(Pictured above) U.S. President Barack Obama speaks during the Business Roundtable's 2010 first quarter meeting in Washington, DC. Looking on are Ivan Seidenberg (right), chairman and CEO of Verizon, and John J. Castellani (middle), president and CEO of Business Roundtable.
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In 1967, as the United States faced a budget deficit during the Vietnam War, business leaders, including those in the big business think tank the Committee for Economic Development (CED), joined in recommending a tax increase as a means of reducing the risk of inflation.
“Looking back at large deficits in the 1960s, 1980s, and the early 1990s, it was very common for big business groups to support tax increases. They acknowledged that spending cuts alone would not reduce a deficit,” says LSA Professor of Sociology and incoming chair of the Organizational Studies program Mark Mizruchi.
Fast forward to July 2011, when the Business Roundtable, a lobbyist group comprised of Fortune 500 executives, produced a letter urging President Obama and members of Congress “to put aside partisan differences and act in the nation’s best interest” in order to solve the nation’s deficit crisis.
“In this case, the most important group within big business didn’t suggest anything; the statement served as more of a plea,” Mizruchi says. “There’s an unwillingness to fully address societal problems in a way that business leaders had done in prior decades.”
Mizruchi, who was awarded a Guggenheim Memorial Fellowship for the 2011-12 academic year, is currently researching this issue, which he calls the decline of the American corporate elite.
“There was a period between 1945 and the 1970s when big companies addressed larger societal problems, not necessarily out of altruism, although there was some of that, but predominantly out of enlightened self-interest,” he explains. “Big businesses do not have that same unity and are not as effective today.”
After World War II, Mizruchi contends that Americans trusted the government more, making the government more powerful in the eyes of corporate elites. Organized labor was fairly strong then too, creating a need for firms to unite on certain stances in exchange for labor peace. Big business think-tanks such as the CED emerged as a result. Comprised of senior corporate executives and university leaders, the CED pushed for initiatives such as the Marshall Plan in which the United States assisted with rebuilding postwar European economies. The CED also had a hand in the Employment Act of 1946 and educational reform in the ’50s and ’60s.
Author of the Marshall Plan and Secretary of Defense for President Harry S. Truman, George C. Marshall (right), meets with Charles Erwin Wilson (left), president of General Motors in 1951.
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With political issues like the Vietnam War and Watergate scandal arising, “there was a sentiment among business leaders that the American way of life was becoming jeopardized,” says Mizruchi. Corporate elites continued to band together and grew more conservative. By the early 1980s, big businesses had succeeded in making organized labor and government regulation less threatening to their interests.
“The corporate elites had achieved such success by this point that there was little left to accomplish. They no longer needed to be as concerned with the forces that had compelled them to be pragmatic and work together in the first place,” Mizruchi says.
Then came the late 1980s, when a third of Fortune 500 companies disappeared, mostly through acquisition.
“Previously CEOs didn’t have to worry about job security, so they could devote more time and attention to their long-term interests. But by the late 1980s, they were under siege,” says Mizruchi. “This meant it was not as easy for CEOs to step back and think about the big picture. They instead became more narrowly focused, thinking more about their own survival than the broader interests of the business community or society. This inward focus caused corporate elites to become fragmented. This was very different from the ’50s and ’60s.”
Over time, groups like the Business Roundtable began to take less active stances on issues. Health care reform is an example. According to Mizruchi’s estimates, Fortune 500 companies spent $375 billion on health care for employees in 2009 alone.
“Most big companies were initially supportive of the Clinton [health care] plan in the 1990s, but they were thwarted by the insurance industry,” Mizruchi says. “Again, in 2010, most large companies supported reform, but they weren't able to pull together to express a uniform perspective.”
Will America see a more forward-thinking corporate elite any time in the near future?
“We might see a resurgence of the corporate elite if conditions similar to the 1950s and ’60s were to reemerge. But there’s no indication that this will happen any time soon,” Mizruchi says.