The golden era of the US corporate elite
Corporate elites “Any President who wants to run a prosperous country depends on the corporation at least as and states after much as—probably more than—the financialization corporation depends on him. His dependence is not unlike that of King John on the landed
Jerry Davis barons of Runnymede, where Magna Carta CRESC Seminar: Studying Elites was born.” University of Manchester Fortune magazine, 1952 24 April 2009
© 2009 by The Regents of The University of Michigan • All Rights Reserved 2
3 4 Research question: Outline of the talk
• Industry and finance capitalism in the early 20th century WTF?? • The evolution of local and national elite networks • The rise of market-based finance and the end of How have the links between corporate “bank hegemony” • Dense elite networks: conspiracy, or something more elites and the state evolved in the benign? US? • Finance turns states from sovereigns to vendors What part does “financialization” • Bespoke tailors, or prêt-à-porter? play?
5 6
Social critics have linked bank-based corporate networks to economic control for a century
Industry and finance capitalism in the early 20th century
Louis Brandeis, 1914 V.I. Lenin, 1916 “The practice of interlocking directorates “A very close personal union is established is the root of many evils. It offends between the banks and the biggest industrial laws human and divine....It is the commercial enterprises…through the most potent instrument of the Money appointment of bank directors to the Trust” Supervisory Boards of industrial and commercial enterprises, and vice versa ”
7 8 On the verge of World War I, three American banks held JP Morgan Chase board, 2001: plus ça change… dominant positions in the corporate network
• In 1912, JP Morgan’s partners collectively held 72 directorships on 47 corporate boards • First National of New York executives served on 49 boards • National City Bank executives served on 48 boards
• 1914: in the face of populist pressure and imminent legislation, JP Morgan’s men resigned directorships in 30 of their “subject” companies
9 10
Mid-century theorists linked business networks Network analysis shows that corporate elites really explicitly to political power do all know each other…
GOLDEN WEST FINANCIAL CORP ONEOK INC NEW
WESTERN RESOURCES INC KS
ABM INDUSTRIES INC MURPHY OIL CORP
REGIONS FINANCIAL CORP
“By the power elite, we refer to those ALASKA AIR GROUP INC C. Wright AVISTA CORP
SCHOLASTIC CORP
LANDSTAR SYSTEM INC
TESORO PETROLEUM CORP
GEORGIA GULF CORP PERFORMANCE FOOD GROUP CO
political, economic, and military circles UNIVERSAL FOREST PRODUCTS INC
TECH DATA CORP NATIONAL FUEL GAS CO The Fortune
Mills, 1956 QUINTILES TRANSNATIONAL CORP WATSCO INC
NASH FINCH CO PROVIDENT FINANCIAL GROUP INC OLD KENT FINANCIAL CORP
PINNACLE WEST CAPITAL CORP SILGAN HOLDINGS INC
CHAMPION ENTERPRISES INC which, as an intricate set of overlapping M&T BANK CORP GENERAL CABLE CORP NEW DEVON ENERGY CORP NEW JDS UNIPHASE CORP 1000 board of FAIRCHILD SEMICONDUCTOR INTL INC UNITED STATIONERS INC
SERVICE CORP INTERNATIONAL HUB GROUP INC PAYCHEX INC SIERRA PACIFIC RESOURCES GENESIS HEALTH VENTURES INC FOAMEX INTERNATIONAL INC RGS ENERGY GROUP INC PUGET ENERGY INC GREENPOINT FINANCIAL CORP PAYLESS CASHWAYS INC PHAR MOR INC PSS WORLD MEDICAL INC JABIL CIRCUIT INC UNIVERSAL CORP EMCOR GROUP INC PENTAIR INC VALERO ENERGY CORP NEW MICRON TECHNOLOGY INC
MITCHELL ENERGY & DEVELOPMENT CORP
cliques, share decisions having at least ABERCROMBIE & FITCH CO DE MILACRON INC COVENTRY HEALTH CARE INC STEELCASE INC MASCO CORP KELLY SERVICES INC LANDAMERICA FINANCIAL GROUP INC GREAT LAKES CHEMICAL CORP TYSON FOODS INC PUBLIC SERVICE CO OF NEW MEXICO directors MAXXAM INC ALTERA CORP MANPOWER INC
MICROAGE INC SPARTAN STORES INC TELEPHONE & DATA SYSTEMS INC DE WHX CORP
DEL WEBB CORP WHOLE FOODS MARKET INC INTERSTATE BAKERIES CORP ALLIANT ENERGY CORP DIEBOLD INC PERKINELMER INC
LAM RESEARCH CORP HARTFORD FINANCIAL SERVICES GROUP I LEAR CORP PATHMARK STORES INC MARSHALL & ILSLEY CORP TORO CO INTERNATIONAL MULTIFOODS CORP POLARIS INDUSTRIES INC CYPRESS SEMICONDUCTOR CORP EMC CORP TELLABS INC QUANTA SERVICES INC WESTERN DIGITAL CORP BORDERS GROUP INC MI NIAGARA MOHAWK HOLDINGS INC FURNITURE BRANDS INTERNATIONAL INC MARK IV INDUSTRIES INC ADMINISTAFF INC VECTREN CORP FLOWSERVE CORP BROADWING INC CARDINAL HEALTH INC E W SCRIPPS CO OH WILLAMETTE INDUSTRIES INC WHIRLPOOL CORP MERISEL INC DTE ENERGY CO MOHAWK INDUSTRIES INC SMURFIT STONE CONTAINER CORP AMERICAN ELECTRIC POWER CO INC HEILIG MEYERS CO KENNAMETAL INC
LSI LOGIC CORP HEALTH NET INC TERADYNE INC WESCO INTERNATIONAL INC SUPERVALU INC national consequences” WORLDCOM INC NEW REYNOLDS & REYNOLDS JACOBSCO ENGINEERING GROUP INC FOOTSTAR INC UNIFI INC QWEST COMMUNICATIONS INTERNATIONAL network AGCO CORP DE MANDALAY RESORT GROUP STANDARD REGISTER CO RITE AID CORP ANIXTER INTERNATIONAL INC PRINCIPAL FINANCIAL GROUP INC DOLLAR GENERAL CORP GALILEO INTERNATIONAL INC AMERICAN AXLE & MANUFACTURING HLDGS MCN ENERGY GROUP INC CALPINE CORP SMITHFIELD FOODS INC IMATION CORP VOLT INFORMATION SCIENCES INC FMC CORP CABLEVISION SYSTEMS CORP NEW DQE OCCIDENTAL PETROLEUM CORP MELLON FINANCIAL CORP LINENS N THINGS INC UNITED AUTO GROUP INC STATE STREET CORP AK STEEL HOLDING CORP A O SMITH CORP VALSPAR CORP LIZ CLAIBORNE INC ALBERTSON S INC RYLAND GROUP INC HEALTHSOUTH CORP ITT INDUSTRIES INC OSHKOSH TRUCK CORP HUMANA INC LENNOX INTERNATIONAL INC MCCORMICK & CO INC LA Z BOY INC BANTA CORP QUESTAR CORP ALLEGHENY ENERGY INC HILLENBRAND INDUSTRIES INC NAVISTAR INTERNATIONAL CORP STARWOOD HOTELS & RESORTSPPG WORLDWIDE INDUSTRIES INC SUNGARD DATA SYSTEMS INC TRIGON HEALTHCARE INC WGL HOLDINGS INC NSTAR MOLEX INC STATER BROS HOLDINGS INC HALLIBURTON CO 3COM CORP DELPHI AUTOMOTIVE SYSTEMS CORP SEALED AIR CORPAMGEN NEW INC ENCOMPASS SERVICES CORP TECO ENERGY INC R R DONNELLEY & SONS CO IMS HEALTH INC J B HUNT TRANSPORT SERVICESRELIANT INC ENERGY INC WELLS FARGO & CO NEW WELLPOINT HEALTH NETWORKS INC NEW DEL MONTE FOODS CO AVNET INC READER S DIGEST ASSOCIATION INC
