Kevin Farnsworth

The Business-Social Policy Nexus: Corporate Power and Corporate Inputs into Social Policy

It is increasingly impossible to understand and explain the shape and delivery of contemporary social policy unless we consider the role of business. Several factors have been at work here. First, many of the changes in social policy introduced since the 1970 sh ave been in response either to business demands or more general concerns about national competitiveness and the needs of business. Second, globalisation has increased corporate power within states, leading to transformations in social and fiscal policies. Third, business has been incorporated into the management of many areas of the welfare state by governments keen to control expenditure and introduce private sector values into services. Fourth, welfare services, from hospitals to schools, have been increasingly opened up to private markets. Despite all this, the issues of business influence and involvement in social policy has been neglected in the literature. This article seeks to place corporate power and influence centre-stage by outlining and critically reflecting on the place of business within contemporary welfare states, with a particular focus on the UK. Business, it argues, is increasingly important to welfare outcomes and needs to be taken into account more fully within the social policy literature.

Promoting business-centred welfare: international and European business perspectives on social policy

Capitalists are today better organized and have stronger voices at the international level than ever before. Several factors have been at work here. First, globalization and rationalization have encouraged firms and organized business to place more of their resources into lobbying at the supranational level in order to steer policy making towards their own agendas. They have, as a result, become far better organized and coordinated at the supranational level (Coen, 1997; Sklair, 2001). Europeanization has meant for business that lobbying only at the national level risks unfavourable policy outcomes being introduced internationally. As a result, business lobbying at the EU level has expanded greatly; by the late 1990s, over 200 large corporations and around 500 corporate lobby groups had established bases in Brussels (Balanya et al., 2000: 3; Coen, 1998; 78). Second, there is some evidence of the formation of common ideological and class positions between governments, international governmental organizations (IGOs) and international capital which, according to Sklair (2001), has spawned the development of an ideologically united, transnational, capitalist class that is steering debate within emerging global political institutions. Whether or not it is accurate to talk about such a class, it is certainly the case that shared ideological positions, based on a loose neo-liberal framework, have played a key part in globalization processes (Farnsworth, 2004: Ch 2). Third, as capital mobility has increased, so decisionmakers have been increasingly eager to find out, through exchanges with corporate ‘representatives’ of mobile capital in particular, business preferences and needs. In contrast to the familiar portrayal of corporations as organizations that have to lobby hard in order to make their demands heard by policymakers, governmental organizations frequently seek to establish closer links with business in order to facilitate the exchange of information and ideas and to learn how they might create more attractive investment environments and how they might smooth the introduction of new policies. Even for IGOs, getting the backing of powerful business interests can be crucial to winning the support of member states. Business leaders who are supportive of proposals put forward by international governmental bodies can be useful proponents of ideas and arguments. This is clear from the following extract, by Keith Richardson, Secretary General of the European Round Table (ERT) from 1988 to 1998. It illustrates the importance of business to the work of the Commission leading up to and following the introduction of the Single European Act (SEA) during the mid1980s:

Capital to the rescue? New Labour’s business solutions to old welfare problems

Business people, business associations and individual firms have been enlisted in various ways by New Labour as part of their strategy to identify and resolve a number of problems within the British welfare state. Business has been important to New Labour’s welfare strategies in at least three ways. First, New Labour has endeavoured to gear social policy more towards the needs of the profit making sector in the hope that this would increase competitiveness and help it to expand welfare expenditure in future. Second, by increasing the inputs of business people and firms into social policy, the government hoped to rescue services from their inefficient public sector strait-jackets. Third, the government has looked to private firms as important new sources of financing for welfare infrastructure. However, this embedding of business culture, business people and private enterprise into social policy has produced few real benefits to services, their employees or their users. This paper examines and evaluates New Labour’s strategy of embedding business into social policy in order to increase the efficiency and effectiveness of welfare services.

Corporate power and social policy in a global economy : British welfare under the influence

Globalisation, corporate power and social policies Business power and social policy development Globalisation, corporate structural power and social policy The national level: Business and social policy in the UK Business and local welfare services The social policies of corporations: Occupational welfare and corporate social responsibility Conclusion: Corporate power and social policy in global context.

Bringing Corporate Welfare In

One of the consequences of the post-2008 global economic crisis is that it has thrust into the public spotlight the issue of state provision for corporations, putting paid to the myth that capitalism and businesses could ultimately be more profitable, more efficient and more competitive without state interference and direct support. The reality is that corporations of every size and within every sector depend on government support in some way. Hence, while the measures taken by governments in response to the global crisis have been exceptional in their scale, they are not exceptional by design. Rather, direct and indirect state support to corporations – referred to here as corporate welfare – is commonplace and is deeply embedded within the states operations with various forms of assistance being delivered through social policies. In such an environment, the fact that social policy has very little to say about ‘corporate welfare’ is a serious omission. Bringing corporate welfare into social policy analysis reinforces the potential defence of the welfare state and, at the same time, increases our understanding of how best to balance the needs of private businesses with those of citizens on the one hand, and the burden of paying for welfare on the other. To this end, this paper argues for a deeper recognition, understanding, consideration and embedding of corporate welfare in social policy analysis. The first half of the paper advances conceptually the analysis of corporate welfare, mapping corporate and social welfare along a continuum. The second half provides some empirical evidence of the relative size of corporate and social welfare provision in a number of OECD countries.

