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Interests, Institutions, and Positive Theory: The Politics of the NLRB

  • Terry M. Moe (a1)

The claim that institutions “matter” is a subject of lively debate in the study of politics today. It is also something of a nonissue that is not really being debated at all. The reason it can be both at once is that the claim is loaded with theoretical baggage. If it is taken to mean that the actions of politicians or bureaucrats are in fundamental respects autonomous of social interests, the statement can easily prove controversial. If it is taken to mean that institutional context shapes the decisions of political actors, or that the relation between social interests and political outcomes varies with the institutional setting, then there is not much to debate; for there has long been a virtual consensus among students of politics that institutions do matter in these general respects.

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1. For an overview of these issues and the surrounding literature, see Krasner Stephen D., “Approaches to the State: Alternative Conceptions and Historical Dynamics,” Comparative Politics (01 1984): 223–46; Skocpol Theda, “Bringing the State Back In: Strategies of Analysis in Current Research,” in Evans Peter B., Rueschemeyer Dietrich, and Skocpol Theda, Bringing the State Back In (Cambridge: Cambridge University Press, 1985); and March James G. and Olsen Johan P., “The New Institutionalism: Organizational Factors in Political Life,” American Political Science Review 78 (09 1984): 734–49.

2. Among other classic pluralist works, see Truman David B., The Governmental Process: Political Interests and Public Opinion, 2nd ed. (New York: Knopf, 1971); and Dahl Robert, Who Governs? Democracy and Power in an American City (New Haven: Yale University Press, 1961).

3. March and Olsen, “The New Institutionalism.”

4. Stigler George J., “The Theory of Economic Regulation,” Bell Journal of Economics and Management Science 2 (01 1971): 321, and “Free Riders and Collective Action: An Appendix to Theories of Economic Regulation,” Bell Journal of Economics and Management Science (Autumn 1974): 359–65; Peltzman Sam, “Toward a More General Theory of Regulation,” Journal of Law and Economics 19 (1976): 211–40; Becker Gary, “A Theory of Competition among Pressure Groups for Political Influence,” Quarterly Journal of Economics 98 (1983): 371400, and “Public Policies, Pressure Groups, and Deadweight Costs,” Journal of Public Economics 28 (1985): 329–47.

5. For a thoughtful perspective on the positive theory of institutions, see Shepsle Kenneth, “Institutional Equilibrium and Equilibrium Institutions,” in Weisberg Herbert F., ed., Political Science: The Science of Politics (New York: Agathon Press, 1986). For a comparison of the economic theory of politics and the positive theory of institutions, see Romer Thomas and Rosenthal Howard, “Modern Political Economy and the Study of Regulation” (Paper presented at the NSF/CMU Conference on Regulation, Airlie, Va., 09 12–14, 1985).

6. The argument I present here is based in part upon the available literature and in part on interviews I have conducted with present and former participants in NLRB politics—people who have variously occupied positions in the agency, the White House, the House and Senate Labor committees, the Department of Labor, the major business and labor groups, and law firms. Collectively, their experiences with the board span the entire period, from the 1930s and 1940s to the present.

7. This article is an early, abbreviated version of a book I am now in the process of writing. The argument I outline here—or a close relative of it—will be developed and documented in greater detail in the book.

8. Scher Seymour, “Congressional Committee Members as Independent Agency Over-seers,” American Political Science Review 54 (1986): 911–20.

9. See especially Wilson James Q., The Politics of Regulation (New York: Basic Books, 1980). Wilson has been most responsible for popularizing this environmental typology, which has found its way into both the economic theory of politics and the positive theory of institutions.

10. I should say at the outset that, although a truly well-balanced treatment of NLRB politics would take systematic account of the courts, I will not attempt to do so here. The courts place important constraints on what agency decision makers can do and provide important points of access for business and labor in their attempts to shape NLRB policy. But the central themes of the following analysis would not be altered in any fundamental way were the courts dealt with explicitly.

