Stuck in Neutral: Business and the Politics of Human Capital Investment Policy (review)

Cathie Jo Martin.Stuck in Neutral: Business and the Politics of Human Capital Investment Policy.Princeton, NJ: Princeton University Press, 2000. 264 pp. $52.50 cloth; $19.95 paper; $14.95 e-book.

As Cathie Jo Martin contends, most of the scholarship on social policy focuses solely on the public side of the equation: the state and public spending. Yet, in the United States, business firms are major providers of social benefits. From health coverage to job training, privately provided benefits accounted for 38 percent of payroll in 1990. Since 1965, the United States has enacted few major, fully public social welfare programs. Health insurance, short-term paid leave, and child care remain private, market-determined goods. We are only just beginning to fill in the picture of how the U.S. public-private welfare state developed and why social policies essentially linked to private employment persist. Cathie Jo Martin's Stuck in Neutral offers an important study of how private, employment-based benefits intersect with national politics and public policy.

The stalemate in U.S. policy, Martin seeks to show, cannot be attributed simply to "blanket business opposition" (5). Business managers, she finds, are a diverse lot with a variety of objectives and strategies to reach them. Managers' policy preferences change over time, particularly in response to their own attempts to modify or change their environment. Martin eschews a simple class preference model: labor supports welfare state initiatives; capitalists oppose them. Instead, she seeks to chart an analytical course between David Vogel's "businessmen hate the state" thesis and the corporate liberal argument, wherein businessmen dominate and capture the state. Consequently, this book offers a model that should explain particular moments when business managers decide that state policy is preferable to laissez-faire as well as episodes when they organize successfully in support of specific policy preferences. In particular, Martin confronts the perplexing failure of President Clinton's health reform effort at a moment when it seemed so many business executives sought some form of state relief from the burdens of employee health insurance.

The model offered in Stuck in Neutral relies on an institutional analysis at two levels: the institutional capacities for formulating and acting on policy positions within the firm and the institutional capacities for mobilizing business at the level of the national political arena. At the firm level, institutional factors are measured not according to firm size, sector, or income; rather, Martin argues, that a firm's political efficacy is due to a concept she calls "corporate policy capacity." The two most salient measures of a firm's corporate policy capacity are whether the firm has a government affairs or lobbying office in Washington and whether the firm participates in issue-specific business policy networks. If a company gives policy experts functional roles within the firm and enables managers to come into contact with the noncorporate world of policy analysis, then the company's managers will be more receptive to new policy prescriptions. In the national political arena, the measure of corporate policy capacity is more complicated; political action on this level involves a cumbersome and contentious balancing act of keeping enough players in line to achieve desired results. With regard to this issue of organizational capacity, Stuck in Neutral concludes that the lack of peak, or nationally unifying, business associations turns the voice of American business into a dysfunctional Tower of Babel. The story of Fortune 500 firms and public policy often amounts to what Colin Gordon (1994) has called a "disorganizational synthesis." An equally important part of Martin's story, however, is how small business firms finally figured out strategies for overcoming this disorganizational synthesis. At the end of the twentieth century, trade associations representing small businesses developed the most effective corporate policy capacity—although mainly in the service of blocking legislation.

Martin uses three case study...