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Politics, Philosophy & Economics

Capitalists Rule Ok? Some Puzzles About Power

Brian Barry Politics Philosophy Economics 2002 1: 155 DOI: 10.1177/1470594X02001002001

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Capitalists rule OK? Some puzzles about power

Brian Barry

Columbia University, USA


Even if we do not observe those who own or manage capital doing anything, are there nevertheless good reasons for saying that they have power over government? My thesis is that, on any analysis of ‘power over others’ that enables us to say that voters have power over those elected and that consumers have power over producers, we also have to say that those who own or control capital have power over government. Conversely, the reasons that can be given (and have been given) for denying that owners of capital have power over governments would be equally good reasons for denying that voters have power over governments and that consumers have power over producers.


power, capitalism, democracy

I) The question

Political philosophy and political economy are both well-established disciplines, but tend to be carried on in separate compartments. What do we get if we try to put them together? No doubt there are many possibilities, but the question that I have chosen involves the relation between political power and economic position: even if we do not observe those who own or manage capital doing any- thing, are there nevertheless good reasons for saying that they have power over government? Philosophy enters in (and is, in fact, the main element) in as far as this is a purely conceptual analysis. To anticipate my conclusion, the answer to the question turns on the interpretation of facts that scarcely anybody would wish to deny. Why should we care about this? For an answer, I suggest that we think about the ideological underpinnings of the current politico-economic dispensation in the western countries conventionally described as liberal democracies. The key

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features of this are a political system in which governments and legislators derive their tenure from the results of a popular vote, an economic system in which goods and services are allocated through the mechanism of a market, and private ownership of capital, which carries with it the right to make decisions that affect the lives of others in fundamental ways. Apologists for this system need to be able to say that, despite appearances to the contrary, the electoral system gives citizens power over those elected and the market gives consumers power over firms. But they are liable to be uncomfortable about the notion that private ownership of capital gives owners of capital power over governments. My thesis is that, on any analysis of ‘power over others’ that enables us to say that voters have power over those elected and that consumers have power over producers, we also have to say that those who own or control capital have power over government. Conversely, the reasons that can be given (and have been given) for denying that owners of capital have power over governments would be equally good reasons for denying that voters have power over governments and that consumers have power over producers. I have said that appearances are against electoral politics and the market as instruments for providing citizens and consumers with power. The reason for this is that there is no getting round the fact that, in both the polity and the economy, decision-making power is concentrated in very few hands, relative to the size of the population. Consider first politics. Over a long career, Robert Dahl has indefatigably promoted the notion that, while political systems such as that of the USA and cities within it cannot properly be described as democracies because they do not meet the demanding conditions that would be required for such an attribution, they can be described as polyarchies. As he wrote in an encyclopaedia article: ‘The term polyarchy refers to the processes and institutions of large-scale, representative democracy of the type developed in the twentieth century. The term was rarely used before 1953 when it was deliberately reintroduced into the vocabulary of political science by Robert A. Dahl and Charles E. Lindblom in Politics, Economics and Welfare’. 1 I do not know why, despite Dahl’s enor- mously influential position within the discipline, the concept has been so uni- formly shunned. However, it is fortunate that it has failed to catch on, because it puts the emphasis in exactly the wrong place. ‘Polyarchy’ is, obviously, modelled on ‘oligarchy’: in an oligarchy, few rule (in Greek, arche means ‘rule’); in a polyarchy, many rule. But it is not true that what distinguishes the USA from (say) Myanmar is that many rule in the former while few rule in the latter. Few rule in either, and the same goes for any state that has ever existed. Perhaps more people rule (in the sense of having a share in the right to make decisions binding on the polity) in the USA than in Myanmar, but that is neither here nor there. The significant difference between them is the way in which the title to rule is acquired: in one case, it arises from a competi- tion for the right to rule in which voters determine who wins and, in the other case, it does not.


Barry: Capitalists rule OK?

What difference this makes is, of course, precisely the question of the relation between having institutions providing for competition between would-be rulers for votes and having democracy. But the starting point must be that, give or take an abrogative referendum here and a recall there, it would be hard to say that rulers (the executive plus the legislature) in the western liberal democracies have significantly less scope for discretionary decision-making than the rulers in any country with a different form of government, such as rule by a supreme council made up of the army officers who staged a coup against the previous government. All that can be done is to try to mitigate it by saying that, thanks to the way in which the competition for office works out, the people have power where politics is competitive in this sense, whereas in other systems the people do not have power. This claim, it will be noted, takes us back to the meaning of the Greek words making up ‘democracy’: that the people (demos) have strength (kratos). The claim has to be, in other words, that, although they do not rule, the people nevertheless have power over the rulers, and thus, indirectly, have power to determine the content of the decisions taken by the rulers. This still leaves all the hard work to be done. What exactly is it to have ‘power over’ somebody, and how exactly does competition result in voters having power over rulers, if it does? These questions will be taken up later. But I think it is worth making a couple of remarks here on what has been said so far. First, it is clear that we can settle the question by stipulation if we simply define any country with competitive politics as a democracy. But even if we conclude that a country with competitive politics is a democracy, that should be because we believe that competitive politics gives power to the people. The connection between the insti- tutions and the distribution of power should still be a contingent one. Thus, Dahl was unquestionably on the right track in wanting to make democracy turn on power relations while using some other expression for the political institutions characteristic of contemporary western countries. Moreover, Dahl’s definition of polyarchy (in its finally developed form) gives us exactly what we want: ‘citizen- ship is extended to most adults, and the rights of citizenship include the opportu- nity to oppose and vote out the highest officials in the government of the state’. 2 I have described this informally as ‘competitive politics’, leaving implicit the stipulation that the competition between different elements in the political elite is for support among voters rather than, for example, for support among the military. The established usage that comes closest to doing the job is, I suppose, ‘representative government’, and this is fine as long as we add the caveat that the term ‘representation’ has to be purged of any built-in assumptions about what the electoral connection actually does: representatives, in other words, are taken to represent in virtue of being elected, regardless of the way in which this may or may not affect their behaviour. Also, of course, it is hardly worth asking what the relation is between representative government and democracy (understood as the power of the people) unless ‘the people’ have voting rights, so we should stipu- late that we are assuming universal suffrage or something close to it.


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The second point to make before moving on is that ‘the people’ is a collective noun, which takes a singular verb. In the first instance, then, we may think of a polity partitioned into the rulers and the ruled, so that in a democracy the ruled have power collectively. This image of representative government is highly influential in the thought of Jeremy Bentham and James Mill, who tended to assume that there was a common interest in honest and efficient administration, which was shared by everybody except for small minorities, such as holders of sinecures or those who made a living out of their knowledge of wilfully unintel- ligible legal procedures. It followed from this that political institutions should be designed so that rulers would find it in their interest to resist the seductions of the ‘sinister interests’ and pursue the common interest. This makes the idea of democracy nice and straightforward, and as it happens fits rather well the case of those who own or control capital, to the degree that they are a small minority with an interest adverse to that of the rest of the population. However, the con- cept of democracy would manifestly be of very limited application if it could be applied only in cases of virtual unanimity among ‘the people’. The wholly unoriginal thought therefore arises that, where ‘the people’ are divided, the majority should be taken as a proxy for ‘the will of the people’. Such

a thought is liable to be closely followed (at any rate in anybody likely to be read-

ing this) by the thought that there may not be a majority view. However, it is easy to make far too much of the results of social choice theory. Arrow’s theorem

shows the impossibility of a social welfare function. But as soon as we realize that a social welfare function is a way of deriving a ‘social’ preference ordering from everybody’s preferences over all possible social states, we have no reason for taking any interest in its possibility, since there is no conceivable purpose for which we would ever want to use it if we had it. The more practical problem is that the majority preferences over policies may form a cycle, but not all failures of transitivity are equally bothersome. If there are 10 alternative proposals for doing something, transitivity is violated if there is a majority preference for a over b, b over c, and so on down until we get to a cycle involving h, i, and j. Even if a is preferred by a majority to b, b to c, and c to a, there may still be a major- ity for any of them over d. If we had good reason to feel assured that the work- ings of representative government would bring about any of a, b, or c, but not d, that would still mean that the people had power. (To appreciate this, we need only notice that we could have no systemic reason for expecting d not to emerge from

a dictatorship.) Thus, for example, there might be a number of possible tax cuts

that would form a cycle, but we might reasonably anticipate that they would all be preferred by a majority to one giving half the gains to those in the top 1 percent of the income distribution. If that proposal (corresponding to d) is even in serious contention, as it is in the USA, we clearly have a basis for casting doubt on its democratic credentials. I can be much more brief about markets, because here the standard analysis has been far more finely honed. The justificatory problem is in essence the same.


Barry: Capitalists rule OK?

There are, as far as I am aware, no countries with a market economy in which

a substantial proportion of the output is produced by consumer cooperatives. Consumers, therefore, have no direct say in the decisions made by firms.