11. On the politics surrounding the creation and early years of the NLRB, see Gross James A., The Making of the National Labor Relations Board (Albany: State University of New York Press, 1974); Berstein Irving, The New Deal Collective Bargaining Policy (Berkeley: University of California Press, 1950), and Turbulent Years (Boston: Houghton Mifflin, 1970); Schlesinger Arthur M. Jr, The Politics of Upheaval (Boston: Houghton Mifflin, 1960); Tomlins Christopher L., The State and the Unions: Labor Relations, Law, and the Organized Labor Movement in America, 1880–1960 (Cambridge: Cambridge University Press, 1985); Irons Peter H., The New Deal Lawyers (Princeton: Princeton University Press, 1982).

12. On the politics leading up to Taft-Hartley, see especially Gross James A., The Reshaping of the National Labor Relations Board (Albany: State University of New York Press, 1981).

13. For an overview of the provisions of the Wagner and Taft-Hartley acts, as well as other aspects of the board's mandate, see McCulloch Frank W. and Bornstein Tim, The National Labor Relations Board (New York: Praeger Press, 1974).

14. Perhaps the most exhaustive account of the NLRB'S tumultuous politics in the Truman and early Eisenhower years is provided by Scher Seymour, “The National Labor Relations Board and Congress: A Study of Legislative Control of Regulatory Activity” (Ph.D. diss., University of Chicago, 1956). I draw on his account here and in the remaining paragraphs of this section.

15. See Greenstone J. David, Labor in American Politics (New York: Knopf, 1969); Slichter Sumner H., “Are We Becoming a ‘Laboristic’ State?” New York Times Magazine, 05 16, 1948: 11ff.; Slichter Sumner H., Healy James J., and Livernash E. Robert, The Impact of Collective Bargaining on Management (Washington: Brookings Institution, 1960); Brody David, Workers in Industrial America: Essays on the Twentieth Century Struggle (New York: Oxford University Press, 1980).

16. As I point out later, there are two exceptions (prior to the full-scale battles of the late 1970s): the politics of Landrum-Griffin and the unions' attempt to repeal 14(B) in 1965. But these were not of great consequence for the structure of NLRB politics. I should also note that the shift away from Congress included the appropriations committees, which I do not discuss in this article. The NLRB is a reactive agency, processing cases as they come in, and its budget goes to process the caseload. There is substantial agreement among the NLRB, the OMB (previously BOB), and the appropriations committees about the tight linkage of budget and administrative effectiveness; and, although the standard belief is that business benefits from delay, whereas labor is hurt, business has not (with rare exceptions) made systematic efforts to pressure for reduced budgets. Most participants, even within business, seem to favor an efficient NLRB. Moreover, the aspects of agency performance they most want to influence, the board's final decisions, are unrelated to the budget anyway. Thus, it is not surprising that the NLRB'S budget has been all but depoliticized. In effect, it is determined by a technical formula relating money to expected caseload.

17. On the unions' organizational decline, see, for example, Lipset Seymour Martin, ed., Unions in Transition (San Francisco: Institute for Contemporary Studies, 1986); Freeman Richard B. and Medoff James L., What Do Unions Do? (New York: Basic Books, 1984).

18. On the transformation of labor relations within big business, see Kochan Thomas A. and Capelli Peter, “The Transformation of the Industrial Relations and Personnel Function,” in Osterman Paul, ed., Internal Labor Markets (Cambridge: MIT Press, 1984); Golden Clinton S. and Parker Virginia D., Causes of Industrial Peace under Collective Bargaining (New York: Harper, 1955); Strauss George, “Industrial Relations: Time of Change,” Industrial Relations 23 (Winter 1984): 115; Mills D. Quinn, “Management Performance,” in Steiber Jack, McKersie Robert B., and Mills D. Quinn, eds., U.S. Industrial Relations 1950–1980: A Critical Assessment (Madison, Wise.: Industrial Relations Research Association, 1981); Freeman Audrey, Managing Labor Relations (New York: The Conference Board, 1978).

