Business Council

THE BUSINESS COUNCIL Grant McConnell had only one hesitation in suggesting that the politics of business were conducted in narrow interest groups. That was the existence of the Business Council. Calling it “one of the more remarkable groups ever associated with the government,� McConnell based his account on the small amount of information on its advisory functions that investigators had been able to obtain from the tight-lipped Department of Commerce up until the mid 1960’s.15 McConnell noted that in the 1940’s and 1950’s the Council included a cross-section of the major business leaders in the nation. It held six meetings a year, some in Washington, some in resort settings like Sea Island, Georgia and Hot Springs, Virginia. Major government officials were in attendance at the meetings, which were strictly confidential. The council also pre¬pared reports on a wide variety of general issues to give to government leaders. The expenses for meetings and reports were paid by private contributions. The Business Council, which was created in 1933 as an adjunct to the Department of Commerce, made a unilateral withdrawal from its quasi-governmental status in 1962 because of a small flap with the Kennedy administration. North Carolina businessman Luther H. Hodges, serving as Kennedy’s Secretary of Commerce, asked the council to include more small-business representatives and to allow reporters to cover its meetings. He was responding in part to congressional and journalistic criticisms of the council’s exclusive relationship with government, and in part to the fact that its chairperson at the time, Ralph Cordiner of General Electric, was in the limelight because of a gigantic price-fixing scandal in the electrical equipment industry. Rather than totally accept Hodges’ suggestions, the Business Advisory Council, as it was then called, quietly told the government that it was changing its name to the Business Council and becoming an independent organization which would offer its advice to all agencies of the government.

15. Grant McConnell, Private Power and American Democracy (Knopf,1966), p. 276. Despite the fact that the Business Council was no longer an official advisory group to the Department of Commerce, it con¬tinued the prominent role it had developed during the Eisenhower administration, supplying businesspeople for government positions and meeting regularly in Hot Springs with government officials. It was especially close to the Johnson administration.16 McConnell considers the possibility that the Business Council might be “a directorate of big business effectually controlling the economic policy of the nation,� but dismisses the idea on the following grounds: Certainly, if a search were to be made for a top executive committee of corporate business, no more likely body could be found than the Business Council. Nevertheless, such an interpretation would probably be mistaken. The Council included a number of disparate elements. Not only were some representatives of small business actually members, but some of the representatives of big business had interests in con¬flict with each other. Moreover, the recommendations of the Council have not always been put into effect.17 In the end, McConnell sees the Business Council as a more ideological group, and also as a social group which confers prestige on its members. It is thus less important to its big-business members than industry advisory committees: “. .. mem¬bership on the National Petroleum Council has probably been more important than membership on the Business Advisory Council to Mr. Eugene Holman, Chairman of the Board of Standard Oil of New Jersey [Exxon]; much the same thing could probably be said of other figures of high stature in business.�18 McConnell’s perceptions of the Business Council are sympto¬matic, for they show the failure to distinguish between narrow interest-group advisory committees and general policy groups. It is in this inclusion of both types of organizations in a single analytical category that the policy process is lost from view. In singling out the Business Council for further discussion, McConnell rightfully put his finger on an organization that has a significant place in the policy-planning process, but did not ex¬plore adequately its unique role. The council does not conduct as many study groups or hold as many meetings as do most policy-discussion organizations. Indeed, it was because the Business Council had only limited research capabilities that the Committee for Economic Develop¬ment was formed. Nonetheless, the Business Council is centrally situated in the policy-planning network. It is a collecting and consensus-seeking point for much of the work of the other organizations. Moreover, it is one of the few organizations that has regular and formal meetings with government officials. It is, then, a major connection between big business and government. In a way, its centrality among the policy groups makes it the unofficial board of directors within the power elite. Many Washington observers have made this claim about the centrality of the Business Council from impressionistic information, but the point also can be made more systematically. In one study, membership overlaps among thirty-one social clubs and policy groups were analyzed mathematically to determine the centrality score for each organization. The Business Council emerged as the most central organization, rivaled only by the Committee for Economic Development.19 In a second study based on the overlapping members in thirty-six clubs and policy groups, another mathematical tech¬nique was used to determine the pattern of relationships among the groups. This study uncovered two cliques that were primarily rooted in organizations on the East and West Coasts, respec¬tively, and a third clique whose members were linked to both the. East and West Coast cliques. The Business Council was a member of this integrating clique, along with the

16. Hobart Rowan, The Free Enterprisers (0. P. Putnam’s Sons, 1964), p. 77. 17. McConnell, op. cit., p. 279. 18. Ibid. 19. G. William Domhoff, “Social Clubs, Policy-Planning Groups and Cor¬porations: A Network Study of Ruling-Class Cohesiveness,� The Insurgent Sociologist, Spring, 1975.

