The Economic Elite in Canada: An Analysis of Business Unity and Corporate Political Action By Jamie Brownlee A Thesis Submitted to the Department of Sociology in Partial Fulfilment of the Requirements for the Degree of MASTER OF ARTS Department of Sociology University of Manitoba Winnipeg, Manitoba @ August,2003 THE UNIVERSITY OF MANITOBA FACULTY OF GRÂDUATE STUDIES COPYRIGHT PERMISSION The Economic Elite in Canada: An Analysis of Business Unity and Corporate political Action BY Jamie Brownlee A Thesis/Practicum submitted to the Faculty ofGraduate Studies ofrhe university of Manitoba in partial fulfillment of the requirement of the degree of MASTER OF ARTS Jamie Brownlee @ 2003 Permission has been grant€d to the Library ofthe University of Manitoba to lend or sell copies of this thesis/practicum' to the National Library of Canada to microfilm th¡s thesis and to lend or sell cop¡es ofthe film' and to University Microfilms Inc, to publísh an abstract ofthis thesis/practicum, This reprnduction or copy of this thesis has been made available by authority ofthe copyright owner solely for the purpose of private study and research, and may only be reproduced and õpiea as permitted by copyright larvs or with express written authorization from the copyright owner. Abstract In the social sciences, the extent to which elites constitute a uniñed group is the substance of a long-standing debate. The controversy centres on whether or not elites - particularly the owners and managers ofbusiness fi¡ms - can achieve unity and solidarity around key issues ofpublic policy and promote a common agenda. There are two main positions on the issue: irutrumental Marxists and critical elite theorists posit the existence of business unity, while structural Marxists and pluralists emphasize the conflicts and divergent interests within the economic elite. The purpose of this study was to explore the parameters ofthis debate, focusing specifically on the situation in Canada. The evidence presented thLroughout strongly supports the position that the Canadian economic elite is extraordinarily cohesive and unified, and thus lends credence to the positiors advanced by instrumental Marxist and critical elite theorists. This unity is made possible by a powerful array of uniSing mechanisms and webs of interconnected associations available to the business community. Many of these ate reviewed, with a focus on interlocking dilectorates, the structure ofcorporate ownership/control networks, the mass media, 'intersectora[' policy organizations, thi¡k-tanks, and business-oriented foundations. Furthermore, it is demonstrated that a group ofhighly class conscious, 'i¡ner ci¡cle' business leaders assume the primary role in forging an elite corsensus within these forums and networks, and therefore largely determine the nature and conditiors of elite dominance. At the close ofthe study, the ties between Canada's business community and elites in other spheres ofpower are briefly elaborated upon, as is the potential for elite unity at the global level. In sum, the argument advanced here is that the degree of elite cohesion seriously impacts the organization ofsocial and political life. When unified, the (Ð corporate world controls the substance ofstate policy and exercises an incredible degree of political influence, thereby limiting the prospects for ordinary citizens to meaningfully participate in the political process. Nevertheless, it is emphasized that these relations are not inevitable and could be modified tlrough networks ofconcerned citizens coming together to challenge the cunent political and economic order. (i') Acknowledgements There are many people without whose guidance and support the completion ofthis thesis would not have been possible. I am especially thankful to Dr. Gregg Olsen, my thesis advisor, for helping me to design this project at its inception. Gregg's input and advice provided a vital source ofdirection ttroughout the thesis process. I would also like to acknowledge committee members Dr. Stephen Brickey and Dr. Fletcher Baragar for their insightful comments and attention to detail. Each of my committee members deserves special recognition for providing feedback under tight time constraints, as deadline pressures loomed. I also owe many thanks to Dr. William Carroll of the University of Victoria with whom I shared a lengthy email conespondence and whose valuable work figrues prominently in my study. Many thanks to my fellow students for their friendship and for making the graduate experience a stimulating and enjoyable one. I am especially grateful to my partner, Salena Brickey. With great devotion and a critical eye, Salena read and provided suggestions on every chapter - often more than once. She helped shape the final product through many hours of late-night conversations and this project would not have been possible without her. Lastly, I am deeply indebted to my parents for being a constant source ofencouragement and for their unconditional love and support. (iiÐ TABLE OF'CONTENTS TNTRODUCTION PART I Theoretical Foundations: The Elite Unity Debate Chapter i Elite Unity, Class Consciousness, and Political Action............................. 