The Corporation in Political Science

CHAPTER
6
The Corporation in Political Science
BASTIAAN VAN APELDOORN and NANÁ DE GRAAFF 1
Introduction stake, such as with all forms of socio-economic

regulation, and where one at least might suspect an
In spite of the obvious centrality of the corporation important degree of corporate influence. In sum,
in contemporary capitalist society, the attention to although this chapter will review diverse literatures
the role of the corporation in national, transnational in which the corporation plays a more or less pro-
and global politics within the discipline of political minent role, it remains a relatively marginal subject
science is uneven and in some places rather scant. within mainstream (comparative) political science.
A search for the key words ‘corporation’ and ‘cor- Even though the corporation is no less ‘political’
porate’ in the abstracts of all articles that have than it is ‘economic’ or ‘social’, this chapter sug-
appeared in the last ten years in the most highly gests that perhaps a reason for this relative neglect is
ranking political science journal, the American that most conventional political science approaches,
Political Science Review, produced a mere five as well as arguably some more critical ‘idealist’
hits, of which only two dealt with corporate political approaches, fail to examine the underlying social
power. Indeed conventional, ‘general’ political structures of political phenomena, social structures
science, often presents itself as the study of formal that make the corporation into such a central institu-
political institutions, such as government and par- tion and actor within contemporary capitalism. This
liament; political actors directly operating within chapter will argue that a critical perspective on the
those institutions, such as political parties; and pro- corporation from within the discipline of political
cesses leading to formal political outcomes such as science – as well as beyond, since we believe that
elections and public policy making (for ultimately only a transdisciplinary approach to the
a representative introductory textbook not mention- corporation makes sense – requires an analysis of
ing anything relating to the political role of corpora- the broader social power relations in which the
tions, see Colomer, 2010). With regard to public corporation is embedded, and which empowers it.
policy making corporate power is sometimes indir- From this perspective, the chapter sets out to criti-
ectly addressed through the analysis of interest cally review some of the diverse political science
groups and their role in shaping policy outcomes, literatures and debates pertaining to the politics of
but often without recognizing the often privileged the corporation and present an agenda for further
position of business groups or corporate capital as research. Throughout we will be guided by the
a source of power. following questions. 1) How can we conceptualize
More explicit analyses of the role of corpora- the corporation as a political actor as well an arena
tions – or their representatives – as political actors, for political struggle? 2) Which social structures
are to be found above all in those fields – usually thus constitute the corporation as a political entity?
situated within the sub-discipline of international And 3) what does the power of corporations, or of
relations (IR)/international political economy certain corporations, over other or of certain groups
(IPE), which explicitly study governance at levels within corporations tell us about the nature of power
beyond the nation-state. The focus here is on large, in contemporary societies and, more normatively,
especially transnational corporations, who are argu- what are the implications of this for legitimacy (of
ably the most politically significant corporate actors public policy making) and democracy?
(Wilks, 2013: 32–37). Still, here too the role of A political science perspective on the corporation
corporate power is often ignored even in policy focuses on the politics of the corporation and of
areas where essential corporate interests are at corporate capitalism, and politics is about power,
134
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The Corporation in Political Science 135
which is indeed the core concept of political science power may involve a ruling elite or class, making
(Hay, 2002). Political scientists, however, do not subaltern groups believe that the current social
agree on what this essentially contested concept order, or particular aspects of it – which is system-
means. The different meanings of power are, as atically skewed against them – is actually in their
we shall see, to an extent reflected in the different best interest. Together, these two structural forms of
ways in which corporate power is theorized and power are, for instance, highlighted in critical ana-
analysed by political scientists. At a basic level, lyses of the power of business elites to set the
we can distinguish between more overt, observable agenda for public policy making and keep certain
and ‘behavioural’ forms of power and more indirect issues that are anathema to business interests (e.g.,
‘structural’ and therefore not directly observable redistribution, nationalization) off the agenda; to
forms of power (that is, the effects of structural shape public opinion; to produce discourses that
power might be directly observable but the struc- legitimate the capitalist free market economy and
tures causing the effects lie at a ‘deeper’ level of particular policies supporting it; and generally, to
reality; see Bhaskar, 1979; see also Barnett and make people believe that corporate capitalism is
Duvall, 2005, for a different but comparable taxon- a good thing that serves the general, public interest.
omy of power).2 Indeed, the fact that in much conventional political
The classical, and ‘behavioural’, definition of science corporations as political actors is often lar-
power within political science is that of Robert gely ignored itself can be seen as attesting to the
Dahl who wrote that power is about A making structural and ideological power of corporate capi-
B doing something that B would not otherwise do tal. Structural power, in that sense, is power not to
(Dahl, 1961). Corporations engaging in lobbying be seen; the less it is seen – including by social
for or against specific legislation or making cam- scientists – the more entrenched it has become.
paign donations, for instance, would fall into this Logically, we can divide the study of the corpora-
category. Of course, behavioural power is always tion within political science in the following ways:
related to structural power inasmuch as, for 1) the politics within the corporation (e.g., between
instance, in the latter example the act of donating workers and management); 2) the politics of public
money to politicians in order to make them behave regulation of the corporation; 3) the politics of the
(e.g., vote, make policy) differently than they would relations between the corporation and the wider
otherwise do is enabled by particular social struc- society, and hence the corporation as a political
tures in which corporations have the wealth and the actor within society and vis-à-vis the state; and 4)
legal possibility to engage in this kind of behaviour. the politics between corporations, or the networks
But Dahl’s concept of power in itself says little of power and corporate control as, for instance,
about the latter.3 constituted by interlocking directorates. Most poli-
The concept of ‘structural’ power rather draws tical scientists focus on power – whether defined
our attention to forms of power exercised in more more in ‘behavioural’ or in ‘structural’ terms – as
indirect, hidden ways, for instance, by controlling the power to shape collective choices within
the (political) agenda and making people acquiesce (national or transnational) societies, shaping formal
so that certain issues will remain off the table (Nye, and informal rules, public governance (by the state)
2012: 12–13). Finally, going one step further, criti- and private governance (self-regulation by private
cal approaches of corporate power in political actors). Since here even private governance argu-
science and in IPE often focus on what Steven ably always takes place in the shadow of the state,
Lukes (1985) identified as the ‘third face’ of most political scientists analyse power within the
power – Dahl’s behavioural power being the first public domain, and as such public policy and other
and controlling the agenda forming the second political outcomes are often taken as the ‘dependent
face – in which certain structures of domination variable’. Therefore, most of the political science
allow one actor, or set of actors, to shape the initial literature that does pay attention to the corporation
preferences of other actors (see also Nye, 2012: focuses on the third aspect, the corporation as
10–18). At the macro-level this kind of structural a political actor influencing public policy making;
136 Bastiaan van Apeldoorn and Naná de Graaff
we, however, will also pay attention to the other will then focus in particular on the political
three aspects of power in relation to the role of corporations and corporate elites in the
corporation.4 arenas of European and of global governance.
