The company of strangers: Defending the power of business in Britain, 1975-2005

New Political Economy

Volumn 11, Issue 4, 2006, Pages 453-477

  Moran, Michael ^a  

^a UNIVERSITY OF MANCHESTER   (United Kingdom)

Author keywords

[No Author keywords available]

Indexed keywords

BUSINESS DEVELOPMENT; ECONOMIC POLICY; POLITICAL ECONOMY;

EURASIA; EUROPE; UNITED KINGDOM; WESTERN EUROPE;

EID: 33845543324     PISSN: 13563467     EISSN: 14699923     Source Type: Journal    
DOI: 10.1080/13563460600988545     Document Type: Article

References (155)

1. Charles Lindblom, Politics and Markets: The World's Political Economic Systems (Basic Books, 1977).
2. For the most powerful critique, see David Vogel, Kindred Strangers: The Uneasy Relationship between Politics and Business in America (Princeton University Press, 1996), pp. 239-322.
3. Measured by aggregate gross domestic product (GDP). On some claims it is now the fifth, since China may have overtaken the UK, but believing this also means believing Chinese output figures.
4. For the comparative setting, see David Coates, Models of Capitalism: Growth and Stagnation in the Modern Era (Polity, 2000).
5. For documentation see, for instance, Harvey Feigenbaum, Jeffery Henig & Chris Hamnett, Shrinking the State: The Political Underpinnings of Privatization (Cambridge University Press, 1999), pp. 1 and 62.
6. Karl Marx, Capital: A Critique of Political Economy, Vol. 3 (Lawrence and Wishart, 1959), p. 253.
7. Vogel, Kindred Strangers.
8. The phrase 'class-wide' echoes Michael Useem, The Inner Circle: Large Corporations and the Rise of Business Political Activity in the U.S. and the U.K. (Oxford University Press, 1984), pp. 16-8.
9. For the standard exposition, see P. G. Cain & A. G. Hopkins, British Imperialism: Innovation and Expansion, 1688-1914 (Pearson Longman, 1993), quotations from pp. 3 and 28
10. P. G. Cain & A. G. Hopkins, British Imperialism: Crisis and Deconstruction, 1914-1990 (Pearson Longman, 1993).
11. See also Geoffrey Ingham, Capitalism Divided The City and Industry in British Social Development (Macmillan, 1984), pp. 96-127
12. Frank Longstreth, 'The city, industry and the state', in Colin Crouch (ed.), State and Economy in Contemporary Capitalism (Croom Helm, 1979), pp. 157-90.
13. For a case study, see Barry Supple, The Royal Exchange Insurance: A History of British Insurance, 1720-1970 (Cambridge University Press, 1970), pp. 12-21
14. more generally,Maurice Kirby, 'Big business before 1990', in Maurice Kirby & Mary Rose (eds), Business Enterprise in Modern Britain: From the Eighteenth to the Twentieth Century (Routledge, 1994), pp. 113-36
15. for the particular case of Lloyds, John Braithwaite & Peter Drahos, Global Business Regulation (Cambridge University Press, 2000), pp. 90, 421, 433
16. J. H. Clapham, The Bank of England: A History. Volume 1, 1694-1797 (Cambridge University Press, 1944), pp. 53-103.
17. For the social foundations, see Michael Lisle-Williams, 'Merchant banking dynasties in the English class structure: Ownership, solidarity and kinship in the City of London, 1850-90', British Journal of Sociology, Vol. 35, No. 3 (1984), pp. 333-62
18. for a wonderfully vivid picture of the human reality of this world, David Kynaston, The City of London, Volume I, A World of its Own 1815-90 (Pimlico, 1995), The City of London, Volume II, Golden Years 1890-1914 (Pimlico, 1996), The City of London, Volume III, Illusions of Gold 1914-45 (Pimlico, 1999).
19. On the evolution of the interest base in the party, see Samuel Beer, Modern British Politics (Faber, 1969)
20. Andrew Gamble, The Conservative Nation (Routledge, 1974)
21. Nigel Harris, Competition and the Corporate Society: British Conservatives, the State and Industry 1945-1964 (Methuen, 1973).
22. See Lisle-Williams, 'Merchant banking dynasties', for documentation of this.
23. See Leslie Hannah, The Rise of the Corporate Economy, 2nd edn (Methuen, 1983), p. 71, on centralisation in the metropolis.
24. The early struggles to create collective organisation via the FBI are told in Stephen Blank, Government and Industry in Britain (Saxon House, 1973), pp 13-20, and in biographies of two key figures: R. T.
