The Capitalist State,Corporate Political Mobilization,and the Origins of Neoliberalism

The ‘Original Sin’ of the Capitalist State

The field of political science was for decades caught up in the false opposition between the dominant ‘pluralist’ and the critical ‘elite theory’ paradigms. Until the 1970s, pluralists like Robert Dahl and Charles Lindblom argued that political power in advanced capitalist democracies was dispersed among a fragmented array of diverse and often conflicting groups. The sheer range of different interests and agendas advanced by these groups meant that it was impossible for anyone to consistently dominate the ‘political system’. Though pluralists accepted that political and economic power was not evenly distributed, they held that most people had at least some power, and moreover that liberal democratic institutions generally prevent ownership of money from conferring excessive control to any one group. Thus the structure of power in such systems is ‘polyarchic’, characterized by many different ‘elite’ groupings with limited overlap or coherence between them. Furthermore, conflict over specific policy areas cuts across boundaries of class and status. This fractious nature of power allows any group sufficiently motivated about a specific issue to exert at least some influence on policy. The function of the ‘political system’, then, becomes organizing coalitions among these competing groups, of which specific policies are the outcomes.

‘Elite theorists’ like C. Wright Mills and Floyd Hunter advanced a different view. These writers held that although there are divisions within the elite, the overriding unity of interest within this group, coupled with its command over resources, allows it to monopolize power in a way that renders notions of ‘pluralist democracy’ mostly illusory. The question of whether or not there is a ruling class in the advanced capitalist democracies – and whether or not liberalism had yielded substantive democracy – was thus dissolved into a debate over the degree of political and social cohesion of a singular ‘elite’. While pluralists emphasized conflict between divergent elite groupings and cross-class political conflicts, elite theorists sought to empirically demonstrate the existence of a unitary elite with coherent political interests, even if this was merely a general consensus around the need to preserve elite control. And just as pluralists emphasized the general acceptance of democratic ‘rules of the game’, elite theorists advanced a version of the ‘false consciousness’ thesis, whereby the masses were unknowingly inculcated with values and ideas imposed through the structures of elite domination.

What each of these arguments is missing, as Miliband and Poulantzas would point out in the 1970s, was a theory of the capitalist state. As a result of this gap, though elite theorists certainly made important scholarly contributions, they ended up yielding far too much to their opponents in staking the existence of a ruling class on the presence of a basic political unity among an ‘elite’ achieved prior to and outside of an encounter with the state. Lacking a theory of the capitalist state, both pluralists and elite theorists dissolved the state into an ontologically neutral ‘political system’, the composition of which was the result of the interaction between variously organized social groups. The difference between the two theories can be resolved into an empirical question over the extent to which a singular ‘elite’ had organized itself as a cohesive political force in a way that allowed it to dominate this essentially pluralistic terrain. Elite domination – that is, class power – was thus understood as a function of superior resource mobilization and organization on the part of a relatively unified ‘elite’, which was able to trump other, competing forces within the overall pluralist pastiche. In this way, elite theory failed to fundamentally challenge the social ontology advanced by the pluralists.

State theorists argued that political power in capitalist societies does not emerge upon the neutral terrain of a passive and generic ‘political system’, but is rather actively organized by a capitalist state that is necessary to bring about the political cohesion of the capitalist class. Class rule in advanced capitalist democracies does not take the form of political domination by an elite with a self-understood unity of interests, even at the most abstract level of ‘preserving the overall system of elite dominance’. Indeed, this view attributes far too much prescience and political awareness to individual capitalists. Rather, the capitalist class ‘rules’ by virtue of its ownership of society’s productive assets, even as this class is itself ‘ruled’ by the imperative to produce profits. Individual capitalists are motivated not by broad class-wide concerns, but rather by the particular needs of individual firms or industries. As a result, the capitalist class is incapable of directly ruling itself, and requires a ‘relatively autonomous’ state to formulate and implement the general, long-term interests of the system as a whole. State theory thus turns elite theory inside-out: rather than an elite that politically organizes itself to impose its will on a neutral ‘political system’, state theorists see a state which organizes the political hegemony of a capitalist class internally riven by competitive pressures, and which would otherwise be unable to form a coherent political unity.

Clearly, state theory would predict substantial political and economic conflict within the ‘elite’, which does indeed imbue liberal capitalist democracies with a certain ‘polyarchic’ character, as the pluralists emphasized. But the state is not merely the passive object of competing interests, even capitalist interests. Rather, it is an active and dynamic social force in its own right. Moreover, the state is in no way ‘neutral’. It is always tainted by the ‘original sin’ of being a capitalist state – that is, one whose concrete functions and apparatuses are determined by their immersion within capitalist social relations, and which ultimately reproduce the hegemony of the capitalist class. The field of action of existing state apparatuses is defined by the structural limits and crisis points of capital accumulation; their overarching purpose is to make capitalism work. Should one develop, a relatively unified business grouping with a coherent political program may indeed be able to trump other agendas, but the absence of such unity does not imply the absence of class rule. What is interesting in this regard, as Lobbying America inadvertently shows, is the way in which state managers sought to shape and encourage business political organization. These organizations, to varying degrees and in different ways, were integrated with internal state decision-making processes, forming a broader set of integral state relations. As Waterhouse’s historical evidence illustrates, ascendant nodal state agencies sought to build a coalition of corporate power behind the neoliberal agenda, and so encouraged the organization of the Business Roundtable, as well as the reinvigoration of National Association of Manufacturers and the Chamber of Commerce during the 1970s.

The New Institutionalists and Pluralism’s Revenge

The critique of pluralism mounted by the neo-Marxist state theorists was utterly devastating to that paradigm. Over the 1970s, pluralists, especially Charles Lindblom, made huge concessions on the importance of the unequal distribution of wealth and power, to the extent that one could plausibly claim that pluralism had become indistinguishable from elite theory. But the neo-Marxist critique – that understanding power in contemporary capitalism meant situating the state as a distinct social relation of force that functioned to reproduce the overall system of capitalist class rule – also undermined elite theory, which explained elite unity on the basis of vague and amorphous sociological categories like ‘family’ or ‘values’. It became clear that constructing a compelling mainstream paradigm meant incorporating those elements of Miliband’s and Poulantzas’ critique that were sufficiently palatable, which was precisely the task undertaken by Theda Skocpol and her ‘new institutionalist’ confederates.