Governments intervene (but less and less) to regulate such things as public utili- ties, and this may (or may not) be done in such a way as to protect the interests of consumers. By and large, however, decisions about what to make and how to price it are taken by firms, which have an enormous amount of discretion under the law. In the light of this undeniable fact about the legal order in which the market is embedded, there is something breathtakingly audacious about the commonly made claim that markets guarantee ‘consumer sovereignty’. This expression is, obviously, a variant on ‘popular sovereignty’, considered as an attribute of a political system. Both are ideological constructs which obfuscate, rather than illuminate, the reality, which is that citizens do not run the govern- ment and consumers do not run the firms. The claim that has to be made is that consumers derive power from competition among firms. By exercising their right

to choose how to spend their money, consumers can exercise power over firms,

because they can lower their profits by ceasing to buy the products of a firm if those products are less attractive than the ones offered by its rivals. In the extreme version of this story, popularized by Milton Friedman, firms have no discretion about what to make or how to price it, because they will go out of business unless they follow the optimal path. In this sense, firms have no power whatever. It may be noticed, though, that even a firm with a monopoly (for example, a drug company with a lucrative patent) may have no power in the same sense. For it may be said that, unless those running it exploit its monopoly position to the utmost, they will face removal by the major shareholders or a hostile takeover bid that the shareholders will find attractive. The issue of dis- cretion therefore appears to be something of a red herring, in as far as even the most brass-necked apologists for the market would hardly wish to maintain that the lack of power on the part of a monopolist has as its counterpart power over it by its victims. The key assertion must be, therefore, that in a competitive market consumers can get firms to sell them things they want at prices that allow only for a normal profit, because a firm that does not do so will lose out to other firms. How far this constitutes a defence of actual market economies is a question I do not need to raise here. I am concerned with the form that the defence takes, and the way in which it invokes the notion that a competitive market gives consumers power.

II) Some puzzles about power

Up until now, I have been reporting claims about power rather than asking exactly what they mean and how they might be substantiated. Any further progress in the argument depends upon getting a grip on the concept of power. Needless to say, I shall concentrate on developing the ideas that I need for the


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purpose of analysing the claims I have introduced. But even to do that I need to raise a question that is fundamental to any attempt to talk about power at all. This is: should we think of power as the possession of an ability or as the possession of the means giving rise to an ability? Both conceptions, it will be noted, make reference to an ability, and this is essential to the definition of ‘power’, as may be seen by consulting any dictionary. (I note in passing that this stipulation eliminates a large proportion of the proposed definitions in the political science literature, which make having power equivalent to actually causing things to happen.) The word ‘power’ is derived from potere, the late vulgar Latin infini- tive corresponding to our ‘to be able’, the infinitive form of ‘can’, and the con- nection is retained in French and Italian, where the nouns pouvoir and potére are the same as the infinitive form of ‘can’. Let me offer a definition of power that is intended to capture the notion of power as ability: power is the ability to bring about desired states of the world by acting. This is, obviously, a very broad definition, which leaves completely open the means that might be employed to get something: they could include doing it yourself, asking other people for what you want (the Clinton approach to house furnishing), persuading somebody that it is a good idea for them to do something, calling on legitimate authority (so that being told to do something is taken as a reason for doing it), offering a reward for doing it, and threatening sanctions for not doing it. There has been a lot of discussion about the propriety of bringing these heterogeneous means under the concept of power. But it seems to me that there is no problem in doing so, as long as we are clear that ‘power’ is then being used in a very general sense. What causes confusion is the widespread tendency to define power more narrowly for certain purposes (as I shall be doing in due course) so that only certain means are included, but then to use in connection with it other terms whose domain is now excluded because they relate only to other means. (I shall be able to explain this more clearly below when I have an example to hand.) So far, so good. But we still have to hear from the alternative way of con- ceptualizing power, which identifies it with the possession of the means of bring- ing about desired outcomes. I shall argue for its rejection, but I think it deserves serious consideration because it makes the possession of power much easier to establish. This makes me reluctant to drop it, and this reluctance is reinforced by three further considerations: first, it involves departing from the definition advanced by my favourite political philosopher; second, it involves dissenting from what I regard as by far the best book on the subject; and, third, it involves recanting my own previous published position on the subject, though since that was put forward a quarter of a century ago, I can feel a certain detachment in relation to it. In chapter 10 of Leviathan, Hobbes gives a definition of power that is as broad as the one I put forward, but different in what it makes power out to be. ‘The POWER of a man, (to take it Universally), is his present means, to obtain some


Barry: Capitalists rule OK?

future apparent Good.’ 3 Hobbes means this literally: thus, for example, ‘Riches joyned with liberality is Power; because it procureth friends, and servants’ and, more generally, ‘what quality soever maketh a man beloved, or feared of many; or the reputation of such quality, is Power; because it is a means to have the assis- tance, and service of many’. 4 Hobbes was no ‘ordinary language philosopher’, and would undoubtedly have given short shrift to the objection that it sounds odd to say that riches or personal attributes are power. He would quite likely have

riposted that an abstract ability has no place in a scientific treatise, and is little better than ‘the Entities, and Essences of Aristotle’. 5 This kind of reductionism has a natural appeal to philosophers captivated by ‘science’: Peter Morriss, in attacking the tendency to equate power with the means of power, quotes W.V.O. Quine as claiming that, when we say sugar is soluble, we are saying that it has

a structure suitable for dissolving. 6 No doubt it does, but this is not what we are saying. All the same, we could decide to swallow our linguistic qualms to gain the advantage of a more operational concept. The trouble is that this gain in our capacity to recognize the existence of power comes at a price. For it means that we close the logical gap between having the means and having the ability. To see how this can be a real disadvantage analytically, let me move (and not before time) to the type of power with which

I shall be primarily concerned in the rest of this article. This is the ability to bring about desired states of the world by acting in such a way as to overcome the resistance of others. What this is intended to capture is the idea of a power relationship as one that incorporates a clash of wills. Thus, getting something by asking for it is not a clash of wills, because the person who gives it does so freely. But I also wish to exclude persuasion and invocation of legitimate authority, because at the end of the process there is no resistance to be overcome. I shall follow a common usage in calling the ability to overcome resistance ‘social power’, though there is obviously something arbitrary about this, since all power, except the ability to do things oneself, involves social relationships. Social power is commonly thought of as an especially efficacious form of power. But it is clearly less reliable (as Max Weber emphasized) than being able to get people to do what you tell them to do because they believe they have a duty to. Similarly, if you can persuade people that they really want to do something for its own sake, you can be more confident of its happening than if you fail and have to try to overcome their resistance. Be that as it may, however, the three cases of power that I introduced in the first section all appear to fall within the category of social power. Social power has as its instrument the ability to change another party’s incen- tives. This takes two forms: making the action one wishes the other to perform more attractive and making the alternatives to it less attractive. Taking up the second of these forms, let me define power over others as follows: A has power over B if A has the ability to bring about desired actions on the part of B by exploiting B’s belief that A can make B worse off contingently on B’s behaviour.


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This is a definition in terms of power of the ability to change behaviour. The corresponding definition of power over others along Hobbesian lines makes power actually consist in the ability to make others worse off contingently upon their actions. This second way of doing things has the analytical convenience that, if we once specify the amount that A can make B worse off, we can read off A’s power. I followed this line in the article on power to which I referred and Keith Dowding does the same in his book Rational Choice and Political Power. 7 But the objec-

tion to it is that it leaves no room for a question about the relation between what

A can do to B and A’s ability to get B to do things. Dowding, it is interesting to

notice, actually concedes this, but does not draw the conclusion that the defini- tion has to be amended. Let us follow his exposition. Consider a case in which A can at will lower B’s utility by more than the

difference between the utility B gets from the action he would choose to do if left

to his own devices (u1) and the utility B gets from the action demanded by A

(u2). Then, Dowding says, ‘the difference u1 u2 that A can make to B’s welfare

is a measure of A’s power’. 8 The rationale of this is that ‘if t1 is the measure of

the disutility to B of the sanction A threatens, then the threat will be successful if

t1 > u1 u2’. 9 Notice, however, that these two sentences are actually about two different things. The first concerns A’s actual ability to lower B’s welfare. The second talks about a threat made by A. But A may threaten less of a reduction in B’s welfare than he could actually carry out or he may threaten more of a reduc-

tion than he could actually carry out. Even an empty threat may be effective if it

is believed: a notice in front of your house threatening ‘Armed Response’ or

‘Savage Dogs’ may encourage would-be burglars to try their luck elsewhere, even if there is no agency or dog to back it up. Let us suppose that A does have the ability to implement the threat and B believes that he does. Even with these assumptions, which Dowding appears to be making, it still does not follow that ‘the threat will be successful’ when the conditions are met. The fact that B would be better off complying with A’s demand than refusing to do so and suffering the sanction for non-compliance threatened by A does not actually ensure that B will comply.