The remainder of this chapter is organized fol- The concluding section will include a discussion
lowing the above division. In the first section, we of yet another form of corporate politics, that is,
will take the first two aspects together and focus on the relatively neglected but arguably important
what we can call the politics of corporate govern- area of the politics of inter-firm relations in world
ance – conceived as power relations within the markets. Here recent literature suggests that in this
corporation – and, closer to the ‘core business’ of realm we are witnessing deeper transformations
political science, what we can call the governance of pointing to a structural power shift within the global
corporations, especially the regulation of corporate political economy with the rise of multinational
governance. A preliminary question we ask in this corporations from the Global South and especially
section is how we can conceptualize the corpora- Asia. This shift, we argue, opens up a new research
tion, or more broadly the corporate form, from area, including how corporate elite power manifests
a critical political science perspective. The second itself (differently) in emerging powers and non-
section addresses the question to what extent and Western contexts.
how the corporation – or maybe rather those who
control corporations – are constituted as political
actors, and what the place of corporate power is, The Politics within the Corporation and
both within society as a whole and within the realm the Regulation of Corporate Governance
of the state. What is at stake here is the broader,
classical political science question of ‘who rules’ The modern corporation is the dominant production
(or governs), and we will here briefly approach the unit of capitalism. Understanding the political nat-
three established approaches of pluralism, elitism ure of the corporation therefore has to start with an
and Marxism. Especially within the latter, we may understanding of capitalism and capitalist social
also recognize forms of corporate power that do not relations, and how the corporate form became domi-
involve any direct corporate political agency but are nant within capitalism with the rise of the large and
rather rooted in the structural economic power of publicly traded joint stock company at the end of the
capital, which may have profound political effects. nineteenth century and the shift away from the
Yet, while we argue that it is important to view the entrepreneurial form of smaller family-owned and
politics and power of corporations as embedded in controlled firms. While obviously we cannot
and generated by underlying social (class) struc- recount this history here, it is important to stress
tures, corporate political and ideological power, the political origins of that process. As the economic
although structural, for its reproduction is depen- sociologist William Roy (1997) has argued on the
dent upon agency, including concrete corporate basis of his detailed historical study on the rise of
political activity.5 the modern corporation in the late nineteenth-
Hence, the third section will discuss the relevant century United States (from where the corporate
literature and provide some illustrative examples of revolution later spread to Europe), this transforma-
empirical research pertaining to the corporation as tion of the organization of capitalist production was
a political actor within national political systems; not mainly driven by a quest for economic effi-
that is, how corporate elite agency shapes national ciency (cf. Chandler, 1977) but by political strug-
public policy making, including foreign policy. gles involving both changing class interests and the
The latter in fact connects comparative political state. The latter ‘not only defined what the corpora-
analysis with IR/IPE, in which since the 1970s tion was and the particular rights, entitlements, and
transnational corporations (TNCs) and lobbying responsibilities that owners, managers, workers,
groups and international planning bodies represent- consumers, and citizens could legally exercise rela-
ing TNCs have been analysed as key transnational tive to the corporation, it actively established and
actors within global politics. The fourth section capitalized corporations’ (Roy, 1997: 41).
Corporations were originally established as quasi- [1932]). The corporation has thus transformed the
public organizations to provide public services, social power relations of capitalism but without
such as creating and maintaining infrastructure, transcending their intrinsic class nature.
most crucially the rapidly expanding railroads, but From a political science perspective on corporate
the subsequent political decision to opt for privati- power or corporate interests that is attentive to
zation on the part of the US state turned these public underlying social structures, it is thus important to
entities into fully private institutions solely accoun- ask the preliminary question of what corporations
table, legally, to their private owners in the form of are and who controls them and to what purpose?
shareholders, leading the way for what became Illustrative of such a critical approach that views
a corporate revolution in American (and later glo- corporate power as rooted in underlying social rela-
bal) capitalism (ibid., Chapter 4). This involved tions, Susanne Soederberg forcefully argues that,
fierce political (class) struggles as new economic regardless of different forms of capitalist owner-
entities, which came to control large sections of ship, the corporation as ‘a social relation of capital-
industry (ibid.: 16–18), were created against the ism’ is a ‘vehicle for capital accumulation’
opposition from both (small) business and workers (Soederberg, 2010: 12, 13). Yet how this goal is
feeling threatened by the privileges and monopoly pursued (and within which constraints), and how the
power that corporations allegedly possessed (ibid.: surplus capital thus produced is exactly appro-
51–55). priated between different social groups, is also
influenced by who exactly controls the corporation.
Thus, another approach is to seek to analyse the
The Rise of the Corporate Capitalist Class
power relations within the corporation by distin-
and Intra-Firm Power Relations
guishing three basic social groups in the modern
The corporate revolution also transformed capitalist corporation (cf. Aguilera and Jackson, 2003: 450;
class relations. Indeed, it is these social relations Cioffi, 2005: 4; Gourevitch and Shinn, 2005): share-
that ultimately underpin the power relations within holders (owners), managers and workers.
the corporation. In capitalism, the means of produc- The power relations between these groups within
tion are privately owned, but as Marx already capitalism are highly asymmetrical to the extent that
pointed out with the joint stock company capital is management and shareholders are clearly dominant,
to an extent ‘socialized’ (Marx, 1991 [1894]: 612). but with important variations across time and space,
However, it has been socialized within one class both with regard to the latter intra-class relation and
(Roy, 1997: 12), that is, the capitalist class, which in capitalist owners’ and managers’ relations to
as a result gained a cohesion that was previously their labour forces. This, then, concerns the politics
unattainable, as well as a liquidity through which it within corporations or the politics of what in mod-
could wield its power – power as money – more ern parlance is called corporate governance, which
flexibly. This form of (structural) market power has refers to ‘those practices that define and reflect the
been enhanced in recent decades through an power relations within the corporation and the way,
increasing marketization of corporate control (van and to which purpose, it is run’ (van Apeldoorn and
Apeldoorn and Horn, 2007; see also Horn, this Horn, 2007: 211). Although this subject is studied
volume). On the one hand, then, the separation of more outside political science (in, for instance,
ownership and management with the introduction of management studies, industrial relations, economic
the corporate form through the creation of often sociology, law), these practices are, of course,
many owners (shareholders) owning pieces of inherently political (for an excellent political analy-
paper transferable through market exchange – that sis of the German case, see Höpner, 2003).
is, the corporation as a commodity – did lead to the One theme that has been picked up here – espe-
creation of managers as a separate social group or cially in the 1970s when critiques of capitalism
sub-set of the capitalist class. On the other hand, this were generally much more prominent – from the
has not led to the dissolution of the capitalist class perspective of (normative) political theory is the
(cf. Burnham, 1975 [1941]; Berle and Means, 1991 question of so-called industrial democracy, or rather
the lack thereof in capitalism. Thus, Dahl (who, (such as those of the EU) – think of capital market
somewhat ironically, is in fact most remembered regulation, company law and labour law, for
for his pluralist thesis denying that business was in example.
any way special or privileged) argued that given the Corporate governance regulation takes place in
central position of corporations in modern society multiple interconnected arenas, such as those of
and their hugely important social and indeed public national, European and global governance, and
functions there was, in fact, no good case to be made involves both public and ‘private’ regulation, or
for private capitalist control and ownership and hybrid forms (van Apeldoorn et al., 2007).
advocated its replacement by workers’ self- The regulation of corporate governance can be ana-
management (e.g., Dahl, 1985). The notion of lysed as both explanans (how it affects corporate
democracy within the corporation has been fully governance practices) and as explanandum, that is,
marginalized in the neoliberal era but has recently as set of political outcomes that need to be
staged a modest comeback in the context of the explained. Here we will focus on the latter (for
growing discontent with globalization and attendant examples of the former, see, e.g., Höpner, 2003;
global corporate power, as, for instance, expressed Höpner and Jackson, 2001). While van Apeldoorn
in the Occupy Movement (Malleson, 2014). et al. (2007: 7–13) note the scarcity of political
analysis seeking to explain corporate governance
regulation through examining its political underpin-
The Governance of Corporate Governance
nings, this body of work has been growing in recent
More attention, though still relatively scant, has years.
been paid by political scientists to how the state Political science jumped on the bandwagon of
shapes the power relations within the corporation corporate governance research rather late. Indeed,
and conditions the way it is run – and to which it was within the so-called law-and-economics tra-
purpose – through the (external) regulation of cor- dition that the politics of corporate governance reg-
porate governance. The power relations between ulation was extensively studied for the first time, in
shareholders, managers and workers are obviously particular through the pioneering work of legal
affected, indeed to a large extent constituted, by scholar Mark Roe (1994; 2003; see also
public regulation and law. Indeed, at the most Gourevitch, 2007), who argued that variation in
basic level, the corporation, apart from being, as national corporate governance regimes was rooted
we saw, historically a creation of the state, can in politics, above all to the degree to which coun-
only exist by virtue of the state’s defining and enfor- tries were ‘social democratic’ or not. The work by
cing property rights and extending them in a certain Roe, and others working on corporate finance from
way as to allow individuals to own (small) pieces of a legal or economics perspective (e.g., Zingales,
a corporation in the form of shares (van Apeldoorn 2000) later on spawned a considerable, mainly com-
and Horn, 2007: 214–215; but see Ireland, this parativist, political science literature that seeks to
volume). Furthermore, while the creation of the show how the three main groups within the corpora-
private corporation empowered, as we argued, capi- tion – owners, managers and workers – also poten-
talist owners, the exact configuration of intra-firm tially formed coalitions outside the corporation and
power relations depends upon how state regulation, in the public arena in other to shape public policy
which may, for example, put restrictions on the affecting their position within the firm, that is, to
power of owners (shareholders) by granting certain shape corporate governance regulation.