12 PART II Economic Cohesion: The Structure of Corporate Capital Chapter 2 Interlocking Directorates ,..... ...................42 Chapter 3 Concentrated Economic Ownership....................... ........... 66 Chapter 4 Canada's Mass Media: A Case Study in Concentrated Ownership.............80 PART Itr The Policy X'ormation Network: An Organizational Basis for Elite Cohesion Chapter 5 Policy Organizations .................. ........... 1 13 Chapter 6 Thi¡k-Tanks..... ............ 136 Chapter 7 Foundations...... ............163 PART Melations Between Elites in Different Spheres of Power Chapter 8 Interpersonal, Social and Political Ties.... .......................177 CONCLUSTON.................. .....197 R8FER8NCES.....,.......... .......216 APPENDIX A ..........................229 (Ð LIST OF'TABLES 1.1 Typology of Corporate Political Action: Business Disunity and Unity ..................32 2.1 Mean Number of Ties with Other Corporations by Ownership Categories, 1981 ... 53 2.2 Distributions of Directors and Positions, 1981 ......,.......... ............56 2.3 Canadian Top 250: Composition, Mean Board Size and Mean Degree of Interlocked Boards, 1992.... ................................57 2.4 Density of Interlocking for Four Types of Ties, 1992............................................58 t< Irurer-Circle Members Cross-Class Classified by Region and Economic Sector, 1996 ..... .........63 3.1 Top Ten Canadian Conglomerates, 200i................. .....................69 3.2 Mergers and Acquisitiors in Dollar Value................ ....................71 3.3 Top Ten Diversified Financials, 2001 ................. .........................j3 3.4 Characteristics of Multi-Unit Ftms, Third Quarter, 1999.......,.......... ....................7 4 6.1 Selected Profiles of Canadian Think Tanks, in Chronological Order ................... 140 6.2 Media Citations for Selected Canadian Think Tanks, 1980-1999 ........................ 152 6.3 Directors in the Corporate Policy Network, 1976 and 1996....................,............ lS6 6.4 Ties Among Policy Groups, 2003 ................. ............................. 159 7.1 Top Foundations by Grants.......... ..................... 165 7.2 Foundation Grants to Advocacy Think-Tanks....... ..................... 170 7.3 Foreign (American) Donations to the Fraser Institute, l9B5-2001 .......................172 1.4 Dorxrer Canadian Foundation Grants to Advocacy Think-Tanks, 2002 ...............17 4 9.1 The20LargestMergersandAcquisitionsinCanada,2001..........................,2I2 (v) Introduction In the social sciences, the extent to which elites constitute a unified group is the substance ofa long-standing debate. Indeed, it has come to represent a central issue in academic discussions about business power and the opportunities for a properly functioning democracy. This controversy centres on whether or not elites - particularly the owners and managers ofbusiness firms - can achieve uniry and solidarity around key issues ofpublic policy and promote a common agenda. It makes a great deal of theoretical and practical difference if the economic elite is, in fact, intemally cohesive and integrated. When unified, the vast resources of the corporate world are typically able to overwhelm the resources of all other social groups. Under these conditions, the prospects for ordinary citizens to meaningfully participate in the political arena or to influence state policy become increasingly remote. Thus, the mechanisms of social cohesion available to the business community have profound implications for the exercise of political power. As Mark Mizruchi (1992:46) points out, "[t]o the extent that cohesion plays an important role in the generation ofcorporate power, it is a result of its effect on the similarity ofcorporate political behaviour." This power is particularly robust when "the political unity ofcorporations stems from class-based modes of association as opposed to a mere coincidence of interests and events" (Dreiling, 2000:42-43). The key combatants in the unity debate represent significant groups oftheoretical thought. Pluralists, such as Robert Dahl (1958, 1961) and Arnold Rose (1967), have argued that different segments ofthe business community do not form a cohesive whole and routinely oppose one another on political issues. Furthermore, they contend that the sources of elite