This essay explores the concern that in contemporary American Politics, business exercises outsized and historically unprecedented influence. Focusing on the largest sector of our economy, the banking industry, the analysis tracks the systematic, purposeful, and bipartisan deregulation of the financial services industry from the Carter Administration thorough the 2008 financial collapse. The claim of business hegemony is examined from an historical/institutional perspective and placed in the context of political science theory, and the conclusion is that while business, represented in this case by the “too big to fail” banks, enjoys significant organizational and structural advantages, business power remains both variable and contingent rather than fixed and hegemonic.
About the author
Richard A. Harris is a Professor of Political Science at Rutgers-Camden where he chairs the Political Science Department. His areas of expertise include regulatory policy, interest groups, and businessgovernment relations. He recently returned from a Fulbright fellowship and visiting appointment at Oxford University where he launched a research project comparing financial reform in the US and the UK.
We say re-regulate because the financial industry, beginning in the Carter Administration and continuing through the second Bush Administration succeeded in remaking the banking industry through a series of major deregulatory laws and actions described below.
The Volcker Rule was intended to distinguish traditional banking from riskier proprietary investment in financial vehicles such as credit default swaps, reserving public insurance for commercial and community banking.
Note that in Wilson’s scheme, perceived cost-benefit distribution may be as important as a real distribution. For example, environmental policy may be perceived as entrepreneurial (costs focused on regulated businesses and benefits spread across the public) even though costs may be passed on to the public depending on the elasticity of demand for the good being regulated.
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