Tim Büthe
Business Partisanship:
Political Consequence of Economic Globalization

 
This project examines how domestic institutions condition the political consequences of economic globalization.  I start by asking: Do firms have a partisan political preference?  This inherently important question is even more consequential after the U.S. Supreme Court substantially expanded corporations' political speech rights in its 2010 "Citizens United" decision.  According to the conventional wisdom, business prefers government by conservative parties of the Right.  While there is much anecdotal support for this conventional wisdom, it is called into question by a dearth of clear theoretical explanations for such a partisan preference, difficulties in measuring the political preferences of firms empirically, and prominent arguments in the literature on economic globalization whose logic implies that economic globalization should have substantially diminished any such business partisanship.
I argue that we should indeed generally see business partisanship in favor of conservative parties of the Right, but for reasons that differ depending on the domestic institutional context.  Specifically, why partisan control of the government matters for firms in the private sector depends to a large extent on the institutional variation identified by the literature on Varieties of Capitalism.  Drawing specifically on Hall and Soskice's work in this tradition, I distinguish between liberal market economies (LMEs), characterized by mostly arms-length relationships between economic actors and hence an overwhelming reliance on the price mechanism in pure market exchanges to organize economic activities, and coordinated market economies (CMEs), characterized by a greater reliance on formal and informal non-market relationships, partly maintained by the state.  Partisan differences on distributional issues (imposing the costs of means-tested social programs and social insurance on firms) should matter in both liberal and coordinated capitalist democracies, but they should be the key motivation for business partisanship in CMEs.  In LMEs, by contrast, there is an even more fundamental partisan conflict over the role of the state in the economy, where business exhibits a strong preference for a minimum of regulatory or other government intervention (an issue that was in principle settled long ago in CMEs).
These institutional differences in turn condition the effect of globalization.  Economic globalization should diminish, from the perspective of business, partisan differences over distributional issues, which are most pertinent for firms in coordinated market economies, but not the partisan differences concerning the role of the state in the economy, which is most pertinent for firms in liberal market economies.  Consequently, globalization should lead to a substantial decline in business partisanship in coordinated--but not in liberal--market economies.
I examine this argument empirically through a combination of quantitative and qualitative analyses, focusing on the two prototypical cases of liberal and coordinated market economies, respectively: the United States and Germany.  For my statistical analyses, I use measures of firms' economic expectations, which are available for both countries over several decades based on business surveys with nearly identical question wording and no reference to policy or politics.  These measures avoid the problems that arise when inferring business partisanship from overtly political behavior or statements:  After controlling for actual economic conditions, economic expectations provide a clear indication of whether firms actually believe that partisan control of government has a systematic effect on business interests.  I supplement the statistical analyses of these time series data with information about business executives' perception of the political context in which they operate, collected through in-depth qualitative interviews that I conducted in both the United States and Germany with senior managers who speak and act on behalf of their firms.  Both the quantitative and qualitative findings strongly support the argument.
This project has resulted in a book manuscript, which is close to completion.  Contact me for more information if interested.

 

 

 

 

 

 

 

< page last updated August 2011 >