The Modern Corporation and American Political Thought. - book reviews

Business Horizons, Nov-Dec, 1997 by Alfred Diamant

The reviewer, Alfred Diamant, is a professor of political science at Indiana University, Bloomington, Indiana.

For several reasons, the two books under review would seem to be a poorly matched pair. They deal with two countries widely differing in size, history, and people, and with greatly contrasting economic systems and political ideologies. In an even sharper contrast, Scott Bowman examines the place of the modem corporation in the history of U.S. political thought, whereas Vivien Schmidt focuses on the empirical evidence concerning the transformation French government and business have undergone, especially in the second half of the twentieth century.

Nevertheless, the authors' different approaches, methods, and findings illuminate common problems these two countries will face on their journey across that mythical bridge to the twenty-first century. Neither of the two authors directly addresses that issue, but both can be read profitably for a better understanding of what might happen to these two economies on that journey. Very few readers will be able to deal comfortably with both of these books, yet the effort is worthwhile. Perhaps this review will provide the impetus to get the reader started, for both books are outstanding works by younger scholars who deserve to be heard.

Vivien Schmidt addresses the changes that have taken place in the French economy and its relations to the state since the ascent of Francois Mitterrand to the presidency in 1981. She does this within an analytic framework of state-society relationships in their various forms: pluralist (United States), corporatist (Germany), and state-centered (France). For the rest of the study, the emphasis is on state-centered or statist policy-making in France.

In Part II, Schmidt provides a detailed historical overview of the state-economy patterns since 1981. This is followed in Part III by an examination of the policy process in government ministries and their relation to the European Union (EU) and to industry. Part IV reviews the performance of major groups of players in government and industry focusing on the persistent pattern of elite domination in the state, the society, and the economy. The final section, Part V, evaluates the changes that have occurred in the French economy: efforts to revitalize it, the restructuring of French capitalism, and changes in managerial practice and recruitment.

Whatever expectations Schmidt might have harbored for a dramatic and far-reaching transformation of French "statist" patterns, she concludes that the force of the EU and the global economy have created a "crisis" in the French state-economy relationships. So far, however, this has not led to major, far-reaching changes in established historic patterns.

If France represents one particular version of the relationships between state and economy--a state-centered approach, as Schmidt calls it--the American model might seem to be the very opposite: a set of arrangements in which economic power is in the ascendancy. This would seem to be particularly true in the late twentieth century, when the global march of the American market-driven model seems to encounter little resistance. Yet, as Scott Bowman demonstrates convincingly, that global dominance will be shaped "in the image of the corporation" (p. 304). If we pay proper attention to Bowman's arguments, laid out in careful detail and resting on a massive foundation in the appropriate sources (113 pages of notes, bibliography, and cases), we will be better prepared to cross the bridge into the twenty-first century than we would be from any other source.

In successive chapters, Bowman reviews the rise of the modem corporation, explores the interaction of American liberalism with the concept of the corporation, traces the consolidation of corporate power as reflected in legal theory, and demonstrates the impact of managerial theory on corporate power. On the basis of this evidence, he concludes that in the corporation, politics and economics cease to be separate realms, thereby revalidating the analysis of A.A. Berle half a century ago: that to study and understand the functioning of the modern corporation, economics and politics must be joined. Bowman has done just that, and most successfully.

Schmidt and Bowman provide us with contrasting yet complementary perspectives on worldwide economic trends. Bowman may well be closer to the central feature of that economy: the role of the corporation in the spread of the market-driven economy a la Americaine. But Schmidt's careful, dissection of state-economy patterns provides a better guide to these relationships in Europe, Asia, and the states of the former Soviet Union. Neither author provides much of a guide to African politico-economic patterns. Still, readers will be well equipped to understand the cross-cutting patterns of economy and polity in much of the industrialized world.

Scott R. Bowman, The Modern Corporation and American Political Thought. University Park, PA: The Pennsylvania State University Press, 1996. 436 pp.