Chapter 8

1. Chapter 8 Elites, the Capitalist Class, and Political Power

2. Three Perspectives on Power • What is power? • The potential of individuals or groups to carry out their will even over the opposition of others. © Pine Forge Press, an Imprint of SAGE Publications, Inc., 2011

3. Three Perspectives on Power, cont. • What are the three perspectives about power? • Elite perspective: It is concerned with the distinction between an organized minority (elite) that rules and an unorganized majority that is ruled. • Class perspective: With its origins in Marxist theory, it is more specifically concerned about the identity of the rulers and the structure that creates them (i.e. the capitalist class). • Pluralistic perspective: This view denies power is concentrated in one group. In democratic societies it identifies a plurality of interest groups that vie for power. © Pine Forge Press, an Imprint of SAGE Publications, Inc., 2011

4. Mills: The National Power Elite • In 1956 C. Wright Mills published The Power Elite which suggested the growing power of a few was undermining American Democracy. • This “power elite” was comprised of the most senior leaders of the modern corporations, the executive branch of the federal government, and the military establishment. • Mills suggested that there was an interlock among these institutions and that members of the power elite tended to circulate among these three institutions. © Pine Forge Press, an Imprint of SAGE Publications, Inc., 2011

5. Mills: The National Power Elite, cont. • Mills conceived the national structure of power as consisting of three tiers: • The power elite • The middle levels of power (e.g., powerful lobbying groups and labor unions) • Mass society • Crucial decisions about economic policy and national security with sweeping ramifications for the lives of the common citizens are made by the power elite. © Pine Forge Press, an Imprint of SAGE Publications, Inc., 2011

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7. Mills, His Critics, and the Problem of Elite Cohesion • Pluralist critics of Mills’ hypothesized power elite argued that his claims were empirical matters that needed to be tested not simply assumed a priori. • Dahl (1967) questioned the extent to which Mills’ power elite were a cohesive group with unitary interests. • Dahl was concerned that Mills defined an elite in terms of key positions in organizations that possess vast resources, but he failed to elaborate a theory of political consensus. © Pine Forge Press, an Imprint of SAGE Publications, Inc., 2011

8. Mills, His Critics, and the Problem of Elite Cohesion, cont. • According to Reisman (1953) a ruling class with concentrated power no longer existed. There was instead a plurality of “veto groups” capable of resisting the attempts of the powerful to impose their will on society. • Mills suggested that Reisman’s argument simply reflected the workings of what he called the “middle levels of power.” © Pine Forge Press, an Imprint of SAGE Publications, Inc., 2011

9. Mills, His Critics, and the Problem of Elite Cohesion, cont. • Mills suggested two ways the three distinct elites might be melded into a single, internally cohesive power elite: • Social-psychological mechanisms including similarities in origins, education, career and lifestyles which produce a “similar social type” and contributes to ease in informal association. • Structural mechanisms including similar career experiences, particularly managing large organizations, and the interchange of personnel that occurs among the three institutions. Mills suggested this enables these individuals to develop a form of Upper-Class consciousness. © Pine Forge Press, an Imprint of SAGE Publications, Inc., 2011

10. Power Elite or Ruling Class? • Paul Sweezy (1968) suggested that Mills' The Power Elite contained an unresolved contradiction between two views of the elite. • Mills' discussion of the importance of the ruling class in stocking the “command posts” with its representatives is contradictory to the idea that the bureaucratic elites situated atop the three distinctly separate and autonomous “major institutional orders” come together to form the power elite. • Sweezy argued that the class that controls income-producing wealth (i.e. the ruling class) is actually the group that wields the most power. © Pine Forge Press, an Imprint of SAGE Publications, Inc., 2011

11. Who Rules? • Thomas Dye (2002) argued that America is an “elitist” society and that elite rule is inevitable in all societies, from the simplest to the most advanced. • The United States, dependent on large institutions, is ruled by those who hold the top institutional positions—the elite. • Dye’s elite consisted of 7,314 leadership positions in 10 key sectors of American society. © Pine Forge Press, an Imprint of SAGE Publications, Inc., 2011

12. Who Rules? cont. • Dye was concerned with the phenomenon of “interlocking directorates.” • Though there are factions within the elite, overall they are of one mindset. © Pine Forge Press, an Imprint of SAGE Publications, Inc., 2011

