The 1980s were characterised by the retreat of the state. Privatisation and deregulation in Britain was part of a global trend, eclipsed in significance by the collapse of the old Communist states in the Soviet Union and Eastern Europe. The old orthodoxy of the mixed economy, and speculation about the benefits of a planned economy, collapsed in the face of a widespread acceptance of the supremacy of the market mechanism as the only sound basis for an economy.
In this chapter, alternative perspectives on the power of business are reviewed. ‘Business’ is no more of a monolith than the state, but before attempting to consider distinctions between, for example, large firms and small firms, a general overview of its power potential will be offered. In particular, the nature and extent of differences in the power position of manufacturing industry and the financial sector will be considered more fully in Chapter 4.
A large firm will have extensive contacts with government every day at a variety of levels and in relation to a variety of tasks. Members of the main board may be engaged in confidential discussions with a minister and his advisers about whether a new plant could be located in Britain rather than overseas. Elsewhere in the same government building, members of the firm’s technical staff may be part of a trade association delegation discussing a draft EC directive on a particular product with civil servants. Members of the firm’s financial staff may be holding a meeting to discuss the implications of proposed changes in tax law. Commercial staff may be discussing the categorisation of machinery imported from a closed foreign plant with Customs and Excise. At one of the plants, the safety arrangements for a new piece of machinery may be under discussion with the Factories Inspectorate. The personnel manager at the plant may be discussing the possibility of vacancies with the local Job Centre. A planning application for a plant extension may require a site visit from the local authority.
The economic strength and political influence of the financial services sector is a distinctive feature of British business which merits separate treatment. The financial sector is often referred to as the ‘City’, but although this is a convenient shorthand, it has always been something of a misnomer, and has become even more so as financial institutions have moved away from the ‘square mile’ in search of dealing rooms which give them the space to cope with round-the-clock international trading. Although the British financial sector has been distinguished for centuries by its international orientation, ‘Perhaps for the first time it is now possible to speak of a single world financial market’ (Coggan, 1989, p. 9). Financial globalisation has been a major driving force behind economic globalisation, and has been accompanied by the growth of ‘financial engineering’, the creation of customised products for both borrower and investor. Financial globalisation has been made possible by developments in information technology which have been facilitated what has, in effect, now become twenty-four hour international financial trading. As one of the three great financial centres of the world, along with Tokyo and New York, London is at the centre of these developments. For example, by 1989, according to the Bank for International Settlements, monthly turnover on the foreign exchange market was $3,740 billion in the UK, compared with $2,580 billion in the US, and $2,300 billion in Japan.
In the 1980s, political scientists paid increased attention to the role of the firm as a direct actor in the political process. By the end of the decade, it was no longer possible to claim, as Dyson had justifiably done in 1983 (p. 35), ‘The politics of the firm has been neglected.’ That is not to say that its importance was fully recognised in research. A number of projects, however, made it clear just how important an actor the firm was. Cawson and his colleagues reported (1990, pp. 375–6):
Our research has led us to the unmistakable conclusion that at the present time the key to unlocking the complexities of industrial politics lies in the corporate strategies of the major firms. Other actors — trade unions, trade associations, even governments — are far less significant as the drivers of change than are the firms.
As well as being represented by national intersectoral associations such as the Confederation of British Industry (CBI), businesses belong to a considerable variety of associations serving a sector of the economy or a particular locality. The sectoral associations range from associations serving particular products, through subsectoral organisations, to well resourced associations serving, for example, the motor industry or the chemical industry. At the local level, businesses are represented through chambers of commerce and trade. In addition there are associations which represent users of particular products or services (such as major energy users), importers and (less common) exporters.
If there are difficulties in the development and expression of business interests through representative associations, then it is possible that other routes may become important for the defence of business interests. One alternative route that suggests itself is through political parties, especially parties apparently favourable to business interests. This chapter will argue that the weaknesses of business political organisation apparent elsewhere are not compensated for by the effective defence of business interests through political parties. Indeed, under Margaret Thatcher’s leadership, the British Conservative Party was able to develop its own conception of what was good for business. In some respects, the policies developed did coincide with what was wanted by a broad spectrum of business opinion, but in others they were seen by some business persons as having harmful effects, particularly for manufacturing industry. When economic interest and party doctrine diverged, it was often party doctrine that emerged as more influential on the course of events. The ideological hegemony of “Thatcherism” meant that attempts to influence policy, to be successful, had to accept the basic premises of the New Right ideology — yet these were the very premises which large sections of domestically-based manufacturing industry sought to challenge in the first place’ (Judge, 1990, p. 221).
Business interest associations should not only be viewed as ‘lobbies’, or as providers of services to their members, important though these functions are. Business associations are also capable of contributing to the implementation of public policy. ‘Public policy’ is seen as covering a task or activity designed to achieve certain objectives which government regards as its duty to discharge, or to arrange for its discharge by others within a framework laid down by government.
One of the difficulties with the literature on Britain’s membership of the European Community is that much of it is written by academics who are not only favourably disposed to the process of European integration, but if possible would like to see it accelerated. As a consequence, there is a tendency to see the integration process as an inevitable one in which the nation-state is displaced by the Community on the one hand, and new forms of regional government on the other. The outcome of the Danish referendum on the Maastricht treaty was a healthy corrective to those who see the nation-state as an outdated political formation, but many of the theoretical perspectives on European integration impel analysts in a direction which tends to lead to federalist conclusions. Implicit neo-functionalist perspectives emphasise the role of interest groups as catalysts in the integration process. Hence, there is sometimes a tendency to exaggerate the extent to which interest group activity has been ‘Europeanised’, and to downplay the continuing importance of attempts to influence the Community through national channels of access.
In the introduction it was argued that business-government relations in Britain have not been mutually productive. A central theme of this book has been that the economic power of business in Britain is not matched by a capacity for developing a coherent political viewpoint and articulating it to government. Business is capable, through the economic power it is able to exert in product markets, labour markets etc., of exerting a considerable influence over people’s everyday lives. Politicians must pay attention to the requirements of business, if they wish to gain re-election as the result of being able to claim that they have managed the economy with a tolerable measure of success. As the politics of production occupies a less central place on the political stage, and as issues related to the politics of collective consumption become more important, politicians also face demands to regulate business in areas such as environmental protection (pollution, packaging etc.) and consumer safety. The central problem then becomes, can a political bargain be constructed with capital which is acceptable to politicians, voters and business persons, and which channels the energies of business without curbing them?