Dowding himself recognizes this, writing: ‘Modern non-co-operative bargain-

ing theory

shows that A does not necessarily have the amount of power sug-

gested by this account. B may rationally refuse to comply with A’s threats despite t1 > u1 u2.’ 10 According to Dowding, this is because there is a long-term advan-

tage in gaining a reputation for ‘stubbornness’, thus making it less likely that one will be subjected to threats in future. But even if B does not look beyond the pres- ent case, it may be rational to refuse to comply. For on the assumption (which Dowding takes to hold normally) that it costs A something to carry out a threat,

A will be worse off carrying it out if B refuses to comply than he would be for-

getting about it. Only a sense of the advantage of acquiring a reputation for puni- tiveness will provide a reason for carrying out a failed threat. This further empha-


Barry: Capitalists rule OK?

sizes the indeterminacy of the relation between A’s having the ability to lower B’s utility and A’s being able to get things he would not otherwise get. Notice, however, what is happening to the concept of power in Dowding’s analysis. If we stick to the original notion that power is to be identified with the

ability to lower another’s utility, then that is what power is, and it makes no sense

to say that ‘A does not necessarily have the amount of power suggested by this

account’. 11 Clearly, this statement is implicitly calling on a different conception

of power, which must be that of power as the ability to get people to do things.

Indeed, Dowding explicitly says that, if one group has more resources than

another, ‘the greater resources of the first group may be the means by which that group is able to have power over the second, but it is not the same as that power’. 12 But this is, manifestly, an abandonment of the original definition, according to which the possession of the means was the power. The conclusion

to which Dowding is driven, almost despite himself, seems to me inescapable. I

shall, therefore, follow the line that equates A’s power over B with the ability to change B’s behaviour and then specifies the means: the belief on the part of B that A can make him worse off. So far, I have been discussing the case in which A can make the course of action B would otherwise follow less attractive. The other case is that in which

A can make a course of action that B would not otherwise follow more attractive.

We can say here that resistance is still overcome, in that B would not perform the action desired by A in the absence of a belief that A will make him better off if he does it. However, it has to be conceded that calling this an instance of social power is liable to seem strange if our paradigm of social power is power over others. Thus, for example, David Baldwin argues that the Louisiana Purchase should be regarded as an exercise of power by the USA. 13 Now if we were think- ing of power as power over someone, we could tell a story that would make the acquisition of the Louisiana territory into an exercise of power by stipulating that the French government anticipated an attack by the USA which it either would not be able to resist or would not find it worth resisting, given other demands on its military capacities in 1803. We might then say that France took the money simply as a more attractive option than the alternative of being forced to cede the territory. But in the absence of such a story, there is nothing except scale to dis- tinguish the Louisiana Purchase from my buying a hot dog from a street vendor. It is true, as Baldwin says, that Jefferson was able ‘to get France to do some- thing it would not otherwise do, i.e. transfer title in this land to the United States’ and that ‘this way of describing the Louisiana Purchase is compatible with standard notions of power employed by social power theorists’. 14 Thus, Dowding

accepts the implication that, if social power is the ability to manipulate incen- tives, the ability to make offers is a form of social power; and John Harsanyi’s theory of social power brings threats and offers within a single analytical frame- work. 15 Even so, I think that our reluctance to call the Louisiana Purchase an exercise of power (in the absence of implicitly coercive background conditions


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such as I sketched) stems from the notion that, in a relationship of social power, one party should stand to gain and the other to lose. In this case, however, both parties can keep the status quo if they choose, so both gain from the exchange. Formally, the answer is (as Baldwin says) that both parties have power in rela- tion to each other. Thus, I can get the hot-dog vendor to do what he would not otherwise do (that is, hand me a hot dog) and he can get me to do something I would not otherwise do (that is, hand over some money). Unless we are very careful to distinguish this sort of power from power over others, we shall finish up by making this case look like the case of mutual nuclear deterrence, which is reciprocal ‘power over’. This would be highly unilluminating. It is thus clear that, if we are going to treat the perceived ability to make

others better off contingently on their actions as a form of social power, we have

to distinguish it sharply from power over others. One obvious difference is that

one would prefer not to be subjected to ‘power over’, whereas one can only gain from being the target of being offered a reward for doing something. (Even if A lowers B’s welfare unconditionally so as to make B more receptive to an offer,

B cannot be worse off with the offer of a reward than without it, though he may

well regret having something that A wants.) At the same time, though, there are real advantages to bringing the two phenomena together. To see this, consider threats of punishment and offers of rewards. These are characteristic ways of trying to create beliefs about one’s ability to make others worse or better off, and

the contingencies under which one will do so. (It is, however, a crucial part of my analysis that social power can exist in the absence of specific threats and offers.) The point is, then, that the case for treating threats and offers within a single analytical framework is rather compelling. To put the case at its strongest, there are some cases in which we can describe what is essentially the same situation as either one in which a threat is issued or one in which an offer is made. Thus, if B has ‘expectations’ about benefiting under A’s will, we are inclined to talk about a threat if A says he will not leave

B anything unless he pursues a certain course of action. If the ‘expectations’ were

weaker or non-existent, we would be more inclined to talk about an offer by A to

B to leave him money if he does pursue that course of action. But in both cases,

B’s future benefit depends on his doing what A demands. Similarly, if a firm that has announced plans to expand its operations in Britain puts out a statement

saying that it will cancel them unless Britain joins the Euro, that is a threat. If a firm puts out a statement saying that it will expand if Britain joins the Euro, but not otherwise, that is a contingent offer. But this difference arises only because the baseline from which we measure gains and losses is different in the two cases:

in the first case, we count the expansion as an element in a sort of hypothetical

status quo, whereas in the second we take the actual status quo as our baseline. Even where the relevant status quo is clear, it may still be artificial to treat threats and offers as if they operated in a different currency. If firms come and go all the

time, a government might reasonably treat a threat by some firm to close unless


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it does x and an offer by another form of the same size to open if it does not do x as cancelling out. Bribery is a corrupt form of exchange in which the quid pro quo for money or other material benefits is a decision by an official, a vote by a legislator, and so on. What should we say about campaign contributions and personal benefits such as gifts, holidays, lucrative speaking engagements, and so on? These are typically described as providing influence, though this is by no means the only source of influence: a trusted confidante may well have the most influence over a politi- cian. The core conception of influence in this context is the ability to shape other people’s judgements or beliefs. An influential theatre critic, for example, is one whose views are taken seriously by a lot of people in deciding what plays to go to see. A lobbyist has influence, similarly, if he is able to get politicians or officials to take serious account of what he says. Those in the trade tell us that the most important part of the job is cultivating good relations with the target and, above all, ensuring access when needed, so as to be able to put the client’s case. What money buys, on this account, is the ability to obtain a sympathetic hearing for your point of view, and that is precisely the kind of thing that ‘influence’ covers. No doubt there is a good deal of humbug and hypocrisy around, and it would be naive to think that this is the only way in which ‘money talks’ in politics. Some members of Congress are, notoriously, nothing but the paid mouthpieces of corporations (‘the Senator from Boeing, Monsanto, and so on’) and, in such cases, to talk about ‘influence’ is merely a polite evasion: what we have is an established pattern of bribery, as against one-off bribery. Let me make it clear that it is open to us to think that buying privileged access is just as obnox- ious as bribing. My point is simply that we need to distinguish two different modes of obtaining favourable decisions or votes. Influence of the form I have been discussing is one form of power in its most general sense. For it is an ability to act in a way that brings about desired states of the world. But it is only one form of power, and there is no overlap between influence and social power. Yet most political scientists treat ‘influence’ as if it were synonymous with ‘power’, even where (as is usual) they are talking about social power. This is the most significant illustration of the point made earlier that we can get into a lot of trouble by narrowing down the concept of power and then treating inappropriate terms as interchangeable. I do not attempt to influence the hot-dog vendor by offering him my US$1.25, nor does he attempt to influ- ence me by offering to sell it at that price. Nor would I be attempting to influence him if I put a gun to his head and demanded a hot dog in return for not pulling the trigger. He might attempt to influence me by displaying an endorsement of his wares by a rabbi, and I might try to influence him by suggesting that he would please the customers more by substituting a different mustard. The common practice of using ‘influence’ as the verb form of ‘power’ can only lead to con- fusion. Although social power and influence are disjoint concepts, it is worth noticing


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that influence can give rise to social power. Consider again the case of the theatre critic who is highly influential, in that a lot of theatregoers follow his recommendations. If the result of his influence is that a play that gets a negative review is likely to have to close because of poor attendance, we can say that he has a source of power over theatres. For he can act in such a way as to make them lose money. Similarly, suppose that some evangelical preacher has a lot of influence with his congregation. He has a source of power over a politician if he makes his endorsement conditional upon the politician’s position on, say, abortion. I shall return to this point in section IV when discussing the power of capitalists.