In the mid-1980s, Skocpol attempted to ‘bring the state back in’, but without its class foundations, by arguing that the state is fully autonomous from the broader social structures in which it is embedded. But as Paul Cammack (1989) showed, her critique of the neo-Marxist ‘state theory’ literature suffered from severe internal contradictions. For one, Skocpol was inconsistent: in general statements and broad conclusions, she tended to suggest a strong view of the state autonomy thesis (i.e. that the state always acts autonomously from ‘society’), while at other points and in concrete case studies she adopted a weak version (i.e. that the state can act autonomously from dominant social forces in specific circumstances). Skocpol’s theoretical conclusions are therefore often deeply misleading, presenting as damaging to the Marxist theory of the state and its relation to social classes material that in fact confirms the validity of that analysis. In the end, it is the weak version of the autonomy thesis that is supported by the case studies she reviews, which can be understood as further empirical support for the concept of relative autonomy.

Recently, New Political Historians like Kim Phillips-Fein and Julian Zelizer have walked back from Skocpol’s strongest statements of state autonomy and acknowledged the important role played by other actors in shaping policy, especially corporate lobby groups. It is as a contribution to this ‘New Political History’ school that Lobbying America is best understood. ‘Rather than assuming the power of business in politics,’ Phillips-Fein and Zelizer (2012: 3–4) write, these scholars ‘seek to show that the role of business in politics and the political effects of economic elites need to be understood as historically specific and distinct.’ The result ‘is an image of American politics that is more complex and contested than it often has been thought to be.’ In effect, the New Political Historians have resuscitated the pluralist-elite theory paradigm by introducing the concept of ‘civil society’ to moderate Skocpol’s strong theorization of state autonomy. From this point of view, the state is an essentially neutral force that is externally related to a polyarchic field of competing interests – civil society – that oscillates between pluralist and elite-theory configurations. That is, on the pluralist terrain of ‘civil society’ something resembling a coherent ‘elite’ interest has occasionally self-organized: as Phillips-Fein and Zelizer put it, their approach aims to ‘show business actors organizing themselves to affect government in myriad different ways’ (2012: 1; emphasis added).

The main research task is then to understand the specific conditions in which this ‘elite’ grouping emerges, and to identify its impact on the state via ‘lobbying’ and other forms of influence peddling. But in taking ‘business organization’ as the independent and ‘state policy’ as the dependent variable, the mutual interaction between the two – in particular, the way in which causality moves in the opposite direction, from ‘state’ to ‘civil society’ – becomes nearly invisible. Indeed, that influence flows democratically from ‘civil society’ to the state is apparently assumed from the outset. The active role of formal state agencies in organizing business into a coherent political bloc, and the way these structures dialectically react back upon the state itself, largely disappears.

Civil Society or Integral State?

In keeping with this approach, Waterhouse argues that the neoliberal restructuring of the 1970s and 1980s was substantially a function of the business mobilization that was briefly able to articulate a relatively unified policy agenda. As he puts it, ‘the decline of liberal and progressive politics and the ascent of a business-oriented, neoliberal political culture’ was ‘the result of specific efforts by a diverse set of conservative activists’, in particular the ‘business leaders [who] catalyzed and shaped the process that historians have labeled the ‘right turn’ toward conservatism in American politics’ (pp. 2–3). This right turn was an effect of the emergence of ‘a coalition of business leaders [who] worked to halt the expansion of the regulatory state, decrease the power of labour unions, liberalize market mechanisms, and shift the tax burden’ (p. 3). ‘Organized through these business associations’ – the Business Roundtable, Chamber of Commerce, and National Association of Manufacturers – ‘corporate activists played a vital role in stopping the tide of liberal reform legislation and took much, but not all, of the wind from the sails of organized labour and the public interest movement’ (p. 3).

In contrast to state theory, which understands the fundamental role of the state as articulating the class-wide interests of capital, one of Waterhouse’s ‘principal arguments is that business’s influence on politics is historically contingent’ (p. 256). While this may be true of specific firms in relation to particular policy questions, this formulation obscures the fundamentally capitalist nature of the state, retreating instead to a ‘pluralist’ view of power. Rather than a state immersed within and dependent upon processes of capital accumulation, we are faced with a field of civil society groups – labour, the consumer rights movement, business, and others – all vying to influence the state. Capturing state power is a function of organizational coherence, ideological power, and command of resources. On this basis, the task before business in the 1970s was to out-lobby other competitors for influence within the state: first the labor unions that apparently dominated politics during the prior Keynesian period, and then the consumer rights movement. In classic elite-theory fashion, Waterhouse then sets about identifying the mechanisms that generated elite unity and allowed ‘business’ to dislodge ‘labour’ as the preeminent force within the state.

Despite its successes, Waterhouse holds that ‘the institutional glue that held the business coalition together proved weak and fleeting’, and eventually the combined pressures of ‘economic globalization, ideological fracture, and the financialization of the American economy’ shattered elite unity, leading to the return of a more pluralistic structure of power (p. 4). The narrative is thus broadly one of the rise and fall of a coherent ‘elite’ political grouping, which eventually dissolved once again into a more fractious, polyarchic mosaic. The mobilization of the 1970s and 1980s was merely a ‘brief moment of unity and intra-industry cohesion that … deeply shaped American politics’ (p. 12). In the end, ‘the fragmentation and fracture that characterized the once-unified business community by the early 1990s largely persisted in the twenty years that followed, punctuated by occasional moments of cohesion on particular issues’ (p. 257). Yet the evidence Waterhouse himself supplies – to say nothing of that which he glosses over – tends to challenge rather than confirm the theoretical frame of spontaneously self-organized civil society groupings exerting periodic influence on a passive state from an external, pluralistic terrain of ‘civil society’.

Indeed, the great insight of what might be regarded as the most important theoretical concept in the book, ‘indirect’ or ‘grassroots’ lobbying, already points toward the need for a different model. ‘Indirect lobbying’, Waterhouse writes, ‘meant that rather than hire professional influence peddlers, groups like the NAM, the Chamber, and the Business Roundtable organized constituents themselves … Their chief organizational strategy thus involved rallying support among business owners, trade association members, and in the case of the Business Roundtable, high-powered chief executive officers from major industrial corporations’ (p. 12). This ‘emerged as the most effective and most common strategy for national employers’ associations because it provided a mechanism for overcoming the collective action problem at the heart of pan-business mobilization’ (p. 12). In other words, since business was structurally unable to cooperate, the emergence of political organizations within ‘civil society’ created a vital mechanism for business to coherently mobilize around a political agenda. Yet this only begs the question: how and why do these structures emerge, and what is their relationship to the state?

