The social organization of the Canadian capitalist class in comparative perspective

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  • The social organization of the Canadian capitalist class in comparative perspective

    MICHAEL ORNSTEIN York University*

    Janalyse, dans cet article, la structure de la classe capitaliste canadienne. Pour ce faire, je compare le reseau de liens entre les conseils dadministration des 256 corporations canadiennes les plus grandes, a ceux existant aux Etats-Unis et dans neuf pays dEurope. Jarrive a la conclusion que le degre de fragmentation du reseau canadien nest pas inhabituel, et que les clivages entre capital industriel et financier, ou entre capital domestique et etranger ne sont pas particulierement prononces. Qui plus est, le capital industriel nest ni subordonne ni peripherique au capital financier. Le reseau canadien ressemble beaucoup a ceux de plusieurs pays europeens, dont 1Allemagne et la France, a propos desquels on ne peut pas avancer dexplication en termes de dependance ou de sous-developpement. La fragmentation des reseaux americain et britannique, par contre, est netternent plus Qlevee.

    This paper assesses claims about the character of Canadian capitalist class by comparing the network of interlocking directorates among the largest 256 Canadian corporations to the corresponding networks in the U.S. and nine European nations. The analysis indicates that the Canadian inter-corporate network is not unusually fragmented, that there are no pronounced cleavages between industrial and financial capital or between foreign and domestic capital, and that industrial capital is neither subordinated nor peripheral to finance. The Canadian network is quite similar to the networks of a number of European nations, such as Germany and France, about which it is impossible to advance arguments about dependency and underdevelopment. In comparison, the networks of the u.S. and Britain are unusually fragmented.

    Although they do not rule, there is now abundant evidence that capitalist classes are conscious of their class interest and organized to pursue it (Useem, 1984; Langille, 1987) . The organization of capital takes four related forms: intercorporate ownership provides direct, hierarchical links between

    * I thank Beth Mintz, John Myles, Frans Stokman and especially Robert Brym for helpful comments on earlier drafts of this paper.

    Canad. Rev. SOC. & Anth. / Rev. canad. SOC. & Anth. 26(1) 1989


    some corporations; interlocking directorates link the boards of the largest corporations; membership on the boards of universities, hospitals, cultural and charitable organizations, political parties, governmental advisory com- mittees and social clubg provides another meeting place; and many organi- zations explicitly organize and represent corporate views.' These different forms of organization serve different, although complementary needs. In- tercorporate ownership co-ordinates the activities of some groups of cor- porations but cannot serve to formulate and pursue a broader political strategy. The interlocking directorates that link most major corporations and business participation in cultural, charitable and social organizations provide an arena for building a political consensus, but they are not as ef- fective at pursuing specific policy objectives as more clearly policy-oriented business organizations.

    There is an urgent need for comparative studies of the social organiza- tion of capital. The known, broad and theoretically significant national var- iation in the structure and organization of the working class, the state and political life should correspond to important differences in the organization of capital. Because, in most contexts, capitalist classes are much less visible than the labor movement, the economy and the state, comparative studies of capital are difficult to undertake. Without minimizing the difficulties of reconciling statistics from different nations, the large and impressive body of research on the contemporary welfare state is testimony to what can be accomplished using official statistics. By comparison there is little system- atic, comparative research on the social organization of capital. National ac- counts data and other economic indicators certainly provide aggregate measures of the activity of capital - but there are no grounds for assuming these are a simple reflection of the organization of capital. Comparative data on interlocking directorates, on business organizations and on the repre- sentation of business in education, cultural, governmental and other organi- zations cannot be looked up; they must be gathered directly.

    This paper builds on one such effort to gather and analyse comparative data on the social organization of capital, the study of interlocking direc- torates of the 250 largest corporations in Austria, Belgium, Britain, Finland, France, Germany, Italy, the Netherlands, Switzerland and the US., which is reported by Stokman, Ziegler, and Scott (1985). Data from these 10 na- tions provide a context for an analysis of interlocking directorates in Canada. While there are important limitations to confining this study of Canadian capital to interlocking directorates, an analysis of interlocks is certainly critical to a broader empirical study conceptualizing national var- iations in the organization of capital.

    Three different bodies of theory and research, which are discussed in turn below, provide insight into the task at hand. First, the recent discussion of the development of the welfare state raises some very general questions about the organization of capital. Second, the organization of the capitalist class plays an important role in the tradition of Canadian political economy. And, third, there is an important tradition of research on the control of capi- tal.



    The richest tradition of comparative research on contemporary advanced capitalism involves the elaboration of what is variously referred to as the class conflict paradigm (Shalev, 1983: 28) or social democratic model (Skocpol and Amenta, 1986: 140ff.) of the welfare state. The argument is that differences in the development of contemporary welfare states reflect the relative strengths of the working classes of different nations - as indi- cated by the proportion of workers belonging to trade unions, the electoral strength of social democratic parties and their ability to form governments, and so on.2 The relative power and political organization of capital are as- sumed to be inversely proportional to the power of labor and the left politi- cal parties, since social reforms represent strategic victories of labor over capital. Measures of the power and organization of capital are absent from the social democratic model (see Shalev, 1983: 29) on the assumption either that they are very strongly correlated with other variables in the model, or that beyond these correlations, the organization of capital has no influence on the welfare state. As Shalev (1983: 82) observes, one justification for re- stricting the social democratic model to a focus on the power of labor in- volves the policy focus of these studies, the policy package associated with the welfare state conventionally addresses only problems connected to em- ployment and distribution, and not the twin loci of control to which capital historically assigned priority, namely accumulation and labor process.