(co-decision) rights to the workforce, or, on the The political science question then becomes how
contrary, be aimed at removing as much as possible these three groups, whose position within the firm
any such pre-existing restrictions. In other words, ‘logically’ gives them certain preferences, ‘translate
corporate governance is very much conditioned by those preferences into public policy’ (Gourevitch,
the governance of the corporation as emanating 2007: 32). The work of Gourevitch and Shinn
above all from the state or state-like institutions (2005) in particular stands out in offering
a sophisticated interest group model in which these 1998; Deeg, 2005; cf. Goyer, 2006; Culpepper,
rival social groups are seen as – mediated by poli- 2007). Explaining – often cross-nationally – chan-
tical institutions – competing as well as forming ging corporate governance regulation as ‘transla-
(sometimes cross-class) coalitions. tions’ of preferences of owners, managers and
Like Gourevitch and Shinn, others within the workers, research in this field often views political
comparative political economy tradition have parties and their (changing) preferences as impor-
sought to explain the diversity of corporate govern- tant mediating institutions (Cioffi and Höpner,
ance regimes in different countries, from the early 2006; Höpner, 2007; Callaghan, 2009). Others
2000s onwards often adopting a so-called varieties rather emphasize the role of managerial or business
of capitalism (VoC) approach (as most prominently elites in seeking to protect their own vested interests
developed by Hall and Soskice 2001, but see also, (Culpepper, 2011; Schnyder, 2012; see also
e.g., Crouch and Streeck, 1997; for a useful over- Heemskerk, 2007, on the Dutch case).
view of the broader, comparative capitalism litera- Furthermore, some other studies, still within the
ture, Jackson and Deeg, 2008). Here, corporate VoC school have applied comparative typologies
governance regulation is seen as one important of capitalism at the level of EU policy making,
dimension of a typology of national models of seeking, for example, to explain the European pol-
capitalism, with much of this research, as we shall itics of capital market liberalization in terms of
see below, consisting of single-country or cross- a political clash of national capitalisms (Rhodes
country comparative case studies focusing mainly and van Apeldoorn, 1998; Callaghan and Höpner,
on OECD countries, especially within continental 2005; cf. van Apeldoorn and Horn, 2007; Clift,
Europe, where the adoption of a more shareholder 2009).
value–oriented corporate governance regimes has While all of these studies provide useful insights
implied a rather radical transformation of extant into how the politics of corporate governance reg-
non-liberal or ‘coordinated’ varieties of capitalism. ulation has changed and with that the legal and
In the latter, as an ideal-type, capital (stock) markets institutional parameters that shape the power rela-
play a much weaker role, with corporate finance tions within the corporation, many of these studies
traditionally provided more by banks or the state suffer from ‘methodological nationalism’ inasmuch
making long-term investment through ownership- as their cross-national comparative perspective does
stakes, while the power of shareholders is also cur- not easily allow them to see the transnational ori-
tailed through workers’ rights and/or a legal frame- gins of much of the national transformations (on the
work empowering autonomous managers or nature of ‘the transnational’, see van Apeldoorn,
providing for the safeguarding of certain public 2004a; 2004b; cf. Callaghan, 2010). Adopting
interests (for an early typology of national corporate both a comparative and more of a transnational
governance systems in Western Europe and political economy approach, Nölke and
a mapping of their transformation, see Rhodes and Vliegenthart (2009) – focusing on the corporate
van Apeldoorn, 1998). governance dimension – have, next to the standard
There thus have been produced rich case studies varieties of ‘liberal market economies’ (UK, US)
of, in particular, the decline of Modell Deutschland and ‘coordinated market economies’ (Germany),
with its particular variety of a ‘stakeholder model’ identified a third variety of capitalism, the ‘depen-
of corporate governance with underdeveloped capi- dent market economies’ argued to be prevalent in
tal markets and a relatively large role played by East Central Europe, and the central feature of
workers through co-determination (e.g., Beyer and which is the dependency of local corporate govern-
Höpner, 2003; Höpner, 2007; cf. Goyer, 2006), and ance on foreign transnational corporations.
of the transformation – or, according to others – Taking the focus on transnational dynamics – and
relative stability of the governance of the corpora- how they unfold within arenas beyond the national
tion within the ‘Southern Model’ of countries like state, such as that of European and global govern-
France or Italy (e.g., Rhodes and van Apeldoorn, ance – one step further, scholars within especially
critical IPE in the past decade or so have produced Theorizing Corporate Power in
work on the politics of corporate governance that Contemporary Capitalism: Pluralism,
recognizes not only the global and transnational nat- Elitism and Marxist Perspectives
ure of capitalism but also the fundamentally asym-
metric social power relations underpinning it, hence The question of corporate power raises a question
making ‘the corporation’ a deeply political phenom- about the nature of power – political science’s core
enon. It is such a perspective that is, for instance, concept – in capitalist society in general. After
adopted by most contributors to Overbeek, van Robert Dahl’s classic Who Governs? was first pub-
Apeldoorn and Nölke (2007) that examines the trans- lished in 1961 (Dahl, 1961), a debate on (the nature
national politics – emphasizing the need to go beyond of) power in contemporary society broke out in
national case studies to capture its multi-levelness – political science that had already been raging for
of changing corporate governance regulation. a longer time in sociology (most recently Mills,
Seeking to advance a critical political economy per- 1956). Dahl, restricting his analysis to the ‘first
spective, Horn (2011) in a detailed study analyses the face’ of power in which A in a directly observable
transnational political struggles driving what she sees way seeks to change the behaviour of B rather than
as the neoliberal transformation – part of a broader the not directly visible, ‘structural’, second and
marketization project– of corporate governance reg- third faces (see above) – became the leading expo-
ulation at the EU level. This transformation has nent of what is still the dominant pluralist tradition
entailed EU company law increasingly becoming an in political science, which argues that at least in
instrument of financial market liberalization and of advanced liberal democracies different social
the attempt to create a European market of corporate groups and the elites who represent them compete
control in which transnational investors can increas- for influence on a more or less equal footing.
ingly exercise their exit power, thus buttressing share- The pluralist position thus implies that the corpora-
holder dominance within the corporation (ibid.). tion or those who own and or run corporations are
From a critical (international) political economy not seen as in any way structurally advantaged vis-
perspective focusing on what are often seen as the à-vis other actors or social groups (see also Vogel,
transnational social forces involved in the making 1987).