The concept of ‘indirect lobbying’ indicates that the direction of causality usually implied by the idea of ‘lobbying’ might be reversed. For this suggests that it is not simply business that somehow self-organizes at the level of ‘civil society’ into lobby groups to influence the state, but rather that political structures which emerge within ‘civil society’ play an active part in organizing business. However, assuming that this space of ‘civil society’ lies fundamentally outside of and apart from the state obscures the very active role of the state in organizing these ‘private’ political structures, and hence business itself. Rather than the concept of ‘civil society’, it is the Gramscian notion of the integral state which best captures the internal relationship between these organizations and the state ‘proper’, drawing attention to the state’s dynamic role in encouraging and shaping these formations – that is, the role of state agencies in ‘lobbying’ business for a political agenda. From this point of view, we are looking not at a ‘brief moment of unity’ when elites were able to more or less spontaneously organize themselves in order to transform the status quo, but rather the systematic workings of a capitalist state attempting to resolve a crisis and reproduce a specific structure of power by organizing the capitalist class (p. 12). As the evidence presented by Waterhouse shows, these business organizations constitute one institutional mechanism through which this takes place.

Situating the formation of these political structures as an internal state process that is integral to the reproduction of the state itself highlights the fact that these bodies do not merely act on the state from without, but are actually organized in part by specific nodes within it. Rather than seeing ‘civil society’ as a democratic field of spontaneously emergent, self-organized ‘interest groups’, this theorization situates the formation of such organizations as both cause and effect of internal state processes, highlighting the very active part played by the state’s dynamic planning capacities in overcoming the structural barriers posed by capitalism’s crisis tendencies. Such a view emphasizes that it is the state – not individual capitalists or associations of these – which is the most active agent in identifying and implementing a broad political vision to protect the general interests of the system as a whole. Similarly, it highlights the degree to which the capitalist state is not a singular ‘subject’, but is rather a complex, contradictory institutional ensemble within which different nodes vie for power and influence.

The history Waterhouse himself presents suggests that such a paradigm may indeed better elucidate the processes of state formation and neoliberal restructuring that took place over the latter part of the 20th century. After detailing the formation of the Business Roundtable and the reinvigoration of the National Association of Manufacturers and Chamber of Commerce during the ‘crisis of confidence’ in the early 1970s that wrecked the postwar ‘liberal consensus’, Lobbying America focuses on four main episodes to examine the role of these organizations: (1) the battle against organized labour and inflation in the 1970s; (2) the fight against the consumer rights or public interest movement in that same decade; (3) the conflicts around tax reform in the 1980s; and (4) regulatory reform, also during the 1980s. In the concluding section, Waterhouse explores some reasons for what he perceives as the fragmentation of business unity in the age of neoliberal financialization and free trade.

Waterhouse presents the familiar panoply of factors that drove the 1970s crisis of confidence: economic stagnation, inflation, the expansion of a costly ‘social regulatory’ infrastructure (the target of which was not specific industries, as during the New Deal period, but capital as a whole – e.g. Occupational Safety and Health Administration, the Environmental Protection Agency, etc.), the increasing progressivism of the Democratic Party with the breakup of the ‘Solid South’, and intensifying competitive pressures from the world market. Together, these factors led to a ‘sense of panic’ among business leaders, which ‘directly sparked overt political action by an increasingly unified capitalist class’ (p. 17). But if, as Waterhouse says, ‘what made the politics of the 1970s unique … was not the substance of business leaders’ critiques but their effectiveness in mobilizing around them’, the question becomes why business leaders were somehow able to act in the 1970s when they had not been before (p. 18). Even though the crisis no doubt created a deep fear within the capitalist class, what enabled them to overcome the structural pressures of capitalist competition to cooperate in forming a unified political agenda and vision?

State Agency and Business Mobilization

Though Waterhouse barely mentions the fact, the Business Advisory Council (BAC) – precursor to the Business Roundtable (BR) – was established through executive order by Franklin Delano Roosevelt to build support for the radical expansion of the state under the New Deal. Indeed, the broader history of the BAC (dealt with more substantively in recent work by Mark Mizruchi) strongly supports the Gramscian theorization described here. Formally established within the Commerce Department, it was ‘a quasi-public advisory agency that was in the government but not of it’ (2013: 22–3). Though Waterhouse recounts this fascinating formulation, which designates an institutional positionality similar to that which I refer to as the integral state, he pays surprisingly little attention to its significance. In fact, such a conception tends to challenge the theoretical edifice upon which his analysis is built, and points toward the need for a different conception of the relationship between state and corporate power.

Similarly, the National Association of Manufacturers was initiated in close cooperation with the McKinley administration around tariff and trade policy. Though its linkages with the state gradually atrophied, the immense complexity of corporate capitalism and the increasingly integrated nature of national and international markets created the necessity for the establishment of the Department of Commerce in 1903. Recognizing that institutional channels for business input and cooperation – that is, integration with the state – were necessary for the new department to carry out its work, the Taft administration helped organize a national Chamber of Commerce in 1910. The Chamber in turn ‘played an important role in major Progressive Era policy debates, including the creation of the Federal Trade Commission’ (p. 51). Though these organizations both became harshly critical of the Roosevelt administration as it advanced the New Deal, their protestations were largely ineffective until the passage of the anti-labor Taft-Hartley Act in 1947. By the 1950s, the ‘status and political clout’ of both organizations ‘declined notably’, in that they ‘played only a minor role in the Eisenhower and Kennedy administrations’ – suggesting that the political mobilization of these groups had a lot to do with the massive restructuring of the New Deal and state planning to avoid a postwar recession (pp. 54–5).

Waterhouse identifies an important prelude to the 1970s mobilization in Kennedy’s appointment of Luther Hodges as Commerce Secretary, a ‘sunbelt political entrepreneur’ who worked to expand investment into the relatively non-union South during the postwar period. This process was an early indication of the expanded capital mobility that would ultimately, by the neoliberal period, culminate in the free movement of capital via globally integrated financial markets and the devastation of organized labor. But shockingly, in the 1960s business opposed this appointment, and reacted via the BAC. In order to facilitate the restructuring and expansion of national markets he had encouraged as a private citizen, in office Hodges pressed aggressively for changes at the BAC. This resulted in the decision of the BAC to formally disaffiliate from the Commerce Department, and ultimately to Kennedy backing down from his support of Hodges (p. 23). Still, this appointment by Kennedy indicates the consistency of state policy in constructing a liberal international (and national) order based on the free movement of capital. This challenges Waterhouse’s periodization of US history into distinct ‘Keynesian’ and ‘neoliberal’ eras, with labor’s supposed dominance within the state during the ‘Keynesian’ period undermined by a ‘neoliberal’ corporate offensive that imposed substantively different policy goals. On the contrary, the American state has remained committed throughout to ‘making global capitalism’, even if recurring crises have complicated this process and the balance of social forces has shifted over time (Panitch and Gindin, 2012).

