From Canadian corporate elite to transnational capitalist class: transitions in the organization of corporate power

COPYRIGHT 2007 Canadian Sociology and Anthropology Assn.

INVESTIGATION OF THE SOCIAL ORGANIZATION of corporate power has deep roots in Canada. Well before John Porter published The Vertical Mosaic (1965), activists and journalists were documenting and criticizing the enormous concentration of economic power that issued from the formation of corporations such as the Canadian Pacific Railway in the late 19th century (e.g., Myers, 1972) and that expanded further with the merger movement of the early 20th century (McLennan, 1929; McCollum, 1935). The guiding motif in these analyses, and in the Parks' Anatomy of Big Business (1973 [1962]), which preceded Porter's book by three years as the first systematic network analysis of interlocking directorates in Canada, was not sociology but socialism.

Porter's work, along with that of C. Wright Mills (1956), was path-breaking in creating the paradigm for sociological research. Equally key was their contribution as public sociologists: their accessible books attracted considerable attention, as the truths they revealed about power concentrated in old boys' networks clashed with the received postwar rhetoric of social citizenship. Mills and Porter, of course, presented somewhat different interpretations of corporate power, with Porter adopting, in James Heap's (1974: 109-12) view, a writing strategy of "liberal respectability" that reduced classes to nominal, statistical categories and drew more upon functionalist and elite theory than upon Marx.

Interest in the social organization of corporate power has subsequently waxed and waned. In the 1970s, American and European researchers brought the emerging tools of network analysis into service, creating what came to be called "power structure analysis" (Domhoff, 1980), while in Canada the revival of political economy led Porter's outstanding student Wallace Clement (1975; 1977) to a dependentist interpretation of Canada's corporate elite. Debates about the structure of the Canadian capitalist class raged throughout the 1980s, with much of the work informed by network-analytic approaches and Marxist class analysis (Brym, 1985; Carroll, 1982; 1984; 1986; Carroll, Fox and Ornstein, 1982; Fox and Ornstein, 1986; Kellogg, 1989; Niosi, 1981; Richardson, 1982; 1988). However, by the 1990s the question of corporate power had been displaced from the higher reaches of the research agenda, as sociology made its cultural turn, which for many meant reconceptualizing power along Foucauldian lines (e.g., Valverde, 1991).

Recently, however, there has been a revival of interest, as indicated for instance by the publication of Jamie Brownlee's Ruling Canada (2005), a useful synthesis of Canadian research, and by workshops on "Reviving Elites Research" at the University of Manchester in March 2006, on "Finance, Industry and Power: The Capitalist Corporation in the 21st Century" at York University a month later, and on "Politics and Interlocking Directorates" at the University of Barcelona in September 2006. At Manchester, four prominent members of the Centre for Research on Socio-Cultural Change (CRESC) called for "a new kind of research programme on the privileged beneficiaries and agents of our form of neo-liberal capitalism," a program that sees "elites as existing in the context of post 1979 economic reform and permanent restructuring of the public and private sector" (Froud, Savage, Tampubolon and Williams, 2006: 16). Since the advent of neo-liberal capitalism, corporate power has indeed been transformed, but the issue of how elites are articulated to and implicated in practices of capital accumulation, class formation and cultural hegemony remains an important one for sociology.

Here, I recount my own intellectual journey across the changing landscape of corporate power, reflecting on the shifting realities and the frameworks within which they have been interpreted. My work in this field, now beginning its fourth decade, has combined the sociology of elites with the political economy of class. Drawing on the power-structure tradition, it has focussed on the social organization of corporate power, as traced by the network of interlocking directorates among the largest firms. Corporate power--the power that accrues to enormous concentrations of capital, organized as corporations--is Janus-faced. One face is inseparable from the accumulation of capital, the other entails the struggle for cultural and political hegemony, conducted for the most part outside the economic field per se. In mapping elite organization we gain a certain perspective on how these forms of corporate power have shaped the capitalist class' top tier. (1)

Consider first the facet of accumulation. We can distinguish three kinds of economic power resident in corporate-elite organization. Strategic power resides at the level of structural decision making; it concerns the determination of long-term corporate goals and of initiatives to realize those goals. The implementation of corporate strategy within an internal chain of command is what entails operational power. Finally, financial institutions wield allocative power through their collective control over the availability of funds, which "gives them the power to determine the broad conditions under which other enterprises must decide their corporate strategies" (Scott, 1997: 139).