III) The power of consumers and voters

We can now return to the issues raised in the first section and see how, in terms of the analysis in the previous section, power may be attributed to consumers and voters. I shall start with the case of consumers and firms because it can be disposed of fairly quickly. The main point to pick up is that, if we start from a situation in which there are no transactions, all social power relations fall under the heading of reward power. However, when we talk about the ability of con- sumers to make firms worse off, we are obviously taking as given an ongoing economic system. The baseline is therefore the current level of sales, and it is in comparison with that level that we say consumers can credibly make firms worse off and thus have an instrument of power over them. It is worth noticing in passing that this move, which is necessary to license the claim that markets give consumers power over firms, also has the implication that firms have power over employees. For in exactly the same way, we must, to be realistic, start from a status quo in which people are already employed. And, from this point of view, ‘injury through the termination of an exchange relation’ can take a very harsh form when the employment relation is in question: ‘the mere threat of termination can be as constraining, as coercive, as menacing as an authoritative governmental command’. 16 As Charles Lindblom (from whom I am quoting here) says, ‘the classical liberal argument postulates a population not yet engaged in economic cooperation and asks how they might be organized by being drawn into mutually advantageous voluntary exchanges. Does such a method of organization impair their liberties? Not at all, for each enters into exchange for his own advantage, hence voluntarily’. 17 It is on the basis of this that it is denied that employers have power over employees, and Lindblom effectively squelches that claim. But my further point is that the claim that con- sumers have power over firms itself requires us to shift away from a perspective in which the baseline is an absence of any market transactions. The ‘liberal’ posi- tion is, thus, internally inconsistent. Let us now move on to the power of voters over governments. Just as the power of consumers over firms depends on the existence of a set of rules defin-


Barry: Capitalists rule OK?

ing a market, so the power of voters over governments depends on a set of rules defining a constitution. In both cases, we may speak of these rules as giving rise to specific powers, for example, the power to set prices or the power to vote. Moreover, in a voting system, there has to be a set of rules stipulating what out- come (policy, candidate, and so on) arises from any given pattern of votes. We can then ask how much power each voter has within a given set of rules, in the sense of power to make the outcome correspond to the one he favours. Call this outcome power. It is important to notice that, although this is power within the

general definition of power, it is not social power. For the process of aggregating votes is one in which only the votes cast enter: the outcome simply emerges from the pattern of votes. Of course, all kinds of social power may enter into an indi- vidual voter’s decision about the way in which to vote: a member of a parliament may vote in a certain way because he has been bribed to do so or threatened with

a scandal if he does not do so, or because he hopes to obtain ministerial office by following the party line or fears expulsion if he does not. But a measure of the power of a vote ignores all that and simply asks how that vote can factor into an outcome under different configurations of votes. Because voting rules are pre- cise, they lend themselves to precise indexes of voting power, and the resulting literature (to which I confess to having contributed) has had a disproportionate impact on the study of power. The crucial point to make about it is that, in the nature of the case, outcome power can tell us nothing about social power. The temptation to think that we can use outcome power as a model for social power must be firmly resisted. Thankfully, I have no need to enter into the analysis of outcome power here. All we need is to recognize that the outcome power of the voters (taken together) must be the foundation of whatever power the voters (taken together)

have over the government. In a system of representative government, the composition of the legislature and (where it is directly elected) the executive is a mapping from the way in which the electorate votes. It is true that, in a mass electorate, no individual voter ever makes a difference to the result. (The margin of error is always more than one vote, whatever the voting system.) 18 But to deduce from this that the voters do not together have outcome power would be like saying that, because a heap of sand is still a heap if you withdraw one grain, no amount of sand can make the difference between something that is a heap and something that is not. If enough electors vote differently, the result of the election will definitely change, in just the same way as the heap will cease to be

a heap if you take away enough sand. We do not imagine that an individual con-

sumer can change the pricing policy or the product mix of a firm by making a purchase or not making a purchase. But if enough consumers start buying or stop buying, we can have little doubt that it will make a difference. (I take this to be common ground, regardless of what might be said about power.) Similarly, any electoral outcome can be changed to another if enough voters vote that way. None of this, however, tells us anything about the power of citizens over rulers


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in a system of representative government. Once elected, as I pointed out in the first section, governments have an immense amount of discretionary power, that is to say, outcome power as provided for under the constitution. Can the outcome power of the electorate that enables them to decide who attains office be turned into power over those who are elected? It is easy enough to set out the way in which this may be thought to happen. We suppose that governments value office, and are therefore motivated to get re-elected. We need not imagine that they are motivated (entirely, mainly, or at all) by the trappings of office or the possibility of benefiting from corrupt deals. Politicians may have policies that they want to see carried out, and recognize that their best chance of seeing them carried out is to do it themselves by attaining or retaining office. If a government wants to be re-elected, it has to somehow persuade enough voters to support it at the next election. And if voters decide how to vote on the basis of the performance of the government in the previous electoral period, this gives the government an incentive to behave in ways that will lead to its being preferred by a majority of voters to the opposition. The voters together, therefore, have the means of power over the government, because they can make it worse off (that is, make it lose office) contingently on what it does. Although possession of the means of power does not itself constitute the ability to change behaviour, the suggestion we are to explore is that we have here a mechanism that can be expected to give voters power over governments. (Formally, we have to add that the government has to believe that voters can make it worse off, as firms have to believe that consumers can make them worse off. But since it is evident that voters and consumers have this ability, I shall not bother to mention the belief in what follows and will talk as if the fact were enough.) It is worth noticing here an analogy with the power of consumers over firms. If we took the relevant baseline for calculating gains and losses at each election to be one in which no party got any votes, there would not be any way in which the government could be made worse off by an election. We could then analyse an election as an exchange in which the currency is performance in office and voters. The government goes first, and supplies a certain record for the period since the previous election. The voters then decide whether to reward it with votes or not. We could do this, but it would obviously be very artificial. As with markets, we can make more sense of what is going on by starting from a position in which there is a government and then treating its loss of office as making it worse off. This is the basis on which we can say that the voters together have the means of power over the government. The institutional setting I have sketched is the simplest possible to get the discussion launched. Thus, it does not take account of the possibility of divided government (as where the executive is directly elected), and it assumes the exis- tence of a ‘government’ and an ‘opposition’ as two entities that could trade places while retaining their identities. We do not thereby limit the scope of the analysis to two-party systems, but we do presuppose a stable coalition structure, so that


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all the parties forming the government leave office if they cease to have a major- ity and a completely different set of parties takes over. Since I am interested in the logic of the electoral sanction, I can best display it by taking up the kind of case that best lends itself to its operation. There is something, on the face of it, paradoxical about the analysis just offered. We assume that voters are interested in bringing about future behaviour by the government: they want the virtually unlimited de jure discretion of the government after the election is over to be constrained de facto by fear of elec- toral retribution at the following election. But if they are to maximize their power over the government, they must base their vote at the coming election entirely on its performance since the previous election. If they allow any thoughts about the future to enter into their calculus, they weaken the electoral sanction, which (in the nature of the case) can only ever operate on the basis of past performance. To the extent that voters believe the promises of a government that has done badly to do better in future, they give governments in future less reason to guide their actions by asking how they can most effectively please a majority of the elec- torate. ‘Using the vote to choose a better government prospectively is costly to voters in terms of their control over the incumbent.’ 19 For example, when the Conservatives dumped Margaret Thatcher as their leader, they did so in the hope that this human sacrifice would wash away their sins. They invited the voters to, in effect, draw a line under their performance prior to the assumption of John Major to the post of prime minister. This appears to have worked, in as far as the Conservatives succeeded in winning a narrow majority at the next election despite their previous unpopularity. Clearly, how- ever, if the voters respond to a deathbed repentance of this kind, it has the likely result that, in future, governments will feel that they can get away with a lot more than if they were always going to be judged on their whole record since the previous election. The crucial point is that whatever power the voters are able to exert over the government comes about in virtue of the government’s expectations about how its performance will affect its prospects at the next election. Once the election comes round, there is nothing the voters can do to change the government’s performance: the past is past. Why then bother to vote according to its record? The answer has to be that this is the only way of keeping the electoral sanction plausible for the future. Ultimately, the whole business turns on mutual trust: the voters install a government in the hope that it will act in ways that are calculated to appeal to voters, and the government has to trust that it will not be thrown out at the next election as long as it does act in such ways. It has been argued that any system of term limits makes this kind of power over those elected impossible. The argument holds, if it is valid, for any fixed maximum number of terms that can be served, but its logic can be displayed by looking at the case corresponding to that of the American presidency in which the number is two. The idea is that, when a president comes up for re-election,


