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Corporations and the American Welfare State: Adversaries or Allies?

  • Mark S. Mizruchi (a1)
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One of the most widely held views about American political life is that business is hostile to the welfare state. In the 1970s, David Vogel asked why American businessmen “distrusted their state.” Kim Phillips-Fein has written of the “businessmen's crusade against the New Deal.” Jane Mayer and Nancy MacLean have recounted the efforts of the Koch Brothers and their wealthy allies to remake American politics in a more conservative direction. What could be more uncontroversial than the view that American business is broadly opposed to government social policies?

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1. Vogel, David, “Why Businessmen Distrust their State: The Political Consciousness of American Corporate Executives,” British Journal of Political Science 8, no. 1 (1978): 4578; Phillips-Fein, Kim, Invisible Hands: The Businessmen's Crusade Against the New Deal (New York: Norton, 2009); Mayer, Jane, Dark Money: The Hidden History of the Billionaires Behind the New Right (New York: Anchor, 2017); MacLean, Nancy, Democracy in Chains: The Deep History of the Radical Right's Stealth Plan for America (New York: Viking, 2017).

2. Kolko, Gabriel, Railroads and Regulation, 1877–1916 (Princeton, NJ: Princeton University Press, 1965); Weinstein, James, The Corporate Ideal in the Liberal State, 1900–1918 (Boston: Beacon Press, 1968); Quadagno, Jill S., “Welfare Capitalism and the Social Security Act of 1935,” American Sociological Review 49, no. 5 (1984): 632–47; Domhoff, G. William, The Power Elite and the State: How Policy is Made in America (New York: Aldine De Gruyter, 1990).

3. Skocpol, Theda, “Political Response to Capitalist Crisis: Neo-Marxist Theories of the State and the Case of the New Deal,” Politics and Society 10, no. 2 (1980): 155201; Skocpol, Theda and Amenta, Edwin, “Did Capitalists Shape Social Security?American Sociological Review 50, no. 4 (1985): 572–75. For a detailed examination of sociological debates surrounding the New Deal, see Manza, Jeff, “Political Sociological Models of the U.S. New Deal,” Annual Review of Sociology 26 (2000): 297322.

4. Swenson, Peter A., “Misrepresented Interests: Business, Medicare, and the Making of the American Health Care State,” Studies in American Political Development 32, no. 1 (2018): 123.

5. Dahl, Robert A., Who Governs? Democracy and Power in an American City (New Haven, CT: Yale University Press, 1961); Truman, David B., The Governmental Process: Political Interests and Public Opinion (New York: Knopf, 1951); Rose, Arnold M., The Power Structure: Political Process in American Society (New York: Oxford University Press, 1967). Dahl and Truman were political scientists, and Rose was a sociologist.

6. Hunter, Floyd, Community Power Structure: A Study of Decision Makers (Chapel Hill: University of North Carolina Press, 1953; Mills, C. Wright, The Power Elite (New York: Oxford University Press, 1956).

7. For critiques by political scientists, see Dahl, Robert A., “A Critique of the Ruling Elite Model,” American Political Science Review 52, no. 2 (1958): 463–69; Polsby, Nelson W., “How to Study Community Power: The Pluralist Alternative, Journal of Politics 22, no. 3 (1960): 474–84; Wolfinger, Raymond E., “Reputation and Reality in the Study of ‘Community Power,’American Sociological Review 25, no. 5 (1960): 636–44. For those by sociologists, see Parsons, Talcott, “The Distribution of Power in American Society,” World Politics 10, no. 1 (1957): 123–43; Bell, Daniel, “The Power Elite—Reconsidered,” American Journal of Sociology 64, no. 3 (1958): 238–50; Kornhauser, William, “‘Power Elite’ or ‘Veto Groups’?” in Bendix, Reinhard and Lipset, Seymour Martin (eds.), Class, Status, and Power: Social Stratification in Comparative Perspective, Second Edition (New York: Free Press, 1966): 210–18.

8. For a contemporary reassessment of The Power Elite, see Mizruchi, Mark S., “The Power Elite in Historical Context: A Reassessment of Mills's Thesis, Then and Now,” Theory and Society 46, no. 2 (2017): 95116.

9. Domhoff, G. William, Who Rules America? (Englewood Cliffs, NJ: Prentice-Hall, 1967).

10. For Marxist or Marxist-inspired critiques, see Balbus, Isaac, “Ruling Elite Theory vs. Marxist Class Analysis,” Monthly Review 23, no. 1 (1971): 3646; Mintz, Beth, Freitag, Peter, Hendricks, Carol, and Schwartz, Michael, “Problems of Proof in Elite Research,” Social Problems 23, no. 3 (1976): 314–24; Whitt, J. Allen, “Toward a Class-Dialectical Model of Power: An Empirical Assessment of Three Competing Models of Political Power,” American Sociological Review 44, no. 1 (1979): 8199. For pluralist critiques, see the sources cited note 7.

