is highly centralized, while scholars trained in political science have just as regularly concluded that in “their” communities power is widely diffused. Presumably, this explains why the latter group styles itself “pluralist,” its counterpart “elitist.”
There seems no room for doubt that the sharply divergent findings of the two groups are the product, not of sheer coincidence, but of fundamental differences in both their underlying assumptions and research methodology. The political scientists have contended that these differences in findings can be explained by the faulty approach and presuppositions of the sociologists. We contend in this paper that the pluralists themselves have not grasped the whole truth of the matter; that while their criticisms of the elitists are sound, they, like the elitists, utilize an approach and assumptions which predetermine their conclusions. Our argument is cast within the frame of our central thesis: that there are two faces of power, neither of which the sociologists see and only one of which the political scientists see.
Over the last fifteen years political scientists have become much more critical of the role that business plays in American politics. Two decades ago business was primarily regarded as another interest group; now many scholars perceive a tension between the large business corporation and the principles and practices of pluralist democracy.
This article challenges this new ‘conventional wisdom’ by critically examining the recent writings of Robert Dahl and Charles Lindblom. Dahl regards the corporation as undemocratic because its managers are not accountable to its employees. Yet, the corporation is hardly unique in this regard: not one single institution in our society – including the government itself – is governed by those who work for it. Lindblom contends that business occupies a privileged position in capitalist democracies. But he exaggerates the role investment decisions play in the performance of the economy, underestimates the options available to politicians to manipulate business decisions and fails to appreciate that businessmen are not unique in requiring inducements to perform their social role. The article concludes by suggesting that while corporations do exercise considerable political power, both its scope and magnitude can be satisfactorily analysed within the framework of interest-group politics.
Increasing exposure to trade, foreign direct investment, and liquid capital mobility have not prompted a pervasive policy race to the neoliberal bottom among the OECD countries. One reason is that there are strong political incentives for governments to cushion the dislocations and risk generated by openness. Moreover, countries with large and expanding public economies (when balanced with increased revenues, even from capital taxes) have not suffered from capital flight or higher interest rates. This is because the modern welfare state, comprising income transfer programs and publicly provided social services, generates economically important collective goods that are undersupplied by markets and that actors are interested in productivity value. These range from the accumulation of human and physical capital to social stability under conditions of high market uncertainty to popular support for the market economy itself. As a result, arguments about the demise of national autonomy in the global economy are considerably overdrawn.
Sovereign Debt Restructuring: Evaluating the Impact of the Argentina Ruling
- Alfaro