This move by the BAC (which renamed itself the Business Council) was also an important precedent for the formal autonomy of subsequent integral state business organization. Similarly, the breakup of the Democratic ‘Solid South’ disrupted longstanding networks of patronage and personal loyalty between business leaders and politicians, instigating the formation of more formal and impersonal institutional channels linking state and corporate power. Together with the emergence of the Political Action Committee as a legal form during the 1960s (the first corporate PAC, the Business-Industry Political Action Committee, was formed in 1963), these shifts established the terrain upon which the major business organizations of the 1970s would develop. Despite its formal independence, Johnson ensured that the BC remained integrated within state decision-making structures through the use of ad-hoc committees of business leaders, both as a means for gathering information and for building political support for his programs. Indeed, Waterhouse acknowledges that in these days the structure of authority was clear: ‘business provided advice when called upon, but the politicians set the agenda’ (p. 29). One could speculate that these integrative processes contributed significantly to the formation of what Michael Useem (1986) once identified as an ‘inner circle’ of interconnected and politically influential corporate elites. Waterhouse suggests that such networks, together with Johnson’s ‘ad-hoc business committees and the Business Council, would later provide vital institutional grounding for the Business Roundtable’ (p. 30).

The Business Roundtable was to unite ‘the CEOs of the country’s largest corporations into a singular political powerhouse that would make an indelible imprint on the history of business and politics in the United States’ (p. 77). Roger Blough, one of the key figures in organizing the BR, was a former Chairman of the Business Council and ‘one of the best known corporate executives in the country, in both business and political circles’, with close links to the state, in particular the Treasury Department (p. 85). Indeed, strong ties to the state, including the military-industrial complex, also distinguished the other individuals who were central to getting the BR off the ground, such as General Electric Vice President Virgil Day and Presidents Fred Borch and Reginald Jones. Critical as well were the roles of Treasury Secretary John Connally and Federal Reserve Chairman Arthur Burns – that is, the heads of the two key ascending neoliberal nodal state agencies – in encouraging the organization of the BR as a unified organization of top executives, conveying these sentiments directly to Borch and Alcoa CEO John Harper (p. 92). Some accounts have gone so far as to suggest that Burns and Connally ‘instructed’ the CEOs to create the group, though Waterhouse points out that these plans were already in the works before they met to discuss the matter in early 1972 (p. 92). In any event, the critical involvement of the state in organizing what became the most important business organization, not just at the moment of its birth but also in creating the institutional bedrock upon which it would take shape, is clear.

The active role played by Treasury Secretary Connally in the formation of these organizations had also been on display earlier, in the chastisement he delivered to business leaders at a 1971 national Chamber of Commerce conference for their failure to have the long-term political vision to end the inflation crisis by supporting ‘Phase II’ of Nixon’s wage and price controls program. Connally pointed out that although business leaders squabbled amongst themselves and wrung their hands over the measures, these had only been necessary because ‘employers made irresponsible and selfish decisions to raise prices and accede to wage demands, despite their effect on the national economy’ (p. 108). Thus the controls would need to continue until business was able to stand up to union demands more effectively. And indeed, though they complained loudly, even the most cantankerous of these bodies, such as the NAM, could do little to obstruct Nixon’s program, and ended up getting on board with the administration after a period of foot-dragging (pp. 115, 118). After all, the program had been designed only after soliciting substantial business input from precisely these organizations, which no doubt did not want to jeopardize this coveted integral state role by appearing obstinate and disunited (pp. 117, 119).

It wasn’t until Phase IV in 1973–74, as state managers groped in the dark for a solution to the crisis without clear direction and public opinion began to shift, that first the NAM, then the Chamber and the BR, came out against the program and turned to pressuring Congress to bring it to an end. But by this point the program was an abject failure, to the extent that even the administration itself had ceased defending it (pp. 120–1). Nevertheless, the continued disorientation and lack of political coherence on the part of organized business was illustrated by its initial tepid support for Carter’s watered-down ‘voluntary’ price controls scheme, before later turning hostile once again (p. 136). The failure to secure the support of business groups left the administration with few alternatives but to ‘engineer a recession’ to bring down inflation via the radical monetarist austerity agenda of the new Federal Reserve Chairman, Paul Volcker. This marked both the ascendancy of the Fed, already visible since the Nixon years, as well as the development of a new set of policy parameters for resolving the crisis: neoliberalism had come into its own.

Episodes such as these indicate that although (as the case of the NAM and the Chamber during the New Deal era suggests) these business groups can be seen as existing within a broader integral state, fused as they are in important ways with internal state processes. Though they have a great deal of autonomy from the formal state apparatus, they are nonetheless important channels through which political influence and pressure flows from the state to business. Moreover, the influence these organizations have often felt they possess over the state can also be seen as the state gathering information in order to make sound and successful policy, or to secure ‘buy in’ for major policy initiatives. For these reasons, a theory of the integral state seems to be a better way to conceive of these processes than the model of ‘civil society’ that Waterhouse, like so many political scientists, assumes at the outset.

Financialization: Fragmentation or Consensus?

Like the New Political Historians more broadly, Waterhouse largely leaves the corporation as a ‘black box’, its internal structure unexamined. Although he does mention the consensus within the ‘neo-mangerialist’ literature that the late 1970s saw a shift from the ‘managerial capitalism’ of the postwar period to the ‘shareholder capitalism’ that has marked the rise of finance, he does not adequately lay out the significance of financialization for corporate power systems, and as a result misunderstands both its economic logic and political implications. Instead, he repeats the argument that the rise of finance has meant the ‘hollowing out’ of manufacturing. On the contrary, finance did not displace but in many ways facilitated the global restructuring of production that took place over the 1980s, and was a key component of the resolution of the crisis of the 1970s. This shortcoming is linked with Waterhouse’s failure to contextualize these phenomena within what Panitch and Gindin (2012) have called the American state’s project of ‘making global capitalism’, which as they show had profound implications both for the rise of finance and the institutional formation of the state itself.

Under the ‘Whip Inflation Now’ slogan, President Ford ‘laid out a broader agenda of reform for the nation’s regulatory system’ and ‘called on Congress to appoint a National Commission on Regulatory Reform’ which, no doubt, would have relied heavily on business organizations to formulate policy and build consensus among corporate elites. When Congress refused to act, Ford began implementing the agenda by executive order, mandating that all new regulations include an ‘inflation impact statement’ that would be evaluated by the director of the Office of Management and Budget (p. 181). Unsurprisingly given the structural changes financialization wrought, ‘business leaders greeted Ford’s policy with unmasked enthusiasm’ (p. 182). Institutional change within the integral state rippled outward: within weeks, the BR’s Policy Committee established a new task force on regulation (p. 182). Yet Waterhouse suggests that this regulatory reform agenda ‘distracted [business leaders’] attention from the larger structural factors that were fundamentally reshaping American business, and indeed global capitalism’ (p. 180). Moreover, he claims that ‘financialization’ drove the political ‘fragmentation’ of the elite, which he argues by the 1980s was increasingly incapable of formulating a collective political program. In fact, financialization resulted from and reinforced deeper conditions for neoliberal consensus among business, not intensified conflict or fracture.

