BUSINESS INFLUENCE IN PUBLIC POLICYMAKING: A CASE STUDY OF THE LOAN GUARANTEE PROGRAM USING AN ASSEMBLAGE-THEORETIC FRAMEWORK A Thesis submitted to the Faculty of the Graduate School of Arts and Sciences 0 of Georgetown University in partial fulfillment of the requirements for the Page degree of Master of Arts in Development Management and Policy By Daniel Starkman, B.A. Washington, DC October 7, 2018 ii Copyright 2018 by Daniel Starkman All Rights Reserved ii BUSINESS INFLUENCE IN PUBLIC POLICYMAKING: A CASE STUDY OF THE LOAN GUARANTEE PROGRAM USING AN ASSEMBLAGE-THEORETIC FRAMEWORK Daniel Starkman, B.A. Thesis Advisor: Eric Langenbacher, PhD ABSTRACT iii This thesis investigates the influence of business on the public policymaking process in the United States. A framework is proposed for categorizing policymaking contexts and mechanisms of influence, synthesized from previous literature on structural versus institutional power, automatic versus instrumental influence, arenas of power, and on the opportunity structures pertaining to distinct varieties of capitalism. Much of the literature on business’ influence on policy performs analyses at the corporation level, resulting in the limited consideration of firms as formal-legal entities, as rational “black- box” actors, or as ensembles of resources. This thesis proposes an assemblage-theoretic approach to conceptualizing the firm and its position within political institutions and political-economic structures. It is argued that firms’ preferences and capacities for influence are properties emergent from the extrinsic relations among actors and resources within the firm, as well as from firms’ extrinsic relations with other actors in broader structural and institutional networks. This framework is demonstrated through an analysis of the Department of Energy’s Loan Guarantee Program (LGP), including an institutional and structural history of the program, a quantitative analysis of the program’s portfolio, and a qualitative analysis of two high-profile cases: Tesla and Solyndra. The qualitative analysis illustrates the instrumentalization of automatic pathways of influence, the transformation of transactional mechanisms into relational pathways, and the interaction of formal and informal pathways. The multivariate regression analyses show a significant positive relationship between lobbying and loan size, reinforcing the notion that relational pathways are instrumentalized effectively by firms at the stage of distribution. Political contributions were not found to be statistically significant, but were negatively associated with loan size, suggesting that the impact of contributions may be indirect through their transformation into relational pathways over time. It is proposed that additional emergent properties captured by the mapping of firm assemblages, such as mediated relational pathways, may be modeled using the framework developed and quantified using network analysis. It is argued that the conception of firms as assemblages comprising larger institutional and structural networks is a promising inroad to future study of business’ influence on policymaking, with broader implications for policy studies and political economy. iii ACKNOWLEDGEMENTS I wish to express my gratitude to the many people in my life who have supported me in my research and writing: To my wife, Fara, for your love, encouragement, advice, and patience, To my parents, Lana and Gary, for your love, support, and for instilling me with a drive for learning, To Professor Eric Langenbacher for your guidance throughout the M.A. program and for advising me on this thesis project, To Professor Guillermina Seri of Union College for being a friend and mentor, for your guidance, and for inspiring my interest in social theory, To Professor Mark Dallas of Union College for inspiring my interest in political economy and development studies, To my professors at Georgetown University and Universidad Nacional de San Martín for iv making the M.A. program in Development, Management, and Policy an enriching and unique experience, especially Marcelo Cavarozzi, Luciano Andrenacci, Diego Page Finchelstein, Mark Rom, Mariana Caminotti and Tomas Bril Mascarenhas, To Gala Diaz Langou, Fabian Repetto, Damián Bonari, and Daniela Dborkin at the Center for Equity and Growth in Buenos Aires for encouraging my policy research, To my friends David Kerner, Evan Penn, Alex Bronfman, and Darius Callier for your insights and support, To Martha and Mickey for being a second family to me while I pursued my studies in Buenos Aires, Thank you, Dan iv TABLE OF CONTENTS Chapter 1 : Introduction ...................................................................................................................................................... 1 A . The Problem: Business Influence on Policy .......................................................................................... 1 B . Building a Conceptual Framework ............................................................................................................... 3 C . The Loan Guarantee Program ........................................................................................................................... 5 Chapter 2 : Theoretical Framework for Assessing Business Influence in Politics .................... 8 A . Policy Typology ......................................................................................................................................................... 9 i. Arenas of Power ..................................................................................................................................................... 10 ii. Active vs. Passive Policies ............................................................................................................................ 13 iii. Supply vs. Demand Side Policies ........................................................................................................... 14 B . Conceptualizing Business .................................................................................................................................. 16 i. Business as Corporation, Capital, and Resource Ensemble .................................................... 16 ii. Firms as Assemblages ...................................................................................................................................... 21 C . Business Preferences ............................................................................................................................................. 25 v D . Structural vs. Institutional Pathways ......................................................................................................... 28 Page E . Automatic vs. Instrumental Pathways ....................................................................................................... 33 F . Institutional Mechanisms of Influence ...................................................................................................... 36 G . Opportunity Structure for Institutional Mechanisms in the US .............................................. 41 H . Structural and Institutional Power in the Case of TARP ............................................................. 45 i. Structural Power of the US Finance Sector ........................................................................................ 46 ii. The Role of Finance’s Institutional Power ........................................................................................ 54 I . Synthesis .......................................................................................................................................................................... 59 Chapter 3 : Analysis of the Loan Guarantee Program ................................................................................. 62 A . Conceptualizing the Loan Guarantee Program .................................................................................. 62 i. Policy Typology of the Loan Guarantee Program ......................................................................... 62 ii. The Loan Guarantee Program within the Green Economy .................................................... 64 B . Setting the Agenda ................................................................................................................................................. 67 i. Expert Opinion ........................................................................................................................................................ 68 ii. Public Opinion ....................................................................................................................................................... 70 iii. The Bush Administration ............................................................................................................................. 73 iv. The Obama Administration ......................................................................................................................... 75 v. Congress ..................................................................................................................................................................... 77 vi. Green and Brown Interest Groups .......................................................................................................... 78 v vii. Structural Influence of the Energy Sector ....................................................................................... 81 C . Formulation