Assess the power of business in America, what implications does it have for democracy?

Who runs America? According to the constitution, direct power lies only in the hands of the President (the executive) and Congress (the legislature). The belief that these select bodies of government hold the power and have the intention to promote the will of their constituents rests on many different assumptions, none of which are absolutely correct. The value of American ‘democracy’ is only as great as the freedom given to the people to select their government, and, once elected, for the government to act in a way that represents the will of the people. Each citizen must have the same right to vote, the same access to information on who and what he or she are voting for and the same level of significance given to them by the elected government. The government themselves must be free from disproportionate influence by a small group of people who can vote with money as well as the ballot, and must be in a strong enough position to resist the overwhelming influence of certain groups (most notably the so called ‘power elites’) who will inevitably attempt to make a mockery of democracy in order to promote their own interests. As many political scientists and commentators have pointed out, the above criteria are rarely, if ever, met by the American political system.

In order to assess the impact of big business on American democracy we must examine the relative power of the ‘ordinary voter’ and the corporation Chief Executive Officer in determining the outcome of elections. How does the American election system allow big business influence to weaken or strengthen certain candidates depending on how closely their policies and personal history matches the power elites’ desires? We must then look at the relationship between power elites and the government. How easy is it for business interests to act outside the wills of the government, what rules are they allowed to break in the interests of the economy and in what ways can they influence the government themselves? Moreover, what new powers are ‘rights’ are the corporations being given?

“A comfortable, smooth, reasonable, democratic unfreedom prevails in advanced industrial civilisation, a token of technical progress. Indeed, what could be more rational than the suppression of individuality in the mechanization of socially necessary but painful performances; the concentration of individual enterprises in more effective, more productive corporations; the regulation of free competition among unequally equipped economic subjects; the curtailment of prerogatives which impede the international organisation of resources.” (Marcuse 1964)

When Marcuse wrote this opening paragraph in 1964, he could not possibly have known how far this tendency would go. Big business is increasingly being seen as a living citizen that should be afforded the same rights as the individual. The gradual loosening of government control over big business reached a peak in 1998 when the OECD attempted to pass the Multilateral Agreement on Investment. The MAI was a closely guarded secret at this time, the only reason the general public has any knowledge of it’s contents and form is that it was somehow ‘obtained’ by a group of activists and published on the internet (Chomsky 1998). The agreement was concerned with the ‘rights of investors’, a description which many have interpreted to mean ‘the rights of corporations’ (begging the question, how can a corporation have rights? (Chomsky 1998)). In it’s essence, it was to remove most if not all of the controls that governments have on foreign investment into and out of their countries. The freedom of governments to block or limit foreign direct investment by imposing criteria (such as number of jobs to be created and technological advancement) would have been completely removed in participating countries. As a result, big business would be free to move its workforce to wherever the labour was cheapest. Though the MAI was eventually scrapped, the very fact that the OECD considered it a viable option is a valuable indicator of the direction in which world, and especially American, economic policy is going. The current negotiation of the Free Trade Area of the Americas agreement (the FTAA) has been seen by some as a ‘backdoor’ through which to implement MAI or a set of policies that amount to the same thing (Moore 2001). The FTAA is intended to transform the entire North and South American continents (with the exception of Cuba) into what will essentially be the world’s largest trading bloc. Furthermore, the legislation will open public services up to competition from business, allowing much more competition from business (ibid). This ‘commodification’ of people has been seen as a further means by which to diminish government, and as a result public, power to the gain of business. Not only will this reduce the accountability of services such as education and medicine, it will also reduce the effectiveness of regulation of these services. As I will later explain, corporations are able to influence public policy via PACs and campaign contributions in a way that is not always visible and never controllable to the public.

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This movement stands as a direct threat to democracy outside that of the influencing of political decisions by business. The increased power of business can be seen as advancing down to separate avenues; not only through financial influence over Congress and the President, but also a reduction in the need for such influence, powers over and above the control of elected politicians are being extended to institutions which have only one aim: the building of capital. This aim, says American political activist and comedian Michael Moore, is in direct conflict with the interests of society. The single-minded pursuit of a seemingly limitless level of wealth combined with a lack of restraining legislation is tearing American communities apart at the seams. Moore argues that allowing corporations to freely move their bases of production leads to loss of jobs on a massive scale, forcing the mass relocation of huge numbers of people threatened with unemployment (Moore 1996). In short, the interests of business are effectively considered more important than those of individual people.

The ability of business to mould foreign and domestic policy is a contentious issue that can be split into two rough sections. Firstly, who holds the direct power, who is President, and who is in Congress? Secondly, in what ways and to what extent can business interests with no legitimate democratic merits influence these governors for their own gain? I will deal with each question in turn and draw the arguments together in a final conclusion.

With regards to the question of who holds direct power several main branches of theory using various different perspectives have developed. Most notable are the pluralist and elites branches of theory. Pluralist academics argue that there is no great division of power in society; while business may wield a large amount of influence over government policy, the relative size of the population at large means the ordinary wage earner is still represented. Theorists concerned with the over-representation of elites in government office maintain that power is more likely to fall into the hands of those who are already economically very powerful (This perspective seems especially relevant in light of the massive wealth of current American President George W Bush. Bush descends from a long line of wealthy men with an occasionally unhealthy and always profitable fixation with fossil fuels).