of public policy (such as corporate governance reg- In contrast, the elitist perspective, which for
ulation), one often finds that the most dominant a long time has been propounded by mainly (poli-
social forces are those representing the interests of tical) sociologists (often explicitly criticizing the
transnationally mobile investors (van Apeldoorn, founding father of modern American political
2002; Horn, 2011). In another example, Perry and science, Dahl, especially Domhoff, 1978), argues
Nölke (2005; 2006) show that new international that power, residing in deeper social structures, is
accounting standards, which transform ‘the rela- concentrated in the hands of what, in the Millsian
tions of appropriation among corporations’ (ibid.: tradition, is viewed as a power elite (see especially
571), have been emanating from new forms of Domhoff, 1967; 2009; for a comparable elitist per-
transnational private authority dominated by spective on US society from within political science
a network of financial sector firms. These firms, see Dye, 1976; 2014). In the view of William
such as large global banks, have thus, according to Domhoff, one the leading writers within this per-
this analysis, been able to set the agenda and influ- spective, such a power elite can be seen – at least in
ence the content of a crucial area of corporate gov- the US case – as made up of ‘three overlapping
ernance regulation. In other words, our attention networks of people and institutions: the corporate
here is drawn to the corporation, or collective actors community, the social upper class, and the policy-
representing corporate (elite) power, as a political formation [or policy-planning] network’ (Domhoff,
actor (for a critical perspective on corporate power 2009: 116, Fig. 4.1). In such a power configuration,
in relation to corporate governance, see also corporations, of course, loom large, in fact they are
Soederberg, 2010). It is to the political study of an essential institution in all three spheres that
this phenomenon to which we will now turn below. Domhoff identifies. The social upper class here is
still above all a propertied class that derives its especially Lindblom (1977), who in a hugely influ-
wealth and power from its ownership and (partial) ential work carried this revisionism one step further
control of corporate capital (Domhoff, 2009: 10–12 by explaining the structural basis of this ‘privileged
and chapter 3; see also Scott, 1997; cf. Winters, position of business’ within what Dahl (1956) had
2011, chapter 1). The corporation is thus the key dubbed ‘polyarchy’ by pointing to the fact that
institution through which this class accumulates corporations are the crucial production units within
capital and exercises both economic and political market economies. Thus, an ‘investment strike’ on
power. At the same, think tanks and other policy- the part of capital would directly threaten not only
planning bodies that in states like the US have an the state’s finances (through a fall in government tax
important role in public policy formation are often income) but also risk the wrath of the electorate (for
also not just largely funded by corporate wealth but a defence of traditional ‘interest group’ pluralism
also governed by corporate directors (e.g., van against Lindblom, see Vogel, 1987). Lindblom thus
Apeldoorn and de Graaff, 2015, forthcoming; see identified what Marxist authors saw as the structural
also Parmar, 2004; Shoup and Minter, 2004 [1977]; dependence of the state upon successful capital
Parmar, 2012). In other words, the power elite is accumulation (Block, 1987).
above all a corporate power elite, whereby The structural power of corporate capital has
a corporate elite may be defined as consisting of been argued as in part rooted in the political frag-
‘the men and (the few) women who are in a position mentation of the world into sovereign territorial
to exercise major influence over the decisions and units (Wallerstein, 1974; Anievas, 2008). It is this
policies of . . . large corporations’ (Useem, 1984: division into multiple national jurisdictions (states)
11; cf. Fennema, 1982: 32; Heemskerk, 2007: 79). that constitutes a major source of the structural
power of capital as it can exit from national regimes
not sufficiently accommodating. Capital here can
The Structural Underpinnings of Corporate
take the form of money capital or bonds, stocks et
Power
cetera which can be moved across borders instanta-
Both pluralist and elitist perspectives are agential in neously and often by actors external to, or at least at
the sense that they focus upon the power of certain arm’s length of, the corporation and of corporate
social groups or elites as (collective) actors vis-à-vis management. Yet the exit power also applies to
other social groups and vis-à-vis the state to affect corporations themselves (rather than the money
social and political outcomes, even if elitist theories that finances them), whether industrial corporate
usually recognize very well the structural condi- capital or financial institutions (cf. Frieden, 1991;
tions – in terms of fundamental power asymme- on the mobility of financial capital, see also
tries – enabling the power of elite agency. Another Andrews, 1994).
perspective that more explicitly emphasizes the Here transnational corporations (TNCs) are
structural dimension of corporate power, and con- more mobile than corporations tied to their domes-
ceptualizes it more abstractly as the power of capi- tic markets – by directly moving parts of the com-
tal, is primarily rooted in a Marxist analysis of pany (e.g., production plants) to other countries or
capitalism (see especially Block, 1987) though non- by making use of outsourcing (to sub-contractors) –
Marxists have also recognized the (growing) struc- thereby contributing to, as well profiting from, an
tural power of capital and hence the unique political increasing transnationalization of the value chain.
power of corporations. In fact it was Dahl himself, With globalization large-scale transnational cor-
as well as most notably his colleague from the (for- porations – representing an enormous concentration
mer) pluralist school, Charles Lindblom, who in the of capital – have not only become more central
1970s came to recognize that ‘[b]usinessmen play within the capitalist world economy but also even
a distinctive role . . . that is qualitatively different more transnationally mobile and hence even more
from that of any interest group. It is also much more powerful (Gill and Law, 1989; 1993; see also Gill,
powerful than an interest-group role’ (Dahl and 1995; Wilks, 2013, chapter 3). The transnational
Lindblom, cited in Vogel, 1987: 386). It has been mobility of capital has been argued to not only
empower capital vis-à-vis labour but also vis-à-vis may be structural in contemporary capitalism and
national states as the structural power of transna- even thought that structural power may be deepen-
tional capital critically restricts their policy-making ing because of globalization, policies still need to be
autonomy (e.g., Robinson, 2001: 167–175; for an enacted in order to enable this power in the first
argument on the growing exit power of capital by place. This requires the active shaping and reshap-
two liberal political scientists, see Keohane and ing of public governance by corporate interests.
Milner, 1996). States, competing to attract mobile Here we are back at, not only the elitist perspective,
capital, including foreign direct investment of which emphasizes the role of corporate elites in the
TNCs, have been argued to have transformed into policy formation process but also at Marxist per-
‘competition states’, acting like quasi-corporations spectives on corporate power, which tend to view
in promoting ‘the commodification and marketiza- this from the lens of class power, emphasizing that
tion of its own activities and structures . . . as well corporate elites are in fact organized social groups
promoting marketization more widely’ (Cerny, representing the interests of a broader capitalist
1997: 272–273; see also Palan et al., 2005; class.
Fougner, 2006; cf. Stopford and Strage, 1991;
Jessop 2002).6 What has become the holy grail of
Integrating Structure and Agency: Corporate
national competitiveness has here become equated
Elites and Transnational Classes
with the competitiveness of mostly transnationally
mobile corporate capital located within the states’ A Marxist perspective on corporate power would
borders (Cerny, 1997; Palan et al., 2005; see also focus not only upon the structural power possessed
van Apeldoorn, 2002, chapter 5; van Apeldoorn and by large-scale, and especially transnational, cor-
Hager, 2010; for an enlightening case study of the porations but also on the underlying class dimen-
rise of the competition state in Central and Eastern sion. It would tend to see TNCs as above all vehicles
Europe, see Drahokoupil, 2009). 7 for the accumulation of private wealth in the hands
While transnational corporations are obviously of a (transnational) capitalist class and as institu-
powerful actors – and have become more powerful tions through which this class can wield both eco-
with globalization – it must also be remembered that nomic and political power. In fact, unlike research
they have been made powerful by states, who are in that focuses on the structural economic power of
fact the very authors of the economic globalization corporate capital – that is, capital having political
process (Robinson, 2001: 173; Panitch and Gindin, effects without corporations or corporate elites
2012; cf. Strange, 1996; Hirst and Thompson, undertaking any political activity – a class perspec-
1999). A political science question thus arises: tive brings political agency back in. It shares this
why it is that states in recent decades have adopted perspective with the elitist approach discussed
policies that have enhanced the structural power of above, but a Marxist perspective connects the agen-
capital, such as the persistent lowering of barriers to tial aspects more explicitly with the structural
foreign direct investment? As Robinson (2001: 173) power dimensions as rooted in capitalist relations
suggests – and in line with a historical materialist of production, and hence within the capitalist class
IPE perspective as, for instance, also represented by structure. This structure is characterized by
Robert Cox who argued that we need to relate the a potential social antagonism and hence potential
‘forms of state’ (and the content of their policies) to resistance to capitalist class rule, which is precisely
the prevailing configuration of social forces (Cox, why, from this perspective, the corporate capitalist
1981; 1987) – the answer might lie in examining the class needs ‘to spend time, energy and money on
underlying balance of class forces in which transna- defending and promoting its interests, and indeed
tional capital has become dominant or even, in seeking to articulate it as the general interest, vis-à-
Gramscian terms, ‘hegemonic’ (see also Gill and vis subordinate classes’ (van Apeldoorn, 2014: 13),
Law, 1993). This then brings us back to the notion the latter of which can be seen as an exercise of
of political agency on the part of corporate capital or structural and ideological power, as discussed in the
its representatives. Even though corporate power introduction of this chapter.