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[he] will have no incentives to seek re-election and

will vote against him’. 20 But then, of course, since he will have only one term whatever he does, ‘he will not have incentives to behave well during the [first] term and voters will not elect him’. 21 Since all candidates are equally liable to term limits, the implication (which the authors do not themselves draw) is that the voters should not vote for anybody. If we keep clearly in mind the logic of retrospective voting, however, we can see that this argument is fallacious. Unless we assume that voters want to reward or punish governments as an end in itself (which falls outside the model), they are always forward looking when they vote retrospectively. Their object is to keep governments worried about the electoral consequences of poor perform- ance, and they can do this only by discriminating at each election on the basis of past performance. Term limits, obviously, limit the opportunities that voters have to keep governments on their toes in this way, since a president in his second term loses office automatically at the end of it, and cannot, therefore, be made worse off by electoral means. But voters can still deploy the electoral sanction in relation to presidents who are seeking a second term. If, as the argument I have quoted suggests, they vote against a candidate in this position, they are gratuitously throwing away the electoral sanction. It is, of course, true that the electoral sanction will not be available to constrain the president if he is in his second term. But, as I have emphasized, voting for the

government or throwing it out on the basis of its performance is always intended to affect the incentives of governments in the future. All we have to add in this case is that we have to assume sufficient sophistication on the part of voters to enable them to see that what they are doing is making an investment in the efficacy of the electoral sanction for the next time it will be applicable, which is to say any time there is a president in his first term. It is worth noticing that the notion (which I took over) that a president in his second term is immune to electoral sanctions depends on the assumption that presidents care only about their own re-election and not about being succeeded by a president of the same party. Assume that voters will vote for the candidate of the outgoing president’s party if they approve of the president’s performance and will otherwise vote for the other major party’s candidate. Assume also that presidents attach as much value to being succeeded by a member of the same party. Then term limits will make no difference — even a limit of one term. Clearly, this model depends on the existence of unitary parties whose candidates are interchangeable and a perception on the part of the voters that this is so. But it is probably closer to the truth about American politics than the alternative in which all candidates are simply regarded purely as individuals by the voters and regard themselves purely as individuals. Political scientists thought, for example, that the favourable economic conditions would help Gore in the 2000 election, and they might have done more for him if he had not perversely distanced him- self from the administration. Similarly, there are reasons for thinking that Clinton

‘voters will know that


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took some decisions primarily to help Gore: for example, releasing oil from the strategic reserves to hold the price down in the run-up to the election. Nevertheless, we may conclude from all this that the logic of retrospective voting is rather arcane. If three distinguished political scientists could get it wrong, we would surely be justified in wondering how far it actually motivates voters. Our doubts about it are liable to be increased, I suggest, when we ask how voters are supposed to decide whether to vote for the incumbent government or the would-be government. The simplest decision rule for voters would be to ask how good things have been during the government’s term of office (on various commonly accepted criteria of goodness), voting for it if things have been good and against it if they have not. ‘Bad things happen to incumbents who preside over recessions, scandals, international humiliations, domestic turmoil, and the like.’ 22 In its unadorned form, this leaves no room for any judgements about the government’s responsibility for such events or any assessment of the likelihood that the opposition would have done any better in the circumstances. Indeed, it has been suggested that a government tends to get a boost in the polls from any- thing that makes people feel better, such as the country’s doing well in the World Cup or a spell of unusually fine weather. Clearly, this is pretty hit and miss as a way of exerting power over governments, since it means that they may be re- elected or thrown out on the basis of factors over which they have had little or no control. Nevertheless, it still gives governments an incentive to do as well as they can, since it remains true that they will improve their prospects in that way. But the weaker the link between the government’s actions and the conditions on the basis of which voters decide how to vote, the more the government may be tempted to regard the outcome as a lottery and pursue its own ends — whether idealistic or corrupt. Suppose that voters turn against the government whenever things go badly, regardless of what the government may be able to say in its own defence. Then, it is important to observe, anyone who can lower the subjective welfare of voters has a power resource that it may well be able to exploit, to get the govern- ment to do things it would not otherwise do. Any body (whether domestic or foreign) that can threaten, say, economic disruption or international embarrass- ment will have a means of power over the government. Even if the government could reasonably say that, taking the long view, the threatened sanction is worth putting up with, rather than caving in to the demand that is backed by the sanction, voting according to actual results is liable to make governments highly vulnerable to threats to disrupt the lives of citizens. A good example of this process at work was the campaign by truck drivers in a number of Western European countries in autumn 2000 to disrupt the flow of oil to consumers in order to bring pressure to bear on the government to lower fuel taxes. The point of this was not to inconvenience ministers personally: no doubt their ministerial vehicles would still have been supplied with fuel, and, if anything, the absence of other vehicles on the road would make it easier for them


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to get about. The point was, rather, to create chaos so that the government would lose electoral popularity unless it acceded to the truckers’ demands. This manoeuvre was successful to the extent that the French government caved in, and the other governments that stood firm did lose support. The British government, for example, lost its lead in the public opinion polls for the first time since the previous election. I am inclined to think that it is a mistake to analyse the link between subjective welfare and voting in strategic terms at all. Rather than thinking of it as a half- baked way of trying to exercise power over the government, we might do better to think of it in purely causal terms. The weather, success in the World Cup, or lines at the pumps may all influence the dispositions of voters. (Bear in mind that ‘influence’ is a very broad term: a painter can be influenced by a landscape or an author by a long-dead writer.) Even if voters act purely reflexively, however, this does not mean that strategy is absent from the situation altogether. For, as I have pointed out, anyone who can lower the subjective welfare of the voters has a means of power over the government. We can tell a more sophisticated story about the ways in which voters make their decisions that will breathe more life into the idea that voting on the basis of the government’s record can be a way of exercising power over it. According to this, voters decide on a subjective level of welfare that the government has to have met before they will return it to office, and this can take account of the con- ditions under which the government is operating, so that the standard can be set lower if the environment is unfavourable. 23 We must always bear in mind, however, that all this means is that each individual voter makes a decision on these lines when the election comes around. In as far as voters exert power, it is purely via the government’s guesses about the way in which what it does will relate to what the voters will do. Thus, to talk about a ‘performance criterion set by the electorate’ is to talk about something that does not exist and cannot exist. 24 For this suggests that some performance criterion is set in advance and then implemented at the election: otherwise, it would not make sense to say that ‘the electorate can choose the performance criterion to motivate the incumbent optimally and have it be credible that this criterion will in fact be employed’. 25 This is, transparently, an attempt to make the case fit the model of threats or promises made in advance and then implemented according to the compliance or non-compliance of the target. But there is, clearly, no institution by which a mass electorate can, collectively, ‘choose the performance criterion’. This would require some kind of voting system that does not anywhere exist and could not exist, since it would have to aggregate the diverse demands of millions of people. This does not mean that the electorate cannot exert power over the government, but it can do so only in the indirect way (looking backward to affect the future) that I have described. In as far as aggregation of demands takes place, it occurs in the interaction between the government’s guesses about the voters and the voters’ responses.


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How are voters to decide how well the government has done? Let us, for the moment, continue to think of this as a question of how competent it has been in pursuing goals that would be widely agreed to be desirable. How competent does the government have to be to deserve re-election? Clearly, if the criterion is set too high, governments in future will be liable to conclude that they will probably be thrown out whatever they do, and if it is set too low, they will be liable to con- clude that they will probably be re-elected whatever they do. In either case the electoral sanction will form a very weak incentive. But what would be a realistic criterion? The only sensible one that I can see is that the government should be re-elected if the opposition would have done worse in its place, and otherwise thrown out. It seems pointless to compare the government’s performance with that of some hypothetical alternative when there is (ex hypothesi) only one actual alternative. Moreover, by focusing on a comparison between the govern- ment and the opposition, we stay in touch with the idea that the power of the voters stems from competition for their votes. The point becomes far clearer if we abandon the assumption that voters are concerned only with the government’s ‘competence’ in bringing about generally desired conditions. Although those political scientists who talk in terms of estimates of ‘competence’ usually mention that voters are also concerned with actual policies, it is clear that the whole terminology is inappropriate to issues such as the death penalty, gun control, abortion, blood sports, anti-drug policy and hundreds of others, where voters have views about policies as such, rather than regarding them merely as means to valued states of the world. To say that a government is ‘competent’ if it pursues policies of which I approve is a very curious way of talking, since there may be no special skill required to enact or administer them. Moreover, the conclusion that rational voters have to compare the actual government and the actual opposition becomes crystal clear here. Suppose that I regard the policies of the current Labour government on civil liberties and asylum issues as extremely obnoxious. Should this lead me to vote for the opposition at the next election? That would be crazy, because I have excellent reasons for believing, on the basis of the directions from which they have attacked the government, that they would have been even worse. We can now see how there really is something paradoxical about pure retro- spective voting as a way of exerting power over governments. For it can work only if voters make a comparison between what the government does (or achieves) and an estimate of what the opposition would have done (or achieved) if it had been in office. This estimate, will, obviously, have to be drawn in large part from what the opposition says it would have done instead, though it can be improved by bringing in other information. For example, if the opposition now says it would have done something that it passed up the opportunity to do the last time it was the government, it may be asked how sincere its change of heart is, or it may be thought that its largest financial contributors are prepared for the opposition to say it would have done something, but would have balked at its