In fact, the agenda for regulatory restructuring initiated by the Ford administration arose precisely as a result of the structural pressures of capital accumulation. As Panitch and Gindin argue, the 1970s crisis was generated by the ‘contradictions of success’ of the Keynesian program. Working-class structural power under the full-employment regime contributed to a profit squeeze as wage increases outstripped productivity gains, while rapidly expanding economic integration generated pressure on the Bretton Woods system of fixed exchange rates. Meanwhile, finance strained against the increasingly outmoded post-Depression regulatory incubator, which attempted to separate ‘investment’ and ‘commercial’ banking activities into watertight compartments (Panitch and Gindin, 2012: 111). Moreover, the rise of the financial sector was complemented by the financial reorganization of ‘non-financial’ firms. The global integration of production intensified pressures for greater capital mobility as firms sought to remove barriers to cross-border flows of value, and increased the importance of derivatives to MNCs seeking to mitigate the new risks of economic integration. The immense complexity of managing globalized value chains also led to administrative decentralization within corporate structures, whereby rigid bureaucratic oversight was replaced with flexible financial discipline on increasingly autonomous divisional managers. This further promoted the growth and prominence of financial functions within firms themselves, a process exacerbated by the explosion of the commercial paper market as a source of corporate finance (which began in the 1970s partly as a way of skirting regulatory limits on interest rates). The globalization of production, the rise of finance, and state restructuring were inextricably linked.

These pressures generated not merely a tendency toward political fragmentation, but rather created the essential conditions for the emergence of a corporate neoliberal consensus (Panitch and Gindin, 2012: 172–93). The rise of finance was mostly uncontested by manufacturing firms – with no major political cleavages emerging between the largest manufacturing firms and the financial sector during the neoliberalization of the American political economy – because this reflected a confluence of interests between these sectors. By the end of the 1970s, most industrial sectors of capital had come to accept that the strengthening of finance involved in disciplining labour and fighting inflation was in their interest (Panitch and Gindin, 2012: 163). Moreover, financialization blurred the boundaries between these ‘fractions’ of capital, so that it became increasingly difficult to clearly differentiate between financial and ‘non-financial’ firms altogether. In other words Waterhouse’s suggestion that the rise of finance amounted to the ‘decline’ of American manufacturing misses the mark, not least because the very same firms that had been manufacturing giants were now also financial powerhouses.

Inasmuch as financial and manufacturing ‘fractions’ of capital were in conflict, corporate structures governing both manufacturing and financial processes and investments increasingly had to internalize compromises between these sectors, based both on the vertical integration of financial activities within production processes as well as their profitability. This muted any significant political conflict that may otherwise have emerged between distinct ‘financial’ and ‘manufacturing’ sectors of the capitalist class, and made possible the consensus around neoliberalism in the form of globally integrated production networks and financial markets. The power conflicts that accompanied financialization mostly happened within corporate command and control structures, as managers sought to protect themselves from the rising power of investors and the financial discipline that accompanied it (Useem, 1993, 1999; Scott, 1997). Though this initially took the form of anti-takeover legislation, the failure of this approach – as investors could insist that firms either ‘opt-out’ of these measures or incorporate in states without such protections – mostly led managers to make measured concessions to investors, who were further bolstered by shifts in SEC regulations. Despite the protestations of the BR, the NAM, and others which had long represented the interests of managers within the integral state, the Reagan administration showed little willingness to protect managerial power, preferring instead to fully unleash finance – which was politically represented in new integral state formations like the American Business Conference (ABC).

In this context, Waterhouse’s argument that American manufacturing firms somehow had an interest in keeping production within the relatively high-wage labor market of the United States appears rather strange. This is especially so since he repeatedly points out that manufacturing firms in fact were among the most active agents pushing the ‘free trade’ regulatory agenda. In the late 1980s, the BR met separately with both the Round Table of European Industrialists and the Canadian Business Council on National Issues to articulate loud and clear mutual support for ‘free trade’ (p. 244). Later, corporate elites formed the Coalition for Trade Expansion in support of NAFTA, which comprised 2300 firms and business associations, including industrial giants like GE and DuPont as well as ‘new economy’ firms like IBM (p. 245). The BR, the NAM, and the Chamber all signed on, as did ABC. Moreover, Waterhouse observes that within these coalitions ‘large manufacturers did the heaviest lifting during the public relations blitz’ (p. 245; emphasis added). It is difficult to see how Waterhouse could square this with his simultaneous claims that such firms were struggling to maintain manufacturing capacity within the US. These measures were no doubt seen in terms of maintaining the competitiveness of American industry, as he says, but this is hardly the same as wishing to maintain manufacturing activities within the United States (p. 245).

Statements by corporate organizations about ‘revitalizing America’ must be seen instead more cynically, as propaganda efforts designed to build support for other interests – including expanding state subsidies and defending managerial positions within corporate governance structures from rising investor power (pp. 239–40). Managers, and the political formations into which they had been organized, sought to depict shareholder power as synonymous with the actions of ‘corporate raiders’ like T. Boone Pickens (p. 237). Yet while a subset of the BR formed a ‘Coalition to Stop the Raid on America’, demanding stricter regulations to limit corporate takeover action and constrain investor power, the ascendant Treasury Department worked closely with Wall Street lobbyists to prevent Congress from passing legislation to limit takeovers (p. 238). This took place in the context of another emergent dynamic within the integral state, whereby the ‘functional proximity’ between the Fed and the financial sector meant that their respective rise within the global economy and the hierarchy of state apparatuses was mutually reinforcing. As such, the ABC, ‘a consortium of 100 CEOs from Wall Street brokerages’, replaced the earlier business organizations like the NAM and BR as the most important component of the integral state to the new Reagan administration (p. 233).

It is certainly understandable why the formations that had been at the core of the integral state throughout the period of crisis, transformation, and restructuring would act to defend the position of their primary constituency within the evolving structure of power. Managers sought to use such campaigns to identify themselves with ‘national prosperity’ and domestic employment in order to both confront the rise of investor power and build support for long-sought-after tax incentives for capital investment and depreciation (p. 237). That these groups did not fundamentally question – in fact, enthusiastically embraced – the ‘free trade’ agenda and program of global financial integration suggests they were trying to have the best of both worlds: to maintain their position at the top of the corporate power structure while also restoring profitability by offshoring and globalizing production. But the state chose not to protect managerial interests, siding instead with ownership power – in part, no doubt, because of the implications for its project of ‘making global capitalism’ of limiting the rise of financial hegemony.

