Political Power and Social Theory: Volume 17

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Table of contents

(17 chapters)

Political Power and Social Theory is a peer-reviewed annual journal committed to advancing interdisciplinary understanding of the linkages between political power, class relations, and historical development. The journal welcomes both empirical and theoretical work and is willing to consider papers of substantial length.

Volume 17 of Political Power and Social Theory showcases a collection of first-rate scholarship by historical, political, and economic sociologists who concern themselves with some of the most powerful movements, actors, and institutions of modern society. The papers in this year's volume are grouped around three broad themes that take us back in time to the early 20th century America, extend our analytical scope beyond national borders, and return the reader to the present and a contemporary controversy that has implications for the future of our nation and perhaps even the entire global economy.

Recent research has challenged traditional views of the 1920s-era Ku Klux Klan in the United States. Case studies have shown that the movement appealed to a broad middle-class constituency and advocated a range of popular reforms. These findings have stimulated a provocative debate over whether the movement represented a mainstream “civic populism” or a more racist reaction to change. Here, I review the recent debate and show how the new data are consistent with current sociological models of collective action. Comparing studies of Klan mobilization in several cities, I argue that the movement was both populist and racist, combining processes of contemporary urban racial and class formation. From this perspective, I suggest, the 1920s Klan highlights a critical moment in the development of racial and class identities in 20th century urban America.

Cincinnati manufacturers before World War I displayed substantial unity in pursuing the open shop. San Francisco employers were divided, in both their attitudes and their actions, on how to deal with unions. I treat these differences in terms of business class formation. My explanation emphasizes how racial dynamics, class relations, and citizenship practices, acting in cumulative historical sequences, shaped employer solidarity and ideology.

Gender distinctions were central to the ideological and discursive construction of ‘freedom’ in colonial plantation societies, but so too were ethnicity and national identity. This article examines the contested nature of masculinity in the making of free citizens in post-emancipation Jamaica through an analysis of government and missionary sources, popular petitions, public speeches, and newspapers from 1834 to 1865. Close readings of the tensions within these public texts and their official reception demonstrate how freed men worked within and against the dominant discourses of Christian liberalism and masculine individualism as the bases for national citizenship. The key argument is that in laying claim to a Christian and British identity, African-Jamaican men constituted their freedom not so much through a seclusion of women in a private domestic role, but more importantly through an exclusion of indentured East Indians who were negatively defined as ‘foreign’ heathens.

Long established and revisionist approaches to European state formation are put to one side in this article and a turn to the imperial domains of early modern states is made. The rise of Atlantic Studies as a new current of history has drawn attention to transatlantic patterns of colonialism. However, historical sociologists and comparativists have yet to grapple with the conclusions of this field of research. This article points to a possible line of argument that could draw historical sociology and Atlantic Studies together. It takes up the argument that early modern polities broke new ground in the formation of territorial institutions when they turned to transcontinental state building. From their inception, the projects of empire produced conflict-driven institutions. Comparative examination of the Spanish, British, Dutch, French and Portuguese empires reveals that, despite the authority accorded to overarching institutions of imperial government, domestic and colonial patterns of institutional formation diverged considerably. The article explores how developments in European territories took one course in each case, while colonial trajectories in the Americas took others and thereby generated distinct kinds of conflict.

The “Battle in Seattle” has been credited with giving birth to a new, more radical phase in transnational social movement organizing; yet evidence suggests it may be misleading to speak of “global” social movements. In Seattle in 1999, the contribution of transnational movement organizations was quite modest compared with that of conventional, nationally based interest groups that focused on local resource mobilization and ideational preparation. This suggests that the basis of the new “global” social movements may be the well-established process of resource mobilization by which organized interest groups provide support for local activist communities.

The bankruptcy of Enron in December 2001 marked the beginning of broad awareness that American corporations had left behind the strategy of expanding through diversification that was the hallmark of the 1950s through the early 1980s. CEOs now made it job one to meet the earnings projections of securities analysts, such that by the year 2000 they were, in record numbers, “restating earnings” – admitting that they had cooked the books. Accounting shenanigans were the tip of the iceberg, and what lay under the water was a new approach to running the corporation to produce numbers that analysts and institutional investors would like. Three groups that stood to benefit from the new strategy spun it to investors as in the interest of all. Managers of hostile takeover firms defined their business as setting firms on the path to performing for shareholders. Institutional investors defined earnings management, rather than acquisitions management, as increasing shareholder value and focused management attention on earnings by popularizing stock options. Securities analysts hawked their own profit projections as the reigning metric of corporate performance, and favored easy-to-analyze single-industry firms through “buy” recommendations. These three groups changed the incentives executives faced, making accounting shenanigans in the pursuit of earnings management widely popular and enriching institutional investors, analysts, and executives in the process. Regulatory changes to end malfeasance have made it marginally more difficult to perform illegal accounting practices, but they have not changed the core corporate strategy that has emerged since the early 1980s. The changes illuminate the rise of groups of business professionals in the power structure, for it was not investors but different groups of business professionals who won the day. The changes illuminate, as well, the role of the social construction of interest in power relations among groups – it was by convincing executives and shareholders that a new corporate strategy was in their own interest, which these business professionals succeeded.

