Chapter 10
The Architecture of Stratification: Social Class and Inequality
Corporate Interlocks
The ruling class in this
country is quite homogenous: similar family and educational backgrounds, similar levels of
attainment in government and business. Such homogeneity provides members of the ruling
class not only with increased opportunities for social contact but also with increased
opportunities for sharing knowledge and mutually beneficial activities.1
Retired government leaders
are often appointed to corporate boards. Government officials frequently call on business
leaders for advice. Persons of wealth are routinely invited to become U.S. ambassadors.
Former cabinet members become highly paid business consultants. Top corporate executives
are often given cabinet posts or other advisory positions within the government. Such
traffic in personnel has become so heavy that Congress had to pass a law setting time
limits and restricting permissible contact between ex-government officials and their
successors.
Certain prestigious
professions have also been able to take advantage of class connections. A few years ago,
in response to reports that doctors' incomes were falling, several bills were introduced
in Congress that would give doctors new ways to make money.2
One bill relaxed restrictions on doctors' ability to operate laboratories and own
companies to which they can refer patients and proposed to allow them to set their own
fees for Medicare patients. Another limited the amount of money malpractice victims could
be awarded in lawsuits against doctors.
Ironically, at the same
time that Congress was attempting to improve the financial well-being of middle- and
upper-class physicians, it was fighting (unsuccessfully) to block a bill that would
increase the minimum wage.
Members of the ruling
class often act as corporate interlocks, serving simultaneously on the boards of directors
of several large corporations.3 A study by a Senate
subcommittee on government affairs found that, of the top 245 large corporations in the
United States, 123 shared at least one board member with, on average, 62 of the remaining
122 corporations. For instance, Morgan Bank shared directors with such corporations as
Ford, Eastman Kodak, IBM, Procter & Gamble, Sears Roebuck, General Motors, General
Electric, Bethlehem Steel, and Prudential Insurance.4
The individuals who
function as corporate interlocks are in a position to exercise influence over several
major firms simultaneously. Because credit is a crucial resource for almost any large
corporation, for instance, the inclusion of a banking executive on its board of directors
can help ensure adequate financing in the future.5
Although people are
forbidden by law to serve on the boards of competing corporationsóFord and General
Motors, for instanceóeven legal corporate interlocks still can have a substantial impact
on the economy and subsequently our personal lives. Interlocks reduce competition among
corporations in general. Thus, a relatively small number of corporate giants have come to
dominate the economy. Through this domination they have obtained tremendous political and
economic influence.
What is important about
this inner circle from an institutional perspective is that, instead of being concerned
with the interests of a single organization, these companies are unified in their concern
for the long-term interests of business as a whole. They come together as a community,
sharing similar values and goals.6
And when individual
members of this inner group find their way into positions of political influence, they can
speak for the interests of the entire corporate world rather than the narrowly defined
interests of one corporation.
1Eitzen, D. S., Jung, M. A., & Purdy, D. A. 1982.
"Organizational linkages among the inner group of the capitalist class." Sociological
Focus, 15, 179-189.
2Gottlieb, M. 1995. "Plan would give doctors new ways
to make money." New York Times, October 31.
3Mizruchi, M. 1996. "What do interlocks do? An
analysis, critique, and assessment of research on interlocking directorates." Annual
Review of Sociology, 22, 271-298.
4United States Senate Committee on Governmental Affairs.
1978. Interlocking directorates among the major U.S. corporations. Washington, DC:
U.S. Government Printing Office.
5Useem, M. 1978. "The inner group of the American
capitalist class." Social Problems, 25, 225-240.
6Domhoff, G. W. 1983. Who rules America now? A view from
the eighties. Englewood Cliffs, NJ: Prentice-Hall.
David Newman and Rebecca Smith.
(Created October 7, 1999). Copyright Pine Forge Press.
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