Committee for Economic Development, the Conference Board and several social clubs 20 Because it cultivates what a congressional committee called an aura of secrecy,� there is very little systematic evidence on the functioning of the Council. However, one of my former re¬search assistants undertook a careful observational study for me of its May 1972 meeting. The four-day gathering was held in the lavish Homestead Hotel in Hot Springs, Virginia, a town of less than 2,500 people, 50 miles from Washington. Council members heard speeches by government officials, conducted panels on problems of general concern, received reports from hired staff and talke4 informally with each other and the government offi¬cials in attendance. The meetings were held in a relaxed and friendly atmosphere that reinforced the feeling of camaraderie between the business and government participants. Discussion sessions were alternated with social events, including golf tournaments, tennis matches and banquet-style dinners for members, guests and wives. The guest list included the chairman of the Federal Reserve System, the Secretary of the Army, the Director of the CIA, the Secretary of State, the Secretary of Commerce, the Chairman of the Coun¬cil of Economic Advisers and a Special Assistant to the President.21 Very little is known about the role the council has played in urging the government to adopt any specffic policies, mainly because it will not make its files available for research. However, a careful historical study of the council’s history is highly persua¬sive in arguing that it had little impact on government policy during its early years, when it was little more than an adjunct to the Departmenf of Commerce.22 Its only real domestic success throughout the New Deal was its supportive involvement in the Social Security Act.23 It was not until the Eisenhower administration that it began to assume its present role. Since that time it has been a major contact point between the corporate community and the executive branch, providing government officials with direct presentations Qf the policy perspectives developed in the rest of the network, and serving as a stepping stone to govern¬ment service for its members.24

SATELLITES AND THINK TANKS The Council on Foreign Relations, Committee for Economic De¬velopment, Conference Board and Business Council are the Big Four of the policy network, but they do not function in isolation. They are surrounded by a variety of satellites and think tanks which operate in specialized areas or provide research informa¬tion and expert advisors for the Big Four. The National Planning Association, for example, is a small policy-discussion group which took its present form in 1942 as part of the concern with postwar planning. It has a more liberal outlook than the CED, but has been very close to it. In the mid-1950’s the two organizations considered a merger, but decided against it because the NPA has a distinctive role to play in that both its leadership and study groups include representatives from labor and agriculture: “NPA did not want to lose the frankness and open interchange it achieved through labor participation, and CED felt it

