Introduction

The composition and growth of territorial communities have been theorized to depend upon their position within larger systems of such communities. Thus analyses of cities and regions have increasingly moved from focussing on attributes of places toward the study of the relations among them. In this chapter, we review past conceptions of the city system in market economies – conceptions that we argue are not appropriate for advanced Western societies like the United States. We then present an alternative conception of the US city system, examine its determinants, and consider how a city's position in this system affects its growth.

Activity without actors

Various mechanisms governing the relationships among places have been studied. Whether conceptualized as exchange, function or industry, these mechanisms are all based upon some form of activity.

In central place theory, places are linked to one another in spatially segregated, hierarchically ordered market areas. Higher-order, more central places produce for lower-order, less central places, each higher-order place exchanging its goods and services with hinterlands of ever larger extent.

Analysis of Japanese business–government relations is facilitated if we accept a working hypothesis at the outset: that business and government in Japan are like two major divisions of a well-run organization – Japan itself. Although some versions of “Japan, Inc.” are generally considered extreme by many Japan specialists, there is no doubt that the Japanese have long accepted the concept of a “corporatist unity of government and business.” (kanmin ittai) for the attainment of national goals.

In this chapter, we intend to show how the personal networks and contacts of public officials and private business leaders render the formal structural distinction of government and business almost meaningless in Japan.

A simple model of the TYZ complex

In order to facilitate the interpretation and appreciation of detailed data presented in this chapter, we first offer a simple model showing how individuals with business leadership qualities go through life cycles and interact with one another in the management of Japan as a close-knit business-oriented society. Executive positions of leading corporations (the Japanese counterpart of “Fortune 500”) are occupied predominantly by graduates of Tokyo University (Tōdai) and four other prestigious universities (Kyōto, Hitotsubashi, Keiō, and Waseda). The graduates of these universities also dominate leading bureaucratic positions in national government. Bureaucrats retire early, and many join leading corporations. A great majority of these bureaucratic and business leaders originate in middle- and upper-class families.

Two trends are revolutionizing the monetary system, and with it the definition of money: first, recent advances in telecommunications and electronic data processing have altered the transaction technology of the economy; second, a plethora of new financial assets that are close substitutes to money – NOW accounts, money market shares, overnight Eurodollar deposits, overnight repurchase agreements – have been developed at an increasing rate.

Introduction

The techniques of structural analysis have been applied to the business community in various ways and a particularly popular application has been in the study of interlocking directorates. Assuming that intercorporate relations can be traced through an investigation of structural ties, recent work in the area has mapped corporate interaction patterns in an attempt to address the question of cohesion within the business community. A consistent finding of such network analyses has been the identification of commercial banks as important actors in the world of big business (Bearden et al., 1975; Mariolis, 1975; Sonquist and Koenig, 1975; Norich, 1980; Mintz and Schwarz, 1981; Mizruchi, 1982, 1983; see also Allen, 1974; Burt, 1979, 1980, 1983). Many investigators have concluded from this and similar evidence that bank boards are the primary location for collective decision-making within the corporate world (Bearden, 1982; Glasberg, 1981; Mintz and Schwartz, 1985).

At the same time, a second set of studies has focussed on identifying sources of cohesion within the capitalist class, concentrating on the role of individuals in unity formation. Research in this realm has identified shared background, friendship networks, and membership on policy planning bodies as mechanisms of cohesion. Domhoff's (1967, 1970, 1975, 1979, 1983) work has been particularly good in identifying institutions dominated by the capitalist class and documenting their usefulness in cohesion formation. Useem (1978, 1979, 1984) has investigated class fractions, arguing that members of the inner group of the capitalist class – including, among others, business people with ties to multiple companies – are in a position to transcend individual interests and formulate general class policy.

The aim of this chapter is to discuss the structural features of big business in the major West European countries. The countries chosen for study are not intended as the basis of a comprehensive survey of West European economies. Rather, they are drawn from the work of a research group which has carried out the first truly comparative investigation of intercorporate structure. The countries selected do, however, constitute all the major economic powers and their trading partners and associations. The countries to which most reference is made are Britain, France, Germany, Italy, the Netherlands, Austria, and Switzerland. The obvious omissions from this list are the countries of the Iberian peninsula and Scandinavia, both of which areas have peculiar and distinct features which set them apart from the major industrial economies.

The research group on intercorporate structure, referred to in the text as the “Bad Homburg Group” after the town in which many of the group meetings took place, brought together researchers from a number of countries to collaborate on an investigation into interlocking directorships in ten countries. In addition to the countries mentioned above, there were participants from the USA (see the chapter by Bearden and Mintz in this book) and Finland, together with a “transnational” team (see the chapter by Fennema and van der Pijl in this book). The study involved the collection of comparable data in each of the countries and the use of the same set of computer programs, computer analysis being carried out centrally at Groningen University.

Introduction

This chapter deals with recent structural changes in the North Atlantic business system established in the period of American hegemony over Europe. In the era running from the closing stages of World War II to the early seventies, US political leadership, in meeting the global challenge of anticapitalist forces, interacting with its economic primacy, worked to galvanize the states of North America and Western Europe into a single military-political bloc within which the American pattern of capital accumulation, developed in the New Deal and World War II, was extrapolated to the Atlantic level.

This process, which eventually eroded the initial American advantage over its Western European client states in terms of labor productivity, level of concentration and centralization of capital, and financial strength, can be analyzed for our purposes in terms of (1) the development of productive capital in the different component regions and in different industrial sectors; (2) the relation between productive and money capital as expressed in the power balance between industrial and financial firms; and (3) the overall structure of the profit distribution process, comprising several other distributive categories besides the main profit-takers mentioned under (2).

It is our contention that, whereas during the period of American hegemony and the Atlantic extrapolation of the mode of capital accumulation pioneered by the USA, these patterns were still primarily national (with a semblance of internationalism due to overwhelming US superiority), from the seventies on the acceleration of the internationalization of capital and the erosion of the US advantage have combined to create a truly international system, which is no longer an extension of a dominant national economy.

As recently as the early 1970s, organizational theory was principally focussed on the internal workings of organizations, and on the analysis of internal factors as the sources of organizational behavior. The bulk of the field utilized either human relations theory, which connected internal structure to worker morale and productivity, or neo-Weberian analysis, which sought to understand the impact of internal power relations on organizational behavior. This work tended to assume unchanging organizational structures invulnerable to outside forces. Contingency theory, though it escaped the static assumptions of previous work, maintained the focus on the internal workings of the organization.

This neglect of the environmental context limited the analytic leverage of organizational theory and led to misleading and incorrect descriptions of corporate behavior. The human relations approach, for example, sought to connect managerial strategy with worker productivity, but it ignored the supply of labor in its analysis. As Pfeffer and Salancik (1978) later argued, however, scarce labor usually implies less compliant workers and more accommodating management. Human relations evaluations of the effectiveness of various managerial strategies were therefore flawed, since the outcomes of each strategy would vary depending on the supply of labor, a variable which was not addressed in their research.

There were, of course, exceptions to this general trend. Works which emphasized the context within which organizations operated included Selznick's (1949) classic study of the TVA, Thompson's (1967) seminal work on organization-environment relations, and the unorthodox contingency theory advanced by Lawrence and Lorsch (1967; see also Zald, 1970).