Although mainstream political science, more global level we do find transnational class networks,
than sociology, has largely stayed away from the but they are superimposed on persisting national
subject of class, it is within critical IPE especially layers within which networks are generally a lot
that we find a growing body of work since the 1980s denser, while at the regional European level we
that sees the importance of class agency in global find the formation of a clearly distinct transnational
politics as manifesting itself above all transnation- capitalist class or business community (Carroll
ally. In particular, the so-called neo-Gramscian et al., 2010; see also Heemskerk and Takes, 2015,
approach in IPE (Cox, 1981; 1987; Gill, 1990; on regional clusters in a global network of
1993; see also Overbeek, 2000; cf. van Apeldoorn corporations).
et al., 2010) and its ‘Amsterdam School’ variety as In contemporary political science research that
developed by Kees van der Pijl and others (van der takes the political role of corporations or corporate
Pijl, 1984; Overbeek, 1990; Holman, 1992; interests seriously, we can find examples of all
Overbeek, 1993; van der Pijl, 1998; Overbeek, perspectives – pluralism, elitism and Marxism
2000; van Apeldoorn, 2002; 2004) have analysed (including the variety emphasizing the transnational
the formation of transnational classes – the van- dimension of corporate power) – though the plural-
guard of which organizes itself politically – seeking ist model is still clearly dominant. Below, we will
to construct a ‘hegemonic project’ (see Cox, 1987; provide illustrations of all three positions but will
Gill and Law, 1993) that can come to underpin focus upon elitist and Marxist analysis – with the
public policies in various national settings at the latter two often converging – precisely because it is
same time, as well as shape transnational and supra- from within those perspectives that the notion of
national arenas of governance. The contemporary corporate power figures most prominently – rather
process of transnational class formation according than seeing corporations as one political actor
to this literature takes place through such organiza- among many. Moreover, we argue that these per-
tional channels as corporate interlocks but also spectives better recognize the political nature of the
through elite socialization in all kinds of transna- corporation.
tional forums or ‘planning groups’ (van der Pijl,
1998) in which top executives of TNCs and those
who have substantial property interests in transna- The Corporation as a Political Actor in
tional capital, as well as sometimes key political and National Political Systems
opinion leaders, meet to exchange ideas and if pos-
sible forge a common outlook and strategy. A classical study of the political activities of cor-
The transnational capitalist class (TCC) here is porations is Michael Useem’s The Inner Circle
seen as the ‘class fraction’ that wields control over (Useem, 1984), though this work is more cited
transnational corporations and hence embodies cor- within sociology or (critical) management studies
porate power par excellence. TNCs also figure pro- than by political scientists. Adopting a corporate
minently in the theory of globalization as elite power perspective, Useem argued and empiri-
formulated by the political sociologist William cally documented how in the United States and in
Robinson (2004) who tends to see a single inte- the UK an ‘inner circle’ of a small selection of
grated global TCC as bound up with an emerging business leaders connected through networks of
transnational state within which national states are interlocking directorates, social clubs, foundations
mere subordinate parts fully subservient to transna- and the like, had come to form a coherent political
tional capital. In contrast to the rather monolithic actor on behalf of the entire corporate community,
and reified conceptualization of the TCC by thus seeking to gain ‘classwide benefits’ (ibid.: 5).
Robinson, recent empirical research by Carroll While giving much insight into the anatomy of the
(2010) on transnational class formation through, American and British corporate elites and into the
for example, corporate interlocks has shown that institutional channels through which those elites
the larger the scale, the thinner the processes of were constituted as a political actor, Useem’s
transnational class formation become. Thus, at the study – very much in the sociological tradition of
Domhoff and other so-called power structure further below in the discussion on foreign policy),
researchers – was restricted to the ‘social organiza- as well as control over the media and influence of
tion’ of corporate politics and did not touch on the public opinion (e.g., Smith, 2000), also play a role.
actual effect of corporate political activity on public Corporate money can also buy political influence
policies, or the process by which such outcomes directly through the increasingly huge donations to
were achieved (ibid.: 8–9). elections campaigns, which by the Supreme Court
Lindblom’s thesis on the unique power of busi- have been interpreted as constitutionally protected
ness to shape collective choices and perceived gen- ‘corporate free speech’ (Wilks, 2013: 11). Here, the
eral public interests within (nominally) democratic rigorous research of Ferguson (1995) in painstaking
polities, and the impact it made in (mainstream) detail show the large role of campaign finance of the
political science, constituted, as Vogel (1987: 387) corporate rich (both corporations and wealthy indi-
observed, quite a break with the kind of interest- viduals) in the American polity, which is arguably
group pluralism that was previously the orthodoxy, increasingly more of an oligarchy than a democracy
at least in American political science. However, (Winters and Page, 2009).
shortly after Vogel declared Lindblom’s critique Most of the political science studies of corporate
of the undemocratic nature of corporate capitalism political power in national political systems tend to
‘the new conventional wisdom’ (ibid.: 385–386), it focus on the corporations themselves and tend to
was already on its way back. Since then, outside the define ‘corporate political activity’ as ‘attempts to
ranks of a relatively marginal neo-Marxist political shape government policy in ways favourable to the
science, scholarly attention to corporate power has firm’ (Hillman et al., 2004: 838), or alternatively on
largely waned, and, arguably in line with the new a particular sector such as the chemical or car indus-
zeitgeist, we have witnessed a return of pluralist try. These then involve lobbying and other political
orthodoxy. activities such as campaign finance that tend to
At the national level some of the important work serve more specific individual or sectoral corporate
that was done focused on the role that large (multi- interests. Yet some political scientists have also
national) corporations played in shaping public pol- adopted the more sociological corporate elite per-
icy in particular policy areas through various forms spective and like Useem (1984) tend to see the
of lobbying, either at the sectoral or at the individual political agency of business leaders in terms of
firm level (e.g., Wilks, 1988; Grant et al., 1989), but defining and promoting ‘classwide benefits’. Here,
overall there has been quite a dearth. Recently, then, it is no longer the corporation as such which is
however, the study of corporate power in national the unit of analysis, but the elite that owns and
political systems has seen somewhat of a revival, controls it and is seen as sub-set of the capitalist
not least through the work of British political scien- class (e.g., Fennema, 1982; Useem, 1984; Carroll
tist Stephen Wilks, focusing on government- et al., 2010).
business relations in the UK (Wilks, 2013). Thus far, our focus has mostly been on the poli-
The most prominent example of business power at tical role of corporations in advanced capitalist
the national level, however, can be found in the political economies, but there is also a literature –
US political system. often placed within the broader context of global,
Here corporate power manifests itself most visi- transnational capitalism and as such belonging more
bly through lobbying, for instance, in Congress (for to the sub-fields of IPE/IR – that focuses on the role
a representative study showing the agenda-setting of (foreign) corporations in developing countries at
power of corporate interests – that is, the ‘second the centre of attention. Here there is an older neo-
face’ of power (see Lukes, 1985; within the overall Marxist body of work from the late 1970s, espe-
lobbying landscape, see Baumgartner et al., 2009; cially the so-called dependency school, that devel-
for an older study, see Vogel, 1996). But direct oped elaborate accounts of local–global linkages
recruitment of business leaders into government or through the activities of multinational corporations
into boards of think tanks and other elite planning (e.g., Evans, 1979), including what Sunkel and
bodies shaping public policies (Burris, 2008, see Fuenzalida (1979) identified as a ‘transnational
community’ consisting of the upper stratum of own- power is translated into foreign policy making, the
ers and managers of multinationals, as well as sparse literature that is there is mainly written from
affiliated politicians and professionals. However, elitist and Marxist perspectives. A classic work in
this research agenda has largely disappeared with this context is the study by Shoup and Minter (2004
the demise of these neo-Marxist perspectives on [1977]) on the most venerable of US foreign policy
core-periphery relations (but see, e.g., Maxfield think tanks, the Council on Foreign Relations,
and Schneider, 1997, for a non-Marxist perspective which they claim to be an instrument of America’s
on business–state relations in the developing financial oligarchy. Explicitly viewing social forces
world). As we shall see below, the attention to the not simply in national terms but also as extending on
role of TNCs – also in the (former) periphery – has a transnational plane through processes of transna-
revived more recently, but from a rather different tional class formation, Kees van der Pijl’s by now
perspective and within a different context. First, classic study on the ‘Atlantic ruling class’ also pays
however, we will discuss one last way of concep- attention to the close links between fractions of the
tualizing corporate power in national political sys- American capitalist class on the one hand and
tems, that is, as a force shaping countries’ foreign imperialist strategies of the US state on the other
policies. (van der Pijl, 1984). Although van der Pijl speaks
more abstractly of a capitalist class, his work is full
of references to concrete corporations on both sides
Corporate Power and Foreign Policy
of the Atlantic and their links both with each other
An area of special interest with respect to corporate and with leading politicians, as part of a particular
political influence within national political systems ‘capital fraction’ and a transnational power bloc.
is how corporate or business elites shape foreign Similarly, neo-Gramscian Stephen Gill focuses on
policies, and how this affects inter-state relations, a key transnational private planning body, the
thereby bridging the divide between domestic and Trilateral Commission, the membership of which
international politics. The so-called field of foreign is interwoven with both the highest levels of the
policy analysis, however, mostly focuses on gov- US state and the corporate community (1991). Yet
ernmental leaders, bureaucrats and more rarely, in neither author explores the links between corporate
line with pluralist political science, on competing elites and US foreign policy systematically.
