How does business power operate? A framework for its working mechanisms

Abstract

The global financial crisis of 2008, its following bank bailouts, and associated corporate impunity sparked a renewed interest in the concept of the structural power of business and the question of “who rules?” in capitalist societies. This new wave of scholarship mitigated some of the problems of the original, theory-driven discussions from the 1970s and 1980s. But despite significant advancements in the empirical identification of business power, we lack a unified framework for studying its working mechanisms. So-called hybrid approaches, drawing on instrumental and structural power for their analyses, display high potential for such a unified and easily applicable framework. We build on this hybrid tradition and propose a novel model that integrates instrumental and structural power analysis into a basic framework. With this, we recalibrate the often rigid division between instrumental and structural power forms and emphasize the role of perceptions as key for understanding the dynamics of business power over time. We illustrate this parsimonious framework by an analysis of the plans of the Dutch government to abolish a dividend tax in 2018 that would have benefited a number of large multinationals but collapsed before implementation.

Business power against redistribution: The case of watered-down tax reform in Poland

“…We apply the framework proposed by Babic et al (2022) to extract the operating mechanisms of business power from the media debate around the reform. The essence of the framework is presented in Figure 3.…”

“…In addition, the framework arises from the observation that businesses would probably have little leverage from direct instrumental power without indirect mechanisms: the credibility to fire workers, move abroad or influence the media 41 Figure 3.The framework for analysing the working mechanisms of business power. Source : Babic et al (2022). …”

“…31 The study shows that business, by shaping ideas, can convince the public opinion that tax hikes may cause disinvestment. Similarly, Babic et al (2022) evaluate the effects of structural power on the result of the dividend tax abolition in the Netherlands. 32 The study indicates that as long as there was a threat of industry exit, the Dutch government maintained the need to abolish the tax.…”

Delegation, deregulation, and business power: a comparative analysis of health insurance in Belgium and France

“…Most contemporary perspectives treat structural and instrumental business power as independent variables rather than constant. More significantly, they recognize the hybrid nature of structural and instrumental sources of business power, noting that they often complement each other (see Babic et al, 2022 for an extended discussion).…”