13. Who Rules? cont. • From a pluralist perspective, Lerner, Nagai, and Rothman (1996) contended there are a plurality of elites, not simply one core “power elite” as suggested by Mills. • These elites wield significant power, but their influence is restricted to the particular sector in which they operate (e.g., the media, the military, and the business sectors). • Members of the “strategic elite” are characterized by a high degree of ideological dissimilarity; however, Lerner, Nagai, and Rothman’s evidence in support of this contention is not very strong. © Pine Forge Press, an Imprint of SAGE Publications, Inc., 2011

14. Who Rules? cont. • In his book Who Rules America (2006), William Domhoff examined a particular elite group, the directors of major corporations. • Domhoff’s research analyzed almost 2,000 large corporations and found that the average firm had 6.1 interlocks. • The corporate community is “closely intertwined with the upper class.” • There is evidence that there is an increased presence of minorities and women in the boardrooms. Yet, this in no way changes the atmosphere of the boardrooms since these individuals still tend to come from Upper -Class backgrounds. © Pine Forge Press, an Imprint of SAGE Publications, Inc., 2011

15. Who Rules? cont. • What do Dye, Domhoff, and Lerner and colleagues have in common with Mills? • They all agree that power in this country is concentrated in the elites at the head of large organizations in key sectors of American society. • They all agree that members of the elites come from relatively privileged backgrounds. • All address the problem of elite cohesion. © Pine Forge Press, an Imprint of SAGE Publications, Inc., 2011

16. The National Capitalist Class:Economic Basis • A traditional division within the capitalist class has been between the following two groups: • National capitalists who own or manage major national corporations, and • Local capitalists who are affluent but community-oriented business people. • This distinction has become less meaningful in recent decades as local capitalists convert their fortunes into diversified national wealth. © Pine Forge Press, an Imprint of SAGE Publications, Inc., 2011

17. The National Capitalist Class:Economic Basis, cont. • Forbes annually publishes a list of the 400 wealthiest individuals identifying them as either inherited or self-made. • An independent analysis of the 1997 list paints a more complicated picture with four levels of inherited wealth. • Inherited 400Status—42% • Inherited SignificantWealth—13% • Inherited Lesser Wealth orAdvantage—14% were from affluent or socially-upper class backgrounds • No InheritedAdvantage—31% began their careers with no apparent financial advantage © Pine Forge Press, an Imprint of SAGE Publications, Inc., 2011

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19. The National Capitalist Class:Economic Basis, cont. • Mills thought large individual fortunes paled in significance to the economic power of large corporations. • Extremely wealthy families used to have substantial stakes in major corporations. • As corporations have grown larger, their stock has become more dispersed. • Small- and medium-sized corporations are still likely to be controlled by their owners. © Pine Forge Press, an Imprint of SAGE Publications, Inc., 2011

20. The National Capitalist Class:Social Basis • The institutions associated with the Upper-Class social world include the elite prep school, the Social Register, and elite metropolitan social clubs. • These institutions perform a national integrating function. • The regular social interaction between members of the Upper Class in the informal social setting that these institutions provide enables the development and maintenance of class solidarity and the achievement of consensus on specific policy issues. © Pine Forge Press, an Imprint of SAGE Publications, Inc., 2011

21. The National Capitalist Class: Participation in Government • Contemporary cabinets are more diverse in ethnicity and gender but are still overwhelmingly drawn from the very top of the class structure. • Between 1897 and 1980, two-thirds of cabinets had served as corporate officers, investment bankers, or corporate lawyers. • From 1961 to 2000, 65% of cabinet officers were drawn from major corporations, financial institutions, or corporate law firms. • In modern times cabinet secretaries have tended to come from higher levels in the class structure than the presidents they served under. © Pine Forge Press, an Imprint of SAGE Publications, Inc., 2011

22. The National Capitalist Class: Participation in Government, cont. • Since 1906 most members of Congress have come from business or the professions. • At least two-thirds of Senators and 40% of House members are worth a $1 million or more. • Almost 20% of senators and 10% of House members are worth $10 million or more. • The cabinet is recruited from the national Capitalist Class; Congress draws on local Upper-Middle and Capitalist Classes. © Pine Forge Press, an Imprint of SAGE Publications, Inc., 2011