Each form of economic power has its characteristic agents and sites. Managers wield operational power within internal hierarchies. Strategic power can involve complex alignments of major shareholders, whether individual or institutional. It is centred in the board of directors, where major strategic decisions are made, but often cuts across individual companies through interlocking directorates and intercorporate ownership (Berkowitz and Fitzgerald, 1995). Allocative power, centred in the control of money-capital, creates complex relations between creditors and debtors, often evident in interlocking directorates between financial institutions and corporations.

The board of directors brings together all three kinds of power, and although operational power remains bound within each enterprise, directorate interlocks often trace relations of strategic and allocative power across firms. Considered in their entirety, these relations constitute a structure of finance capital: a coalescence of the forms of capital, under conditions of monopolization and internationalization (Thompson, 1977; Overbeek, 1980; Richardson, 1982). Thus defined, finance capital has been an integral feature of advanced capitalism, what Hilferding called "organized capitalism," (2) yet the specific institutional ordering of finance capital has varied with national differences in business systems.

The Continental European and Japanese systems have been the most "organized," with deeply structured capital relations integrating the largest corporations and banks. At the other end of the continuum, the Anglo-American system of capital mobilization and elite formation has limited the concentration of shareholdings and positioned banks at the centre of a system of "polyarchic financial hegemony," inducing a relatively thin corporate network (Scott, 1997). Canada's regime has been somewhat of a hybrid. Although financial-industrial relations have been built more around credit than ownership, Porter (1965) and others (e.g., Niosi, 1978) were able to identify controlling interests (whether persons, investment companies or other corporations) for most large corporations, and diversified investment companies have integrated strategic control over numerous firms within complex pyramids of intercorporate ownership (Carroll and Lewis, 1991).

Corporate power is not simply a matter of commanding the heights of industry and finance. The consent of subordinates cannot be taken for granted. Much of the work of manufacturing that consent can be delegated to various intellectuals--in media, public relations, academe, etc.--but the corporate elite must exercise active leadership. The ruling class may not rule, but business leadership does reach into civil society and the state, recruiting support for a worldview within which the interest of capital in profitable accumulation is universalized. To reach effectively, to be a leading cultural and political force, the corporate elite must achieve cohesiveness as a business community, with a shared perspective on what is to be done. A second component of my research program has focussed on how corporate-elite organization enables the exercise of hegemony as a form of class power distinct from accumulation. Here again, the empirical mapping of corporate-elite networks gives us one window on the relations and practices of corporate power.

This framework can be applied both at the national and transnational levels. Indeed, my own research has gradually moved from the former to the latter, considering Canada as a critical case--a middle power whose national economy has been for many decades relatively internationalized via high levels of foreign investment and trade, within the logic of a "permeable Fordism" (Jensen, 1989) linking "Canadian" capital circuits to those of global capitalism's dominant state. Let us begin with Canada.

With co-authors that include my doctoral supervisors, John Fox and Michael Ornstein, international collaborators like Malcolm Alexander and Meindert Fennema, and several of my graduate students, I have mapped corporate networks with an eye to transitions in the organization of corporate power. The timeframe has spanned the second half of the 20th century, taking in the "golden era" of Fordism, the Keynesian welfare state, the economic downturn of the 1970s and subsequent development of transnational neo-liberalism. What animated my research initially was the debate--in full flower by the late 1970s--over the character of Canadian capitalism and the capitalist class, summarized well by Brym (1989). For the corporate elite, the question could be posed in terms of two scenarios. Has corporate power been organized around an alliance of Canadian banker/merchants and foreign-based industry, presiding over a cumulative process of silent surrender and underdevelopment? Or has Canada's corporate elite been organized much as in other advanced capitalist societies--its dominant fraction controlling finance capital and showing the capacity to accumulate globally (Carroll, 1986: xiv-xv)? Along with important work by Ornstein (1976) and Richardson (1982), my research on the "golden era" (Carroll, 1986) established the validity of the second scenario:

1. Leading industrial corporations and financial institutions controlled by Canadian capitalists have tended to interlock...