Business-State Relations in Europe

by

Pepper D. Culpepper

• LAST REVIEWED: 08 February 2021
• LAST MODIFIED: 28 February 2017
• DOI: 10.1093/obo/9780199756223-0210

Introduction

The contemporary literature on business-state relations explores questions both of how business influences public policy (from the outside) and how business associations or firms are themselves formally incorporated into political institutions (from the inside, so to speak). In the first literature, the questions about business have to do with it as constituting a potentially privileged interest group, vis-à-vis other interests in democratic polities. Here the background question is mainly this: does the economic power of firms in capitalism transfer into their having disproportionate political power in democracy? In other words, does business—or at least, do some business actors—capture the state? The second literature emphasizes the varying institutional forms through which polities govern their economies, and the differential degrees to which such institutions accord a formal or informal role for employers alongside other social actors, such as labor unions. In the first body of work, the focus is often on patterns that are similar across capitalist democracies, though they often vary over time. In the second, cross-country variation among different institutional arrangements governing business-state relations typically takes pride of place. The tension between these two different points of intellectual focus continues to define the business-state literature and its most important debates.

Modern Foundations

The book that stands as the quintessential contribution on the influence of business on the state is Lindblom 1977, which powerfully articulated the concept of the privileged position of business. Lindblom’s work would continue to be a touchstone in the debate over the relative importance of lobbying versus the structural power of business. Two books that would come to be regarded as modern classics, Hall 1986 and Katzenstein 1985, started out with important questions of national variations. Why had French growth outpaced the British for much of the postwar era (Hall)? And why were the small economies of northern Europe so successful economically, when they might have been disadvantaged in competition with the larger states in the international system (Katzenstein)? These came to be seen as foundational contributions to the school of historical institutionalism, which showed how sticky institutional configurations that incorporated employers and unions into politics in different ways had long-term effects on national prosperity.

• Fioretos, Orfeo, Tulia G. Falleti, and Adam Sheingate, eds. The Oxford Handbook of Historical Institutionalism. Oxford: Oxford University Press, 2016.

  Although not devoted exclusively to the relations between business and government, the chapters in this handbook provide a useful analysis of the most important strains of argument in historical institutionalism and summarize the current state of debate.

• Hall, Peter A. Governing the Economy: The Politics of State Intervention in Britain and France. London: Oxford University Press, 1986.

  Established that economic policymaking is intrinsically political, and that its politics owe much to the way in which institutions structure the input of different actors into the system.

• Katzenstein, Peter J. Small States in World Markets: Industrial Policy In Europe. Ithaca, NY: Cornell University Press, 1985.

  This book first established the difference between liberal and social corporatism as two strategies of adjustment open to small states.

• Lindblom, Charles E. Politics and Markets. New York: Basic Books, 1977.

  Famous now especially for its work on the structural advantages of business, the book is also a formidable inquiry into the ways in which business exerts influence in politics through lobbyists and through effects on public ideas.

• Zysman, John. Governments, Markets, and Growth: Financial Systems and the Politics of Industrial Change. Ithaca, NY: Cornell University Press, 1983.

  Brought the politics of credit allocation into the discussion of how states intervene in the economy.