23. Money and Politics • Who makes campaign contributions? • Studies going back to the 1920’s indicate contributors, not surprisingly, are better educated, higher in occupational status, and richer than the average American. • There are now regulations in place (i.e. campaign finance reform legislation), though not heavily enforced, that restrict the amount of money that can be directly contributed to political candidates. © Pine Forge Press, an Imprint of SAGE Publications, Inc., 2011

24. Money and Politics, cont. • Courts have ruled that no limit can be placed on the amount that candidates or their families can spend on their own campaigns. • Still, most campaign money comes from business sources such as individual corporate executives and corporate political action committees (PACs). © Pine Forge Press, an Imprint of SAGE Publications, Inc., 2011

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26. Business Lobbies • Especially since the emergence of the modern corporate economy, business representatives have actively lobbied the Congress and the federal departments and regulatory agencies that carry legislation into practice. • Two of the most powerful business lobby organizations in Washington are the U.S. Chamber of Commerce and the Business Roundtable. • The Chamber is particularly strong due to its ability to pressure individual members of Congress through local affiliates. • The Business Roundtable draws its power from the formidable resources controlled by its member corporations and the prestige of those who lead them. © Pine Forge Press, an Imprint of SAGE Publications, Inc., 2011

27. Policy-Planning Groups • Policy groups are organizations dedicated to formulating and disseminating broad proposals for national policy. • They are largely created and financed by the corporate elite. • Major charitable foundations fund research and pilot projects to test new policy ideas. • E.g., Ford, Lilly, and Kellogg foundations © Pine Forge Press, an Imprint of SAGE Publications, Inc., 2011

28. Policy-Planning Groups, cont. • Think tanks are organizations staffed with experts in various fields who produce research findings and policy recommendations. • They are often located in Washington, D.C., where they are able to provide sympathetic politicians, lobbyists, and journalists with grist for their respective interests. © Pine Forge Press, an Imprint of SAGE Publications, Inc., 2011

29. Indirect Mechanisms of Capitalist-Class Influence • Capitalist-Class influence is not limited to direct means. • The influence that the Capitalist-Class has over government policy is also indirect through its control of the economy and the mass media. • Many of the decisions made by business leaders depend on their level of confidence in the government and its policies. • One of the primary decisions made by business leaders concerns the level of new investment. © Pine Forge Press, an Imprint of SAGE Publications, Inc., 2011

30. Indirect Mechanisms of Capitalist-Class Influence, cont. • Factors that lead to a loss of confidence are less important than the fact that this mechanism provides the Capitalist Class with an indirect veto over government policy. © Pine Forge Press, an Imprint of SAGE Publications, Inc., 2011

31. Indirect Mechanisms of Capitalist-Class Influence, cont. • There are two important implications of the business-confidence veto: • The mere risk of the curtailment of investment is often enough to persuade decision-makers to reconsider or abandon a particular policy proposal. • The veto mechanism does not require conscious, concerted action by members of the Capitalist Class to be effective. Large numbers of individual investors making decisions based on potential risk or profitability can bring about changes in the economy and can put pressure on government officials. © Pine Forge Press, an Imprint of SAGE Publications, Inc., 2011

32. Indirect Mechanisms of Capitalist-Class Influence, cont. • Governments are also subject to the limits imposed by private control of the mass media. • The principal media organizations in the U.S. are themselves typically major corporations owned by major corporations. • Corporate advertisers also wield some influence in that they can choose where to spend their advertising dollars. • The media is extremely powerful because they help define the public agenda—what is considered “acceptable.” © Pine Forge Press, an Imprint of SAGE Publications, Inc., 2011

33. The Capitalist-Class Resurgence • The idea that the distribution of power is stable over time is probably not a safe assumption. • In the early 1970’s capitalists had a growing sense of vulnerability and declining power and reacted to this. • Business leaders took a direct and aggressive role in national politics. • Upscale “grassroots” campaigns mobilized business leaders, stockholders, depositors, suppliers and dealers to lobby Congress. • The Heritage Foundation and the American Enterprise Institute were founded and received financial backing from the wealthy. • Their efforts paid off. © Pine Forge Press, an Imprint of SAGE Publications, Inc., 2011