11. For a classic statement of this position from an explicitly Marxist perspective, see Esping-Andersen, Gosta, Friedland, Roger, and Wright, Erik Olin, “Modes of Class Struggle and the Capitalist State,” Kapitalistate 4–5 (1976): 186220. For more recent works by non-Marxist political scientists suggesting that the passage of the Social Security Act was a result of class conflicts between business and labor, see Skocpol, Theda, Social Policy in the United States: Future Possibilities in Historical Perspective (Princeton, NJ: Princeton University Press, 1995); Hacker, Jacob S. and Pierson, Paul, “Business Power and Social Policy: Employers and the Formation of the American Welfare State,” Politics and Society 30, no. 2 (2002): 277325.

12. Ironically, a Chicago School economist, George Stigler, famously made a similar argument, suggesting that regulatory agencies, regardless of their initial intent, typically became “captured” by the very private interests they were designed to regulate. See Stigler, George J., “The Theory of Economic Regulation,” Bell Journal of Economics and Management Science 2, no. 1 (1971): 321. For a contemporary version of this argument, see Zingales, Luigi, A Capitalism for the People: Recapturing the Lost Genius of American Prosperity (New York: Basic Books, 2012).

13. Mitchell, Neil J., The Generous Corporation: A Political Analysis of Economic Power (New Haven, CT: Yale University Press, 1989).

14. Quadagno, “Welfare Capitalism.”

15. Bachrach, Peter and Baratz, Morton S., “Two Faces of Power,” American Political Science Review 56, no. 4 (1962): 947–52; Crenson, Matthew A., The Un-Politics of Air Pollution: A Study of Non-Decision Making in the Cities (Baltimore, MD: Johns Hopkins University Press, 1971)

16. Mizruchi, Mark S., The Fracturing of the American Corporate Elite (Cambridge, MA: Harvard University Press, 2013).

17. Schriftgiesser, Karl, Business Comes of Age: The Story of the Committee for Economic Development and its Impact upon the Economic Policies of the United States, 1942–1960 (New York: Harper, 1960).

18. Quoted in Jacoby, Sanford M., “Employers and the Welfare State: The Role of Marion B. Folsom,” Journal of American History 80, no. 2 (1993): 545.

19. For examples of such conflicts, see Bauer, Raymond A., de Sola Pool, Ithiel, and Dexter, Lewis Anthony, American Business and Public Policy: The Politics of Foreign Trade (New York: Atherton Press, 1963).

20. Mizruchi, Fracturing, 66–67.

21. Ibid., 242.

22. Quoted in Vogel, David, Fluctuating Fortunes: The Political Power of Business in America (New York: Basic Books, 1989): 282.

23. Davis, Gerald F., Managed by the Markets: How Finance Re-Shaped America (New York: Oxford University Press, 2009); Mizruchi, Fracturing, 210.

24. Cantor, Joel C., Berrand, Nancy L., Desonia, Randolph A., Cohen, Alan B., and Merrill, Jeffrey C., “Business Leaders’ Views on American Health Care,” Health Affairs 10, no. 1 (1991): 98105.

25. Milt Freudenheim, “Calling for a Bigger U.S. Health Role,” New York Times, May 30, 1989.

26. Mizruchi, Fracturing, 243–52.

27. Martin, Cathie Jo, Stuck in Neutral: Business and the Politics of Human Capital Investment Policy (Princeton, NJ: Princeton University Press, 2000): 187.

28. Mizruchi, Fracturing, 259.

31. Mizruchi, Fracturing, 260–64.

32. Johan Chu and Jerry Davis, “Corporate America's Old Boys Club is Dead—and That's Why Big Business Couldn't Stop Trump,” The Conversation, October 20, 2016, https://theconversation.com/corporate-americas-old-boys-club-is-dead-and-thats-why-big-business-couldnt-stop-trump-67035. There have been numerous accounts in the popular press in recent years of how big business “lost Washington” or lost control of the Republican Party. For a particularly detailed account of political difficulties that large corporations have experienced, albeit prior to the Trump presidency, see Tory Newmyer, “The Inside Story about how Big Business Lost Washington, Fortune, February 20, 2015, http://fortune.com/2015/02/20/the-inside-story-of-how-big-business-lost-washington/.”

33. Mizruchi, Fracturing, 261.

34. Barton, Allen H., “Determinants of Economic Attitudes in the American Business Elite,” American Journal of Sociology 91, no. 1 (1985): 5487.

35. Ibid., 85.

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Studies in American Political Development
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  • EISSN: 1469-8692
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