KINDRED HEALTHCARE INC PREMCOR USA INC HARRAH S ENTERTAINMENTSAFECO INC CORP CLAYTON HOMES INC FIFTH THIRD BANCORP LYONDELL CHEMICAL CO HUBBELLCOLLINS INC & AIKMAN CORP NEW ADVANTICA RESTAURANT GROUP INC OXFORD HEALTH PLANS INC XCEL ENERGY INC ON SEMICONDUCTOR CORP COMERICA INC DEERE & CO JO ANN STORES INC WILLIAMS COMPANIESEASTMAN INC CHEMICAL CO CERIDIAN CORP NEW FEDERAL MOGUL CORP MAYTAG CORP GREY GLOBAL GROUP INC CINERGY CORP WALLACE COMPUTER SERVICES INC EQUITABLE RESOURCES INC JOY GLOBAL INC CMS ENERGY CORP AMERICAN HOME PRODUCTS CORP COMMERCIAL METALS CO CBRL GROUP INC POLAROID CORP GENTIVA HEALTH SERVICES INC USFREIGHTWAYS CORP CORNING INC NORDSTROM INC ALLMERICA FINANCIAL CORP SCI SYSTEMS INC NCR CORP BAKER HUGHES INC STARBUCKS CORP SEQUA CORP NEIMAN MARCUS GROUP INC KLA TENCOR CORP TIMKEN CO POLO RALPH LAUREN CORP UAL CORP UTILICORP UNITED INC MODIS PROFESSIONAL SERVICES INC BIG LOTS INC RAYTHEON CO NEW MONY GROUP INC PITNEY BOWES INC TRANS WORLD AIRLINES INC BRIGGS & STRATTON CORP MERITOR AUTOMOTIVE INC NEWPORT NEWS SHIPBUILDING INC BANK ONE CORP GRAND UNION CO CRANE CO SHERWIN WILLIAMS CO UNUMPROVIDENT CORP DOW CHEMICAL CO CABOT CORP FIRST TENNESSEE NATIONAL CORP UNOCAL CORP ABBOTT LABORATORIES CONSTELLATION ENERGY GROUP INC AMERISOURCE HEALTH CORP ALLIED WASTE INDUSTRIES INC WALGREEN CO FINOVA GROUP INC JOHNSON CONTROLSSPRINT INC CORP UNITED RENTALS INC NEW RUSSELL CORP CAMPBELL SOUP CO KELLWOOD CO H & R BLOCK INC ECOLAB INC WISCONSIN ENERGY CORP NEW YORK TIMES CO HERSHEY FOODS CORP PHARMACIA CORP DE TRIBUNE CO SERVICE MERCHANDISE CO INC RYERSON TULL INC NEW AIR PRODUCTS & CHEMICALS INC CINTAS CORP INGRAM MICRO INC SAKS INC TEKTRONIX INC CHARMING SHOPPES INC ILLINOIS TOOL WORKS INC AETNA INC PA HERMAN MILLER INC WALTER INDUSTRIES INC LOUISIANA PACIFIC CORP TRICON GLOBAL RESTAURANTS INC IBP INC EXXON MOBIL CORP WAL MART STORES INC RADIOSHACK CORP TENNECO AUTOMOTIVE INC DOW JONES & CO INC SOLUTIA INC IMC GLOBAL INC NORTHERN TRUST CORP CLEAR CHANNEL COMMUNICATIONS INC HORMEL FOODS CORP CADENCE DESIGN SYSTEMS INC UNIVERSAL HEALTH SERVICES INC ALCOA INC NEWMONT MINING CORPHOME DEPOT INC BRIGHTPOINT INC AT&T CORP CONVERGYS CORP JOHN HANCOCK FINANCIAL SERVICES INC BRM HOLDINGS INC KOHL S CORP LIMITED INC UNITED TECHNOLOGIES CORP LEHMAN BROTHERS HOLDINGS INC TARGET CORP AMERICAN STANDARD COS INC CVS CORP UGI CORP PA AES CORP E I DU PONT DE NEMOURS & CO USEC INC STAPLES INC HOUSEHOLD INTERNATIONALCSX CORP INC PUBLIC SERVICE ENTERPRISE GROUP INC PEPSI BOTTLING GROUP INC CUMMINS INC PFIZER INC LEXMARK INTERNATIONAL INC THOMAS & BETTS CORP INTERNATIONAL FLAVORS & FRAGRANCES THERMO ELECTRON CORP CONTINENTAL AIRLINES INC FLEETBOSTON FINANCIAL CORP GPU INC COUNTRYWIDE CREDIT INDUSTRIES INC EXELON CORP SNAP ON INC CDI CORP CHUBB CORP TECUMSEH PRODUCTS CO WEYERHAEUSER CO ARMSTRONG WORLD INDUSTRIES INC USG CORP PHILIP MORRIS COS INC EMERSON ELECTRIC CO COMCAST CORP TEXTRON INC KMART CORP CONEXANT SYSTEMS INC AUTOLIV INC PEPSIAMERICAS INC NEW VIACOM INC PETSMART INC TEMPLE INLAND INC HARMAN INTERNATIONAL INDUSTRIES INC CITIGROUP INC HONEYWELL INTERNATIONAL INC FEDERATED DEPARTMENT STORES INC NEW XEROX CORP SERVICEMASTER CO PNC FINANCIAL SERVICES GROUP INC J C PENNEY CO INC DANA CORP GENERAL ELECTRIC CO OHIO CASUALTY CORP STANLEY WORKS HARCOURT GENERAL INC PHELPS DODGE CORP STANCORP FINANCIAL GROUP INC WASHINGTON MUTUAL INC MICROSOFT CORP ASHLAND INC AUTOZONE INC ALLSTATE CORP STORAGE TECHNOLOGY CORP QUEST DIAGNOSTICS INC LEGGETT & PLATT INC ZIONS BANCORPORATION MDU RESOURCES GROUP INC EASTMAN KODAK CO SUMMIT BANCORP NJ ELECTRONIC DATA SYSTEMS CORP SHOPKO STORES INC KB HOME PEPSICO INC W R GRACE & CO NEW MINNESOTA MINING & MANUFACTURING CO V F CORP HARLEY DAVIDSON INC ST PAUL COS INC ARROW ELECTRONICS INC DYNCORP INTERNATIONAL PAPER CO AON CORP BAXTER INTERNATIONAL INC ROHM & HAAS CO TRANSMONTAIGNE INC W R BERKLEY CORP DPL INC SEARS ROEBUCK & CO OWENS ILLINOIS INC GOLDMAN SACHS GROUP INC FEDEX CORP “As an elite, it is not organized, although MOTOROLA INC KELLOGG CO POTOMAC ELECTRIC POWER CO NEWELL RUBBERMAID INC MARRIOTT INTERNATIONAL INC NEW GANNETTSCIENCE CO INC APPLICATIONS INTERNATIONAL BOSTON SCIENTIFIC CORP UNION CARBIDE CORP NEW DUKE ENERGY CORP PACKAGING CORP OF AMERICAOWENS & MINOR INC NEW ESTEE LAUDER COS INC WALT DISNEY CO NEW J P MORGAN CHASE & CO CIRCUIT CITY STORES INC POPULAR INC ROCKWELL INTERNATIONAL CORP NEW AMPHENOL CORP U S BANCORP DE MGM MIRAGE PRAXAIR INC PACTIV CORP MEAD CORP ORACLE CORP DE JOHNSON & JOHNSON CLOROX CO GENERAL MOTORS CORP TEXACO INC SARA LEE CORP UNITEDHEALTH GROUP INC REVLON INC COMMUNITY HEALTH SYSTEMS INC AMSOUTH BANCORPORATION AVON PRODUCTS INC W W GRAINGER INC UNITRIN INC AMERICA WEST HOLDINGS