Moreover, free trade agreements are also an excellent example of the role of the state in restructuring. Though the internationalization of production was underway before these processes were formalized through trade agreements, these agreements were necessary to limit nationalist responses and secure future investments and trade patterns, in effect ‘constitutionalizing’ ‘free trade.’ Business could try to get such guarantees from states individually (and often did), but broader international agreements that included the US state were necessary to reduce uncertainty, unify international markets, including generalizing practices and regulations across national contexts. Additionally, as for other issues, trade requires trade-offs that generate ‘losers’, and business could not agree to trade-offs on its own. As for other aspects of managing global capitalism, implementing ‘free trade’ required the active leadership of the state.

‘Deregulation’ and the Neoliberal Consensus

These changes connected with the ‘deregulation movement’ that had formed in opposition to the New Deal regulatory architecture, essentially a set of industry-specific regulations enacted during the Great Depression to protect corporations from competitive pressures by establishing barriers to entry and regulating prices. It’s important to note that ‘deregulation’ is a misleading term: indeed, ‘deregulation’ actually brought the concentration of state power in the Fed and Treasury, and an expansion of their regulatory role and centrality to global financial markets (Panitch and Gindin, 2012: 170). Interestingly, the push for regulatory restructuring ‘came not from business lobbyists’ but other components of the integral state, including think-tanks. The BR, Chamber, and NAM all initially refrained from taking strong positions on the issue, while the ‘fiercest resistance’ to these programs came from regulated companies themselves (p. 185). The persistence of the state in pushing forward restructuring despite the difficulty of getting corporations on board illustrates once again the importance of state relative autonomy, implementing a broad political vision beyond the more parochial views of corporate leaders themselves. Though it had been possible to organize business directly behind a program of rolling back ‘social regulations’, since they imposed costs on capital in general and thus could serve as a unifying common enemy, industry-specific regulations split this coalition (p. 186).

As a result, the neoliberal regulatory program – a vital step both in resolving the crisis and in ‘making global capitalism’ – could only be initiated by a relatively autonomous state. The continued inaction of Congress on the issue, partly as a result of its lack of autonomy from individual capitals, contributed out of necessity to the increasing autonomy of neoliberal nodal agencies and their insulation from representative institutions, in what Nicos Poulantzas referred to as ‘authoritarian statism’. The growing integration of business organizations with Congress – which accelerated during the battle to stop the creation of Ralph Nader’s Consumer Protection Agency (CPA) – deepened their integral state character, bolstered by post-Watergate legal changes increasing ‘openness’ and ‘transparency’ that further formalized and institutionalized such linkages. Though Ford had vetoed it, despite Carter’s subsequent support for the bill Congress never again passed it, no doubt in part as a result of corporate lobbying pressure (p. 171). But following in Ford’s footsteps, Carter implemented by executive order measures intended to restrain the regulatory state, a move ‘hailed’ by corporate leaders as an alternative to the CPA (p. 187). In response, the BR began mobilizing resources in alliance with a ‘diverse coalition … united by the Carter administration to work on a comprehensive regulatory reform bill’ (p. 189).

Though Carter ended up backing down on comprehensive regulatory reform, passage of the Paperwork Reduction Act, which he supported, accomplished many of the same objectives. The Act, which was ‘passed over the objection of many career bureaucrats and regulators’ – an indication of the extent to which it restructured state processes – created the Office of Information and Regulatory Affairs (OIRA), which was tasked with reviewing all proposed regulations to ensure they were congruent with the goals of the administration. Moreover, the BR task force on regulatory reform which had worked so closely with the Carter administration continued to work with Reagan’s transition team to develop a new executive order, maintaining the political coalition around restructuring in the interregnum (p. 192). These efforts culminated in Reagan’s Executive Order 12291, which mandated cost-benefit analysis for all regulations costing more than $100 million annually and required agencies to choose the least expensive alternative – essentially enshrining the logic of neoliberal efficiency within the state regulatory apparatus (p. 193). Reagan also established a Presidential Task Force on Regulatory Relief chaired by Vice President George Bush to oversee compliance with the new regime, which ‘coordinated closely’ with the BR, NAM, and Chamber before passing the baton of coordinating regulatory reform on to the OMB (p. 194).

The episode of regulatory reform again illustrates the central, catalyzing role of the state in organizing corporate power behind a political agenda. And once again, the actions of the ‘relatively autonomous’ capitalist state cannot be explained merely as a response to pressure from corporate lobby groups; rather, the state must be seen as a dynamic force in its own right. Moreover, that regulatory restructuring was largely accomplished through executive order rather than omnibus legislation illustrates the specific dynamics of neoliberal state restructuring, including the ascendancy of the executive branch, the increasing irrelevance of Congress, and the institutionalization of ‘authoritarian statism’ around neoliberal nodal agencies (p. 196). Though Waterhouse believes the failure of business to achieve the full rollback of the social-regulatory state and completely squash ‘the spirit of environmentalism and consumerism’ illustrates ‘the limitations of their political power’ and the growing fragmentation of corporate political organization, there is another, more persuasive way of seeing this: as a result of the victory of neoliberal forces within the state – including across both parties, albeit in different ways – in implementing neoliberal restructuring with the support of integral state formations.

Though Waterhouse wishes to attribute business ‘fragmentation’ in part to the fact that, with the election of Reagan, corporate lobbies now had to serve a more active and protagonistic role rather than merely rolling back liberal initiatives, such conclusions also do not appear to be supported by the evidence he presents (pp. 202, 228). As he put it, ‘once conservatives had gained control of the federal government and had to make hard choices about exactly how to cut spending and allot tax cuts, conflicting priorities within and among business groups, and with other conservatives, weakened their collective influence’ (p. 228). Yet as the above makes clear, ‘the struggle to maintain unity within the ranks’ of business organization was certainly nothing new, and the state’s role in doing so in regard to regulatory reform seems absolutely typical (p. 200). This could easily be framed in another way: with the neoliberal policy paradigm having triumphed with the support of integral state structures, and the process of neoliberal state transformation under way, corporations still found that their individual interests were often contradicted by the political vision the state was implementing. As a result, they sought to influence the policymaking process in order to ensure that the costs of state programs did not ‘unfairly’ affect a given sector or firm. This is precisely what the concept of relative autonomy would lead us to expect.

Indeed, it is hard to see how Waterhouse is able to frame the historical narrative as one of business struggling to ‘implement their policy agenda amid the pluralistic contentiousness of the American political system’ (p. 202). A more plausible interpretation would frame the story as a process of neoliberal restructuring largely formulated within formal state apparatuses, which organized support of business for these initiatives in part through integral state organizations. This required first rolling back the power of organized labour and defeating the public interest movement, then implementing regulatory restructuring. The final phase involved the implementation of tax cuts, which could serve as a tool for ‘ratcheting down’ the welfare state.