19. A nice illustration of the political cleavage between big-business moderates and small-business extremists can be found in Scher, “The National Labor Relations Board and Congress.” See also Levitan Sar A. and Cooper Martha R., Business Lobbies (Baltimore: Johns Hopkins University Press, 1984); and Green Mark and Buchsbaum Andrew, The Corporate Lobbies: Political Profiles of the Business Roundtable and the Chamber of Commerce (Washington, D.C.: Public Citizen, 1980).

20. The analysis of appointments is based largely on interviews with participants. In al-most every case, individuals requested confidentiality—in part because the labor relations community is fairly small and tightly knit, and they do not want to go on record as having said anything disparaging or controversial about their acquaintances. At this stage, at least, I am accordingly not in a position to indicate through citations who said what.

21. On the logic of cooperation among self-interested actors, see Axelrod Robert, The Evolution of Cooperation (New York: Basic Books, 1984).

22. See Moe Terry M., “The Politicized Presidency,” in Chubb John E. and Peterson Paul E., The New Direction in American Politics (Washington, D.C.: Brookings Institution, 1985).

23. Perhaps the most striking example of labor's electoral influence on a Republican president came in 1972 when Nixon, courting Teamster support, acceded to their demand that he reappoint the liberal John Fanning.

24. Note that the repeated-game logic of cooperation applies to the historical emergence of these norms, just as it does to the relationship between business and labor in their struggle for influence. See Axelrod, The Evolution of Cooperation, for discussion of its widespread applicability to politics. The literature on appointments per se, however, is not oriented by this or any other theory. The most comprehensive overview can be found in Mackenzie G. Calvin, The Politics of Presidential Appointments (New York: Free Press, 1981).

25. Since Watergate, senators have been somewhat more likely to scrutinize presidential appointees in general. But the extent of this is exaggerated by media accounts of a few spectacular cases. If there has been any breakdown in the norm of deference to the president, it has been of only marginal importance.

26. See Moe Terry M., “Control and Feedback in Economic Regulation: The Case of the NLRB,” American Political Science Review 79 (1985): 10941116; McCulloch and Bornstein, The National Labor Relations Board; Delorme Charles D., Hill R. C., and Wood Norman J., “The Determinants of Voting by the National Labor Relations Board on Unfair Labor Practice Cases: 1955–1975,” Public Choice 37 (1981): 207–18; Cooke William N. and Gautschi Frederick H. III, “Political Bias in NLRB Unfair Labor Practice Decisions,” Industrial and Labor Relations Review 35 (1982): 539–49; McGuiness Kenneth, The New Frontier NLRB (Washington, D.C.: Labor Policy Association, 1963).

27. Because of its specificity, I should point out that this material is based on interviews with Farmer, Stanley Strauss (legal counsel to Philip Rodgers), and other familiar with the Eisenhower board. The same basic story is told by a long line of participants about subsequent boards.

28. His professionalism did not rule out all strategic behavior, of course. In order to ensure greater control over policy, for instance, Farmer temporarily did away with decision making by three-member panels and required that all cases be heard by the full board. Similarly, he deferred some controversial cases until, with Eisenhower's appointment of Beeson in 1954, he had a new majority. But strategy was not allowed to violate the sanctity of decisions on individual cases.

29. For accounts of NLRB personnel problems (at all levels) during the early years—along with the political problems they caused—see Gross, The Reshaping of the National Labor Relations Board, and Scher, “The National Labor Relations Board and Congress.”

30. For an account of the politics surrounding Landrum-Griffin, see McAdams Alan K., Power and Politics in Labor Legislation (New York: Columbia University Press, 1964).

31. See, for example, Goulden Joseph, Meany (New York: Atheneum, 1972).

32. The battle over common situs picketing was concerned with whether individual unions should have the legal right to picket an entire construction site; in practice, this would often allow them to shut down work by subcontractors and members of other unions working at the same site, enhancing their economic power in collective bargaining with employers. Labor law reform was concerned more generally with union-supported modifications of the Taft-Hartley Act intended to reduce delays and increase the penalties for employer violations of the law.

33. For accounts of these turbulent years, see, for example, Levitan and Cooper, Business Lobbies; Green and Buchsbaum, The Corporate Lobbies.