CORP STRYKER CORP WASTE MANAGEMENT INC NEW MCDONALD S CORP EOG RESOURCES INC KINDER MORGAN INC NEW HAWAIIAN ELECTRIC INDUSTRIES INC FORD MOTOR CO QUAKER OATS CO TRANSOCEAN SEDCO FOREX INC DARDEN RESTAURANTS INC INTERNATIONAL BUSINESS MACHINES COR VERIZON COMMUNICATIONSFOOT INC LOCKER INC D & K HEALTHCARE RESOURCES INC MBNA CORP SAFEGUARD SCIENTIFICS INC CONOCO INC CATERPILLAR INC ALLEGHENY TECHNOLOGIES INC SYSCO CORP MORGAN STANLEY DEAN WITTER & CO NATIONAL SERVICE INDUSTRIES INC PROCTER & GAMBLE CO WARNACO GROUP INC DELL COMPUTER CORP WM WRIGLEY JR CO LUBRIZOL CORP SUNOCO INC POLYONE CORP MATTEL INC COOPER INDUSTRIES INC AMERICAN EXPRESS CO WESTPOINT STEVENS INC GENERAL MILLS INC AMERICAN INTERNATIONAL GROUP INC TELEFLEX INC HCA INC NEW BANK OF NEW YORKKIMBERLY CO INC CLARK CORP GEORGIA PACIFIC CORP INGERSOLL RAND CO BERGEN BRUNSWIG CORP GENERAL DYNAMICS CORP SAFEWAY INC DOMINION RESOURCES INC VA BRISTOL MYERS SQUIBB CO MCLEODUSA INC USA EDUCATION INC WESTVACO CORP REEBOK INTERNATIONAL LTD FEDERAL HOME LOAN MORTGAGE CORP SCIENTIFIC ATLANTA INC EATON CORP SBC COMMUNICATIONS INC GOODYEAR TIRE & RUBBER CO LUCENT TECHNOLOGIES INC CH2M HILL COMPANIES LTD CIGNA CORP AMERADA HESS CORP WYNDHAM INTERNATIONAL INC HASBRO INC KNIGHT RIDDER INC GATX CORP NOBLE AFFILIATES INC ARAMARK CORP VIASYSTEMS GROUP INC AMR CORP AMERICAN WATER WORKS CO INC TRIAD HOSPITALS INC CSK AUTO CORP RYDER SYSTEM INC PACCAR INC PG&E CORP CHARLES SCHWAB CORP OWENS CORNING DYNEGY INC IL GOODRICH CORP BOISE CASCADE CORP BURLINGTONPARKER NORTHERN HANNIFIN SANTA CORP FE CORP UNION PACIFIC CORP DIAL CORP NEW DIME BANCORP INC BLACK & DECKER CORP WACHOVIA CORP NEW COX COMMUNICATIONS INC DE KROGER CO MAY DEPARTMENT STORES CO BMC SOFTWARE INC TEXAS INSTRUMENTS INC BECTON DICKINSON & CO MERCK & CO INC BEST BUY CO INC BELO CORP CENDANT CORP FLOWERS FOODS INC EQUIFAX INC VULCAN MATERIALS CO US AIRWAYS GROUP INC AMEREN CORP LANIER WORLDWIDE INC BELLSOUTH CORP LINCOLN NATIONAL CORP TIFFANY & CO ADOLPH COORS CO FLUOR CORP NEW FRONTIER OIL CORP WY TRINITY INDUSTRIES INC HARRIS CORP FLA its members often seem to know one OGE ENERGY CORP IT GROUP INC WASHINGTON POST CO PRIMEDIA INC PEP BOYS MANNY MOE & JACK BRUNSWICK CORP BAUSCH & LOMB INC CIT GROUP INC INTERPUBLIC GROUP OF COS INC UNISYS CORP NATIONAL CITY CORP COCA COLA CO FPL GROUP INC DELTA AIR LINES INCAOL TIME WARNER INC MANOR CARE INC NEW BORDEN INC KERR MCGEE CORP ROADWAY CORP SPORTS AUTHORITY INC NORFOLK SOUTHERN CORP ANHEUSER BUSCH COS INC AUTOMATIC DATAFLEMING PROCESSING COS INC INC PROVIDIAN FINANCIAL CORP PITTSTON CO MARSH & MCLENNAN COS INC DUN & BRADSTREET CORP DE NEW ENGELHARD CORP WINN DIXIE STORES INC UNOVA INC JONES APPAREL GROUP INC LONGS DRUG STORES CORP EDISON INTERNATIONAL DOVER CORP KEYCORP OHIO MCKESSON CORP DE BANK OF AMERICA CORPCOLGATE PALMOLIVE CO EL PASO CORP NACCO INDUSTRIES INC COMFORT SYSTEMS USA INC NORTHROP GRUMMAN CORP NEW AMERICAN GREETINGS CORP QUORUM HEALTH GROUP INC STILWELL FINANCIAL INC SUNTRUST BANKSCOCA INC COLA ENTERPRISES INC TJX COS INC NICOR INC GENTEK INC TRW INC BOEING COOMNICOM GROUP INC KEYSPAN CORP DIMON INC RALSTON PURINA CO LEGG MASON INC SOUTHERN CO CENTEX CORP AUTONATION INC DE ANNTAYLOR STORES CORP AMES DEPT STORES INC LOWE S COS INC SCHERING PLOUGH CORP MERRILL LYNCH & CO INC YELLOW CORP ENTERGY CORP DE APPLE COMPUTER INC PROGRESSIVE CORP PAYLESS SHOESOURCE INC NEW LITTON INDUSTRIES INC BEAR STEARNS COS INC SONOCO PRODUCTS CO PRICELINE COM INC ANALOG DEVICES INC ENTERASYS NETWORKS INC APPLERA CORP NORTHWEST AIRLINES CORP NEW PROGRESS ENERGY INC DEAN FOODS CO TRUE NORTH COMMUNICATIONS INC GRANITE CONSTRUCTION INC METRIS COS INC USA NETWORKS INC SEMPRA ENERGY ENRON CORP OR LOCKHEED MARTIN CORP BRINKER INTERNATIONAL INC BETHLEHEM STEEL CORP PHILLIPS PETROLEUM CO RELIANCEGILLETTE GROUP COHOLDINGS INC FIRSTENERGY CORP LTV CORP SUN MICROSYSTEMS INC ENERGIZER HOLDINGS INC COMPUTER SCIENCES CORP ALLERGAN INC TXU CORP VIAD CORP GENUINE PARTS CO AMAZON COM INC OFFICE DEPOT INC FISHER SCIENTIFIC INTERNATIONAL INC CHEVRONTEXACO CORP METALS USA INC UNITED PARCEL SERVICE INC
CISCO SYSTEMS INC CONSOLIDATED EDISON INC GAP INC ELI LILLY & CO another, seem quite naturally to work COMPAQ COMPUTER CORP SYNOVUS FINANCIAL CORP PETER KIEWIT SONS INC NEW LOEWS CORP NISOURCE INC REPUBLIC SERVICES INC WEATHERFORD INTERNATIONAL INC NEW SODEXHO MARRIOTT SERVICES INC CONAGRA FOODS INC TORCHMARK CORP WACKENHUT CORP CB RICHARD ELLIS SERVICES INC RAYONIER INCNIKE INC TRANS WORLD ENTERTAINMENT CORP ALLTEL CORP AMERICAN GENERAL CORP URS CORP YORK INTERNATIONAL CORP ULTRAMAR DIAMOND SHAMROCK CORP GOLDEN STATE BANCORP INC BROWN SHOE CO INC HON INDUSTRIES INC INTEL CORP FIRST DATA CORP CHARTER ONE FINANCIAL INC BURLINGTON INDUSTRIES INC ELECTRONIC ARTS INC CORN PRODUCTS INTERNATIONAL INC PHILLIPS VAN HEUSEN CORP BEVERLY ENTERPRISES INC NEW IKON OFFICE SOLUTIONS INC PENNZOIL QUAKER STATE CO HILTON HOTELS CORP OAKWOOD HOMES CORP FERRO CORP ARCHER DANIELS MIDLAND CO CARLISLE COMPANIES INC AMERICAN FINANCIAL GROUP INC NEW APPLIED INDUSTRIAL TECHNOLOGIES INC BORGWARNER INC EXPRESS SCRIPTS INC CONSECO INC CONSOLIDATED FREIGHTWAYS CORP AVERY DENNISON CORP FIRST AMERICAN CORP BECKMAN COULTER INC PRECISION CASTPARTS CORP RPM INC RUDDICK CORP BALL CORP IMPERIAL SUGAR CO TX R J REYNOLDS TOBACCO HOLDINGS INC BERKSHIRE HATHAWAY INC NEW DOLLAR TREE STORES INC AMERICAN MANAGEMENTNEXTEL SYSTEMS COMMUNICATIONS INC INC NEW TOYS R US INC NEW COOPER TIRE & RUBBER CO CAREMARK RX INC DST SYSTEMS INC BANKNORTH GROUP INC ME AFLAC INC ANADARKO PETROLEUM CORP PROTECTIVE LIFE CORP NUCOR CORP ROCK TENN CO UST INC CHIQUITA BRANDS INTERNATIONAL INC GROUP 1 AUTOMOTIVE INC FREEPORT MCMORAN COPPER & GOLD INC MILLENNIUM CHEMICALS INC COMDISCO INC BURLINGTON RESOURCES INC ADELPHIA COMMUNICATIONS CORP L 3 COMMUNICATIONS HOLDINGS INC OFFICEMAX INC NORTHWESTERN CORP together, and share many organizations E TRADE GROUP INC LABORATORY CORP OF AMERICA HOLDINGS
