The literature on organizations has been dominated by a rationalistic, individualistic perspective and, for the most part, has denied both the reality of organizations as institutions (Zucker, 1983) as well as the embedded and at times quasi-political character of organizational action and choice (Granovetter, 1985). Thus, for instance, much of the writing in the 1950s and 1960s, particularly that emanating from schools of administration, emphasized the primacy and efficacy of managerial action. The behavior of organizations was to be understood in terms of concepts such as leadership, managerial values, style, culture, and strategy (Miles and Snow, 1978). The emphasis on proactive, intentional managerial action remains a prominent, if not dominant, theme in contemporary writing as well (Bourgeois, 1984; Peters and Waterman, 1982).

Such a focus has two consequences. First, attention is directed inside the organization in seeking explanations of organizational practices and decisions. If managerial intention and choice are prepotent, it is inevitably to managerial decision-making that one must look to understand organizations. Such a focus continues to dominate the managerial literature on organizations as well as much of the social science literature more generally. It fits prevailing social ideologies emphasizing the individual, rational choice and decisionmaking, and managerial accountability as well as being consistent with cognitive biases that tend to lodge causation in individuals rather than in their environments (Nisbett and Ross, 1980).

Second, this focus tends to deny the institutional reality of organizations.

Structural analysis focusses upon the patterns of relationships among social actors. This emphasis rests on the often unspoken postulate that these patterns – independent of the content of the ties – are themselves central to individual action. Moreover, structural analysis posits that the constraints associated with positions in a network of relationships are frequently more important in determining individual action than either the information or attitudes people hold (Berkowitz, 1982: 8).

Structural context is represented by patterns of ties of varying content, and the analyst's interest is in how individual behavior serves to reproduce the structural context (Burt, 1982). The discovery of “self-reproducing” structural contexts has occupied structural analysts in such diverse areas as kinship systems (White, 1963), organizational structures (Kanter, 1977), world systems (Snyder and Kick, 1979; Love 1982; Breiger, 1981) and abstract social structures (Lorrain and White, 1971). In this endeavor structures are “explained” when their self-reproducing properties – and therefore their continued existence – are analytically understood.

This approach contrasts sharply with information-oriented approaches, which explain the existence and/or continuation of a particular structure by showing how it is more “efficient” (in terms of a set of defined goals) than any available alternative (Williamson, 1975). Only efficient structures are likely to be empirically observed, because inefficient structures would perish through natural selection or be made more efficient through the “maximizing” efforts of interested individuals. Structural approaches, on the other hand, identify a self-perpetuating system of structural constraints, without stepping within the kind of information framework needed to assess efficiency.

A handful of immense banks, concentrating within their coffers the bulk of the assets and deposits of the entire banking system and providing much of the loans and credits for industry, are the decisive units in the circulation of capital in contemporary capitalist economies. With this consolidation of oligopoly in banking itself, the amount of loans and credits granted by the leading banks actually determines the amount of money deposited with them, because what they lend flows back to them as deposits. They can, within fairly wide limits, “vary at will the supply of credit or short-term capital available at any given time” and thus determine the price of (or rate of interest on) loan capital. As C. Wright Mills (1942:46) aptly remarks, “not violence, but credit may be a rather ultimate seat of control within modern societies.”

The leading banks are also structurally interconnected – through long-standing business associations, financial arrangements, interlocking directorates, and overlapping and interpenetrating ownership – with the top nonfinancial corporations. Thus, if our originating question is how this affects the dynamics of contemporary capitalism, this article focusses, in particular, on the inner structure of the capitalist class itself, and involves the following questions: Do the interconnections between the major financial institutions (banks, insurance companies, and other financial firms) and large industrial corporations constitute institutional means of intraclass power? Do the men who sit simultaneously in the managements of both of them play a distinctive role in the corporate world? Are they, in a phrase, “a special social type, in contrast to the other officers and directors of the largest corporations and banks?” (See Zeitlin, 1974: 1103, 1110; also 1976: 900–1.)

Introduction

By approaching business structure as a component of social structure, the present chapter analyzes the hegemony of business in the local and regional development of a Latin American nation (Colombia), as well as the relationships between public and private (business) elites. In the-authors' view these are critical issues for the structural analysis of business, in particular in developing nations, and represent a needed complement to approaches centered upon economic concentration and market structure, the role of foreign investment, and internationalization of capital or corporate structure.

This chapter is part of a research project on power structure, class and economic development in the mid-seventies, carried out by the authors in urban Colombia. It covers eleven Colombian cities in the 100,000–500,000 population range. We begin by sketching the outlines of Colombian political economy. We then discuss the background of the study of business and power structures in Latin America, and in Colombia in particular, and the conceptual and theoretical orientations of the present research.

Empirical results are then examined in four parts: the class basis for the composition of the power structure; the fractions within business; the concentration of power in terms of interlocking directorates; and the cleavage of public and business sectors. The final section presents our general conclusions.

Some features of Colombian politics and economy

Located in the northwest corner of South America, Colombia is the third most populous country in Latin America, ranking behind Brazil and Mexico. In 1983 it had a population of 28 million. Its 1,141,748 sq. km. area exhibits important regional variations which reflect geographical, economic, and historical differences (Fajardo, 1978; Jaramillo, 1983: 191–4).