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Free keywords:
Business and politics; welfare state politics; political economy of entrepreneurship; history of economic ideas
Abstract:
Social scientists dealing with business and politics have tended to focus
mostly on the power of business and less on the political challenges and
constraints that business interest groups face. This paper analyses how
business interest groups respond to political initiatives that challenge
their interests, using four episodes of political conflict in Germany. The
paper elaborates a model of response strategies and their likely impact
on political outcomes. The model suggests that business interest groups
can respond to political challenges in two ways: by seeking
confrontation or by pursuing adaptation. The paper illustrates these two
response strategies with four episodes of political conflict in the
political-economic history of Germany: (i) the adoption of social
insurance under Bismarck, (ii) the adoption of unemployment insurance
in the 1920s, (iii) the adoption of board-level codetermination in the
early 1950s, (iv) and the Agenda 2010 labour market reforms of the early
2000s. These four case studies show that adaptation facilitates social
compromise, while confrontation results in a bifurcated outcome,
producing either dominance or defeat of business interests, depending
on what side government takes. Furthermore, the analysis finds that
confrontation tends to be associated with a unity of interests within the
business community, while adaptation tends to be associated with a
fragmentation of interests. The discussion emphasises that the role of
business in politics should not be seen solely in terms of business
‘influencing’ politics, but also as potentially adaptive.
