From Canadian corporate elite to transnational capitalist class: transitions in the organization of corporate power

Canadian Review of Sociology and Anthropology, The, August, 2007 by William K. Carroll

One way of interpreting these shifts--the weakening of institutionalized relations between commercial banks and corporations, the ascendance of shareholder value and institutional investors--is to speak of the financialization of capital and of capitalism. Jim Stanford (1999) has observed how the "paper economy" has overtaken the "real economy." Each day, something between US$1.5 and US$2 trillion circulates on the global currency market, and 98% of this is a "purely speculative flow of money" (Korten, 2006: 10). In a financialized economy, the dynamics of capital accumulation shift toward the dominance of financial circuits as "new forms of financial competition reflect the requirement to meet the expectations of the capital market as much or more than those of consumers in the product market" (Thompson, 2003: 366). (6)

The enhanced salience of money capital is evident on both sides of the industrial/financial divide. Industrial capital comes to resemble financial capital, as stock options align corporate management with a money-capital standpoint, as corporations issue their own commercial paper and as firms come to depend less on productive activities and more on income from financial sources, the case of Enron being the most notorious (Krippner, 2005). On the other side, financial institutions come to prefer liquidity (7) over long-term loans; deregulation spurs capital centralization into universal banks whose activities range from financing production to speculation in derivatives (Carroll and Lewis, 1991); and with the accumulation of assets from deferred wages institutional investors become important centres of allocative as well as strategic power. The clamour by institutional investors for shareholder value is part of these trends, as are the looser and more episodic relations between commercial banks and corporations. To some extent, financialization disembeds institutional investors from productive capital and weakens the financial-industrial nexus, but national business communities such as Canada's persist, held together by the need to exercise hegemony locally and to access the business scan that interlocking directorates enable. The old nationally organized financial-industrial axis, whose backbone was long-term bank loans to corporations, weakens as bankers decline corporate directorships in the new governance framework. Finance capital becomes more loosely organized and more transnational in its circuitry.

From a Culture of Leisure to a Culture of Activism

Turning more directly to the other face of corporate power, that of hegemony, what is striking is the extent to which, with neo-liberal globalization, the cultural basis for elite solidarity has shifted from the sphere of leisure to activism. Consistent with the conservative normative order I mentioned earlier, private clubs were in the mid-1970s still key sites for building class cohesion. The corporate elite was organized along patriarchal, plutocratic lines, as an old boys' network. It was in the dense, centralized network of private clubs, and on the sprawling boards of the big five banks, that the elite found its collective identity as a "confraternity of power." But in the ensuing decades the clubs emptied out as leading capitalists turned to a more actively political construction of hegemony.