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actually doing so if it had been the government. The question that now arises is this: if voters are prepared to throw out the government on the strength of an estimate of what the opposition would have done instead, why not vote on the basis of an estimate of what the opposition would do if it won the next election? And then, of course, this would need to be compared with an estimate of what the government would do if it were re-elected. Recall that we got into all this by asking what can be done about the fact that, once elected, a government has virtually unfettered legal power. Voting on the basis of the government’s past performance was put forward as a way in which voters could exert power over governments. If I am right, however, rational retrospective voting requires the construction of a hypothetical alternative world in which the opposition is the government. This involves some ability to figure out the dynamics of policy formation within the opposition party — the interplay between, among other things, the policy preferences of the key politicians and those of the rank and file in parliament, the views of large contributors, and the sentiments of party members. While it is not actually incoherent to maintain that this can be done for the past but not for the future, it is difficult to see why this should be believed. If there is a ‘problem of induction’ here, it seems no more than a particular application of the general one that the fundamental laws of nature might change tomorrow. After this rather circuitous journey, then, we arrive at the conclusion that voters may as well cast their votes on the basis of their expectations for the com- peting parties’ conduct in the future. Of course, it is quite compatible with this to say that ‘voters use the past as a signal of future policy outcomes’. 26 If, like the authors of that quotation, we call this retrospective voting, there will always be a retrospective element in voting. But it seems to me much clearer to confine the term ‘retrospective voting’ to the kind of thing I have been analysing under that name: voting on the basis of the past in order to keep the electoral sanction maximally credible in the future. If the voters make their decisions on the basis of predictions about how parties will behave in future (their policies, their com- petence, their honesty, and so on), they will inevitably give a large amount of weight to the evidence provided by past performance. But this does not change the crucial point, which is that the voters’ outcome power is being used to select the party believed to be best in the future, and only incidentally in order to exert power over the government through electoral sanctions. The upshot is, I believe, as follows. First, there is a lot of evidence that voters are more likely, other things being equal, to support the government when things go well and are liable to turn against it when they do not, where the criteria for ‘going well’ are widely shared values. Although this could be conceived of as an exceedingly crude attempt to exercise power over government, my suggestion is that it is more reasonably thought of as reflexive rather than rationally strategic. And second, although the notion of pure retrospective voting, as a way of maxi- mizing the power of voters over governments, is not precisely incoherent, it


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becomes extremely implausible once we see what it involves. It is very hard to see why, if voters were prepared to make the informational assumptions required for retrospective voting to work, they should not switch to prospective voting. I am strongly inclined to doubt if retrospective voting exists at all, once we distin- guish reflexive responses from it. However, a certain amount of power over governments arises as a by-product of prospective voting in as far as one of the elements entering into these expectations is the performance of the government in comparison with the hypothetical performance of the opposition. Governments thus still have an incentive to act in ways that voters approve of.

IV) The power of capitalists

I am going to assume that owners and managers of capital (directors of large companies, for example) have power over governments in a variety of ways. Especially in the USA, where candidates have to raise their own funds to a large

degree, financial contributions give influence (in the way discussed in section II) and also social power in as far as politicians do things for contributors not because they are persuaded by them, but as part of a corrupt quid pro quo. ‘When [party] funds come from special interests, they are exchanged for favors. Pre- sumably, if Philip Morris Co. Inc. contributed in 1996 over US$2.5 million to

, it must have expected at least US$2.5

million in favors; otherwise its management should have been thrown out by the stockholders.’ 27 In some cases, it may be appropriate to talk about power over politicians in this context: if a politician’s future depends on maintaining contri- butions from a few large contributors, it would be reasonable to set the baseline for computing gains and losses at the present level of contributions, so that a threat to stop contributing would count as an attempt to exert power over the politician. The argument about Philip Morris goes a little too fast, however. For the direc- tors of the company could have said that the Republican position was in any case more favourable to their interests than the Democratic one, and that the US$2.5 million was simply an investment in improving the Republicans’ chances. Philip Morris would then, in terms of the analysis here, be giving the Republicans the means to influence the electorate. On the present hypothesis, however, the com- pany would not be hoping to get power or even influence over the Republicans, because the party would do the same thing anyway. It might be hard to convince

the Republican National Committee

shareholders, though, that US$2.5 million (a drop in the bucket in relation to total expenditure) would make enough difference to the probability of the Republicans calling the shots in Washington to constitute a profitable use of the funds. In any case, the ability of business ‘to advance the chances of friendly candidates and, especially, incumbents who offer the security of a well-known voting record’ gives it disproportionate influence over voters, even if we leave aside the influ- ence or power over the candidates that it might yield. 28 In addition, of course,


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owners of capital or their representatives can purchase advertisements them-

selves. If their interests are challenged, they may do this on a huge scale, as with ‘the [US]$100 million spent by opponents of the Clinton health plan in 1993– 4’. 29 (The amount spent on advertisements in favour was presumably close to zero.) ‘The result is to increase their opportunities to influence public opinion,

to influence policymakers who treat these advertisements as indicators

of potential public opinion.’ 30 Indeed, in terms of my categories, the ability to influence the voters can be a means of power over governments to the extent that they take account of this ability when deciding what policies to pursue. Taking all these forms of power and influence as given, what I am concerned with here is the account to be given of what Charles Lindblom, in his classic Politics and Markets, called ‘the privileged position of business’. The foundation of this is, as Lindblom pointed out, that ‘government officials cannot be indiffer- ent to how well business performs its functions’ because ‘depression, inflation, or other economic distress can bring down a government’. 31 As we saw in the previous section, this could come about because voters reflexively respond to bad times by turning against it or because they believe (rightly or wrongly) that the opposition would have done a better job in the same circumstances and that this is a reason for giving it a chance to try its hand at the next election. At the same time, as Lindblom again points out, the fundamental rule of a capitalist economy is that the government cannot force a firm to invest or produce if those who own it, or their agents, choose not to: ‘although governments can forbid certain kinds of activity, they cannot command business to perform’. 32 Even if a company is quite profitable, the government cannot stop it from closing down a plant if its owners believe that they could make more money by relocating to another country with lower wages, poorer protection of workers and worse environmental standards, for example. It is not at all apparent that Lindblom would be happy saying that this relation between business and government gives business power over government. We require, in order to understand it, he says, ‘no conspiracy theory of politics, no theory of common social origins uniting governments and business officials, no crude allegation of a power elite established by clandestine forces. Business simply needs inducement, hence a privileged position in government and politics if it is to do its job’. 33 This might be read as suggesting that business is simply in the fortunate position that what government does to further its own ends (keep the voters happy with the state of the economy) involves its taking very serious account of the interests of business. Along these lines, Keith Dowding argues that ‘in a capitalist society, capitalists are systematically lucky because the welfare of everyone is dependent upon the state of the economy and capitalism is the motor of the economy’. 34 More specifically, politicians ‘will not be re-elected if the economy plunges into recession, so they must ensure that their policies help the economy — which means helping the interests of capital. This does not itself make capital powerful. Rather, it is lucky, for capital does not set the constraints



Barry: Capitalists rule OK?

upon what is feasible; it simply benefits from what is’. 35 At this point, Dowding invokes an argument from Jon Elster to the effect that, if an outcome arises from market forces (for example, the tax rate that maximizes revenue), it cannot be described as one embodying power. 36 Similarly, Donald Wittman says that ‘the Marxists [who say capitalists have power] have it about 98 per cent right, but the remaining 2 per cent makes all the difference to the analysis. It is true that democratic governments are severely constrained in their policy choices by eco-

nomic forces. But the Marxists are wrong in attributing these forces to capitalists or to capitalism itself. Capitalists don’t control, markets do’. 37 ‘It wasn’t me, mum, honest!’ It should be added that Dowding says capitalists may have power as well as

have no need to intervene partly because they are lucky, and

partly because the politicians may be afraid to act in ways contrary to the inter- ests of business lest businessmen do intervene.’ 38 In an earlier formulation, Dowding wrote that capitalists are lucky because they are ‘capitalists in a

capitalist system with a competitive party structure

well, but there is an empirical difference between the two. If they are systemati- cally lucky and not powerful, then when their interests are challenged they will not be able to respond; if they are also powerful then they can respond’. 39 Unfortunately, Dowding does not explain what he means by the two key terms in those quotations, ‘intervene’ and ‘respond’. However, I assume that it should refer to something more exciting than capitalists quietly going about their busi- ness taking decisions about investment or disinvestment, increasing or decreas- ing production, and so on. It sounds as if we should be looking for some kind of concerted effort involving threats to do horrid things to the economy unless their demands are met. My argument will be that, if there is any sense in which consumers have power over firms and voters have power over governments, capitalists have power over governments merely by acting as individual profit- maximizing agents. Why might this be denied? We already have some idea of what may be said. In the remainder of this section, I shall take up all the reasons I can think of for saying that capitalists do not have power if they simply behave in the way I describe. 1) First objection: to say that capitalists have power, in the absence of any evidence, is to give vent to an anti-capitalist ideology, and not a serious contribu- tion to social science. This is the burden of the ‘pluralist’ attack on the notion of a ‘power elite’. As an argument against the claim that there is a unified group in every city and every country pulling the strings, so that governments are merely puppets, this is fair enough if diligent attempts to discover such string pulling have failed to discover it. But the thesis to be assessed here is that capitalists have power over governments in virtue of anticipation by governments of loss of popular support if they act contrary to the interests of capitalists. Thus, capital- ists are able to deter governments, and deterrence is an exercise of social power.