20. Philip Bonacich and C. William Domlioff, “Overlapping Memberships Among Clubs and Policy Groups of the American Ruling Class,� paper presented at the annual meeting of the American Sociological Association, Chicago, 1977. Using an entirely different approach based on interviews with businesspeople and the leaders of business groups, sociologist Floyd Hunter arrived at the same result in 1959 - the Conference Board, the Committee for Economic Development and the Business Council are at the heart of the national power structure. See Floyd Hunter, Top Leadership U.S.A. (Univ. of North Carolina Press, 1959), p. 33. 21. See Craig Kubey, “Notes on a Meeting of the Business Council,� The Insurgent Sociologist, Spring, 1973, for a summary account of this study. 22. Kim McQuaid, “The Business Advisory Council of the Department of Commerce, 1933-1961: A Study of Corporate/Government Relations,� Paul U. Selding, ed., Research in Economic History, Volume 1 (JAT Press, 1976). 23. Domhoff, The Higher Circles, op. cit., pp. 210—215. The council also played a very central role in creating and managing the National Labor Board and labor advisory boards in specific industries in the years 1933-35. However, these efforts in “self-regulation� did not work out and were superseded by the National Labor Relations Act of 1935, an act that was opposed by most members of the council. I am grateful to Professor Kim McQuaid for providing me with access to his original research on this topic through personal communications. 24. Frank V. Fowlkes, “Business Council Shuns Lobbying but Influences Federal Policy,� National Journal, November 20, 1971, presents interview evidence of council influence. had acquired a reputation for objectivity and did not wish to dilute this good will toward an avowedly business organization by bringing in other groups.�25 Similarly, a policy-discussion group started in the early 1950’s, the American Assembly, has many links to the CED, and once considered merger with it. Once again, the merger idea was dropped because the American Assembly has a unique function. Its twice-a-year meetings on a variety of general issues include labor and farm leaders as well as businesspeople and academics. Moreover, the assembly has a greater outreach program to upper-middle-income groups and students through books, pamphlets and a series of regional and local “Little Assemblies� based on the same topics discussed at the semi-annual national meetings in New York.26 The deepest and most critical thinking within the policy net¬work does not take place in the policy-discussion groups, as many academicians who have taken part in them are quick to point out. While this claim may be in part sell-serving by professors who like to assume they are smarter than businesspeople and bankers, there is no question but that many new initiatives are created in various think tanks before they are brought to the discussion groups for modification and assimilation by the corporate leaders. There are dozens of these think tanks, some highly specialized to one or two topics.27 Among the most important are the RAND Corporation, the Stanford Research Institute, the Urban Institute, the National Bureau of Economic Research, Resources for the Future and the Center for International Studies at MIT. The institutes and centers connected to universities receive much of their funding from foundations, while the large and less specialized independent think tanks are more likely to undertake contract research for businesses or government agencies. Some organizations are hybrids that incorporate both think-tank and policy-discussion functions. They do not fit neatly into one category or the other. Such is the case with one of the most important institutions in the policy network, The Brookings Institution. This large organization is directed by big business-people, but it is not a membership organization. It, conducts study groups for businesspeople and government officials, but it is even more important as a kind of postgraduate school for expert advisors. Employing a very large number of social scientists, it functions as a source of new ideas and sophisticated consultants for policy groups and government leaders. In particular, its economists have served both Republican and Democratic administrations since its founding in 1927. It has been especially close to the CED since the 1950’s, but it also has strong ties to the Council on Foreign Relations and the American Assembly.28 Several hybrids function in specialized areas. The Population Council was established in 1952 to fund research and develop policy on population control. Relying on large personal donations from John D. Rockefeller III and several foundations, it helped to create population research institutes at major universities, held conferences and publicized its findings. Case studies reveal that it has done very well indeed in getting its message across Resources for the Future was founded about the same time as the Population Council, with funds from the Ford Foundation. It has become one of the power elite’s major sources of information and policy on environmental issues, although it has to share this role with the Conservation Foundation, the American Conservation Association and three or four other closely related organizations30 In the issue-area of education, and in particular higher education, the Carnegie Corporation has played a central role through a series of special commissions.31

