Corporate Power in a Globalizing World: A Study in Elite Social Organization (review)

Many students of corporate power have been waiting quite some time for an updated analysis of control and governance in Canadian corporations. Much has changed since the writings of John Porter in 1965 and my own in 1975/1977. Canada has undergone the rounds of Free Trade and North American Free Trade but little has been written about those who now control the corporate world. No less an authority than University of Victoria sociologist William Carroll has now addressed the lacunae. Carroll is well positioned to undertake this analysis; he is theoretically and methodologically sophisticated with a critical foundation in both comparative sociology and political economy.

Thirty years ago, following upon John Porter's classic study of the economic elite from 1951, I anticipated the twin effects of increased foreign ownership and corporate concentration in 1972 would expand the role of the middle class and displace the traditional upper class hold on corporate power in Canada. Instead, I found a greater share of upper class control over corporations in an unequal alliance with foreign, largely U.S. capital, present in Canada in the form of branch plants. This was a combination of comprador alliance in the domestically weak sectors of manufacturing and resources with indigenous strength in finance, transportation and utilities. Now William Carroll finds a different alignment. In the era of "free trade" there is not so much need for branch plants or comprador elites. The central global action flows to the financial centres in the United States and beyond in which the Canadian corporate elite has a "middle-level" role but with profound effects at home.

The core of Carroll's research is two studies of corporate interlockers from the Top 250 corporations in 1976 and 1996. Through this research he finds that corporate control and governance have undergone major changes in the past two decades. He begins with the social characteristics of the economic elite. Women have risen from negligible representation in the 1950 to 0.6% in 1976 to 9.2% in 1996 (slightly below the U.S. at 11.9%). [These findings are consistent with a Catalyst survey reported by the ILO for 2002 finding 14% of corporate officer positions in the Financial Post 500 companies held by women, up from 12% in 1999.] Some changes have also occurred regarding ethnicity: British background declined from 78% in 1976 to 64% in 1996 while French increased from 13% to 18%. Still, less than 1% has ethnic backgrounds from outside Europe. In terms of national men's clubs, the Toronto Club, York Club and to a lesser extent Mt. Royal remained fairly central but a dramatic decline occurred in the St James, National and Rideau clubs.

For corporate control, Carroll finds that wealthy families remain at the core of the elite, the state continues to have an active role in business (22 of the top 250 companies, especially through provincial power companies), and foreign control fell while share capital in the form of institutional investors (pension funds, mutual funds, etc.) increased. There has been some transnational expansion by Canadian finance capitalists, exemplified by Power Corporation's Paul Desmarais. Generally, there is looser corporate organization as represented by interlocking directorates than before, most notably the decline in the role of bank boards.

Board governance has changed in the past couple of decades. More exposure and scrutiny has caused boards to be more conscious of public image ('correctness') and less likely to be the informal meeting ground for the corporate elite. The big banks are the strongest examples; now they are much leaner and less meeting places. Most bank officers no longer sit on their boards. Moreover, new "norms" discourage banker's presence on the boards of their industrial clients. Mainly, however, the change has occurred because the big five banks have integrated "universal services;" centralization of financial services means links to outside trust companies and insurance companies are virtually gone as the banks broadened their direct...