Individual corporations frequently influence the political process on matters of immediate financial interest to themselves through donations and lobbying and the threat of transferring their activities abroad. They also play a major role in setting the political and the public agenda through their use of public relations, lobbying, and funding of third parties such as media, think tanks, and business organizations.
However, corporations have not been content with the degree of economic power and political influence they can wield individually. Since the mid-20th Century they have conspired to increase their power, consolidating their political influence to pressure governments to make decisions in their favour.
In the 1970s, faced with declining profits and a proliferation of public interest groups that challenged the authority of business and sought government controls over business activities, corporate leaders created whole networks of business groups to mobilize political support and reassert business dominance.
At the time business was under attack and public interest groups were challenging the authority of business and seeking government controls over business activities. Confidence in free enterprise was in decline. The first-wave of modern environmentalists were blaming development and the growth of industrial activities for environmental degradation. Their warnings were capturing the popular attention, resonating as they did with the experiences of communities facing obvious pollution in their neighbourhoods. Worst of all, from a business point of view, governments were responding with new environmental legislation.
Governments worldwide responded with new forms of comprehensive environmental legislation such as Clean Air Acts and Clean Water Acts and the establishment of environmental regulatory agencies. These new environmental laws were part of a general trend in legislation aimed at regulating corporate activities and constraining unwanted business activities.
Public respect for business was at an all time low and ‘for the first time since the Great Depression, the legitimacy of big business was being called into question by large sectors of the public.’
A Harris poll found that between 1967 and 1977, at a time when the counter-culture movement brought with it a proliferation of public interest groups—including environmental and consumer groups—that challenged the authority of business and sought government controls over business activities, the percentage of people who had ‘great confidence’ in major companies fell from 55 percent to 16 percent.
In various business meetings corporate executives lamented their decline in influence. For example, Carter Bales, Director of McKinsey, New York, stated: ‘Around the world, there have been challenges to the authority of each corporate actor – a breaking down, if you will, of their legitimacy’. And the president of the National Federation of Independent Business, Wilson Johnson, claimed ‘we’re losing the war against Government usurpation of our economic freedom.’
In response to government regulations, brought on by the activities of environmentalists and public interest groups, businesses began to cooperate in a way that was unprecedented, building coalitions and alliances and putting aside competitive rivalries.
Broad coalitions of business people sought to affect ‘a reorientation of American politics.’ In the US, the Chamber of Commerce and the National Association of Manufacturers (NAM) were resurrected and rejuvenated and new organizations such as the Business Roundtable (for large corporations) and the Small Business Legislative Council (for small businesses) were formed to lobby governments.
Corporations and allied foundations also poured huge financial resources into a network of dozens of think tanks aimed at devising and advocating policies that would shift power from government to business.
This political mobilization of business interests could be observed in other countries too. In Australia, for example, corporations ‘substantially increased their level of resources and commitment to monitoring and influencing the political environment’. They ensured their senior executives were effective political operatives in their dealings with politicians and bureaucrats. They hired consulting firms to help with government submissions and established government relations units within their companies with direct access to the chief executive officer. Also, as in the US, ‘concerted efforts were made to improve and centralize business representation at the national level’ so as to mobilize and increase their power.