Pluralists such as Robert Dahl argue that power stems from a variety of different sources, most of which do not overlap significantly across the population. Dahl’s theory was that different issues will be differently influenced by various different groups, there is no monopoly on power and no such issue as ‘cumulative inequalities Factors to bear in mind include: access to economic power, control of available employment, charisma, spare time, solidarity of ethnicity, social status and expertise (Luger 2000). In his case study of the local government of the American city of New Haven, Dahl examines in detail the composition of local executive power and how it changed over the years. Dahl’s and other similar pluralist arguments have been criticised on the basis that they ignore (or rather downplay) the importance not only of who governs, but also of how free those people are to govern with the absence of power elite influence (ibid).

In terms of policymaking, corporations, especially the very large ones, have limited but occasionally effective means of control. Not only do corporations (via political action committees or PACs) have the freedom to donate large sums of money to candidates (both congressional and presidential) who they favour in order to promote public awareness of that candidate and increase their chances of victory, but they also may have some influence over those same people once elected. In their 1992 study of corporate policy making ‘Why does the air stink? Corporate power and public policy’ Clawson, Neustadtl and Scott examined the ways in which PACs are able to influence members of Congress, and how in turn, Congress is able to do favour for specific businesses and industries. As a case study, Clawson et al used the 1990 American Clean Air Act. The act, had it been passed in its original draft form, would have had expensive repercussions for many large American companies associated with PACs, specifically the pharmaceutical and chemical industries. Clawson found that even PACs linked to heavily polluting companies were making contributions to Congress members who they knew would votes in favour of the bill (Clawson et al 1992). Instead of directly opposing a bill that will damage campaign contributors, a congress member will instead delay the passing of the bill with unnecessary debate and questions and in the mean time will often be presented with a seemingly minor amendment by their PAC paymasters (Clawson et al 1992). These amendments are specifically designed to create loopholes through which the corporation is able to continue exactly the behaviour that the bill was intended to prevent (ibid).

The corporate ability to carry out such actions stems from their economic superiority to anti-corporate bodies such as the Environmental Protection Agency. Such bodies are not only less well funded than big business, but are also subject to funding control from Congress itself and hence vulnerable to the point where threats of funding cuts are not even necessary (ibid). Additionally, corporations are in the economic position to offer jobs (at vastly increased salaries) to members of Congress who know the weaknesses of the system and how to exploit it, bodies such as the EPA are not in such a strong position and are unable to buy such expertise (ibid). The implications for democracy are obvious, the very reason loopholes are used to weaken acts rather than votes to block them is to maintain the perception that the public still has the power to choose (ibid). Here, we see the importance of public opinion being eroded from the inside out, a process that may continue for some time without being noticed. The passing of the Clean Air Bill may appear to the casual observer to be a victory against business and for the good of the entire population, but in actual fact it is an appeasement with covertly pro-business (or at least only very weakly anti-business) implications. A good recent example of corporate influence is the amendment of the newly drafted homeland security bill, by republican members of congress that exempts certain pharmaceutical companies from being sued over side effects. The corporation most concerned is drugs-giant Eli Lilly, which was in the process of being sued for millions of dollars by parents claiming their children have developed autism as a direct result of using a vaccine. That such a loophole, so profoundly removed from the subject matter of the bill itself (mainly international terrorism), could be created, presumably with the intention of it never being noticed, seems incredible. Perhaps it is no coincidence that Eli Lilly chairman Sidney Taurel is a member of the White House Advisory Council on Homeland Security.

So we can see that, while not in possession of a complete monopoly of power, a possession that, in it’s most extreme form at least, is guarded against by the ballot, corporations do have the power to influence and often directly change congressional voting behaviour. Moreover, corporations are being given more powers that have, in the past, been reserved only for the democratically elected. This two-tier incursion into civil liberties by big business should obviously be stopped if democracy is a more important aspect of the American ideology than profit and economic growth. But in an increasingly competitive world undergoing inevitable globalisation, perhaps America needs to erode its people’s civil liberties in order to remain the world’s only super power. Business is more powerful economically than the individual, and in terms of rights it is quickly gaining the ability to carry out the “free competition among unequally equipped economic subjects” of which Marcuse spoke. It seems that the question is not whether the government wishes to allow this; it is whether the government has the power to do anything about it without making huge sacrifices of the strength of the American economy.

Bibliography

One Dimensional Man, Marcuse, 1964, Routledge and Kegan Paul Limited, London.

Why Does The Air Stink? Corporate Power and Public Policy, Clawson, Neustadtl and Scott, published in Voices of Dissent, Grover and Perschek, 1999, Addison-Wesley Inc.

The Downsizing of The American Dream, Moore, 1996, published in Voices of Dissent, Grover and Perschek, 1999, Addison-Wesley Inc.

Who Governs? Dahl, 1961, Yale University.

Corporate Power, American Democracy and the Automobile Industry, Luger, 2000, extract taken from:

Domestic Constituencies, Noam Chomsky, 1998, available at:

Bill rules out lawsuits against vaccine maker, Frank, 2002, available at: