Monday, October 17, 2011

Corporate Power and Government Policy: Reflections from “Occupy Toronto”

By Sean Buchanan. 
This past weekend I was at the Occupy Toronto protest taking place in St. James Park in Downtown Toronto. Sparked by the Occupy Wall Street protests, Toronto is one of hundreds of cities staging their own version of the protest. The event received considerable attention in the media in the days leading up to it; as a budding academic researching power and institutional change, I was curious to see the protests in person. One criticism that has been made about the Occupy Wall Street movement is the apparent lack of a concise or unified message. So, I was particularly interested in hearing protesters’ motivations for attending the protest as well as their views on where they believe changes need to be made in society.  

There were over 2000 people in the park when I arrived. The media presence was also notable with reporters and cameras lining the exterior. I spoke with several individuals during my time at the protest, many of whom were aligned with different groups. Some were environmental activists; some were from the Marxist Party of Canada; others were union members; while others (though less so) were simply concerned citizens. Although the Occupy Wall Street movement is quite diverse, the protesters appeared to have one overarching concern in common: the powerful role of corporations in shaping government policy and the effects it has on representative democracies.  

Perhaps surprisingly, research in management has had relatively little to say on the issue of corporations influencing governments in comparison to other areas of social inquiry; and some researchers, like Herman and Barley have acknowledged it. Recently, Barley conducted a careful study of the ways in which corporations influence government policy in the United States. He found that through lobbying, peak organizations, political action committees, trade associations, think tanks, and public relations firms, corporations have substantial means to formally and informally influence government policies.  Furthermore, Ferguson, a political scientist, has shown how future policies of presidential candidates can be predicted by where their campaign dollars came from.

Given the enormous influence corporations potentially have, they also arguably have a political responsibility, whereby they should use their political power to promote social as well as economic well-being. This view advocates for a proactive role for business in addressing social issues.  For example, this view would argue, corporations are can be a potential solution to the grievances of the Occupy Wall Street protesters rather than simply part of the problem. This view is particularly relevant if you accept the argument that governments are largely ‘handcuffed’ by corporate interests. Yet, when I asked protesters what they thought business should do to address their concerns, they had little to say.  Rather, protesters argued that it was the government’s role to change the structures that allow corporations to have so much influence in policy (e.g. U.S. campaign financing laws). A paradox that arises is how is government to change these structures if they are constrained by the very interests they are trying to regulate?

This raises a lot of questions for management scholars.  First, what is the role of business in addressing social concerns, such as those raised by the Occupy Wall Street protestors?  Should business even have a role in addressing these concerns? Are the protestors correct to assume that business cannot play a productive role in addressing their grievances? How does government regulate corporations if they are controlled by corporate interests? These questions are going to become increasingly important if the relationship between business and government continues to grow fuzzier.

While researchers address the above issues, it is heartening to note evidence of corporations actively cooperating with government with regards to industry regulations. For example, in the Nordic European countries, many businesses have requested that governments actually increase national environmental regulations. The apparent rationale behind this is that strong government regulations will set a boundary for these companies to compete within, and thus, even the playing field.  Furthermore, companies with a strong environmental performance will have an advantage in this new regulatory environment, which provides significant incentives for companies to proactively address environmental concerns. Is it too far fetched to believe that financial institutions might also push for stricter regulations on their ability to influence government policies?  The protesters I met at Occupy Toronto certainly thought so. The way in which the ongoing Occupy Wall Street protests unfold will likely shed considerable light on questions of this nature.
Sean Buchanan is a PhD Candidate at the Schulich School of Business at York University in Canada. 

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