25. P. Davenport-Hines, Dudley Docker: The Life and Times of a Trade Warrior (Cambridge University Press, 1984), pp. 84-7
26. Keith Grieves, Sir Eric Geddes: Business and Government in War and Peace (Manchester University Press, 1990), pp. 169-72.
27. On which, J. P. Nettl, 'Consensus or elite domination: The case of business', Political Studies, Vol. 13, No.1 (1965), pp. 22-44
28. Andrew Shonfield, Modern Capitalism (Royal Institute of International Affairs and Oxford University Press, 1965)
29. Sidney Pollard, The Wasting of the British Economy: British Economic Policy since 1945 to the Present (Croom Helm, 1982)
30. David Marquand, The Unprincipled Society: New Demands and Old Politics (Jonathan Cape, 1988).
31. Bishop Hunt, The Development of the Business Corporation in England 1800-1867 (Russell and Russell, 1969), p. 138
32. see also Robin Pearson, 'Shareholder democracies? English stock companies and the politics of corporate governance during the industrial revolution', English Historical Review, Vol. 117 (2002), pp. 840-66, for the spread of the 'technocratic' model of company accountability and control.
33. Andrew Gamble & Gavin Kelly, 'Shareholder value and the stakeholder debate in the UK', Corporate Governance, Vol. 9, No. 2 (2001), p. 111.
34. For a demonstration of this orthodoxy, see John Parkinson, Corporate Power and Resonsibility: Issues in the Theory of Company Law (Clarendon Press, 1994), p. 30
35. Brian Cheffins, Company Law: Theory, Structure and Operation (Clarendon Press, 1997), p. 39
36. John Parkinson, Andrew Gamble & Gavin Kelly (eds), The Political Economy of the Company (Hart, 2000)
37. Mary Stokes, 'Company law and legal theory', in William Twining (ed.), Legal Theory and Common Law (Blackwell, 1986), pp. 115-83.
38. For the historical origins of this regulatory ideology I rely heavily on the work of W. G. Carson, 'Some sociological aspects of strict liability and the enforcement of factory legislation', Modern Law Review, Vol. 33, No. 4 (1970), pp. 396-412
39. 'White-collar crime and the enforcement of factory legislation', British Journal of Criminology, Vol. 10, No. 4 (1970), pp. 383-98
40. 'Symbolic and instrumental dimensions of early factory legislation: A case study in the social origins of criminal law', in Roger Hood (ed.), Crime, Criminology and Public Policy: Essays in Honour of Sir Leon Radzinowicz (Heinemann, 1974), pp. 107-38
41. 'The conventionalization of early factory crime', International Journal for the Sociology of Law, Vol. 7, No. 1 (1979), pp. 37-60
42. 'The institutionalization of ambiguity: Early British Factory Acts', in G. Geis & E. Stotland (eds), White-Collar Crime: Theory and Research (Sage, 1980), pp. 142-73
43. The Other Price of Britain's Oil: Safety and Control in the North Sea (Martin Robertson, 1984).
44. For case studies of individual policy domains that corroborate Carson's account, see, for example, Eric Ashby & Mary Anderson, The Politics of Clean Air (Clarendon Press, 1981) on pollution
45. Stephen Wilks, In the Public Interest: Competition Policy and the Monopolies and Mergers Commission (Manchester University Press, 1999) on competition policy.
46. On this history of fragmentation and the 'blind eye', see Brian Cheffins, 'Mergers and the evolution of patterns of corporate ownership and control: The British experience', Business History, Vol. 46, No. 2 (2004), pp. 256-84
47. Oliver Westall, 'The competitive environment of British business, 1850-1914', in Kirby & Rose (eds), Business Enterprise in Modern Britain, pp. 207-35
48. J. H. Clapham, An Economic History of Modern Britain: The Railway Age 1820-1950 (Cambridge University Press, 1930), pp. 219-62
49. for its persistence into the inter-war years, see Hannah, Rise of the Corporate Economy, pp. 41-7.
50. See P. L. Payne, 'The emergence of the large-scale company in Great Britain, 1870-1914', Economic History Review, Vol. 20, No. 3 (1967), pp. 519-42
51. T. R. Gourvish, 'British business and the transition to a corporate economy: Entrepreneurship and managerial structures', Business History, Vol. 29, No. 4 (1987), p. 26.