They may be powerful as

luck. ‘Capitalists


politics, philosophy & economics 1(2)

Formally, we need to expand the definition of ‘power over’ to include deterrence,

but this should be uncontroversial. Thus, we can add to the original definition that A has power over B if A can prevent B from doing something that A does not want B to do by making B worse off if he does it than he would be if he kept to the action preferred by A. The thesis I am proposing can still be attacked on the basis of lack of evidence.

Thus, Nelson Polsby wrote: ‘How can one tell

powerful unless some sequence of events, competently observed, attests to his

If these events do not occur, then what grounds have we to suppose

that the actor is powerful. There appear to be no scientific grounds for such a supposition’. 40 The objection is that there is no observable set of events asso- ciated with successful deterrence. We are probably safe in thinking that those who find this line of argument congenial against claims about the power of capital are keen on the idea that mutual nuclear deterrence prevented war and challenges to the vital interests of either side during the cold war. But what set of observable events would demonstrate (or even provide evidence for the proposi- tion) that deterrence was happening? If the USA and the Soviet Union had started lobbing nuclear missiles at one another, we would have been able to observe something (though only briefly, if we lived in one of those countries), but what we would have been seeing was failed deterrence. (Similarly, if we observed capitalists closing down plants or moving to other jurisdictions, we would be witnessing failed deterrence, if the conditions that have led to their doing so could have been avoided by different government policies.) The fallacy lies, of course, in the ‘behaviouralist’ dogma that what is observed must be a set of events. There is plenty of information to support talk about nuclear deterrence. We know what nuclear bombs can do to a population, we know roughly how many each side has, and we have some idea of the way in which they are targeted. There is nothing metaphysical about saying that these

whether or not an actor is


are the means of deterrence, even though we cannot ‘observe’ actual deterrence going on. Similarly, we know what capitalists can do to a population, and therefore indirectly to a government’s re-election prospects. Why should we not believe that governments are deterred from carrying out a whole variety of otherwise attractive policies? Moreover, although we do not (and could not in the nature of the case) observe adverse actions by capitalists in countries with ‘business-friendly’ governments such as those of Britain and the USA, we can observe what happens when governments fail to provide capitalists with a favourable enough environment. The textbook example, which doubtless traumatized a whole generation of politi- cians in western countries, was the capital flight that brought the new socialist government in France to its knees in 1981. The government’s reversion to more capital-friendly tax and social benefit policies was as good an illustration of the successful exercise of power as one could hope to find. As I was writing this, the New York Times carried a story saying that ‘over the


Barry: Capitalists rule OK?

confidence in the government [of South Africa] has lagged among

business people, who are overwhelmingly white. Many have felt alienated by Mr. Mbeki, who has focused more on rooting out racism and racial disparities than on promoting reconciliation’. 41 This lack of ‘confidence’ had the predictable con- sequence: ‘In 2000, [Mbeki] saw his popularity plummet as the economy shed jobs’. 42 Notice that capitalists in South Africa were able to hold the government hostage not only on the basis of its economic policies, but also its own political agenda of ‘rooting out racism and racial disparities’. President Mbeki, therefore, devoted his state of the nation speech to encouraging ‘confidence’ by pushing ‘reconciliation’ at the expense of more radical goals and promising trade liberal- ization. As ‘officials’ are quoted as saying, ‘persuading local businesses to

reinvest in the economy’ is the priority, in the hope that ‘strong signs of business

will attract foreign dollars and, ultimately reduce joblessness’. 43 I

rest my case. 2) This is all very well, it may next be said, but ‘power over’ needs threats, and we do not see much in the way of threats from capitalists. The first thing to say

is that we do see threats all the time: firms claim (as I mentioned in section II) that they will leave or not make planned investments if Britain does not join the Euro. Similarly, firms put out statements about dire consequences for employ- ment of, say, raising the minimum wage or refusing to raise the permitted axle weights of trucks on the roads. The second thing to say is that ‘power over’ was not defined in a way that mentioned threats. A has power over B if A can get B to do something he would not otherwise do in virtue of B’s belief that A could make him worse off if he does not do it. A threat by a firm will be ineffective if

it is not believed by the government; conversely, if the government believes that

a certain action will have adverse consequences because of the action of a firm,

that firm certainly has the means of power over it and may well have power over it.

The third point to make, which is especially relevant here, is that the power of consumers over firms and the power of voters over governments do not typically manifest themselves in the form of threats. Consumers may complain about faulty products to get their money back, but they rarely write disinterested letters to firms telling them that their products are no good and that they are planning to switch suppliers. Similarly, only a tiny proportion of the electorate writes letters to the government threatening to vote against it unless it does something or stops doing it. In all three cases, the means of power is the possibility of exit, and the presence or absence of voice is essentially irrelevant. It is noteworthy that Robert Dahl made this point in relation to voting in 1961, the heyday of his ‘behaviouralist’ phase. Why, he asks, has the Mayor of New Haven ‘not tried to increase taxes? It was not, I think, because someone said

“Mayor Lee don’t you dare raise taxes!”

He anticipated what might happen

to him in the next election if he should raise taxes’. 44 Dahl calls this ‘indirect influence’, but, since he is one of those who uses ‘power’ and ‘influence’ as if


last year


politics, philosophy & economics 1(2)

they were interchangeable, he presumably would have been equally willing to call it power. He goes on to say that this ‘anticipatory’ influence ‘is very impor- tant for some kinds of leaders, particularly those who have to win elections’. 45 But this admission drives a coach and horses through hard-line ‘behaviouralism’ à la Polsby, according to which ‘it is impossible to conform or disprove in principle claims about power in the absence of observable actions’. 46 If we can impute power to the voters over the mayor from something he has not done (raise taxes) there can be no a priori methodological objection to the claim that Mayor Lee’s actions were subjected to power exerted by capitalists, and that this was exhibited in things he might have done and did not. (One of these might, of course, have been raising taxes, in which case the decision not to raise them was overdetermined.) 3) The next objection runs as follows. All you are talking about is an aggregate of individual decisions by capitalists or their agents, taken in their self-interest. This has nothing to do with power. Moreover, what you described as ‘threats’ are more accurately described as friendly warnings — predictions by firms of future actions contingent on government policy. Before we can properly talk about capitalists having power over the government, we would need to see concerted action giving rise to an explicit threat to do something collectively unless the government complies. This objection gets us, I think, to the heart of the Dowding-Wittman contention that the kinds of constraints capitalists can impose on a government in virtue of their credible ability to mess up the economy do not constitute power. The ques- tion is: why should we define power in the way that is being implicitly proposed here? It is quite true that a characteristic way of trying to exercise power over somebody is to issue an explicit threat, with the specific object of making the target do something, or refrain from doing something. It is also true that charac- teristically the sanction costs something to carry out, so that the only incentive for carrying it out if the threat fails is to maintain future credibility. But I see no reason for imposing either of these conditions as a matter of definition. Consider the wealthy testator discussed in section II. Suppose that he keeps a lawyer on a retainer, so it costs him nothing to alter his will, and that he would actually like to disinherit the person with ‘expectations’ if he fails to do what is demanded of him. If we want to be picky, we can say that what he says is now a warning rather than a threat, but it would seem absurd to suggest that it thereby ceases to be deployment of the means of social power. For in both cases he wants the current beneficiary to change his behaviour, and has a credible ability to make him worse off if he fails to change it. My main point, however, as the reader will already astutely have guessed, no doubt, is that the power of capitalists stands or falls with the power of consumers and voters. Consumers act individually and normally in pursuit of their own interests, in taking their custom away from firms whose products displease them. But if enough of them do so they can make the firm significantly worse off, and


Barry: Capitalists rule OK?

