2 – Election in the USA. America’s old boys’ club is dead
BSSB.BE theconversation.com 04.11.2016
If corporate money controls our politics, as Bernie Sanders and others have claimed, then how did the Republican Party – the reputed party of business – manage to nominate a candidate whom almost no one in Big Business supports? And why have so many been so silent about it?
The demise of the power elite
This world of cozy, highly connected boards is now gone.
The JP Morgan Chase board in 2001 had 15 directors, and all but two of them served on other boards. One director served on eight boards including the bank itself, five held five seats each, and another five were on three or four.
Today, the bank’s board consists of a dozen directors, half of them retirees from prior corporate jobs. One serves on four boards, another serves on three. The rest are on just one or two.
For the corporate network as a whole, by 2012, only one director sat on five major boards (compared with about 100 who sat on that many or more in 1974).
So what killed the inner circle? The corporate scandals of the early 2000s and the Sarbanes-Oxley Act of 2002 were the precipitating factors.
As our research shows, before these events, serving on many boards was a source of prestige, and the largest corporations courted well-connected directors. But after the scandals, being a well-connected director became suspect.
For example, in 2002, Forbes published an article that profiled the five directors with the most S&P 500 board seats, asserting that they were too overstretched to provide adequate oversight. In 2004, Institutional Shareholder Services, which advises large institutional investors on corporate governance, began recommending that its clients vote against directors who served on too many boards.
Within a few years, the inner circle had disintegrated.
Big Business’ waning influence was on full display as Trump took the helm of the Republican Party in July. Tom Williams/CQ Roll Cal via AP Images)
From group think to kingmakers
Did the demise of the inner circle stop the 1 percent from dictating policy? Well, not exactly.
Each individual in the corporate elite still wields considerable influence. But as sociologist Mark Mizruchi has pointed out, they now tend to do so as individuals pursuing their own idiosyncratic agendas rather than as a group. Think Sheldon Adelson or the Koch Brothers rather than the Business Roundtable.
This has not been altogether a good thing.
When a single network connected corporate America, executives were forced to listen to opinions from a range of peers. And although the group skewed Republican on average, individual directors held a range of political opinions.
- The most well-connected leaders converged on a preference for more moderate candidates and policies and often ended up donating to both parties’ candidates, not just one.
- The support of this group was useful, if not absolutely essential, for potential presidential candidates, and it is hard to imagine that a putative anti-establishment candidate like Trump would have passed muster.
- The dense web of connections allowed the inner circle to police the corporate ranks and present a unified, middle-of-the-road message to policymakers. Our own research, forthcoming in the American Journal of Sociology, finds that board ties are now too sparse to provide a means for business executives to forge common ground.
CEOs today rarely serve on two or more boards, and, as a result, they no longer have monthly opportunities to hear what peers who support another point of view might think. Those board connections turned out to be a force for political moderation, and annual gatherings in Davos are not enough to replace them.
American politics has arrived at a millennial inflection point. While Mills and his fellow critics lambasted the well-connected corporate inner circle for furthering their own interests over those of the majority of society, we now see that the alternative may be dysfunction and an inability to find common ground.
Extremists in every corner of the political universe can gather power by targeting well-heeled funders like Adelson on the right and George Soros on the left. In this new world, compromise is frowned upon.
While we don’t want to return to a world where a handful of powerful white men held rule over corporate America and by extension the nation, we may benefit from building structures that operate like board ties previously did, acting as a force for compromise and moderation.
To hold together, American society may require new institutions that connect a broad and diverse spectrum of business and nonprofit leaders to each other, forcing individuals to consider the views of their peers.
Instead of a corporate agenda, we may have more wealthy individuals like Sheldon Adelson (middle, at the first debate) pursuing their own goals. Lucas Jackson/Reuters
The demise of the power elite
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