52. On the late emergence of modern models of corporate organisation, Hannah, Rise of the Corporate Economy, p. 88
53. Alfred Chandler, Scale and Scope: The Dynamics of Industrial Capitalism (Harvard University Press, 1990), p. 392
54. William Lazonick, Business Organization and the Myth of the Market Economy (Cambridge University Press, 1991), pp. 4-6.
55. Before Norman, Governors had served for fixed terms of two years, on a seniority rule occasionally modified to exclude the most obviously mentally deficient. However, already under the pressure of war Norman's predecessor, the choleric and barely sane Cunliffe had served longer than any of his 107 predecessors. See R. S. Sayers, The Bank of England, 1891-1944, Vol. 1 (Cambridge University Press, 1976), p. 109
56. Kynaston, The City of London, Volume III, pp. 166-8.
57. On this reorganisation, see Henry Clay, Lord Norman (Macmillan, 1957), pp. 272-317
58. Kynaston, The City of London, Volume III, pp. 42-4.
59. On the historical sociology of the Party, see Simon Haxey, Tory MP (Gollancz, 1942) and W. Guttsman, The British Political Elite (Macgibbon and Kee, 1965), pp. 361-4.
60. This strategy of class conciliation reached its peak in the 1950s: For the impact on a key sector see Eric Wigham, The Power to Manage: A History of the Engineering Employers' Federation (Macmillan, 1973), pp. 184-8.
61. The quotation is from Blank's history, Government and Industry in Britain, p. 66 pp. 48ff for the transformation of the FBI into an insider institution.
62. On the failure of Docker's vision, see Davenport-Hines, Dudley Docker, pp. 84-7
63. for tensions with the powerful Engineering Employers' Federation in particular, see Wigham, The Power to Manage, pp. 103-4
64. Keith Middlemas, Politics in Industrial Society: The experience of the British system since 1911 (Deutsch, 1979), pp. 116-8
65. for the restricted vision of Eric Geddes, another key early figure in the Federation, Grieves, Sir Eric Geddes, p. 169.
66. Blank, Government and Industry in Britain, p. 20.
67. The significance of the 'turn to planning' is documented in, for instance, Wyn Grant & David Marsh, The Confederation of British Industry (Hodder and Stoughton, 1977), p. 25.
68. Report of the Commission of Inquiry into Industrial and Commercial Representation, Chairman, Lord Devlin (Association of British Chambers of Commerce and Confederation of British Industry, 1972), p. 15.
69. On this in general, see Grant & Marsh, The Confederation of British Industry, pp. 59-60
70. on problems with the most formidable employers' association, the engineers, see Wigham, The Power to Manage, p. 216.
71. Grant & Marsh, The Confederation of British Industry, pp. 31-2 and 61. The CBI actually only allowed retail stores to join in 1969.
72. Grant & Marsh, The Confederation of British Industry, p. 25.
73. For examples of governing roles that now seem extraordinary see Grant & Marsh, The Confederation of British Industry, pp. 192-3
74. for the CBI anger after 1979, Wyn Grant & Jane Sargent, Business and Politics in Britain (Macmillan, 1993), p. 124.
75. John Scott, Corporate Business and Capitalist Classes (Oxford University Press, 1997), p. 119.
76. John Fidler, The British Business Elite: Its Attitude to Class, Structure and Power (Routledge, 1981), especially pp. 89-90, summarily tabulates the studies to that point.
77. See also John Scott, Who Rules Britain? (Polity, 1991)
78. Scott, Corporate Business and Capitalist Classes
79. John Scott, 'Transformations in the British economic elite', Comparative Sociology, Vol. 2, No. 1 (2003), pp. 155-73
80. John Scott & Catherine Griff, Directors of Industry (Polity, 1984).
81. Useem, The Inner Circle, especially pp. 42-57.
82. As Useem acknowledges (p. 60) his classic owes much to an earlier classic: C. Wright Mills, The Power Elite (Oxford University Press, 1956).
83. For two prestigious official statements at key moments in the twentieth century, see Committee on Finance and Industry, Report, Cmnd. 3897 (HMSO, 1969 reprint of 1931 report), p. 5
84. Committee on the Working of the Monetary System, Report 1959, Cmnd. 827, p. 120.
85. Ben Clift, Andrew Gamble & Michael Harris, 'The Labour Party and the company', in Parkinson et al. (eds), The Political Economy of the Company, pp. 51-81
86. Sue Bowden, 'Corporate governance in a political climate: The impact of public policy regimes on corporate governance in the United Kingdom', in Parkinson et al. (eds), The Political Economy of the Company, pp. 175-94.
87. I have sought to document this history of incompetence in Michael Moran, The British Regulatory State: High Modernism and Hyper-Innovation (Oxford University Press, 2003).
88. See data reported in Audit Commission/Mori, Trust in Public Institutions (Audit Commission, 2005), pp. 30 and 38, www.mori.com/sri (accessed 28 January 2005)
89. in Brian Gosschalk & Allan Hyde, The Business World Will Never be the Same: The Contribution of Research to Corporate Governance Post-Enron (Mori, 2003), p. 4, http://www.mori.com/pubinfo/bg/esomar2003 (accessed 28 January 2005).
90. For similar examples, see Audit Commission/Mori, Trust in Public Institutions, pp. 30 and 38
91. Gosschalk & Hyde, The Business World Will Never be the Same, p. 4.
92. The figures for 'too much power' are: 1964: 65 percent; 1966: 63 per cent1970: 55 per cent; 1974 (October): 62 per cent; 1979: 60 per cent; 1983: 68 per cent; 1992: 74 per cent; 1997: 79 per cent; 2001: 78 per cent; 2005: 75 per cent. I have not been able to obtain data for February 1974 or 1987. These figures exclude 'don't knows' and 'non-respondents', which rose sharply in 2001 and 2005. It is uncertain why this happened, but it may be due to technical changes in the administration of the questionnaire. I am grateful to David Sanders for supplying me with this data - and should emphasise that the interpretation is my responsibility alone.
93. For the 1980s, see Steven Vogel, Freer Markets, More Rules: Regulatory Reform in Advanced Industrial Countries (Cornell University Press, 1996), pp. 93-117; and for the Financial Services Authority, Financial Services Authority, Introduction to the Financial Services Authority (FSA 2001), and Financial Services Authority, Annual Report 2001/02 (Financial Services Authority, 2002).
94. For case studies, see Adrian Smith, Integrated Pollution Control: Change and Continuity in the UK Industrial Pollution Policy Network (Ashgate, 1997)
95. Adrian Smith, 'Policy networks and advocacy coalitions: Explaining policy change and stability in UK industrial pollution policy', Environment and Planning C: Government and Policy, Vol. 18, No. 5 (2000), pp. 95-114.
96. Timothy O'Riordan & Albert Weale, 'Administrative reorganisation and policy change: The case of Her Majesty's Inspectorate of Pollution', Public Administration, Vol. 67, No. 3 (1989), pp. 277-94
97. Albert Weale, 'Can we democratize decisions on risk and the environment?', Government and Opposition, Vol. 36, No. 3 (2001), pp. 355-78
98. Albert Weale, Geoffrey Pridham, Michelle Cini, Dimitris Konstadakopulos, Martin Porter & Brendan Flynn, Environmental Governance in Europe: An Ever Closer Ecological Union (Oxford University Press, 2000)
99. Wilks, In the Public Interest, pp. 282-330.
100. IanDewing&Peter Russell, 'Accounting, auditing and corporate governance of European listed companies: EU policy developments before and after ENRON', Journal of CommonMarket Studies, Vol. 42, No. 2 (2004), pp. 289-319 for the most up to date available summary.
101. For a parallel development in the important world of actuaries see Derek Morris, Morris Review of the Actuarial Profession: Final Report (HM Treasury, 2005).
102. For the latest available, see Department of Trade and Industry, Company Law Reform (DTI, 2005), Cm. 4656, pp. 1-3.
103. I rely on Department of Trade and Industry, Company Law Reform and (for a summary of the evolution since the start of the Review in 1998) the documents gathered at http://www.dti.gov.uk/cld/review.
104. Scott, 'Transformations in the British economic elite', p. 170.
105. National Statistics, Share Ownership: A Report on Share Ownership as at 31st December 2004 (HMSO, 2005), p. 9.
106. T. Tassell & L. Saigol, 'International investors in the UK are buying up the keys to the kingdom,' Financial Times, 22 June 2005, p. 21.
107. N. Milward, M. Stevens, D. Smart&W. R. Hawes, Workplace Industrial Relations in Transition (Dartmouth, 1992), pp. 45-6.
108. Justin Greenwood, 'The association of small and medium-sized enterprises in the United Kingdom', mimeo, at http://www.rgu.ac.uk (accessed 25 June 2005). Employers' associations are required to submit returns to an official Certification Officer Greenwood's observations are based on a fall in the numbers reporting of 48 (to 178) over the period 1994-2003.
109. Timothy May, John McHugh & Tom Taylor, 'Business representation in the UK since 1979: The case of Trade Associations', Political Studies, Vol. 46, No. 2 (1998), pp. 260-75
110. Mark Boleat, Managing Trade Associations (Trade Association Forum, 2003). Not all those in Boleat's figure are trade associations, but most are.
111. Report of the Commission of Inquiry into Commercial and Industrial Representation.
112. May et al., 'Business representation in the UK', pp. 261-2.
113. Trade Association Forum, 'About the forum', at www.taforum.org (accessed 11 August 2005).
114. May et al., 'Business representation in the UK', p. 265.
115. Alistair MacDonald, The Business of Representation: The Modern Trade Association (Trade Association Forum, 2001). MacDonald is a particularly important source independent of the value of his reported research. For many years he was the lead civil servant in the DTI concerned with trade associations, and served in the early 1970s as secretary to the Devlin Commission.
116. On political incompetence, MacDonald, The Business of Representation, p. 12
117. on primitive technology (many had no e mail facilities as late as 1999), ibid., pp. 22ff.
118. Ibid., p. 24.
119. Grant & Sargent, Business and Politics in Britain, p. 124.
120. Wyn Grant, Globalization, Big Business and the Blair Government (Working Paper 58/00, University of Warwick Centre for the Study of Globalization and Regionalization, 2000), p. 12.
121. For the case history of division over a critical issue between the IOD and the CBI, see M. Harrison, 'Business at loggerheads over single currency', The Independent, 24 April 1997, p. 21
122. M. Halligan, 'Peer launches campaign against CBI euro "myth"', Financial Times, 12 June 1998, p. 10
123. O. Morgan, 'Business: The great euro debate', The Observer, 10 June 2001, p. 4.
124. On Chambers of Commerce, Graham Fallon & Reva Berman Brown, 'Does Britain need public law status Chambers of Commerce?', European Business Review, Vol. 12, No. 1 (2000), pp. 19-27.
125. On the FSB, Grant Jordan & Darren Halpin, 'Cultivating small business influence in the UK: The Federation of Small Businesses' journey from outsider to insider', Journal of Public Affairs, Vol. 3, No. 4 (2003), pp. 313-25
126. Jordan & Halpin, 'Olson triumphant? Recruitment strategies and the growth of a small business organisation', Political Studies, Vol. 52, No. 3 (2004), pp. 431-49.
127. But the rise of these at the local level still leaves a highly fragmented system where most small businesses have no connection with representative organisations: See James Curran, Robert Rutherford & Stephen Lloyd Smith, 'Is there a local business community? Explaining the non-participation of small business in local economic development', Local Economy, Vol. 15, No. 2 (2000), pp. 128-43.
128. Timothy May & John McHugh, 'Small business policy: A political consensus?', The Political Quarterly, Vol. 73, No. 1 (2002), pp. 76-85.
129. John Bryson, David Keeble & Peter Wood, 'The creation and growth of small business service firms in postindustrial Britain', Small Business Economics, Vol. 9 (1997), p. 356.
130. Wyn Grant, 'Large firms and public policy in Britain', Journal of Public Policy, Vol. 4, No. 1 (1984), pp. 1-17, and Grant & Sargent, Business and Politics in Britain, pp. 93-104.
131. Two key studies of this are Aeron Davis, 'Public relations, business news and the reproduction of corporate elite power', Journalism, Vol. 1, No. 3 (2000), pp. 282-304
132. David Miller & William Dinan, 'The rise of the PR industry in Britain, 1979-98', European Journal of Communication, Vol. 15, No. 1 (2000), pp. 5-35.