BROWN FORMAN CORP PARK PLACE ENTERTAINMENT CORP FRANKLIN RESOURCES INC WENDY S INTERNATIONAL INC TENET HEALTHCARE CORP DELUXE CORP
STANDARD PACIFIC CORP CRESTLINE CAPITAL CORP HEWLETT PACKARD CO CHARTER COMMUNICATIONS INC DE BOWATER INC BELK INC
ZALE CORP JEFFERSON PILOT CORP HEALTH MANAGEMENT ASSOCIATES INC PENN TRAFFIC CO QUALCOMM INC APPLIED MATERIALS INC PIER 1 IMPORTS INC
JACK IN THE BOX INC DE ASTORIA FINANCIAL CORP CKE RESTAURANTS INC FLEETWOOD ENTERPRISES INC CROWN CORK & SEAL CO INC SCANA CORP
FIDELITY NATIONAL FINANCIAL INC DANAHER CORP
EXIDE TECHNOLOGIES GUIDANT CORP HOUSE2HOME INC WILLIAMS SONOMA INC BARNES & NOBLE INC WABASH NATIONAL CORP
ADC TELECOMMUNICATIONS INC HARSCO CORP TEREX CORP in common.” MARTIN MARIETTA MATERIALS INC DOLE FOOD CO INC SOLECTRON CORP BJ S WHOLESALE CLUB INC LANDS END INC APACHE CORP COMPUTER ASSOCIATES INTERNATIONAL I
WORTHINGTON INDUSTRIES INC CNF INC NORTHEAST UTILITIES COSTCO WHOLESALE CORP DE HUGHES SUPPLY INC CAPITAL ONE FINANCIAL CORP TEXAS INDUSTRIES INC CDW COMPUTER CENTERS INC PIONEER STANDARD ELECTRONICS INC COMPUWARE CORP
PACIFICARE HEALTH SYSTEMS INC NEW TOWER AUTOMOTIVE INC SYMBOL TECHNOLOGIES INC
FISERV INC MICHAELS STORES INC
RENT A CENTER INC NEW PEOPLES ENERGY CORP
SOUTHWEST AIRLINES CO DILLARD S INC AMKOR TECHNOLOGY INC SPHERION CORP
BANK UNITED CORP PPL CORP
DURA AUTOMOTIVE SYSTEMS INC
SPX CORP
SEABOARD CORP
EXPEDITORS INTERNATIONAL OF WASH IN
MASTEC INC MAXTOR CORP
POTLATCH CORP
NABORS INDUSTRIES INC
BJ SERVICES CO
COOPER CAMERON CORP 11 12 …and banks sit somewhere in the middle
The evolution of local and national
JP Morgan Chase elite networks
Bank of America Citigroup
13 14
The 1920s stock market boom dispersed ownership in the largest US corporations
• Corporate ownership grew increasingly dispersed during the 1920s as retail investors poured into the stock market Retail investors, • Number of shareholders in the US AKA “widows and – 1924: 2.4 million orphans” – 1927: 5 million – 1930: 10 million • By 1930, 44% of the 200 largest corporations lacked a single large ownership block, according to Berle and Means (1932)
15 16 The dispersion of ownership and the rise of the “managerial class”
• Dispersed ownership and the rise of professional managers created a new system of “managerialism” • “The economic power in the hands of the few persons who control a giant corporation is a tremendous force which can harm or benefit a multitude of individuals, affect whole districts, shift the currents of trade, bring ruin to one community and prosperity to another. The organizations which they control have passed far beyond the realm of private enterprise--they have become more nearly social institutions.” Berle and Means, 1932
17 18
Did finance become irrelevant? The same New York banks were the most central firms in the national board interlock network for decades
1962 1982 “Not ‘Wall Street financiers’ or bankers, but large 1. JP Morgan 1. AT&T 2. Chase Manhattan 2. JP Morgan owners and executives in their self-financing 3. Chemical Bank 3. Chase Manhattan 4. First National City Bank 4. Citicorp corporations hold the keys of economic power” 5. Southern Pacific Railroad 5. IBM C. Wright Mills, The Power Elite (1956) 6. Mellon Bank 6. General Foods 7. Manufacturers Hanover 7. Chemical Bank 8. AT&T 8. Bankers Trust 9. Pennsylvania Railroad 9. Manufacturers Hanover And yet… 10. Bankers Trust 10. Mobil
10 most central public corporations (eigenvector centrality). Source: Mintz and Schwartz, 1985 (1962); Davis and Mizruchi, 1999 (1982)
19 20 In ~ every major city, local corporate executives staffed the boards of local banks… …creating relatively dense urban elite networks Local Non-profit • Boston: Bank of Boston Local Bank – Computervision – Dennison Manufacturing – General Cinema – Gillette – Prime Computer –Raytheon – Wyman Gordon • Pittsburgh: Mellon Bank – Air Products – Allegheny International –Alcoa – Joy Manufacturing – PPG Industries – Quaker State Oil – Sperry – US Steel Data for 1986 from Davis (1991) Minneapolis-St. Paul 2000 21 22
“The coming death of commercial banks,” ca. 1991
• Indicators of decline in traditional business included – Industry contraction: number of banks dropped from 12,380 (1980) to 7,926 (1994) due to bank closures and mergers – Declining significance of bank loans to corporations: bank loans The rise of market-based finance share of corporate debt dropped from 20.5% (1980) to 14.5% (1994) – Alarmist claims by insiders: “The banking industry is dead, and we and the end of “bank hegemony” ought to just bury it” (Dick Kovacevich, CEO of Norwest) • Reasons for decline include – More attractive (lower cost) alternatives for corporate borrowers (commercial paper, equity markets, etc.) – More attractive (higher return) alternatives for depositors (mutual funds, money market accounts, pension plans, etc.)
23 24 Bank consolidation since 1990: Q: What is the date of this article? How (almost) every New York-based commercial bank became JP Morgan Chase
Of the 10 biggest US banks in 1989, 5 are now part of JP Morgan Chase
…plus ça change… 25 26
Bank consolidation since 1990: Bank consolidation and centrality: How North Carolina National Bank became Bank of America Most central firms, 1962-2002
1962 1982 2002 1. JP Morgan 1. AT&T 1. Dell 2. Chase Manhattan 2. JP Morgan 2. Sara Lee 3. Chemical Bank 3. Chase Manhattan 3. Verizon 4. First National City Bank 4. Citicorp 4. Allstate 5. Southern Pacific Railroad 5. IBM 5. AMR 6. Mellon Bank 6. General Foods 6. JP Morgan Chase Bank of America 7. Manufacturers Hanover 7. Chemical Bank 7. Pfizer 8. AT&T 8. Bankers Trust 8. Morgan Stanley holds nearly 10% 9. Pennsylvania Railroad 9. Manufacturers Hanover 9. Dow Chemical of all deposits in 10. Bankers Trust of all deposits in 10. Mobil 10. Sears the US through its 5800 branches
27 28 The Fortune 1000 in 2003
GOLDEN WEST FINANCIAL CORP ONEOK INC NEW
WESTERN RESOURCES INC KS
ABM INDUSTRIES INC MURPHY OIL CORP
REGIONS FINANCIAL CORP 903/1034 firms in
ALASKA AIR GROUP INC
AVISTA CORPlargest component
SCHOLASTIC CORP
LANDSTAR SYSTEM INC
TESORO PETROLEUM CORP
GEORGIA GULF CORP PERFORMANCE FOOD GROUP CO
UNIVERSAL FOREST PRODUCTS INC
TECH DATA CORP NATIONAL FUEL GAS CO
QUINTILES TRANSNATIONAL CORP WATSCO INC Mean degree: 7.9 NASH FINCH CO PROVIDENT FINANCIAL GROUP INC OLD KENT FINANCIAL CORP
PINNACLE WEST CAPITAL CORP SILGAN HOLDINGS INC
CHAMPION ENTERPRISES INC
M&T BANK CORP
GENERAL CABLE CORP NEW DEVON ENERGY CORP NEW JDS UNIPHASE CORP
FAIRCHILD SEMICONDUCTOR INTL INC UNITED STATIONERS INC
SERVICE CORP INTERNATIONAL HUB GROUP INC PAYCHEX INC SIERRA PACIFIC RESOURCES GENESIS HEALTH VENTURES INC FOAMEX INTERNATIONAL INC RGS ENERGY GROUP INC PUGET ENERGY INC GREENPOINT FINANCIAL CORP PAYLESS CASHWAYS INC PHAR MOR INC PSS WORLD MEDICAL INC JABIL CIRCUIT INC UNIVERSAL CORP EMCOR GROUP INC PENTAIR INC VALERO ENERGY CORP NEW MICRON TECHNOLOGY INC
MITCHELL ENERGY & DEVELOPMENT CORP
ABERCROMBIE & FITCH CO DE MILACRON INC COVENTRY HEALTH CARE INC Mean geodesic: 4.0 STEELCASE INC MASCO CORP KELLY SERVICES INC LANDAMERICA FINANCIAL GROUP INC GREAT LAKES CHEMICAL CORP TYSON FOODS INC PUBLIC SERVICE CO OF NEW MEXICO MAXXAM INC ALTERA CORP Why all the elites know each other: MANPOWER INC MICROAGE INC SPARTAN STORES INC TELEPHONE & DATA SYSTEMS INC DE WHX CORP
DEL WEBB CORP WHOLE FOODS MARKET INC INTERSTATE BAKERIES CORP ALLIANT ENERGY CORP DIEBOLD INC PERKINELMER INC
LAM RESEARCH CORP HARTFORD FINANCIAL SERVICES GROUP I LEAR CORP PATHMARK STORES INC MARSHALL & ILSLEY CORP TORO CO INTERNATIONAL MULTIFOODS CORP POLARIS INDUSTRIES INC CYPRESS SEMICONDUCTOR CORP EMC CORP TELLABS INC QUANTA SERVICES INC WESTERN DIGITAL CORP BORDERS GROUP INC MI NIAGARA MOHAWK HOLDINGS INC FURNITURE BRANDS INTERNATIONAL INC MARK IV INDUSTRIES INC ADMINISTAFF INC VECTREN CORP FLOWSERVE CORP BROADWING INC CARDINAL HEALTH INC E W SCRIPPS CO OH WILLAMETTE INDUSTRIES INC WHIRLPOOL CORP MERISEL INC DTE ENERGY CO MOHAWK INDUSTRIES INC SMURFIT STONE CONTAINER CORP AMERICAN ELECTRIC POWER CO INC HEILIG MEYERS CO KENNAMETAL INC
LSI LOGIC CORP HEALTH NET INC TERADYNE INC WESCO INTERNATIONAL INC SUPERVALU INC WORLDCOM INC NEW REYNOLDS & REYNOLDS JACOBSCO ENGINEERING GROUP INC FOOTSTAR INC UNIFI INC QWEST COMMUNICATIONS INTERNATIONAL AGCO CORP DE MANDALAY RESORT GROUP STANDARD REGISTER CO RITE AID CORP ANIXTER INTERNATIONAL INC PRINCIPAL FINANCIAL GROUP INC DOLLAR GENERAL CORP GALILEO INTERNATIONAL INC AMERICAN AXLE & MANUFACTURING HLDGS MCN ENERGY GROUP INC CALPINE CORP SMITHFIELD FOODS INC IMATION CORP VOLT INFORMATION SCIENCES INC FMC CORP CABLEVISION SYSTEMS CORP NEW DQE OCCIDENTAL PETROLEUM CORP MELLON FINANCIAL CORP LINENS N THINGS INC UNITED AUTO GROUP INC STATE STREET CORP AK STEEL HOLDING CORP A O SMITH CORP VALSPAR CORP LIZ CLAIBORNE INC ALBERTSON S INC RYLAND GROUP INC HEALTHSOUTH CORP ITT INDUSTRIES INC OSHKOSH TRUCK CORP HUMANA INC LENNOX INTERNATIONAL INC MCCORMICK & CO INC LA Z BOY INC BANTA CORP QUESTAR CORP ALLEGHENY ENERGY INC HILLENBRAND INDUSTRIES INC NAVISTAR INTERNATIONAL CORP STARWOOD HOTELS & RESORTSPPG WORLDWIDE INDUSTRIES INC SUNGARD DATA SYSTEMS INC TRIGON HEALTHCARE INC WGL HOLDINGS INC NSTAR MOLEX INC STATER BROS HOLDINGS INC HALLIBURTON CO 3COM CORP DELPHI AUTOMOTIVE SYSTEMS CORP SEALED AIR CORPAMGEN NEW INC ENCOMPASS SERVICES CORP TECO ENERGY INC R R DONNELLEY & SONS CO IMS HEALTH INC J B HUNT TRANSPORT SERVICESRELIANT INC ENERGY INC WELLS FARGO & CO NEW WELLPOINT HEALTH NETWORKS INC NEW DEL MONTE FOODS CO AVNET INC READER S DIGEST ASSOCIATION INC