Business in education: a reassessment of the contribution of outsourcing to LEA performance

New Labour promised to introduce dramatic reforms to the education system when it came to power in 1997 and one of the key strategies it employed in the pursuit of educational improvement was the utilisation of the methods of the private sector. Arguably its most controversial policy was its effective privatisation of the functions of ‘failing’ Local Education Authorities (LEAs). Although criticisms of this policy were widespread, the potency of the arguments against private sector involvement in education waned somewhat following the publication of a comprehensive investigation into outsourcing by the Confederation of British Industry (CBI) in 2005. This report, entitled The Business of Education Improvement claimed, on the basis of its analysis of Department for Education and Skills (DfES) data, that the outsourced authorities were comprehensively outperforming those that remained in the state sector. However, the conclusions of the CBI’s report were, in many instances, highly misleading. This paper provides a brief background to Labour’s privatisation programme, followed by a reassessment of the performance of the outsourced LEAs. Contrary to the conclusions reached in the CBI’s report, the analysis here finds no evidence to suggest that the outsourced LEAs performed better than those that remained in the public sector. If anything, on the rather narrow assessment of performance offered by the CBI, LEAs appear to perform better under public sector management.

Globalisation, business and British public policy

Hardly a day goes by without the publication of another new book that warns of the ever-growing threat posed by big business, and the transnationals in particular, on workers, governments and the environment. In one of the most recent texts on the subject, Anthony Sampson updated his long-running investigation into power and influence within Britain and concluded that ‘The retreat of both the old Establishment and the rebels on the left has left a vacuum which has been filled by the masters of the market place.’ The transnationals, meanwhile, are accused of undermining democratic and human rights and many governments seem to believe that nothing is possible any more in politics unless it draws on private-sector capital or ‘expertise’. Despite all this, the power and influence of business has been relatively under-researched and under-theorized in the public policy literature generally. Although this literature has investigated, to varying degrees, changing corporate power under globalisation, much work remains if we are to fully understand the impact of business on corporate power and, in turn, its implications for public policy. This paper places corporate power centre-stage. The first part outlines how corporate power has increased under globalisation. The second part goes on to argue that corporate power is variable temporally, spatially and between policy areas and, given this, examines globalisation and its impact on corporate power and the implications of this for public policy within the UK.

International Class Conflict and Social Policy

The history of welfare states is marked by divisions between capital and labour and these divisions are replicated at the international level. At the heart of these divisions is enduring class interests which accord different priorities to social and economic factors. That these divisions exist is neither surprising, nor necessarily a problem; the problem, this paper argues, is the increasingly high priority given to business interests by ever more powerful international governmental organisations. This paper presents an analysis of power in the global economy before investigating the social policy preferences of key international capital and labour organisations. It argues that international class mobilisation has failed to produce very much of a compromise on the part of capital, and that, if anything, international social policy discourse is today even closer to business than it has ever been.

Deciphering the International Monetary Fund’s (IMFs) position on austerity: Incapacity, incoherence and instrumentality:

Back in 2009, at the height of the global financial crisis, the London G20 forum met and declared the Washington consensus dead. What emerged in its place was a contradictory and confusing array of narratives and international policy prescriptions for post-crisis recovery that owed as much to the past as the present. Divisions within and among International Governmental Organisations (IGOs) arose about how best to address the economic challenges, but the dominant solution was ‘austerity’ which became firmly rooted in the policies and discourse of national governments and international organisations alike. While signalling a downward political reconditioning of public welfare expectations, the austerity strategy has itself lacked organisational conviction and coherence. Austerity is, thus, important for identifying the location of social policy in international post-crisis economic discourse. Since the crisis has paradoxically, bolstered economic interests at the expense of political choice, it is also necessary to study the crisis responses advocated by economic organisations as more, rather than less significant in shaping welfare futures. This article draws on evidence from a textual content analysis of International Monetary Fund (IMF) documents over the period 2004–2015 to examine discourse on austerity and social policy. The findings indicate that, while the language of ‘austerity’ and policy prescriptions vary, the IMF’s essential position has been to advocate austerity-like policies throughout the period, leaving its ideational ‘economistic’ position on the purpose of social policy fundamentally unchanged. These findings contrast with others that perceive a shift towards social justice concerns within the organisation, whereas our evidence suggests that the IMF’s position on social policy is one of ambivalence and incoherence.

Business Power, Social Policy Preferences and Development

Business influenced the evolution of social policies within the developed welfare states and it is just as important in the context of economically developing countries. Policy-makers everywhere respond to powerful structural signals, business lobbying and business engagement in social provision. Meanwhile citizens are the victims or benefactors of corporate activities within the various spheres of production, distribution and consumption. However, the context within which states and citizens engage and respond to business in developing economies is different to that which spurred social policy development in the West. In addition to facing a different playing field, where contemporary corporations are internationally more significant and more powerful, international governance is also more important and more prescriptive in terms of how states engage with the international economy. Even with evidence of the softening of neoliberal prescriptions at the international level, intergovernmental organizations (IGOs) and governments alike promote taken-for-granted views that corporations both need and favour lightly regulated economies with minimalist social policies.