Dobbin and Zorn discuss the role that the rise of shareholder value has played in the behavior that led to the corporate scandals from 2001 and onwards, and they also discuss the link between the notion of shareholder value and malfeasance more generally. Their basic argument is that there is a distinct tendency for corporations that are operated according to the principles of shareholder value to engage in corrupt behavior. More precisely, in an attempt to live up to securities analysts’ predictions, they will falsify the books. Attempts to stop this type of behavior through legal means, such as the Sarbanes-Oxley Act, will not succeed since they do not eliminate the main reasons why the books are cooked in the first place.

Of late, the business news has battered the reputation of modern capitalism as rational and efficient. As portrayed in the headlines, leaders of industry appear driven by status anxiety and hormones and pride, as well as greed of impressive proportions, rather than the pursuit of efficient production and expanded market share. In “Corporate Malfeasance and the Myth of Shareholder Value,” Frank Dobbin and Dirk Zorn explore the sources of this latest outbreak of speculation and fraud. They locate the source in the new power of business professionals, specifically stock analysts, in constructing a metric of value driven by the expected earnings (or losses) of publicly held companies. As executive compensation included ever-larger quantities of stock options, executives and stock analysts, along with institutional investors, have become entwined in a system of incentives which encourages the manipulation of these expectations, often at the expense of sustaining a productive and profitable enterprise. Rather than being driven by status anxiety, hormones or greed, financial misbehavior is both rational and rewarding.

Dobbin and Zorn offer a rich and insightful explanation for recent shifts in corporate strategies and incentives that, they argue, left American firms open to the wave of scandals that have filled the nightly news over the past few years. Where once far-sighted corporate leaders trained their eyes on stability and long-term growth, today's CEOs have trouble looking beyond the quarterly profit predictions that constitute the new bottom line in corporate America. Focused as they are on “meeting the quarterlies,” institutional investors, takeover artists, and financial analysts have emerged as the new corporate elite, displacing the largest private owners of capital and bureaucratic managers alike.

Frank Dobbin and Dirk Zorn have admirably summed up what we know about how large U.S. corporations have been governed in the past 20 years. As such, I do not have many quibbles with their story. Instead, I would like to argue that the era of shareholder value has now come to a close. This is for two reasons. First, and most importantly, the methods and practices of financial engineering Dobbin and Zorn describe, have reached an endpoint in their ability to make corporations more profitable. The recent stock market crash is at least in part a result of investors becoming convinced that firms could not sustain the upward profit path. Second, the financial scandals of the early 1980s show the limits of these tactics. Firms like Enron and Worldcom were aggressively pursuing exotic forms of financial engineering with the help of their accountants and the forbearance of financial analysts. They, of course, veered from legality into illegality as they tried to convince investors that their futures were bright. The Oxley–Sarbanes Act has made it more difficult for CEOs to cook their books and it has pushed accounting firms out of the business of selling such advice. Financialization in the pursuit of increasing shareholder value has been given a bad name from which it is unlikely to recover. In this article, I would like to briefly describe why I think this is so. Then, I will briefly illustrate some of this through the Enron case. I conclude with some speculation about the future of the American economy.

These commentaries, from five of the sharpest minds in sociology, confirm our belief that economic sociology is developing a coherent and powerful set of concepts and methods for analyzing major economic and business trends. Economics as a field has not done much to address the most important changes in corporate strategy and structure over the course of the 20th century. The business historian Alfred Chandler recounts the history of the modern firm in a framework that is broadly consistent with the tenets of neoclassical economics, but that is as close as we get to an explanation based in economics. Ever since economic sociologists began to reapply their concepts and methods to the topic, in the late 1970s, we have seen the promise of the discipline to fill a gaping intellectual hole – a comprehensive understanding of where the main trends in corporate behavior come from.

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Political Power and Social Theory
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Emerald Publishing Limited
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