KINDRED HEALTHCARE INC PREMCOR USA INC HARRAH S ENTERTAINMENTSAFECO INC CORP CLAYTON HOMES INC FIFTH THIRD BANCORP LYONDELL CHEMICAL CO HUBBELLCOLLINS INC & AIKMAN CORP NEW ADVANTICA RESTAURANT GROUP INC OXFORD HEALTH PLANS INC XCEL ENERGY INC ON SEMICONDUCTOR CORP COMERICA INC DEERE & CO JO ANN STORES INC WILLIAMS COMPANIESEASTMAN INC CHEMICAL CO CERIDIAN CORP NEW conspiracy, or something more FEDERAL MOGUL CORP MAYTAG CORP GREY GLOBAL GROUP INC CINERGY CORP WALLACE COMPUTER SERVICES INC EQUITABLE RESOURCES INC JOY GLOBAL INC CMS ENERGY CORP AMERICAN HOME PRODUCTS CORP COMMERCIAL METALS CO CBRL GROUP INC POLAROID CORP GENTIVA HEALTH SERVICES INC USFREIGHTWAYS CORP CORNING INC NORDSTROM INC ALLMERICA FINANCIAL CORP SCI SYSTEMS INC NCR CORP BAKER HUGHES INC STARBUCKS CORP SEQUA CORP NEIMAN MARCUS GROUP INC KLA TENCOR CORP TIMKEN CO POLO RALPH LAUREN CORP UAL CORP UTILICORP UNITED INC MODIS PROFESSIONAL SERVICES INC BIG LOTS INC RAYTHEON CO NEW MONY GROUP INC PITNEY BOWES INC TRANS WORLD AIRLINES INC BRIGGS & STRATTON CORP MERITOR AUTOMOTIVE INC NEWPORT NEWS SHIPBUILDING INC BANK ONE CORP GRAND UNION CO CRANE CO SHERWIN WILLIAMS CO UNUMPROVIDENT CORP DOW CHEMICAL CO CABOT CORP FIRST TENNESSEE NATIONAL CORP UNOCAL CORP ABBOTT LABORATORIES CONSTELLATION ENERGY GROUP INC AMERISOURCE HEALTH CORP ALLIED WASTE INDUSTRIES INC WALGREEN CO FINOVA GROUP INC JOHNSON CONTROLSSPRINT INC CORP UNITED RENTALS INC NEW RUSSELL CORP CAMPBELL SOUP CO KELLWOOD CO H & R BLOCK INC ECOLAB INC WISCONSIN ENERGY CORP NEW YORK TIMES CO HERSHEY FOODS CORP PHARMACIA CORP DE TRIBUNE CO SERVICE MERCHANDISE CO INC RYERSON TULL INC NEW AIR PRODUCTS & CHEMICALS INC CINTAS CORP INGRAM MICRO INC SAKS INC TEKTRONIX INC CHARMING SHOPPES INC ILLINOIS TOOL WORKS INC AETNA INC PA HERMAN MILLER INC WALTER INDUSTRIES INC LOUISIANA PACIFIC CORP TRICON GLOBAL RESTAURANTS INC IBP INC EXXON MOBIL CORP WAL MART STORES INC RADIOSHACK CORP TENNECO AUTOMOTIVE INC DOW JONES & CO INC SOLUTIA INC IMC GLOBAL INC NORTHERN TRUST CORP CLEAR CHANNEL COMMUNICATIONS INC HORMEL FOODS CORP CADENCE DESIGN SYSTEMS INC UNIVERSAL HEALTH SERVICES INC ALCOA INC NEWMONT MINING CORPHOME DEPOT INC BRIGHTPOINT INC AT&T CORP CONVERGYS CORP JOHN HANCOCK FINANCIAL SERVICES INC BRM HOLDINGS INC KOHL S CORP LIMITED INC UNITED TECHNOLOGIES CORP LEHMAN BROTHERS HOLDINGS INC TARGET CORP AMERICAN STANDARD COS INC CVS CORP UGI CORP PA AES CORP E I DU PONT DE NEMOURS & CO USEC INC STAPLES INC HOUSEHOLD INTERNATIONALCSX CORP INC PUBLIC SERVICE ENTERPRISE GROUP INC PEPSI BOTTLING GROUP INC CUMMINS INC PFIZER INC LEXMARK INTERNATIONAL INC THOMAS & BETTS CORP INTERNATIONAL FLAVORS & FRAGRANCES THERMO ELECTRON CORP CONTINENTAL AIRLINES INC FLEETBOSTON FINANCIAL CORP GPU INC COUNTRYWIDE CREDIT INDUSTRIES INC EXELON CORP SNAP ON INC CDI CORP CHUBB CORP TECUMSEH PRODUCTS CO WEYERHAEUSER CO ARMSTRONG WORLD INDUSTRIES INC USG CORP PHILIP MORRIS COS INC EMERSON ELECTRIC CO COMCAST CORP TEXTRON INC KMART CORP CONEXANT SYSTEMS INC AUTOLIV INC PEPSIAMERICAS INC NEW VIACOM INC PETSMART INC TEMPLE INLAND INC HARMAN INTERNATIONAL INDUSTRIES INC CITIGROUP INC HONEYWELL INTERNATIONAL INC FEDERATED DEPARTMENT STORES INC NEW XEROX CORP SERVICEMASTER CO PNC FINANCIAL SERVICES GROUP INC J C PENNEY CO INC DANA CORP GENERAL ELECTRIC CO OHIO CASUALTY CORP STANLEY WORKS HARCOURT GENERAL INC PHELPS DODGE CORP STANCORP FINANCIAL GROUP INC WASHINGTON MUTUAL INC MICROSOFT CORP ASHLAND INC AUTOZONE INC ALLSTATE CORP STORAGE TECHNOLOGY CORP QUEST DIAGNOSTICS INC LEGGETT & PLATT INC ZIONS BANCORPORATION MDU RESOURCES GROUP INC EASTMAN KODAK CO SUMMIT BANCORP NJ ELECTRONIC DATA SYSTEMS CORP SHOPKO STORES INC KB HOME PEPSICO INC W R GRACE & CO NEW MINNESOTA MINING & MANUFACTURING CO V F CORP HARLEY DAVIDSON INC ST PAUL COS INC ARROW ELECTRONICS INC DYNCORP INTERNATIONAL PAPER CO AON CORP BAXTER INTERNATIONAL INC ROHM & HAAS CO TRANSMONTAIGNE INC W R BERKLEY CORP DPL INC SEARS ROEBUCK & CO OWENS ILLINOIS INC GOLDMAN SACHS GROUP INC FEDEX CORP MOTOROLA INC POTOMAC ELECTRIC POWER CO KELLOGG CO NEWELL RUBBERMAID INC MARRIOTT INTERNATIONAL INC NEW GANNETTSCIENCE CO INC APPLICATIONS INTERNATIONAL BOSTON SCIENTIFIC CORP UNION CARBIDE CORP NEW DUKE ENERGY CORP PACKAGING CORP OF AMERICAOWENS & MINOR INC NEW ESTEE LAUDER COS INC WALT DISNEY CO NEW J P MORGAN CHASE & CO CIRCUIT CITY STORES INC POPULAR INC ROCKWELL INTERNATIONAL CORP NEW AMPHENOL CORP U S BANCORP DE MGM MIRAGE PRAXAIR INC PACTIV CORP MEAD CORP ORACLE CORP DE JOHNSON & JOHNSON CLOROX CO GENERAL MOTORS CORP TEXACO INC SARA LEE CORP UNITEDHEALTH GROUP INC REVLON INC COMMUNITY HEALTH SYSTEMS INC AMSOUTH BANCORPORATION AVON PRODUCTS INC W W GRAINGER INC UNITRIN INC AMERICA WEST HOLDINGS CORP STRYKER CORP WASTE MANAGEMENT INC NEW MCDONALD S CORP EOG RESOURCES INC KINDER MORGAN INC NEW HAWAIIAN ELECTRIC INDUSTRIES INC FORD MOTOR CO QUAKER OATS CO TRANSOCEAN SEDCO FOREX INC benign? DARDEN RESTAURANTS INC INTERNATIONAL BUSINESS MACHINES COR VERIZON COMMUNICATIONSFOOT INC LOCKER INC D & K HEALTHCARE RESOURCES INC MBNA CORP SAFEGUARD SCIENTIFICS INC CONOCO INC CATERPILLAR INC ALLEGHENY