Transcript 9th lecture (Oinas)

Finnish business elite
Tomi Oinas
Postdoctoral researcher
Department of social sciences and philosophy
University of Jyväskylä
Introduction
• Topic:
– Large scale corporations’ CEOs’ can be seen
forming part of power elite i.e. business elite
– Attitudes of business elite and how they differ
from whole population
Background
• Classics of elite theory:
1.
2.
3.
4.
Gaetano Mosca (1858-1941)
Vilfredo Pareto (1848-1923)
Robert Michels (1876-1936)
C. Wright Mills (1916-1962)
Gaetano Mosca: The Ruling Class
• Every politically organized society of any degree of complexity
is characterized by the existence of an organized minority i.e.
ruling class that rules and a majority that is ruled
• In different types of societies, different qualities and functions
characterize the members of the ruling class
• According to Mosca the members of ruling class regularly
have some attribute, that is highly esteemed and influential.
• He also adhered to the concept of the circulation of elites,
which is a dialectical theory of constant competition between
elites, with one elite group replacing another repeatedly over
time.
Definition of Elites
• The existence of elite can not be deduced from the fact that
power is concentrated in the hands of small group of people.
Practically all modern societies exhibit this feature.
• The essential criterion for the existence of an elite is that it
constitutes a cohesive, unitary and self-conscious group.
• Meisel´s three Cs´:
1.
2.
3.
Group consciousness
Coherence
Conspiracy i.e. common will to action
Vilfredo Pareto: The Theory of Elites
• In society as a whole, and in any of its particular strata and
groupings, some people are more gifted than others.
• Those who are most capable in any particular grouping are
the elite.
• Society divided in three parts: 1) governing elite, 2) nongoverning elite and 3) none-elite
• However, only in perfectly open societies (=perfect social
mobility) would elite position correlate fully with superior
capacity.
• In the real world inherited wealth, family connections etc.
prevent the free circulation of individuals through the ranks of
society, so that those wearing an elite label and those
possessing highest capacity tend to diverge to greater or
lesser degrees.
Pareto: circulation of elites
• When governing or non-governing elites attempt to close
themselves to the influx of newer and more capable elements
from the underlying population the circulation of elites is
impeded, social equilibrium is upset and the social order will
decay.
• Pareto argued that if the governing elite does not find ways to
assimilate the exceptional individuals who come to the front
in the subject classes, an imbalance is created in the body
politic and the body social until this condition is rectified,
either through a new opening of channels of mobility or
through violent overthrow of an old ineffectual governing
elite by a new one that is capable of governing.
Pareto: lions and foxes in business
• The ideal elite contains a judicious mixture of Machiavellian
“lions” and “foxes”, of men capable of decisive and forceful
action and of others who are imaginative, innovative, and
unscrupulous
• In economic field “speculators” and “rentiers” correspond to
the foxes and lions
• The “speculators” are primarily responsible for change, for
economic and social progress. They engage in large-scale
financial manipulation to merge, combine, and recombine
enterprises.
• The “rentiers”, instead, are a powerful element in stability, and
in many cases counteracts the dangers attending the
adventurous capers of the “speculators”.
Robert Michels
• Developed the Iron law of oligarchy: all organizations,
regardless of whether they have a democratic constitution or
agenda, in practice develop into oligarchies.
• Oligarchy develops out of a desire to be effective. The
members look for leaders and organizers, these people
specialize in various tasks, and their specialized knowledge
and skill makes them indispensable—they can threaten
resignation if the organization seems to be on the point of
making a wrong decision.
• Elites have three basic principles that help in the bureaucratic
structure of political organization:
1.
2.
3.
Need for leaders, specialized staff and facilities
Utilization of facilities by leaders within their organization
The importance of the psychological attributes of the leaders
Mills: The Power Elite
• Elite are those political, economic, and military circles, which
as an intricate set of overlapping small but dominant groups
share decisions having at least national consequences. Insofar
as national events are decided, the power elite are those who
decide them.
• The governing elite in US primarily draws its members from
three areas:
1.
2.
3.
the highest political leaders and a handful of key cabinet members
and close advisers
major corporate owners and directors
high ranking military officers
• These groups overlap, and elites tend to circulate from one
sector to another, consolidating power as they do so
Mills: business elite
•
•
•
•
A shift in focus of US business from regional to national
markets and interests
Transition from propertied class (owners of real assets)
to a managerial class, who were able to organize the
corporate enterprise into an engine for ever-expanding
profits.
CEO´s chosen because of bureaucratic skills, not
because they were of the right social background.
Could exercise national influence not only through their
companies, but through the roles that they would be
called upon to serve in "the national interest."
Class, Status and Elite?
• According John Scott (2003) the distribution power is most
usefully analyzed along broadly Weberian lines: structures of
power are organized around relations of class, status and
command
• Class concerns power in the economic sphere of property and
market relations, status concerns those forms of power that
derive from the differentiation of groups in the sphere of
culture and community.
• Command relations are organized around the distribution of
authority within structures of “imperative co-ordination”.
These authority relations are the basis of positions of
command.
• Privileged or advantaged groups exist in each of these
dimensions of power, but only those based in positions of
command should be seen as elites.
Class, Status and Elite?
• An elite is a social grouping whose members occupy similar
advantaged command situations and who are linked to
another through circulation and interaction
• Economic elite i.e. business elite is organizational elites that
arise within the authority structures of large scale economic
organizations (capitalist business enterprises, employers
federations, other organisations of capital)
• The connections within which the intra-organizational
exercise of authority is embedded comprise personal,
commercial and capital relations.