    The social democratic model implies that nations with weakly developed welfare states, such as Canada and especially the u.S., should have stronger and better organized capitalist classes. One obvious difficulty with this ar- gument, however, is immediately apparent from a consideration of the balance of class power in Sweden, the exemplar of the welfare state. Al- though the development of the Swedish welfare state is unquestionably marked by strategic victories of labor over capital (see Korpi, 1978), there is also a remarkable concentration of power within the Swedish capitalist class (see Sundqvist, 1987). Furthermore, the organization of Swedish capi- tal in the Employers Federation is both more unified and plays a much more important role than the comparable Canadian organizations. The point here, made clearly in theoretical arguments about corporatism by Panitch (19861, Schmitter (see the essays in Schmitter and Lehmbruch, 1979) and others, is that the system-wide bargaining in the welfare state requires the organization of labor and capital. Without the centralized organization of capital, extensive consultation between business and the state, let alone tri- partism, is impossible. Explaining Swedish tripartism, Panitch notes that the sine qua non of the whole edifice was the capacity of both the SAF and the LO [respectively the Swedish Employers Federation and the central trade union organization] to commit their affiliates to central agreements (1986: 57). Analysing data from the 10 nation comparative study, Ziegler provides the link between the network of interlocks and corporatism: those four countries having the least centralized networks of interlocking direc-


    torships (France, Great Britain, Italy and the USA) also show weak forms of corporatism (1985: 280).

    Suggestive of the weakness of Canadian labor and corresponding disor- ganization of capital is the slow development of the welfare state in Canada, relative to the typical Western European experience (although, as Kudrle and Marmor (1981: 83ff.) show, after the adoption of medical insurance and maternity benefits in the early 1970s, social insurance coverage in Canada is not far from the mean for Europe). The results of Colemans (1986) study of business associations in Canada are consistent with this argument:

    There is little doubt that the system of business associations is underdeveloped. It is characterized by congeries of isolated groups: intersectoral associations operate independently of divisional associations, divisional associations of sec- toral associations ... and sectoral associations of subsectoral associations. Regional associations are paid little attention and the representativeness of as- sociations with more general domains is suspect. (Coleman, 1986: 272)

    This view of the relative disorganization of Canadian capital has not, however, gone unchallenged, especially as it relates to the Business Coun- cil on National Issues (the BCNI), whose representativeness and effective- ness is repeatedly questioned by Coleman. In a recent study Langille (1987: 70) argues that: In the course of the last decade, the Business Council on National Issues has become the most powerful and effective interest group in Canada - to the point where it can now exercise hegemony over both the private sector and the state. Langille cites compelling evidence of the BCNIS effectiveness in promoting free trade (also see Cameron, 19881, in designing an exit from the National Energy Programme and in shaping competition policy. In view of its supposed hegemony, however, it is surprising (as Lan- gille acknowledges) that the BCNI has been quite ineffective in achieving major reductions in social programs, government spending and the deficit.

    Despite the qualifications offered by Langille, on the whole this litera- ture suggests that Canadian capital is relatively disorganized, perhaps be- cause the weakness of labor has allowed capital to influence policy without strong organization. As the next section shows, this view is consistent with the now dominant view in Canadian political economy.


    In terms of its economic strength - defined as the ability to sustain capital accumulation and defend itself from foreign and state intervention - the Canadian capitalist class is widely regarded as exceptionally weak and frag- mented. The uniquely high degree of foreign ownership and correlated overdevelopment of extractive industry and finance, relative to manufac- turing, is often said to be more characteristic of underdeveloped than developed capitalist nations3 In structural terms, this proposition is self- evident. In no other advanced capitalist nation is nearly half of all manufac- turing in the hands of foreign owners. The disproportionate development of extractive industries is less unusual, however, especially if Canada is com-


    pared to other nations with extensive natural resources, such as Australia and the U.S. More controversial is the related argument that the structure of the Canadian capitalist class is distorted.

    The strongest claim about the uniqueness of the Canadian capitalist class is advanced by Naylor (1972), who argues that Canadian capital is domi- nated by a mercantile element of corporations in the financial and trans- portation sectors.* Clement (1975) argues that the Canadian capitalist class is divided into indigenous and comprador elites on the basis of the dis- tinction between Canadian and foreign ownership. Although foreign control is concentrated in particular industries, in Canada the relationship between ownership and industry is not strong enough to make Naylors and Cle- ments claims identical. More recently, Niosi (1985: 58) has advanced a com- plementary, but still broader argument,

    As a social group the Canadian bourgeoisie is deeply divided. With so many large foreign multinational corporations present in Canada there is a comprador counterpart to the autochthonous Canadian bourgeoisie whose job is to manage these foreign subsidiaries ... The regional character of the Canadian economy provides a second basis for cleavage within the bourgeoisie ... land1 ethnicity is a third source of cleavage ... the Canadian capitalist class is now deeply divided along linguistic and ethnic lines, with the Anglophone/Francophone split the single most important cleavage.

    Taken as a description of the demographic composition of the capitalist class, Niosis argument is self-evident. The more important and difficult question, however, is whether these cleavages affect its behavior as a social class. While the similarities in the arguments of Naylor, Clement, and Niosi are apparent, there are important differences in their emphases. Also, they refer to different historical periods: Naylors theoretical argument is built around a narrative about the nineteenth and early twentieth century; Cle- ment focusses on the postwar period and most of his empirical analysis is concerned with the early 1970s; and Niosi deals with developments a t the beginning of the 1980s. Still, all three point to the importance of examining regional, ownership and industry divisions within the Canadian capitalist class. Comparative analysis of Canadian economic development, notably the work by Ehrensaft and Armstrong (1981) and Laxer (19851, is used to sup- port this model of distorted or truncated development.

    An attack on this vi...


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