34. The following is based on interviews with John Fanning, Betty Murphy, Donald Zimmerman, John Truesdale, Robert Thompson (Chamber of Commerce), Randy Hale (National Association of Manufacturers), Douglas Soutar (appointments activist for business), Lawrence Gold and Thomas Donohue (AFL-CIO), Robert Baptiste (Teamster lawyer), and many others.

35. The following is based largely on interviews and news accounts. For general treatments of Reagan's appointments strategy, see National Academy of Public Administration, Recruiting Presidential Appointees (Washington, D.C.: National Academy of Public Administrations, 1985); and Nathan Richard, The Administrative Presidency (New York: Wiley, 1983).

36. See, for example, Congressional Quarterly, Auguest 28, 1982, 2113–14.

37. See National Academy of Public Administration, Recruiting Presidential Appointees.

38. See, for example, Business Week, July 6, 1981, 27–28.

39. See, for example, Kemble Penn, “The New Antiunion Crusade: How Reagan's NLRB Is Subverting Industrial Democracy,” New Republic, 09 1983, 1820.

40. Business Week, June 11, 1984, 122.

41. Congressional Quarterly, December 29, 1984, 3168.

42. See, for example, Business Week, March 25, 1985, 34.

43. Quoted in Kemble, “The New Antiunion Crusade,” 20.

44. See, for example, Freeman and Medoff, What Do Unions Do?; Strauss, “Industrial Relations: Time of Change”; Leo Troy, “The Rise and Fall of American Trade Unions: The Labor Movement from FDR to RR,” in Lipset, Unions in Transition.

45. See, for example, Downs Anthony, An Economic Theory of Politics (New York: Harper & Row, 1957), and Inside Bureaucracy (Boston: Little, Brown & Co., 1966); Buchanan James M. and Tullock Gordon, The Calculus of Consent (Ann Arbor: University of Michigan Press, 1962); Niskanen William, Bureaucracy and Representative Government (Chicago: Aldine-Atherton, 1971).

46. Olson Mancur, The Logic of Collective Action: Public Goods and the Theory of Groups, 2nd ed. (Cambridge: Harvard University Press, 1971).

47. See Peltzman Sam, “Constituency Interest and Congressional Voting,” Journal of Law and Economics 27 (1984): 181210

48. Peltzman, “Toward a More General Theory of Regulation.”

49. Becker, “A Theory of Competition among Pressure Groups for Political Influence.”

50. For a review and critique of this literature, see Roger Noll, “Economic Perspectives on the Politics of Regulation,” in Richard Schmalensee and Robert Willig, eds., Handbook of Industrial Organization (Amsterdam: Elsevier, forthcoming). See also Derthick Martha and Quirk Paul J., The Politics of Deregulation (Washington, D.C.: Brookings Institution, 1985); James Q. Wilson, The Politics of Regulation.

51. Coase Ronald, “The Problem of Social Cost,” Journal of Law and Economics (1960): 144.

52. Coase's theorem, along with its assumption of zero transactions costs, has direct implications—never thoroughly addressed by writers in this tradition, to my knowledge—for the economic theory's perspective on political control and other aspects of institutional politics. It is also inconsistent with Olson's logic of mobilization. These issues will be considered later. For one account (somewhat different from mine) of how transactions costs figure into the economic theory, see Noll, “Economic Perspectives on the Politics of Regulation.”

53. Arrow Kenneth J., Social Change and Individual Values, rev. ed. (New York: Wiley & Sons, 1963).

54. See Shepsle Kenneth A., “Institutional Arrangements and Equilibrium in Multidimensional Voting Models,” American Journal of Political Science 23 (1979): 2760; Shepsle, “Institutional Equilibrium and Equilibrium Institutions”; Riker William H., “Implications from the Disequilibrium of Majority Rule for the Study of Institutions,” American Political Science Review 74 (1980): 432–47; Shepsle Kenneth A. and Weingast Barry R., “Structure-Induced Equilibrium and Legislative Choice,” Public Choice 37 (1981): 503–19.

55. In addition to the above cited works, see, for example, Denzau Arthur T. and Mackay Robert J., “Gatekeeping and Monopoly Power of Committees: An Analysis of Sincere and Sophisticated Behavior,” American Journal of Political Science 27 (12 1985): 1117–34; Weingast Barry R. and Marshall William J., “The Industrial Organization of Congress,” Working Papers in Economics (Stanford: Hoover Institution, 1986).

56. See, for example, Calvert Randall L., McCubbins Mathew D., and Weingast Barry R., “Political Control and Agency Discretion: The Fallacy of Execution” (Paper presented at the annual meeting of the American Political Science Association, 08 1986); Hammond Thomas H., Hill Jeffrey S., and Miller Gary J., “Presidents, Congress, and the ‘Congressional Control of Administration’ Hypothesis” (Paper presented at the annual meeting of the American Political Science Association, 08, 1986); Mackay Robert J. and Weaver Carolyn L., “The Power to Veto,” Working Papers in Political Science (Stanford: Hoover Institution, 1986).

57. See, for example, Weingast Barry R. and Moran Mark J., “Bureaucratic Discretion or Congressional Control? Regulatory Policymaking by the Federal Trade Commission,“Journal of Political Economy 91 (1983): 765800; Weingast Barry R., “The Congressional-Bureaucratic System: A Principal-Agent Perspective with Applications to the SEC,” Public Choke 44 (1984): 147–92; Barke Richard and Riker William, “A Political Theory of Regulation with Some Observations on Railway Abandonments,” Public Choice 39 (1982): 73106; McCubbins Mathew D. and Schwartz Thomas, “Congressional Oversight Overlooked: Police Patrols versus Fire Alarms,” American Journal of Political Science 28 (1984): 165–79;

58. McCubbins Mathew D., “The Legislative Design of Regulatory Structure,” American Journal of Political Science 29 (1985): 721–48; Fiorina Morris P., “Legislative Choice of Regulatory Forms: Legal Process or Administrative Process?Public Choice 39 (1982): 3366.

59. There is an interesting irony at work here: the new economics of organization traces its roots to a seminal article by Coase, in which he argued that organizations arise because of—and therefore are explained by—attempts by rational actors to minimize transactions costs. See Coase Ronald, “The Nature of the Firm,” Economica 4 (1937): 386405. Thus, the economic theory of politics and the positive theory of institutions are both grounded in classic articles by Coase—but they are different articles that proceed from diametrically opposed assumptions. His “Nature of the Firm” assumes transactions costs are substantial and uses this to explain the emergence of organizations. “The Problem of Social Cost” argues that, in a world of zero transactions costs, individuals can overcome collective action problems through market exchange. There is nothing inconsistent about the two arguments per se. The economic theory tends to adopt a “negligible transactions costs” view of the world, whereas PTI and the new economics of organization tend to embrace a “high transactions costs” view—with very different consequences, obviously, for their explanations of politics.

60. See Axelrod, The Evolution of Cooperation; Shepsle, “Institutional Equilibrium and Equilibrium Institutions”; McCubbins, “The Legislative Design of Regulatory Structures”; Calvert, “The Role of Reputation and Legislative Leadership” (Mimeo, Washington University, St. Louis, 1986).

61. For a discussion of some of the issues surrounding institutional “inertia,” see Shepsle, “Institutional Equilibrium and Equilibrium Institutions.”

62. Two points should be made here. First, the all-or-nothing nature of majoritarian elections (an institutional property) and candidate strategies (which are institutionally conditioned) imply that virtually identical constituencies might elect politicians with very different support coalitions; even though both politicians might subsequently act as conduits, very different constituency interests would get reflected in their political choices. See Fiorina Morris P., Representatives, Roll Calls, and Their Constituents (Lexington, Mass.: D. C. Heath, 1974). Second, because transactions costs are so high, constituents cannot achieve a high degree of control over politicians. Were politicians motivated to pursue their own policy preferences (were they ideological, for instance), they would have some flexibility to do so even in the presence of electoral constraints. PTI typically assumes, however, that politicians care only about reelection and that their policy preferences are entirely induced, so these sorts of control issues are rarely explored. For early attempts to do so, see Kau James B. and Rubin Paul H., “Self-Interest, Ideology, and Logrolling in Congressional Voting,” Journal of Law and Economics 22 (1979): 365–85; Kalt Joseph and Zupan Mark, “Capture and Ideology in the Economic Theory of Politics,” American Economic Review 74 (1984): 279300.

63. For a general discussion of these issues, see Moe Terry M., “Congressional Control of the Bureaucracy: An Assessment of the Positive Theory of ‘Congressional Dominance’,” Legislative Studies Quarterly 12 (1987): forthcoming; McCubbins and Schwartz, “Congressional Oversight Overlooked.”

64. Acknowledging the significance of transactions costs, for example, would do more than simply justify the theoretical role now accorded Olson's logic of mobilization. It would also lead to the conclusion that political control is often highly problematic—which directly undermines the economic theory's presumed chain of control from groups to politicians to bureaucrats, as well as its claim that public policy can be explained without any attempt to model these links in the chain. By acknowledging the importance of transactions costs, the economists would presumably be led to the kind of theoretical perspective now being developed within the positive theory of institutions.

65. For an attempt to extend Olson's logic to issues of organization, see Moe Terry M., The Organization of Interests (Chicago: University of Chicago Press, 1980).

66. An alternative is that Reagan was indeed responding to business pressure, but to the antiunion, small-business elements of his support coalition. Interviews with participants strongly suggest otherwise. The Reagan administration was taking the initiative on these matters, not responding to pressure.

67. See Kalt and Zupan, “Capture and Ideology in the Economic Theory of Politics.”

68. On these issues generally, see Axelrod, The Evolution of Cooperation, and Weingast , “A Rational Choice Perspective on Congressional Norms,” American Journal of Political Science 23 (1979): 245–62.

69. There have been some promising moves in this direction within PTI, but they still get back to notions of direct control. McCubbins, for instance, argues that agencies are largely controlled by virtue of the structural—programmatic, organizational, procedural—constraints imposed by Congress. Once these are in place, Congress “controls” the agency without intense monitoring and all the rest. His assumption, however, is that legislators design these structural constraints for optimal control—this is their purpose. Thus, it is ultimately grounded in a model of conscious, intentional control. See McCubbins, “The Legislative Design of Regulatory Structure.” Much the same can be said of McCubbins and Schwartz, who argue that legislators have little incentive to engage in continuous oversight for control purposes (“police patrol” oversight), that their incentive instead is to intervene in response to constituency “fire alarms.” When these bells go off, however, they wield their various rewards and sanctions to whip bureaucrats back into line. Again, bureaucrats are held in check by direct efforts to control their behavior. See McCubbins and Schwartz, “Congressional Oversight Overlooked.”

70. See especially Weingast and Moran, “Bureaucratic Discretion or Legislative Control?”

71. This general perspective on professionalism and political control is widely accepted in political science and is not confined to PTI. See, for example, James Q. Wilson, The Politics of Regulation, and Rourke Francis E., Bureaucracy, Politics, and Public Policy, 3rd ed. (Boston: Little, Brown & Co., 1984).

72. See Weingast, “A Rational Choice Perspective on Congressional Norms.”

73. See Wildavsky Aaron, The Politics of the Budgetary Process, 3rd ed. (Boston: Little, Brown & Co., 1979).

74. For a discussion of their relevance to PTI and its further development, see Shepsle, “Institutional Equilibrium and Equilibrium Institutions.”

75. See Romer and Rosenthal, “Modern Political Economy and the Study of Regulation.”

76. Most notably, Cyert Richard M. and March James G., A Behavioral Theory of the Firm (Englewood Cliffs, N.J.: Prentice-Hall, 1963).

77. See March and Olsen, “The New Institutionalism,” for a review.

78. See, for example, Keohane Robert, After Hegemony (Princeton: Princeton University Press, 1984); Wagner R. Harrison, “The Theory of Games and the Problem of International Cooperation,” American Political Science Review 77 (1983): 330–46.

79. See, for example, Nordlinger Eric, On the Autonomy of the Democratic State (Cambridge: Harvard University Press, 1981).

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