TECHNOLOGIES INC SYSCO CORP MORGAN STANLEY DEAN WITTER & CO NATIONAL SERVICE INDUSTRIES INC PROCTER & GAMBLE CO WARNACO GROUP INC DELL COMPUTER CORP WM WRIGLEY JR CO LUBRIZOL CORP SUNOCO INC POLYONE CORP MATTEL INC COOPER INDUSTRIES INC AMERICAN EXPRESS CO WESTPOINT STEVENS INC GENERAL MILLS INC AMERICAN INTERNATIONAL GROUP INC TELEFLEX INC HCA INC NEW BANK OF NEW YORKKIMBERLY CO INC CLARK CORP GEORGIA PACIFIC CORP INGERSOLL RAND CO BERGEN BRUNSWIG CORP GENERAL DYNAMICS CORP SAFEWAY INC DOMINION RESOURCES INC VA BRISTOL MYERS SQUIBB CO MCLEODUSA INC USA EDUCATION INC WESTVACO CORP REEBOK INTERNATIONAL LTD FEDERAL HOME LOAN MORTGAGE CORP SCIENTIFIC ATLANTA INC EATON CORP SBC COMMUNICATIONS INC GOODYEAR TIRE & RUBBER CO LUCENT TECHNOLOGIES INC CH2M HILL COMPANIES LTD CIGNA CORP AMERADA HESS CORP WYNDHAM INTERNATIONAL INC HASBRO INC KNIGHT RIDDER INC GATX CORP NOBLE AFFILIATES INC ARAMARK CORP VIASYSTEMS GROUP INC AMR CORP AMERICAN WATER WORKS CO INC TRIAD HOSPITALS INC CSK AUTO CORP RYDER SYSTEM INC PACCAR INC PG&E CORP CHARLES SCHWAB CORP OWENS CORNING DYNEGY INC IL GOODRICH CORP BOISE CASCADE CORP BURLINGTONPARKER NORTHERN HANNIFIN SANTA CORP FE CORP UNION PACIFIC CORP DIAL CORP NEW DIME BANCORP INC BLACK & DECKER CORP WACHOVIA CORP NEW COX COMMUNICATIONS INC DE KROGER CO MAY DEPARTMENT STORES CO BMC SOFTWARE INC TEXAS INSTRUMENTS INC BECTON DICKINSON & CO MERCK & CO INC BEST BUY CO INC BELO CORP CENDANT CORP FLOWERS FOODS INC EQUIFAX INC VULCAN MATERIALS CO US AIRWAYS GROUP INC AMEREN CORP LANIER WORLDWIDE INC BELLSOUTH CORP LINCOLN NATIONAL CORP FLUOR CORP NEW TIFFANY & CO TRINITY INDUSTRIESADOLPH INC COORS CO FRONTIER OIL CORP WY OGE ENERGY CORP IT GROUP INC HARRIS CORP FLAWASHINGTON POST CO PRIMEDIA INC PEP BOYS MANNY MOE & JACK BRUNSWICK CORP BAUSCH & LOMB INC CIT GROUP INC INTERPUBLIC GROUP OF COS INC UNISYS CORP NATIONAL CITY CORP COCA COLA CO FPL GROUP INC DELTA AIR LINES INCAOL TIME WARNER INC MANOR CARE INC NEW BORDEN INC KERR MCGEE CORP ROADWAY CORP SPORTS AUTHORITY INC NORFOLK SOUTHERN CORP ANHEUSER BUSCH COS INC AUTOMATIC DATAFLEMING PROCESSING COS INC INC PROVIDIAN FINANCIAL CORP PITTSTON CO MARSH & MCLENNAN COS INC DUN & BRADSTREET CORP DE NEW ENGELHARD CORP WINN DIXIE STORES INC UNOVA INC JONES APPAREL GROUP INC LONGS DRUG STORES CORP EDISON INTERNATIONAL DOVER CORP KEYCORP OHIO MCKESSON CORP DE BANK OF AMERICA CORPCOLGATE PALMOLIVE CO EL PASO CORP NACCO INDUSTRIES INC COMFORT SYSTEMS USA INC NORTHROP GRUMMAN CORP NEW AMERICAN GREETINGS CORP QUORUM HEALTH GROUP INC STILWELL FINANCIAL INC SUNTRUST BANKSCOCA INC COLA ENTERPRISES INC TJX COS INC NICOR INC GENTEK INC TRW INC BOEING COOMNICOM GROUP INC KEYSPAN CORP DIMON INC RALSTON PURINA CO LEGG MASON INC SOUTHERN CO CENTEX CORP AUTONATION INC DE ANNTAYLOR STORES CORP AMES DEPT STORES INC LOWE S COS INC SCHERING PLOUGH CORP MERRILL LYNCH & CO INC YELLOW CORP ENTERGY CORP DE APPLE COMPUTER INC PROGRESSIVE CORP PAYLESS SHOESOURCE INC NEW LITTON INDUSTRIES INC BEAR STEARNS COS INC SONOCO PRODUCTS CO PRICELINE COM INC ANALOG DEVICES INC ENTERASYS NETWORKS INC APPLERA CORP NORTHWEST AIRLINES CORP NEW PROGRESS ENERGY INC DEAN FOODS CO TRUE NORTH COMMUNICATIONS INC GRANITE CONSTRUCTION INC METRIS COS INC USA NETWORKS INC SEMPRA ENERGY ENRON CORP OR LOCKHEED MARTIN CORP BRINKER INTERNATIONAL INC BETHLEHEM STEEL CORP PHILLIPS PETROLEUM CO RELIANCEGILLETTE GROUP COHOLDINGS INC FIRSTENERGY CORP LTV CORP SUN MICROSYSTEMS INC ENERGIZER HOLDINGS INC COMPUTER SCIENCES CORP ALLERGAN INC TXU CORP VIAD CORP GENUINE PARTS CO AMAZON COM INC OFFICE DEPOT INC FISHER SCIENTIFIC INTERNATIONAL INC CHEVRONTEXACO CORP METALS USA INC UNITED PARCEL SERVICE INC
CISCO SYSTEMS INC CONSOLIDATED EDISON INC GAP INC ELI LILLY & CO COMPAQ COMPUTER CORP SYNOVUS FINANCIAL CORP PETER KIEWIT SONS INC NEW LOEWS CORP NISOURCE INC REPUBLIC SERVICES INC WEATHERFORD INTERNATIONAL INC NEW SODEXHO MARRIOTT SERVICES INC CONAGRA FOODS INC TORCHMARK CORP WACKENHUT CORP CB RICHARD ELLIS SERVICES INC RAYONIER INCNIKE INC TRANS WORLD ENTERTAINMENT CORP ALLTEL CORP AMERICAN GENERAL CORP URS CORP YORK INTERNATIONAL CORP ULTRAMAR DIAMOND SHAMROCK CORP GOLDEN STATE BANCORP INC BROWN SHOE CO INC HON INDUSTRIES INC INTEL CORP FIRST DATA CORP CHARTER ONE FINANCIAL INC BURLINGTON INDUSTRIES INC ELECTRONIC ARTS INC CORN PRODUCTS INTERNATIONAL INC PHILLIPS VAN HEUSEN CORP BEVERLY ENTERPRISES INC NEW IKON OFFICE SOLUTIONS INC PENNZOIL QUAKER STATE CO HILTON HOTELS CORP OAKWOOD HOMES CORP FERRO CORP ARCHER DANIELS MIDLAND CO CARLISLE COMPANIES INC AMERICAN FINANCIAL GROUP INC NEW APPLIED INDUSTRIAL TECHNOLOGIES INC BORGWARNER INC EXPRESS SCRIPTS INC CONSECO INC CONSOLIDATED FREIGHTWAYS CORP AVERY DENNISON CORP FIRST AMERICAN CORP BECKMAN COULTER INC PRECISION CASTPARTS CORP RPM INC RUDDICK CORP BALL CORP IMPERIAL SUGAR CO TX R J REYNOLDS TOBACCO HOLDINGS INC BERKSHIRE HATHAWAY INC NEW DOLLAR TREE STORES INC AMERICAN MANAGEMENTNEXTEL SYSTEMS COMMUNICATIONS INC INC NEW TOYS R US INC NEW COOPER TIRE & RUBBER CO CAREMARK RX INC DST SYSTEMS INC BANKNORTH GROUP INC ME AFLAC INC ANADARKO PETROLEUM CORP PROTECTIVE LIFE CORP NUCOR CORP ROCK TENN CO UST INC CHIQUITA BRANDS INTERNATIONAL INC GROUP 1 AUTOMOTIVE INC FREEPORT MCMORAN COPPER & GOLD INC MILLENNIUM CHEMICALS INC COMDISCO INC BURLINGTON RESOURCES INC ADELPHIA COMMUNICATIONS CORP L 3 COMMUNICATIONS HOLDINGS INC OFFICEMAX INC NORTHWESTERN CORP LABORATORY CORP OF AMERICAE TRADE HOLDINGS GROUP INC