From Tax State to Debt State

In what Wolfgang Streeck recently identified as the conversion of the ‘tax state’ into the ‘debt state’, beginning in the late 1970s tax cuts and sluggish growth rates intensified fiscal discipline on the state, increasing reliance on debt to finance budget outlays. This made bond prices a central component of policy calculations and contributed to the ascendance of the monetary apparatus at the expense of the state’s fiscal capacity – the classic neoliberal configuration of state power. State programs were thus increasingly limited by the willingness of investors to support them, making democracy a potentially disruptive proposition and justifying the entrenchment of authoritarian statism. The era of the ‘fiscal consolidation state’ ensued in the wake of the global financial crisis, with the intensification of austerity to reduce debt-to-GDP ratios (Streeck, 2014). Yet through it all, the leading role of the ‘relatively autonomous’ state in generating policy, engineering restructuring, and forming political consensus among business seems not to have changed much. But the frameworks of ‘pluralism’ and ‘civil society’ make it difficult indeed to perceive these dynamics. Such a theoretical framework leads us to see business organizations as ‘interest groups’ which spontaneously self-organize on the neutral terrain of civil society – the only basis on which Waterhouse’s conclusions make sense.

Of note in this regard is the state autonomy exhibited in the radical neoliberalism of the Reagan years. Though often remembered as simply an agent of corporate power, Waterhouse shows that in fact business was deeply skeptical about Reagan’s programs. While large corporations mostly favored increased incentives for investment and savings coupled with low state deficits so as to prevent public indebtedness from crowding out private borrowing, Reagan wanted a general reduction in all taxes – and even ended up increasing corporate taxes (by closing loopholes) in part to cover reductions in marginal income tax rates. This would seem to be another clear example of the relatively autonomous state acting in the class-wide interests of capital as a whole – running up deficits to facilitate neoliberal restructuring and roll back the welfare state – against the wishes of individual corporations, who looked to more immediate concerns of profitability and investment. Though the tax cuts had a populist appeal that certainly contributed to Reagan’s election, as Waterhouse says, they were also an important tool in imposing fiscal discipline and rebuilding capitalist class power coming out of a decade of crisis.

Even during the 1980 presidential campaign, business leaders mostly preferred either former Treasury Secretary Connally or George H.W. Bush to Reagan, partly as a result of the latter’s populist commitment to personal tax cuts (p. 211). Bush, on the other hand, proposed cuts to personal and corporate taxes in addition to increased tax deductions for investment (p. 211). Once elected, the Reagan administration made a conscious effort to reshape the integral state to build support for its programs, granting privileged access to Chamber president Richard Lescher in exchange for his unbridled enthusiasm for ‘Reaganomics’, especially the tax cuts, which did not go unnoticed by the heads of other business groups (p. 214). Far from Reagan being merely a stooge of business, the struggle over tax cuts reveals that it was in fact the administration which lobbied business in order to generate a consensus around the next stage of neoliberal restructuring. Integral state networks were crucial to the Reagan administration’s ability to organize business behind its program of tax cuts alongside massive slashes to federal spending – that is, the implementation of the policies identified by increasingly dominant neoliberal forces within the capitalist state as the only way out of crisis (p. 214).

To be sure, the coalition was not always easy to hold together, and indeed the very concept of relative autonomy implies there can and often will be dissension in the ranks. Thus when Reagan proposed a tax cut program – the Tax Equity and Fiscal Responsibility Act – containing a mix of corporate tax increases and personal deductions, the BR opposed the measure though emphasizing they still broadly stood with the president. For its part, the NAM publicly stuck with the administration. But in the end, the BR was brought back on board, endorsing TEFRA amidst a relatively tough congressional fight. And when Chamber head Richard Lesher began opposing the bill publicly, the White House ‘announced that it would no longer welcome Lesher’s input’ and ‘would work with the Chamber but only through Paul Thayer’, who had emerged as a rival to Lesher within the organization over the TEFRA issue (p. 219).

The Reagan administration was skillful indeed at shaping the integral state, appearing to understand this as a necessary component to support the massive state restructuring that was by then fully under way. This awareness was also on display with Reagan’s creation of the Deficit Reduction Action Group, which revealed the twin pillars that would eventually lock in place a cycle of neoliberal austerity: simultaneous personal tax cuts and state budget cuts. While economic stagnation already meant that the viability of social programs which dependended on long-term growth was increasingly questionable, Reagan’s tax cuts signalled that raising taxes as a way out of the looming fiscal crisis was not in the cards, and further encouraged corporations to push for reductions in state spending to reduce interest rates and devalue the dollar. In this way, the state developed and established the framework for the neoliberal offensive against the welfare state. This significant autonomy attained by the state during the neoliberal period was further made clear with the failure of organized business to do anything to stop the Tax Reform Act of 1986, which ‘dramatically scaled back’ corporate investment incentives and closed hundreds of billions in tax loopholes that benefitted corporations (p. 230).

With the neoliberal paradigm securely in place, the integral state underwent another transformation. Although ‘the organized business associations saw their collective unity wane, corporate lobbying itself boomed’ (p. 231). By the end of the Reagan administration, ‘practically nothing remained of the coherent and organized “business movement” that so dominated policy debates in the 1970s’ (p. 232). Whereas business had gradually become organized behind the neoliberal policy agenda, the establishment of neoliberal hegemony across the state by the 1980s brought political engagement by firms and industries seeking to protect their own parochial concerns within it, including special tax benefits and government appropriations. This ‘fragmentation’ does not necessarily mean that business was politically ‘disparate and ineffectual’, as Waterhouse claims (p. 232). On the contrary, seeing the historical narrative from the point of view laid out here, the relatively autonomous capitalist state was nearly always the leading dynamic element organizing the integral state, though it did so on the basis of vitally important consultation with business leaders.

With the hegemony of the neoliberal paradigm established, and the autonomy of the neoliberal nodes institutionalized in a pattern of ‘authoritarian statism’, corporate power could be politically organized by the state directly from out of a wider field of networks and associations. This is precisely what state theory would generally expect the ‘normal’ state of affairs in liberal capitalism to be, though the institutional form of the integral state clearly took on a distinctly neoliberal hue. And one can still discern the importance of those residing at the ‘commanding heights’ of the economy, as well as the role of the most well connected corporate elites possessed of interlocking directorships, in forming an ‘inner circle’ of business leaders to whom the state regularly turns in order to make or execute policy.