thus together may well have power over it. Similarly, voters act individually: I explicitly rejected the idea that they could be thought of as issuing some sort of collective threat (or, if you like, warning) to the government that they will re- elect it at the next election if it does one set of things and throw it out if it does not. Moreover, when voters decide how to vote, they are pursuing their own interests — or, more broadly, their own ends, which may be altruistic. They are not, in other words, acting in a way that they would not otherwise act, simply in order to implement a sanction. (There is a possible exception here in the case of pure retrospective voting: in theory, one could believe that the opposition would have done better than the government, but that the government would do better next time, perhaps because of the greater experience it would then have, and be required to vote for the opposition in order to maximize the effectiveness of the electoral sanction. But this is such a whimsical idea that it lends further credence to my claim that pure retrospective voting is rare or non-existent.) It may be said that it costs something to vote. But this is immaterial. The point is that it costs no more, once you get into the polling booth, to vote against the government than to vote for it. For an analogy, suppose that the rich testator has announced his intention, but not yet made his will. It costs him something (time and money) to get it made, but it costs no more to drop the prospective beneficiary than to include him. I maintain, then, that the underlying game is the same in all three cases. The firm goes first (makes and prices its products), and the consumers, acting indi- vidually, determine between them whether or not to make it worse of by ceasing to patronize it. The government goes first in the second and third cases, choosing laws and policies to enact and implement. The voters, acting individually, deter- mine between them whether or not to make it worse off by voting against it; and the capitalists, acting individually, determine between them whether or not to make the government lose votes by making the voters worse off. If any one is a case of power, all are. And if any one is not, none is. 4) A further suggestion is that capitalists are lucky, rather than powerful, because ‘no individual capitalist has any control’. 47 It is quite true that no indi- vidual capitalist may be able to change government policy, at any rate national macro-economic policy. (Individual firms may, however, be able to change policies that affect them specifically, especially if a few firms are responsible for most of the economic activity of some local jurisdiction.) But Dowding himself, from whom that quotation is drawn, provides the antidote to it in his next para- graph, when he says that capitalists can exert control collectively, and that ‘they may collectively have that power even though they act individually’. 48 Similarly, no individual consumer can make a firm perceptibly worse off and no individual voter can make a government lose an election — or so I argued in section III. But between them, the consumers can bankrupt the firm and the voters can annihilate the government. (In Canada, a party went from a governing majority to two seats in a single election.)


politics, philosophy & economics 1(2)

We have to keep the level of analysis straight, in distinguishing power and luck. From the point of view of the individual consumer, voter, or (let us assume) capitalist, the firm’s products and prices and the government’s policies are givens: if the individual likes them, that is good luck, and if not, it is bad luck. But acting together (though individually) they have power. Thus, to say that capitalists as a class are systematically lucky is to imply that they could get out- comes they want without having to do anything. But the point is that, although no one capitalist’s action is (let us again assume) essential, enough of them do have to be believed to be able to do something to exercise the means of power by making the voters worse off, and through them make the government worse off at the next election. 5) Lastly, it may be said that, even if governments act so as to keep capitalists happy, it is quite possible that they do much more than would really be needed to induce capitalists to stay and to invest. This already concedes, of course, that capitalists have power where the government’s perception of what it takes is correct and it adjusts its policies accordingly. But even where the situation is as presented, it still fits my definition of ‘power over’. For the government does what the capitalists want in virtue of their ability to make it worse off (via its ability to make the voters worse off). Constraining capitalists is rather like prodding a hibernating grizzly bear with a sharp stick. You know that at some point it will tear you limb from limb, but the margin of uncertainty is great. Where there is a large downside risk, there is a correspondingly strong tempta- tion to play safe. But it remains true that, even if concessions are made that were unnecessary, they are still made in virtue of the perceived ability of capitalists to inflict damage on the voters and thereby on the government. We should distinguish this case from one with which it is sometimes con- founded. This is one in which the ability to raise or lower pay-offs imputed to an actor does not really exist, or is at any rate much smaller than is supposed by those in awe of it. Since I have defined social power in terms of a belief in the existence of that ability, and not in terms of its actual existence, this is still a source of power. As Hobbes put it in his own terminology, ‘Reputation of power is Power’. 49 In all my three cases, however, it seems perfectly safe to assume that the ability to lower pay-offs exists and is also believed to exist. It is surely common ground that capitalists can bring about states of affairs experienced as aversive by citizens, and that governments on whose watch such conditions occur are liable to lose support. Thus, to come back to what I said right at the beginning, the basic facts are not in dispute. The only question, to which I have offered by answer, is what conclusions about the power of capitalists we are to draw from these facts. Since we can take the facts as given, different conclusions must stem from different concepts of power. I have put forward one and defended it by putting it through its paces in a variety of contexts. I hope that even those who have from the start regarded it as blindingly obvious that the facts just recapitulated imply that


Barry: Capitalists rule OK?

capitalists have power over governments (and I confess to some sympathy with them) will still feel that the analysis of power carried out here along the way makes some contribution to elucidating this extraordinarily complex concept.



Robert A. Dahl, ‘Polyarchy’, in Towards Democracy: A Journey. Reflections:

1940–1997, Vol.1, Robert A. Dahl (Berkeley, CA: Institute of Governmental Studies Press, 1997): p. 93.




Thomas Hobbes, Leviathan, edited by Richard Tuck (Cambridge: Cambridge University Press, 1991), p. 62.




Ibid., p. 465.


Peter Morriss, Power: A Philosophical Analysis (Manchester: University of Manchester Press, 1987), p. 18.


Brian Barry, ‘Power: An Economic Analysis’, in Democracy and Power: Essays in Political Theory I, Brian Barry (Oxford: Clarendon Press, 1991): pp. 222–69; Keith


Dowding, Rational Choice and Political Power (Aldershot: Edward Elgar,




Dowding, Rational Choice and Political Power, p. 75.








Ibid., p. 76.


David A. Baldwin, Economic Statecraft (Princeton, NJ: Princeton University Press, 1985), pp. 43–4.


Ibid., p. 44.


For Harsanyi, see Dowding, Rational Choice and Political Power, pp. 74–7.

(Harsanyi’s analysis, like that of Dowding, actually makes power a function of the pay-offs of the parties.)


Charles E. Lindblom, Politics and Markets: The World’s Political-Economic Systems (New York: Basic Books, 1977), p. 48.




This point had already been made by Russell Hardin before the fiasco of the 2000 presidential election brought it home. See Russell Hardin, Liberalism, Constitutionalism, and Democracy (Oxford: Oxford University Press, 1999),




Bernard Manin, Adam Przeworski and Susan C. Stokes, ‘Elections and Representation’, in Democracy, Accountability, and Representation, edited by Adam Przeworski, Susan C. Stokes and Bernard Manin (Cambridge: Cambridge University Press, 1999): p. 45.


Ibid., p. 34, n.8.




Donald R. Kinder and Don Herzog, ‘Democratic Discussion’, in Reconsidering the Democratic Public, edited by Greg Marcus and Russell Hanson (University Park, PA: Pennsylvania State University Press, 1993): pp. 347–77.


politics, philosophy & economics 1(2)

23. Manin, Przeworski and Stokes, ‘Elections and Representation’, especially pp. 40–2.

24. James D. Fearon, ‘Electoral Accountability and the Control of Politicians: Selecting Good Types Versus Sanctioning Poor Performance’, in Democracy, Accountability, and Representation, edited by Adam Przeworski, Susan C. Stokes and Bernard Manin (Cambridge: Cambridge University Press, 1999): p. 75.

25. Ibid.

26. Lawrence R. Jacobs and Robert Y. Shapiro, Politicians Don’t Pander: Political Manipulation and the Loss of Democratic Responsiveness (Chicago: University of Chicago Press, 2000), p. 14.

27. Manin, Przeworski and Stokes, ‘Elections and Representation’, p. 35.

28. Jacobs and Shapiro, Politicians Don’t Pander: Political Manipulation and the Loss

of Democratic Responsiveness, p. 41.

29. Ibid., p. 40.

30. Ibid., p. 41.

31. Lindblom, Politics and Markets: The World’s Political-Economic Systems, pp. 172–3.

32. Ibid., p. 173.

33. Ibid., p. 175.

34. Keith Dowding, Power (Buckingham: Open University Press, 1996), p. 80.

35. Ibid., p. 74.

36. Ibid.

37. Donald Wittman, The Myth of Democratic Failure: Why Political Institutions are Efficient (Chicago: University of Chicago Press, 1995), p. 176.

38. Dowding, Power, p. 75.

39. Dowding, Rational Choice and Political Power, p. 154.

40. Nelson W. Polsby, Community Power and Political Theory, second edition (New Haven: Yale University Press, 1980), p. 60, quoted and discussed in Morriss, Power: A Philosophical Analysis, p. 16.

41. New York Times, ‘Mbeki Strongly Urges Racial Reconciliation in South Africa’, 10 February 2001, p. A4.

42. Ibid.

43. Ibid.

44. Robert A. Dahl, ‘Equality and Power in American Society’, in Towards Democracy:

A Journey. Reflections: 1940–1997, Vol.2, Robert A. Dahl (Berkeley, CA: Institute

of Governmental Studies Press, 1997): pp. 901–2.

45. Ibid., p. 902.

46. Polsby, Community Power and Political Theory, p. 68.

47. Dowding, Power, p. 74.

48. Ibid., pp. 74–5.

49. Hobbes, Leviathan, p. 62.