BROWN FORMAN CORP PARK PLACE ENTERTAINMENT CORP FRANKLIN RESOURCES INC WENDY S INTERNATIONAL INC TENET HEALTHCARE CORP DELUXE CORP
STANDARD PACIFIC CORP CRESTLINE CAPITAL CORP HEWLETT PACKARD CO CHARTER COMMUNICATIONS INC DE BOWATER INC BELK INC
ZALE CORP JEFFERSON PILOT CORP HEALTH MANAGEMENT ASSOCIATES INC PENN TRAFFIC CO QUALCOMM INC APPLIED MATERIALS INC PIER 1 IMPORTS INC
JACK IN THE BOX INC DE ASTORIA FINANCIAL CORP CKE RESTAURANTS INC FLEETWOOD ENTERPRISES INC CROWN CORK & SEAL CO INC SCANA CORP
FIDELITY NATIONAL FINANCIAL INC DANAHER CORP
EXIDE TECHNOLOGIES GUIDANT CORP HOUSE2HOME INC WILLIAMS SONOMA INC BARNES & NOBLE INC WABASH NATIONAL CORP
ADC TELECOMMUNICATIONS INC HARSCO CORP TEREX CORP MARTIN MARIETTA MATERIALS INC DOLE FOOD CO INC
SOLECTRON CORP BJ S WHOLESALE CLUB INC LANDS END INC APACHE CORP COMPUTER ASSOCIATES INTERNATIONAL I
WORTHINGTON INDUSTRIES INC CNF INC NORTHEAST UTILITIES COSTCO WHOLESALE CORP DE HUGHES SUPPLY INC CAPITAL ONE FINANCIAL CORP TEXAS INDUSTRIES INC CDW COMPUTER CENTERS INC PIONEER STANDARD ELECTRONICS INC COMPUWARE CORP
PACIFICARE HEALTH SYSTEMS INC NEW TOWER AUTOMOTIVE INC SYMBOL TECHNOLOGIES INC
FISERV INC MICHAELS STORES INC
RENT A CENTER INC NEW PEOPLES ENERGY CORP
SOUTHWEST AIRLINES CO DILLARD S INC AMKOR TECHNOLOGY INC SPHERION CORP
BANK UNITED CORP PPL CORP
DURA AUTOMOTIVE SYSTEMS INC
SPX CORP
SEABOARD CORP
EXPEDITORS INTERNATIONAL OF WASH IN
MASTEC INC MAXTOR CORP
POTLATCH CORP
NABORS INDUSTRIES INC
BJ SERVICES CO
COOPER CAMERON CORP 29 30
Six degrees of JP Morgan Chase: From worst to best in four steps Shortest paths from the Fortune 1000
Chase # N of firms Cumulative 1344.5%On average, any two 2 233 34.1% Fortune 1000 boards are connected by 4 degrees 3 374 81.8% through shared directors 4 121 97.2% 5 17 99.4% 6 2 99.6% Business Week rated 7 2 99.9% Conseco as one of the worst boards and 8 1 100% Colgate as the best
31 32 A benign interpretation of the “small world of the From worst to second-worst corporate elite”
• Corporate directors really do all know each other, or have friends in common, with predictable consequences (contagion of practices; common political views; easier collective action) •But: because of the “small world effect” and a few regularities in recruiting, this will be true even if all New York banks disappear, all prep schools are closed, and the Bohemian Grove it turned into an anti-globalist training camp by the Ruckus Society •And: the “inner circle” is heavily populated with women and minorities, not white male bankers
33 34
What do “post-industrial” corporations look like?
Finance turns states from Headquarters: Hong Kong sovereigns to vendors Incorporation: British Virgin Islands Annual meeting: Barbados Manufacturing: Mexico and China Stock listing: New York Stock Exchange
35 36 What would states that emulated postindustrial corporations look like?
• Financially driven Tuvalu receives $2.2M • Attentive to their brand per year (about 15% of GDP) from VeriSign • Focused on their core competence for the use of its Internet domain name • Skilled at outsourcing “.tv” • Ties to place are provisional
37 38
Delaware allows anonymous incorporation over the Internet for Russian money launderers, making it the Placebrands helps create Amazon.com of “brand equity” for state financial crime clients including Botswana, Croatia, and Malaysia [Note: “brand equity” formerly known as “imagined community”]
39 40 How is the US government like Nike?
• The Federal Activities Inventory Reform Act of 1998 (“FAIR Act”) encourages all The ship registry for Federal agencies to hire “Liberia” is operated private contractors for tasks out of an office park not “inherently governmental” near Dulles Airport • The number of Federal employees declined by 350K under Clinton • The definition of “inherently governmental” has proved flexible…
41 42
Government tasks that can be (and have been) outsourced in the US • Operating prisons • Collecting taxes • Hiring other contractors and investigating charges States today: of contractor fraud • Interrogating prisoners at Abu Ghraib Bespoke tailors, or prêt-à-porter? • “Aggressively” protecting diplomats: “We cannot operate without private security firms in Iraq. If the contractors were removed, we would have to leave Iraq.” -Patrick F. Kennedy, Under-Secretary of State for Management
43 44 45