Moreover, the Department of Defense is not capable of operating as the coercive arm maintaining world order unless Lockheed Martin makes the airplanes, General Electric makes the engines, etc., that it requires for this purpose. Similarly, no program to counter global warming will be possible without corporations that can produce, install, and service new energy infrastructures. And the list goes on. This integral state construction at the level of industrial policy draws into question Waterhouse’s view that while the United States ‘favoured some industries over others’, it did not do so ‘according to any coherent or intentional plan’, instead emerging ‘through the muddled give-and-take of parochial politics’ (p. 241). There is some truth to this, in the sense that industrial policy is not organized by any central state ‘brain’ but is rather formulated through the interaction of competing and contradictory institutional interests at different levels. Yet as work by Fred Bloch, Mariana Mazzucato, and others has long since demonstrated, the integral state nexus of state and corporate power is responsible for much – if not most – of the dynamism and innovation in the American economy, especially in cutting-edge hi-tech fields subsidized through defense spending, the space program, the Department of Energy, and so on (Mazzucato, 2013; Block and Keller, 2015; Panitch and Gindin, 2012: 147–8).

Waterhouse’s resort to pluralism obscures the fact that these linkages constitute a systematically reproduced integral state, not spontaneously emerging interests within a pluralist ‘civil society’. The integral state is indeed at the very heart of the American political economy.

Conclusion: Theorizing the Integral State

Though their appeal to historical specificity is most welcome, the pluralist framework adopted by the New Political Historians obscures the integral nature of the state, whereby business organizations have been systematically interconnected with internal processes within the formal state apparatus, whether this is at the level of industrial policy, ‘lobbying organizations’, general nodal integration within the executive branch, or otherwise. While the New Political Historians have focused on the role of business in transforming the state, integral state networks are also an important way in which different nodes within the state influence and organize business. Waterhouse’s concept of ‘indirect lobbying’ already gestures toward some of the limits of the pluralist theoretical frame. In walking back from Skocpol’s boldest claims of state autonomy, the New Political Historians have bent the stick too far in the other direction. From Miliband’s critique of pluralism, we arrive at a new and improved pluralism.

But if this suggests that there is a need to return to state theory, it also points to major gaps in that literature. For though state theory’s concept of relative autonomy is absolutely vital to understanding power in capitalist societies, this theorization tends to invoke two separate ‘spheres’: the public and the private (hence the notion of state ‘intervention’ into the ‘private sphere’). Yet what is one to make of whatever space remains between the two, even if this is merely a ‘point of contact’? What has the concrete role of specific state nodes been in the political organization of business, and how has this propelled the neoliberal transformation of the state? Which state institutions have been most identified with integral state formation in different periods, and what are the targets of pressure exerted from these organizations? Where are the broad agendas being formulated, and what hierarchies, synergies, and contradictions can be identified within and between formal state institutions and business organizations? Asking the question in this more dialectical way requires a conception not of ‘civil society’ as a constraint or limit on state power, but rather of the integral state as an institutional formation wherein certain ‘civil society’ organizations are seen as internally linked with the formal apparatuses of state.

Just as a relatively high level of polyarchy and fragmentation characterizes the contradictory integral state nexus of political and economic power, the formal state apparatus itself is not a singular, unified monolith, but a conflictual assemblage of divergent institutions and interests. Certainly, the agency of executive branch nodes does much to validate the integral state nature of the most prominent business political organizations. Yet this is not the only way in which these bodies can be said to constitute an integral state. Indeed, the deepening institutional integration with Congress of the leading business organizations, and later of an expanding number of lobbying firms – which have become vital sources of research and information, campaign resources, and the like – also indicates the integral state character of these structures. While Congress is the most polyarchic and ‘pluralist’ political venue in the American state, the formation of these organizations and their linkages with Congress is clearly not merely spontaneous or accidental but a systematically reproduced component of the institutional structure of Congress itself. These integral state structures bridge between and beyond the formal branches of government. Integral state formation has also taken the form of the deepening interpenetration of business political organizations with the Washington DC think-tank infrastructure, itself interconnected with executive branch policymakers, Congress, and political party structures, among which it has played an increasingly important integrative ideological function (pp. 141–200).

From this point of view the fragmentation of integral state linkages between state and corporate power suggest not a return to some form of pluralism, but is rather a symptom of the specific modality of class power within the neoliberal state. This is not the ‘fragmentation of the corporate elite’, as Mark Mizruchi recently called it, but rather the result of the triumph of a policy paradigm for which a basic consensus had been engineered via integral state structures on the basis of profound economic structural pressures. Of course, this ‘new’ paradigm was merely an extension of the project of constructing a liberal capitalist international order, which had been the undertaking of the American state since the Second World War. What is significant is how the neoliberal ingredients for exiting the doldrums of the 1970s that had temporarily stymied that project were formulated and implemented. Neoliberal state restructuring involved an expansion of the role of the monetary apparatus, especially the Fed and the Treasury, in the formation of policy. These bodies were increasingly insulated from democratic institutions, securing as well their increased autonomy from capital. This left the political organizations that had been so crucial to organizing business during the period of restructuring without a clear purpose. In the new, neoliberal moment, this particular mode of integral state organization was simply no longer necessary.

The business organizations that worked to organize a broad class perspective outside the formal apparatus of the state throughout the period of restructuring were largely transitional forms. They were supported and encouraged by nodal state agencies that were struggling – haltingly and unevenly – to formulate and implement a policy paradigm to resolve the crisis into which the project of ‘making global capitalism’ had been thrown. This created the impetus for a kind of ‘parallel state’ to develop and organize a class consensus around restructuring, driven substantially by the ascendant neoliberal nodes within the state. The history of the BAC laid out above suggests a similar process may have been at work during the New Deal period, while the story of the Chamber possibly points to an analogous scenario at the birth of corporate capitalism. Of course, the making of sound policy, let alone building political support for specific programs, still meant working with business through institutionalized linkages with the formal apparatus of state. And of course firms still sought to make their perspectives known to policymakers, seeking to add input to the state process of formulating the general interest of capital that may impose ‘unfair’ costs on their specific firm or sector. But the most dynamic elements of the integral state have consistently been the formal state apparatuses.

The specific formation of the integral state during the period Waterhouse examines was from this point of view both a symptom of the crisis of the state and an important cause of restructuring. Once the restructuring was complete, there was simply no need for organized advocacy toward the implementation of a new policy paradigm, which was the raison d’être of these organizations during the crisis period – even if the state itself often lacked clear direction, as during the Nixon and especially Ford and Carter years. The critical point is that the state itself had been transformed by the processes reflected in the resurgence of the integral state during the crisis period, in ways that rendered such bodies redundant. With the neoliberal paradigm securely in place, firms were now once again free to ‘lobby’ for their own parochial concerns, while executive branch ad-hoc advisory committees ensured that top business leaders remained integrated within decision-making structures and on board with broad political programs. It was the agency of the capitalist state, immersed within the pressures and contradictions of an expanding global capitalism, that was at the center of the project of neoliberal restructuring.