133. Davis, 'Public relations', pp. 286-93.
134. David Coen, 'The European business interest and the nation state: large-firm lobbying in the European Union and the member states', Journal of Public Policy, Vol. 18, No. 1 (1998), pp. 75-100.
135. Christian Lahusen, 'Commercial consultancies in the European Union: The shape and structure of professional interest intermediation', Journal of European Public Policy, Vol. 9, No. 5 (2002), pp. 695-714.
136. Bastiaan Van Appeldoorn, 'Transnational class agency and European governance: The case of the European Round Table of industrialists', New Political Economy, Vol. 5, No. 2 (2000), pp. 157-81.
137. For the example of Shell, see Stewart Lewis, Reputation and Corporate Responsibility (Mori, 2003); for the wider role and growth of corporate PR, Davis, 'Public relations', and Miller & Dinan, 'The rise of the PR industry'.
138. For examples see Audit Commission/Mori, Trust in Public Institutions, p. 30.
139. Lewis, Reputation and Corporate Responsibility, p. 5 on Shell after two damaging scandals, and pp. 8-9 on Marks and Spencer.
140. On Shipman, see 'The public's trust in doctors rises', www.mori/polls/ 2002/bma-topline (accessed 18 August 2005). In a 2002 poll, 91 per cent of the public trusted doctors to tell the truth; the comparable figure for business leaders was 25 per cent.
141. Jürgen Habermas, Legitimation Crisis (Polity 1976), pp. 37, 68-75 and 96.
142. For reviews of Greenbury and its setting alongside the wider turmoil in corporate governance, see Ian Jones & Michael Pollitt, Who influences debates about business ethics? An investigation into the development of corporate governance in the UK since 1990 (Working Paper 221, University of Cambridge ESRC Centre for Business Research, 2001)
143. Ian Jones & Michael Pollitt, 'Understanding how issues in corporate governance develop: Cadbury report to Higgs Review', Corporate Governance, Vol. 12, No. 2 (2004), pp. 162-71. For the original report, Sir Richard Greenbury, Directors' remuneration: Report of a study group chaired by Sir Richard Greenbury (Gee, 1995).
144. For CAFOD's origins, and examples of its contemporary radicalism, see 'About CAFOD', www.cafod.org.uk/history/timeline (accessed 14 July 2005)
145. 'Policy briefings: New policy reports', www.cafod.org/policy (accessed 14 July 2005).
146. For intervention in the company law review in 1999, see Cafod submission on the Company Law Review, www.cafod.org.uk/archive/policy/ policylawreview (accessed 2 July 2005).
147. This is drawn from the home pages of the Council: http://www.eccr.org.uk (accessed 18 July 2005).
148. For instance see Anne Fruehauf, The British Council and UK NGOs: A report commissioned by the British Council (Institute for Public Policy Research, 2005), p. 5 for the UK
149. for global data, Helmut Glasius, Mary Kaldor & Marlies Anheier, Global Civil Society Yearbook (Oxford University Press, 2002), p. 3.
150. Duncan Green & Matthew Griffith, 'Globalization and its discontents', International Affairs, Vol 78, No. 1 (2002), p. 50.
151. Cited in Hugh Williamson, 'Campaigners in the corporate mould', Financial Times, 5 September 2005, p. 10. For the general NGO trend among leading opinion formers across several nations, Edelman, Inc., Fifth Annual Trust Barometer 2004, presented at the World Economic Forum, January 2004, http://italia/ edelman.com/people-and-perspectives (accessed 7 September 2005).
152. John Clark, Worlds Apart: Civil Society and the Battle for Globalisation (Earthscan, 2005).
153. Fruehauf, The British Council and Global NGOs, p. 6.
154. For a long list of detailed cases of companies responding in detail to reports (and sometimes declining to respond) from the Ecumenical Council for Corporate Responsibility, see www.eccr.org.uk/pub_main (accessed 14 September 2005).
155. Data reported in Gosschalk & Hyde, The Business World Will Never be the Same. I have not been able to perform secondary analysis of this data, but my hypothesis would be that the 15 per cent over-represents activists from the churches and those employed in the public sector.