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Politics and Markets : The World's Political Economic Systems

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The relationship between business and democracy is often murky. As such, operationalizing the relational power between these entities has long been the task of political economists. Lindblom and Vogel set out to examine the issue of business power in democratic political systems; each coming to a different conclusion.

Lindblom argues that big business and corporations do not "fit" with the idea of democracy. He supports this proposition by examining the many different types of politico-economic systems, ultimately breaking them down into a two-by-two matrix. In his examination, Lindblom finds that all democratic systems are characterized by a free-market economic arrangement. The author explains this anomaly by arguing that democratic systems are dependent on the market and private enterprise (162). He then builds on this foundation to demonstrate the ways in which corporate power maintains control or at least a significant amount of power, in democratic systems.

Lindblom begins to shore up this premise by examining democracy from a historical perspective. He argues that although many hold that democracy (or polyarchy) is a system of popular rule, it in fact is a system established to ensure the personal freedoms of individuals. Often these liberties exist in the form of economic freedoms, exemplified by participation in the free market. He writes, "Polyarchies were established to win and protect certain liberties: private property, free enterprise, free contract and occupational choice" (164). Under polyarchy, the liberties illustrated here were to be protected from the infringement of the governing authority.

Once Lindblom captures the idea that the purpose of polyarchy is to protect the liberties of the people, he poses the question as to why the people never attempt a system of central planning in order to address collective problems. Lindblom suggests that such an experiment has never been undertaken because the process "is subversive of the existing system, specifically of the prerogatives, privileges, and rights of the business and property-owning groups" (168). It is at this point that Lindblom makes the strong move to suggesting that corporate business interests possess a good deal of control under democratic governments. He writes: "We must at this point consider the possibility that existing polyarchies are not very democratic, that political debate in them is not very free, and that policy making in them is actually in the hands of persons who want to protect the privileges of business and property" (168).

Lindblom supports this argument of examining the advantaged power of business. In a system of centralized planning, all decisions regarding the production and dispersion of good and services (all things economic) would be left up to a centralized authority. However, in a polyarchy, many of the economic decisions affecting a nation are made by those in control of the business arena. Lindblom suggests that in free-market systems, it is the corporations which "decide a nation's industrial, technology, the pattern of work organization, the location of industry, the market structure, resource allocation" and other aspects of nation's economic well-being (171). The author refers to this relationship as the "public function" of the corporation. Once business begins to take on a public function, the government cannot readily avoid taking into consideration the interests of the corporate world. It becomes a necessary action of government to ensure that business is able to operate in an efficient manner. However, the relationship is not necessarily a hierarchical one. Rather what emerges is a "duality of leadership" between business and government leaders (180). The question then becomes, why, in a polyarchal system - one in which the government is supposedly run by the masses - do business interests hold such a disproportionate sway over government.

The problem arises in the fact that the under the duality of leadership between government and business, only government is constrained by polyarchal rules. Although often affected by the decisions of corporations, the citizens do not have a means to control the actions of big business (191). In fact, Lindblom argues, a rivalry emerges between the polyarchal interests and those of business. However, business often maintains an advantage over the polyarchal interests.

Due to the inordinate amount of resources, business interests are far more able to influence government than the polyarchal masses. First, corporations can draw upon the finances garnered through business. This grants them a significantly larger war chest which can be "thrown into party, interest-group, and electoral activity in pursuit of what ever corporate executives themselves choose" (194).

Secondly, corporations are often better organized than the polyarchal people. The corporation is an organization in and of itself. Staff exists which can be readily diverted to political issues. Lindblom argues that interests that rival big business to not have the organizational capacity to effectively purse their political interests.

Lastly, building on the previous point, business interests are already closely tied to governmental leadership. Having a duality of control puts them in a position of significantly more power than those pursuing polyarchal political influences. Lindblom writes, "Because of their privileged position in government and politics [corporations] are already known to government officials, already attentively listened to, already engaged in negation" (197). Such a close relation automatically grants big business a privileged position in negotiating with government in the pursuit of its interest.