‘interest groups’, of which business then could be Such analysis is in fact offered by the more recent
one (e.g., Hudson, 2005). Seldom is explicit atten- work of Inderjeet Parmar, which theoretically is
tion paid to the role of corporations or corporate situated in between the elitist approach and
elites as political actors. Yet, the little research that a particular variety of Gramscianism. His research
exists shows that the corporate influence on foreign on the Council on Foreign Relations shows both the
policy formation is actually quite substantial, at extent and limits of the power of this private, cor-
least in the case of the United States (though there porate interests-dominated body vis-à-vis both the
is a whole research agenda to be explored here with British and the American state (Parmar, 2004).
regard to other countries, see, e.g., Halperin, 2009; A more recent study by Parmar (2012) analyses
and Anievas, 2011, for the UK). the role of corporate philanthropy in shaping the
One of the few studies to assess empirically social and intellectual underpinnings of American
which societal groups have most influence on globalism – with the ‘Big Three’ of Ford,
US foreign policy has been conducted by political Rockefeller and Carnegie for generations having
scientists Jacobs and Page (2005), whose statistical drawn their leadership from the ranks of the
analysis of three decades of survey data show that – American corporate elite (see further Parmar, this
in refutation of the pluralist model – ‘internationally volume). Van Apeldoorn and de Graaff (2012;
oriented business leaders’ have consistently the big- 2014; 2016 have contributed to this field by empiri-
gest impact upon US foreign policy, as opposed to cally mapping the actual personal links between
public opinion and labour leaders. Analysing the the state managers making US foreign policy, on
actual political processes by which corporate the one hand, and America’s corporate elite, on the
other. Employing the method of social network corporations, investment banks and corporate law
analysis, this research shows how top foreign policy firms’, and the mobilization of this power structure
officials of the past three US administrations have through recruitment of the corporate elite into top
almost all had several, and often many, ties to the positions within the administration, through invol-
corporate community – both direct ties as former vement in elite planning bodies and through direct
corporate board members and indirect through cor- corporate lobbying (Kirshner, 2014: 67, 69). This
porate-dominated policy planning bodies – prior to then also brings us to the role of large, transnational
serving in the particular administration for which corporations in arenas beyond the national state,
they had been selected. that is, within European and global governance.
What this body of critical literature shows is that
the American state is embedded in elite networks
that are dominated by corporate capital and asso- The Corporation as a Political Actor in the
ciated private planning councils and that these elite European and Global Arenas
networks have in some cases played a key role in
shaping American foreign policy. All of these stu- Large corporations are to varying degrees almost
dies, though, while revealing how a corporate elite always TNCs, at least in the sense of conducting
is involved in public policy making, do not analyse part of their activities outside their home country.
the corporation itself as a political actor. A focus on While IR as a sub-discipline of political science was
the more direct political activities of corporations traditionally focused on inter-state relations and
within the realm of foreign policy is even more rare, thus took states as the primary, if not exclusive,
yet there are a few studies on how particular busi- actors of word politics, since the 1970s, and from
ness lobbies or coalitions have influenced policies within various schools of thought, transnational
in particular areas (see, e.g., some contributions to relations and hence transnational actors have gained
Cox, 2012). Ferguson has done important historical much more attention (Risse, 2002; van Apeldoorn,
political research in this area with his study of what 2004). When this research agenda first emerged
he calls the New Deal coalition which consisted of within what we can broadly identify as the liberal
‘of capital-intensive industries, investment banks, and pluralist tradition, TNCs (then still called multi-
and internationally oriented commercial banks’, national corporations) were among the most promi-
and which influenced both US domestic and foreign nent transnational actors identified (see Keohane
policy under Roosevelt (Ferguson, 1984: 46). and Nye, 1971; cf. Gilpin, 1975) even if seen as
Within IR/IPE scholars from around the 1970s part of wider set of societal actors bargaining
onwards started to write about the domestic sources amongst each other (Risse, 2002: 258). Yet, from
of foreign economic policy, such as trade policy, the 1990s onwards – arguably the time when the
identifying coalitions of multinational corporations power of TNCs was most rapidly expanding – most
and big banks as in some cases important driving research on transnationalism within the liberal and
forces behind, for instance, the liberal policy regime constructivist perspectives has instead come to
in the area of trade or finance (for an early example, focus much more on the non-profit sector (such as
see Katzenstein, 1978). Yet the mainstream litera- non-governmental organizations), and the study of
ture in this area – in line with the conventional TNCs fell to the wayside.
pluralist model – tends to just take business or Outside the mainstream, the attention to transna-
‘capital as a factor of production’ among other tional corporate power had moved on from the
interests and factors shaping policy preferences of original debate, with the aforementioned depen-
formal political actors (e.g., Milner and Tingley, dency theory arguing that TNCs were instruments
2011). A recent exception is the work of Kirshner of exploitation by the core. More recently, as we
that shows how America’s rise to global trade hege- shall see, the study of TNCs, has made something of
mony has been premised upon a domestic power- comeback in the context of the study of global
structure ‘at the apex [of which] are the nation’s governance. At the same time, the deepening of
largest and most internationally oriented European integration that took place in the closing
decades of the twentieth century also spawned Hansen and Wigger, 2011). Van Apeldoorn’s
a whole literature on the politics of the EU, within work on the European Round Table of
which a critical body of work focuses on the role of Industrialists (ERT) shows how in the 1980s the
corporate (elite) power as well. It is to the latter that CEOs and chairpersons of Europe’s largest TNCs
we will now turn first. were at the forefront of a political mobilization of
Europe’s emergent transnational corporate elite,
founding the ERT in 1983 and turning it into
Corporate Power and European Governance
a very successful platform for the creation of
With the increasing transfer of policy competen- a common outlook and the pursuit of a collective
cies – especially those important to large corpora- strategy serving the long-term needs of European
tions, such as the creation and regulation of the transnational capital – with the ERT seen as a both
internal market – to Brussels from the end of the medium and outcome of a process of European
1980s onwards, interest groups and lobbyists also transnational class formation (van Apeldoorn,
opened up shop in the European capital and created 2000; 2002; 2014; see also Carroll et al., 2010;
a huge lobbying circus in many respects rivalling Heemskerk, 2013). The political agency of the
that of Washington. This has sparked a whole lit- ERT, enabled by the growing structural power of
erature on EU interest group politics. Although at transnational corporate capital, has been especially
times recognizing the clear dominance of large cor- successful in launching the idea of the internal
porations within the EU landscape of interest repre- market and subsequently lobbying for its imple-
sentation, this literature has for the largest part mentation, as well as later advocating the idea of
remained within the pluralist mould, often arguing a single currency to complement that market (van
the heterogeneity of business interests, with differ- Apeldoorn, 2002), and in the 2000s continues to
ent sectors wanting different things as well as other promote a deepening of the European market,
societal and political interests involved in a multi- bringing new areas under the discipline of the
level game in which European public policy is made market, among others through the pro-business
(for overviews of the EU interest group and lobby- Lisbon Agenda (van Apeldoorn and Hager, 2010).
ing literature, see Coen, 2008; Coen and In sum, the power of large (transnational) cor-
Richardson, 2009; Greenwood, 2011). porations is arguably both a driving force and out-
Nevertheless, there is substantial empirical come of the process of European integration that
research that points to the dominance of corporate deepened at the end of the last century with the
interests, with some in particular noting the better creation of the single market and the single cur-
access and larger political influence of large firms rency, both projects very much promoted by big
within the wider variety of interest groups – business.
a situation sometimes referred to as elite pluralism
(Coen, 1997; 1998; Bouwen, 2002; cf. Eising,
Corporate Power and Global Governance
2007). Thus, here big TNCs – which indeed often
have their own lobbying offices in both Brussels and Although not comparable to the process of
national capitals – are analysed as political actors in European integration, global governance – or
their own right (McLaughlin et al., 1993; Coen, forms of collective steering of the global political
1997; 1998; Bouwen, 2002). economy through international organizations and
A smaller yet growing group of scholars adopt- transnational policy making as well as forms of
ing a critical political economy framework, has private authority – has arguably risen as a political
much more squarely recognized the rise and dom- counterpart to globalization; and here TNCs, of
inance, or hegemony, of European transnational course, also loom large as important political actors.
corporate elites, seen as a vanguard of a European The growing literature builds upon earlier attempts
capitalist class (Holman, 1996; 1996; van to bring the corporation back into the study of IPE
Apeldoorn, 2000; Bieler and Morten, 2001; van (Eden, 1991; Stopford and Strange, 1991; Strange,
Apeldoorn, 2002; 2009; 2014; see also Buch- 1991; 1996).
While power is often bracketed in global govern- regimes that are centred in Western [neoliberal]
ance studies (see Barnett and Duvall, 2005) there is economic concepts’ (Sassen, 2000: 382). Another
a growing body of research on corporate power in domain of private power is global corporate-
global governance, employing a diversity of per- dominated planning bodies, such as those illumi-
spectives (for a useful overview, see Barnett and nated in a critical analysis of the discursive (indir-
Duvall, 2005; Ougaard and Leander, 2010; see also ect) power embedded in the World Economic
Fuchs, 2007; Wilks, 2013: chapter 7). Irrespective Forum (WEF) (Fougner, 2008; cf. Graz, 2003),
of how corporate power is conceptualized – that is, a form of indirect power that Barnett and Duvall
in a more direct way or a more indirect structural would label ‘institutional power’ (2005: 52), and as
manner (e.g., Barnett and Duvall, 2005) – and shown by the well-documented study of Richardson
whether it is seen as dominant or not, large corpora- et al. on the otherwise secretive Bilderberg Group
tions are at least seen as key players in this regard. (2011), in whose meetings many corporate execu-
Indeed, what is at times called ‘private power’ or tives participate.
‘private authority’ is sometimes seen as directly With regard to other policy areas in global gov-
emanating from corporations as a source of author- ernance involving (inter)governmental authorities,
ity in forms of private self-regulation or transna- a variety of studies analyse the role of corporate
tional private authority (Cutler et al., 1999; Hall and power of which we will focus on four key areas:
Biersteker, 2002; Cutler, 2003; Sell, 2003; May, trade, finance, security and the environment.
2010; Graz and Nölke, 2012). As shown in the To start with trade and the role of corporate power
studies in Cutler et al. in a wide variety of cases in shaping the global trade regime, studies, such as
and sectors – from online commerce to intellectual Cowles, for example (2001), have shown how busi-
property rights legislation – the ‘framework of gov- ness elites on both sides of the Atlantic have shaped
ernance for international economic transactions is what was then called the transatlantic business dia-
increasingly created and maintained by the private logue, aimed at promoting transatlantic trade and
sector and not by state or inter-state organizations’ investment liberalization. Studies on the role of
(1999: 3). corporate power in the two contemporary global
Indeed, these and other studies tend to emphasize free trade agreements in the making – mostly behind
how state (or public) authority is increasingly chal- doors and without any public involvement or trans-
lenged and even waning. This is, for instance, parency – namely the Transatlantic Trade and
powerfully illustrated by the work of Sinclair on Investment Pact (TTIP) and the Trans-Pacific
bond-rating agencies (e.g., 2005). Others, however, Partnership (TPP) – are scarce (but see Siles-
point to the active participation of the state in the Brugge, 2014). Arguably, these are developments
creation of spheres of private authority and spaces to watch closely in terms of how corporate power is
of private power. IPE studies on tax havens have, operating to carve out additional transnational and
for instance, explored the question to what extent global spaces where it can operate freely and keep
these spaces of private power – insulated from fiscal accumulating.
laws – are hollowing out state power and sover- Global financial governance obviously involves
eignty, or whether they are actually partly facilitated not just governments, international organizations
by the state (Palan, 2003). Sassen (2000) and others, (such as the International Monetary Fund) and cen-
in similar fashion, explore how corporate (or ‘pri- tral bankers but also private bankers and other
vate’) power within the legal realm – as witnessed representatives of the world’s largest financial cor-
by the growing influence and transnationalization of porations. These public and private actors constitute
commercial and merchant law in world politics transnational elite policy networks that shape finan-
(Sassen, 2000; Cutler, 2003) or what Sassen argues cial (de)regulation at the global level (Seabrooke
to amount to a ‘private law system’ – is underpinned and Tsingou, 2009; Nesvetailova and Palan, 2013;
by the (geo)political power of the US and UK in Nesvetailova, 2014; Tsingou, 2014;). Seabrooke
particular. That (geo)political power would help to and Tsingou (2009), for instance, point to the
establish ‘the formation of transnational legal close (public-private) nexus between politicians
and powerful elites in the financial architecture and them, and subsequently themselves deliver these
how their short-term interests coincide (as opposed advised ‘services’.
to the long-term interests of regulators and citizens). In the study of global environmental governance
They subsequently argue that the financial crisis can finally – especially in the work focusing on climate
be explained by the (intellectual) capture of regula- change – corporations are increasingly recognized
tion (more particularly through the propagation of not only as involved in, for instance, public–private
risk management) by these elites cum policy makers partnerships but also as outright political actors (for
(see also Tsingou, 2014, on how what she calls ‘club useful overviews, see Pinkse and Kolk, 2009;
governance’ by such financial elite clubs as the Biermann and Pattberg, 2012; Clapp and
Group of Thirty shape global financial governance; Meckling, 2013) An important critical political
and Seabrooke, 2006). What these and other studies economy contribution that also pays attention to
highlight – see also, for instance, Nesvetailova corporate power within global environmental gov-
(2014) on how financial innovation is a source of ernance in the domains of trade, production and
power rooted in both the activities of financial finance is provided by Newell (2012) whose analy-
agents and the structures of the financial system – sis – based on a historical materialist approach –
is the role of corporations (in this case financial) and starts from the proposition that ‘globalization [and
corporate elites as active agents of corporate struc- thus global governance] has always been, and con-
tural power, by shaping and maintaining the (crisis- tinues to be, driven by deliberate actions on the part
ridden) financial system both discursively and of states, international organizations and the private
otherwise, rather than viewing this as a self- actors that they often serve’ (2012: 4, see also
maintaining system driven by the ‘invisible hand’ Newell and Paterson, 2010, on the role of business
of market forces (as the neoliberal ideology would and investors in climate change). Levy and Egan
have it); thereby also underscoring the politics that apply a neo-Gramscian perspective to analyse what
are essentially embedded in financial global they view as the independent instrumentalist, struc-
governance. tural and discursive forms of corporate power and
Global security governance is another realm influence within climate change negotiations at both
where corporate power has been on the rise in the the national and transnational levels, which within
recent decade. While still mostly contracted by and an overall framework of a neoliberal ‘transnational
formally under the control of states, the privatiza- historical bloc’ have ensured the preservation of
tion of military tasks previously carried out by reg- ‘corporate autonomy’ against more intrusive forms
ular armies is now being outsourced to private of global governance (Levy and Egan, 1998: 335;
military corporations (PMCs) at an ever- see also Levy and Egan, 2003).
expanding scale (Singer, 2001; 2003; Leander, The latter neo-Gramscian perspective also serves
2005). These PMCs are often large transnational to make a more general point regarding the nexus
businesses such as Xe Services (formerly between corporate power and global governance,
Blackwater), Dyncorp or divisions of defence giants namely that TNCs are not just key players in trans-
like Lockheed (e.g., Leander, 2010). Given the national policy making but that their power is inher-
increasing use that states (especially the United ent in (and hence structural to) the nature of
States) make of the services of PMCs, these cor- contemporary global capitalism and the way it is
porations no longer just shape foreign and defence managed. Inasmuch as global governance is above
policies but also play a role in carrying them out, all a neoliberal system of rule (Overbeek, 2010) and
thus eroding the state’s monopoly on the means of reflects a market civilization promoted by, and ser-
violence and raising questions of accountability and ving the interests of, a transnational capitalist class
legitimacy (Brayton, 2002; Mandel, 2002; (Gill, 1995; Rupert, 2005; Fuchs, 2007; Gill, 2008;
Krahmann, 2013). This becomes particularly perti- Gill and Cutler, 2014), the political power and role
nent – as Leander (2005) documents – when the of large corporations in this system is deeply
same security firms provide both analysis of the entrenched. Indeed, the social purpose of this sys-
security problems and advice on how best to solve tem of governance is to entrench it further, even if
resistance to this form of global corporate rule, of mostly outside of the political science discipline, the
course, does take place (Gill, 2008). power dimension and the politics involved are lar-
Another, potentially more transformative chal- gely neglected. That there is such a political – and
lenge to (neo)liberal global governance and the even geopolitical – dimension to this development
corporate interests and values embedded in those is, however, quite evident, in particular because
institutions comes from the rise of emerging many of these ‘Southern MNCs’ are still either
powers, in particular the so-called BRICs (Brazil, partly or wholly owned by the state. Indeed, the
Russia, India and China) (for a classical political rapid growth and expansion of these state-owned
science analysis of an earlier challenge to the liberal players led to alarmed responses on the part of some
order with the formation of the new international leading Western analysts, the general gist being that
economic order, see, e.g., Krasner, 1985). state-directorship and control would be detrimental
The growing influence of the emerging economies to the workings of the market and threaten
and their corporations implies not only a possible (Western) commercial interests (e.g., Bremmer,
challenge to existing power relations – introducing 2008).
a partly different set of political values, interests and Most of the academic research on emerging
systems to the global political and economic arena – powers and the corporation that can be situated
but also brings on (the global) stage a different within – or related to – political science has been
corporate entity, namely state-owned enterprises focusing on SOEs in strategic sectors, such as
(SOEs). Research into the phenomenon of these national oil companies (Marcel, 2006; Hertog,
emerging players, their globalizing trajectory and 2008; Stevens, 2008; Vivoda, 2009; Victor et al.,
the impact on Western markets, corporate elite net- 2012). Most of this literature, similar to that in
works, social relations and governance has been business and economics, focuses on the internal
growing but is, given the relative novelty of this and domestic workings of these corporations and
development, still in its infant stages (for more their relations to the home governments, often in
historical accounts of the political role of MNCs comparison to Western corporations. Surprisingly
and corporate power in, for instance, Latin America little attention, however, has been directed to their
and the Middle East, see, e.g., Sampson, 1975; influence on the power relations within the global
Anderson, 1981; Schlesinger and Kinzer, 1982; economy, which are bound to be impacted by the
Kinzer, 2003). Below we will discuss a sample of integration of these new kids on the block (Sauvant
this literature, focusing in particular on the realm of 2008: 4; for an exception, see, e.g., Nölke, 2014).
inter-firm relations in world markets and the dis- The studies discussed earlier, grounded in critical
tinctive configurations of corporate elite power that elite perspectives that map the transnational and
emerging multinationals might represent. national social networks, through, for instance,
interlocking directorates and their inter-linkages
with the policy planning world of think tanks, busi-
The Politics of Emerging Corporations from
ness councils and the like (Carroll, 2010), have thus
the South
far largely focused on Global 500 firms, and have
The phenomenon of rising multinational corpora- therefore tended to exclude many firms and direc-
tions from emerging economies (sometimes also tors from the rising powers. Recently, though,
referred to as the ‘Southern multinationals’, within this tradition, there have been some impor-
Brennan (ed.), 2011) has already generated a great tant attempts to broaden the scope and explicitly
deal of research, particularly in business studies, focus on the impact – or lack thereof – of emerging
law and economics (e.g., Sauvant, 2008; Sauvant powers’ corporations and corporate elites on global
et al., 2010; Brennan (ed.), 2011; Marinov and transnational elite networks. De Graaff (2011;
Marinova, 2011), investigating their efficiency; cor- 2012), for instance, shows that although the emer-
porate governance models, and impact on European ging economies’ firms are integrating into world
and global markets, and corporate law and govern- markets through an increasing number of joint ven-
ance. Yet, within this scholarship, which also falls tures and corporate alliances with key players of
those markets, the emerging corporate elites – as the emerging economies elites influenced by their
represented by the directors of these SOEs – are transnationalization, and what are the implications
hardly integrated into the Western ‘old boy net- of their globalizing trajectories? Will they be gra-
works’, nor do they form similar alternative trans- dually integrated into Western circuits of corporate
national corporate elite networks themselves (see power, or will they form alternative contending
also Cardenas, 2014, on the formation of Latin structures? And will this lead to strategies of con-
American transnational corporate networks). frontation, co-optation or consensus-building and
In part, this can be attributed to the different hybridization?
state–business ties of these elites, which – at least
in the strategic energy sector – turn out to be very
extensive and at high levels in the state apparatus. Conclusion
In the Chinese case, this has been interpreted as
creating a dual commitment, with directors of In this chapter, we have provided an overview of
these globalizing state corporations putting up the scholarship within political science of the
‘two faces’, balancing their commitments to the corporation as a political actor, whereby we
values and interests of the state and the party with have emphasized the power embedded in the cor-
their corporate commitments to commercial values poration and its primary agents, corporate elites.
and interests (de Graaff, 2014; see also Stephen, Although the investigation of corporate power is
2014). relatively scanty within large parts of the political
All in all, however, there remains much to be science discipline, we have presented a wide
explored here. In particular, the question to what range of perspectives and findings on the role of
extent there is an increasing transnationalization of the corporation as a key actor in capitalist socie-
these elites, and what their impact is on corporate ties and in national, transnational and global pol-
elite networks and political dynamics in the West, itics. We have focused our analysis of the existing
remains a fertile field of further critical research on scholarship on, consecutively, the politics within
the corporation as a political actor. Such a research the corporation, the politics of public regulation
agenda could follow the four aspects of the politics of the corporation, the politics of the corporation
of the corporation as identified in this chapter: first within society, and finally the politics between
of all, analyses of possible changes of the politics corporations and the people directing and/or own-
within firms generated by the growing influence of ing them. We have concluded our review of this
these new corporate players. On the one hand, one literature with some future avenues for further
can think of how their distinctive rules and values research on in particular that last dimension in
impact on, for instance, labour. On the other hand, the context of the major ongoing power shift in
their increasingly globalizing value chains and inte- the global political economy: the rise of emerging
gration into the liberal order must have an impact on economies and the challenges and opportunities
the distinctive models that rising powers’ multina- that this might imply for the corporation as
tionals represent. Second, and directly related, is the a political actor and as a phenomenon to further
governance and regulation of these firms; and, integrate into the discipline of political science.
third, the distinctive relations of these corporations
with society and in particular vis-à-vis the state.
What do the differences in these state-corporate Notes
relations tell us, and how does the gradual expan-
sion of new forms of capitalism in turn influence 1. We would like to thank the editors of this hand-
politics, policies and governance of these firms at book, Grietje Baars and Andrew Spicer, for their
the national, European and global level? Finally, helpful comments on an earlier version of this
there is the issue of the politics between Western chapter.
and non-Western corporations and their ongoing 2. For an application of this distinction to analysing
competition in global markets. How and why are the power of capital see Gill and Law, 1993.
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CHAPTER

Introduction stake, such as with all forms of socio-economic

3. Conversely, structural power is only effectuated References

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