• Inter-organizational corporate elites as structure of
interlocking directorships i.e. person sits on the board of two
or more companies creating interlock between companies
Typology of elite structures
From Ruostetsaari 2003
Degree of coherence
High
Degree of
openness in
recruitment
Low
Low
EXCLUSIVE
•recruited from single
social stratum
• members have close
contact with each other
• members share same
opinions, attitudes and
values
SEGMENTED
• recruited mainly from one
social stratum
• members have little
interaction
• no shared attitudes etc.
High
INCLUSIVE
• recruited from several
social strata
• members have close
contact
• shared social views
FRAGMENTED
• recruited from several social
strata
• little or no coherence
Elites and elite structure in Finland
• According to Ruostetsaari (1992;2003) Finland was ruled by
unified power elite at least in the beginning of the 1990s
• This group had a closed form of recruitment and differed form
the rest of population in several aspects
• Different elite groups were tightly connected by institutions
(mass media, private corporations and banks) and informal
personal contacts
• There was notable circulation between elite groups which
increased the cohesiveness of the network
• The power elite was also attitudinally unified
• In the 1990s Finland was somewhere between exclusive and
inclusive elite structure
Elites and elite structure in Finland
• Results mixed on whether there still is one power elite in
Finland.
• In the early 2000s there was indication of increased social
mobility in the elite groups
• Also the circulation of elites had been notable
• On the whole, there where only minor changes in the
cohesiveness of elite structure in Finland between 1990 and
2000
• Finland had moved somewhat nearer to the inclusive elite
structure
Business elite
• The business elite consists of top executives and directors of
the largest corporations.
• Members of business elite have direct control over wealthproducing property, make large-scale investments and
employment decisions that determine the direction of
national economy including plant location and layoff decisions
• These decisions shape regional economic situation and the
life changes of individuals that work for corporations they
control
• In addition, these positions are among the financially best
compensated occupations. They have high salaries and,
especially, the potential wealth through stock options.
Business elite as class-for-itself?
• Question whether the corporate elite is capable of moving
from a class-in-itself (shared interest) into a class-for-itself
(capable of acting collectively on class interests)
• Interlocks among boards of directors one of the most widely
studied mechanism of intercorporate order.
• Interlocks between industrial corporations and commercial
banks one of particularly significant for producing
intercorporate elite.
• Intercorporate relations create mechanism promoting the
capacity for unified political action among the corporate elite,
including connections between banks and firms as well as an
inner circle of politically active multiple directors with
exposure to diverse sectors of the economy
Social background of business elite
• Have clearly higher class background compared to whole
population
• The background of business elite has become less “elite”. The
share of coming from top stratum has declined considerably
and at the same time famer and blue collar background has
become more common.
• However, high share (42%) of business elites come from
families where father was upper-level employee or in leading
position
• Ownership continues to be important for recruitment to the
business elite. It also compensates lack of education, leaders
of family businesses don´t necessarily need a academic
degree
• Business elite has the highest income on all elite groups
Social background of business elite
Attitudinal differences between elites
and population
•
According to Julkunen (2001) there are three main reasons
for differences in attitudes between elites and general
population:
1.
2.
3.
•
Elites have more responsibility than people on average
Because elites have higher education and are more informed, they
are better equipped to perceive complex phenomenon
Social reforms have different affect to elites because they have high
income and are in many ways privileged
Most of these correspond especially well to the business
elite:
–
–
–
responsibility of costs and profits
knowledge about economy
very high income (more than doubled between 1990 and 2000)
“Income politics should continue to strongly
emphasize equality principle in future?”
“Finnish economy would function more efficiently if it
had higher income disparity?”
“Finnish economy produces too great income and
welfare disparities?”
“The interests of employees and employers are
nowadays mainly congruent?”
“Finland should joint the EMU among the first?”
Attitudes of business elite vs. general
population (1997)
• Strongest differences in attitudes of business elite and
population on average are found in central social questions
such as income distribution, conflicting interest of employees
and employers etc.
• These differences derive partly from divergent views of
optimal level of income disparity in society
• In addition, level of income seem to explain some of this
difference. The higher social position, the less gap there is in
attitudes compared to business elite.
• The future society desired by business elite and “masses”
differ considerably!
• If there were referendum on joining EMU in Finland, the
population on average would have rejected it… (cp. Sweden)
Is there a business elite in Finland?
• Does the three Cs condition hold (consciousness, conspiracy
and coherence)?
• There are only minor attitudinal differences inside large scale
corporations’ CEOs’ i.e. cohesion is high
• Neoliberal ethos i.e. privatization and public sector
downsizing single most important unifying attitudinal
dimension
• Same ethos also the most important dividing factor between
business elite and general public
• In representative democracy members of political elite are
selected with elections, members of business elites are not
• In other words, contrary to political elite business elite is not
forced to take into consideration the public opinion
Thank you!
Literature
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•
•
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•
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Pareto , V. The Mind and Society (1916)
Mosca, G. The Ruling Class (1939).
Mills, C. W. The Power Elite (1956).
Michels, R. Political Parties: A Sociological Study of the
Oligarchical Tendencies of Modern Democracy (1966).
Scott, J. Stratification and Power: Structures of Class, Status
and Domination (1996).
Scott, J. Power (2001).
Ruostetsaari, I. Vallan Ytimessä. Tutkimus suomalaisesta
valtaeliitistä (1992).
Ruostetsaari, I. Valta muutoksessa (2003).