25. Eakins, op. cit., p. 479. 26. Ibid., pp. 465—471. 27. See Paul Dickson, Think Tanks (Atheneum, 1971), for a descriptionof the major think tanks. 28. Eakins, op. cit.; Bonacich and Domhoff, op. cit. 29. William Barclay, Joseph Enright and Reid T. Reynolds, “Population Control in the Third World,� NACLA Newsletter, December, 1970; Steve Weissman, “Why the Population Bomb Is a Rockefeller-Baby,� Ramparts, May, 1970; Phyllis T. Piotrow, World Population Crisis: The United States Resporue (Praeger, 1973). 30. Katherine Barkley and Steve Weissman, “The Eco-Establishment,� Ramparts, May, 1970; Peter Corner and David Horowitz, The Rockefellers: An American Dynasty (Holt, 1976), pp. 305-306, 384-385, and 401. 31. Merle Curti and Roderick Nash, Philanthropy in the Shaping of Ameri¬can Higher Education (Rutgers Univ. Press, 1965); David N. Smith, Who Rules the Universities? (Monthly Review Press, 1974); and Frank Darknell, “The Carnegie Council for Policy Studies in Higher Education: A New Policy Group for the Ruling Class,� The Insurgent Sociologist, Spring, 1975. There are also corporate-financed groups in the areas of farm policy, municipal government and even the arts, for the arts are considered by some execu¬tives to be important in maintaining the morale of inner-city residents.32 All of these more specialized groups are linked by funding and common directors to the biggest foundations, major policy-discussion groups and largest banks and corporations. Council on Foreign Relations members and trustees tend to dominate in the population establishment, and CED trustees are more evident in farm groups, but these differences are nuances within a general picture of cohesion. Sometimes the specialized groups lend their services to the discussion groups of the larger organizations. They often are listed as advisors on specialized CED policy statements. TIlE BUSINESS ROUNDTABLE The most recent and atypical organization to join the policy net¬work is the Business Roundtable, founded in early 1973 by the chairpersons of several dozen of the largest corporations in the nation. The Business Roundtable is in many ways the lobbying counterpart of the Business Council, with which it has numerous common members. In 1976, 33 of the 45 leaders of the Business Roundtable also were members of the Business Council. While the Business Council prefers to remain in the background and focus on the Executive branch, the Business Roundtable is unique among general policy groups in that it has an activist profile and personally lobbies members of Congress as readily as it meets privately with the President and cabinet leaders. In 1976 Business Week called it “business’ most powerful lobby in Washington.�33 The Roundtable was created through the merger of three ad hoc business committees - the Construction Users Anti-Inflation Roundtable, which was originally organized to fight inflation in the construction industry; the Labor Law Study Committee, which worked for changes in labor laws; and the March Group, which was created to tell “business’ story� via the mass media: The new group was formed because it was felt that corporate executives were relying too heavily on specific trade associations to do their lobbying. It was hoped that direct lobbying contact by the chief executives with legislators would have even more impact.34 The 150 member companies pay from $10,000 to $35,000 per year in dues, depending on their size. This provided a budget of $2.4 million in 1976. Membership in the organization is open, but it is not solicited. Decisions on where the Roundtable will direct its money and prestige are ultimately determined by a forty-person policy committee which meets every two months to dis¬cuss current public issues, create task forces to study selected issues and review position papers prepared by task forces. In developing its positions and strategies, the policy committee relies on task forces. Each is headed by the chief executive of a major company. Task forces avoid problems within a given industry. They concentrate on issues “that have a broad impact on business.�35 With a staff of only nine people, including clerical help, the Roundtable does not have much capability for developing its own information. However, this presents no problem because task force members “often draw on the research capabilities of their own companies or the companies of other task force members.�36 In addition, the Business Roundtable, like the Business Council, is the beneficiary of the work of other organizations in the policy network, for most of the members of the policy committee are in one or more of these organizations. So far the Roundtable has played a defensive role in Washington,. stopping legislation rather than passing its own. It helped kill the proposed Consumer Protection Agency during the Ford administration, and then did the same during the Carter administration, even while working very closely with Carter on other issues.37 The Roundtable also is credited with watering down federal

32. Wesley McCune, Who’s Behind Our Farm Policy (Praeger, 1956); Frank M. Stewart, A Half Century of Municipal Reform (Univ. of Cali¬fornia Press, 1950); Arnold Gingrich, Business and the Arts (Paul S. Eriksson, 1969). 33. “Business’ Most Powerful Lobby in Washington,� Business Week, December 20, 1976, p. 63. 34. “Business Roundtable: Big Corporation Bastion,� Congressional Quar¬terly, November 23, 1974; Peter Slavin, “The Business Roundtable: New Lobbying Arm of Big Business,� Business and Society Review, Winter, 1975/1976. 35. Business Week, op. cit., p. 63. 36. ibid. 37. “Carter’s Campaign to Placate Business,� Business Week, November 29,1976, P. 23.

antitrust legislation, including the deletion of an amend¬ment which would have given the attorneys general of all fifty states the authority to sue antitrust violators on behalf of the citizens of their states ‘and collect money damages.38 However, it failed in 1974 in its attempt to make it illegal for striking workers to collect food stamps. It is too soon to tell if the Business Roundtable} will play a permanent role within the poll network The fact that it focuses on Congress and fights against legislation disliked by big business does give it a somewhat special niche within the larger network. On the other hand, organizations that lobby and become embroiled in conflict often outlive their usefulness after a few years. They get a bad name, and new organizations have to be created. Whatever the long-run fate of the Business Roundtable, it Is useful to be reminded that new organizations are possible within a network that has been stable for many years.

38. Eileen Shanahan, “Antitrust Bill Stopped by a Business Lobby,� the New York Times, November 16, 1975, p. 1.