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We argue that the United States has experienced a decline of economic, political, and military power since the 1970s, and that this decline can be attributed in part to the fragmentation of the American corporate elite. In the mid-twentieth century, this elite – constrained by a highly legitimate state, a relatively powerful labor movement, and an active financial community – adopted a moderate and pragmatic strategy for dealing with the political issues of the day. The “enlightened self-interest” of corporate leaders contributed to a strong economy with a relatively low level of inequality and an expanding middle class. This arrangement broke down in the 1970s, however, as increasing foreign competition and two energy crises led to spiraling inflation and lower profits. In response, the corporate elite waged an aggressive (and ultimately successful) assault on government regulation and organized labor. This success had the paradoxical effect of undermining the elite’s own sources of cohesion, however. Having won the war against government and labor, the group no longer needed to be organized. The marginalization of the commercial banks and the acquisition wave of the 1980s exacerbated the fragmentation of the corporate elite. No longer able to act collectively by the 1990s, the corporate elite was now incapable of addressing issues of business and societal-wide concern. Although increasingly able to gain individual favors from the state, the elite’s collective weakness has contributed to the political gridlock and social decay that plague American society in the twenty-first century.

Using Simmel’s external threat–internal cohesion hypothesis, I argue that a group that succeeds in nullifying the threat that it faces will tend to become increasingly fragmented as a consequence. I illustrate this process by drawing on a study of the changing nature of cohesiveness among the leaders of large American corporations from the mid-twentieth century to the present. I use this historical case to develop a series of propositions about the relations among collective action, network structure, and political outcomes.

This chapter analyzes the relations among bank mergers, changes in boards and their networks, and changes in the global footprint of merging banks. We examine all mergers involving U.S. banks with foreign branches between 1986 and 2004. We find that while the largest banks have become even larger through mergers, their boards have stayed roughly the same size with the same pattern of connections, leaving banks relatively less central in the intercorporate network. And while global banks previously had more globally oriented boards, this is no longer the case, as the link between board networks and strategy has become more tenuous. Because global banks were particularly prone to merging, the average commercial bank in the U.S. is now far more domestically oriented than firms in most other industries. American banks have thus become more domestic at the same time that the rest of American industry has grown much more global.

The events surrounding the financial crisis of 2008 are well known, and subject to a broad level of agreement. Less accepted are theories regarding the larger context within which this crisis was able to unfold. Much has been made of the financialization of the American economy and the lax regulation of new financial instruments, both of which stem from the trend toward a laissez-faire economic policy that has characterized the United States since the late 1970s. I do not take issue with these claims. Instead, I argue that these developments have an earlier and deeper source: a breakdown in the ability of large American corporations to provide collective solutions to economic and social problems, a phenomenon that I term “the decline of the American corporate elite.” From a group with a relatively moderate political perspective and a pragmatic strategic orientation, this elite, through a series of historical developments, became a fragmented, largely ineffectual group, with a high degree of societal legitimacy but a paradoxical lack of power. I trace the history of this group, from its origins in the early 1900s, through its heyday in the post-World War II period, to its decline beginning in the 1970s and escalating in the 1980s. I argue that the lack of coordination within the American business community created the conditions for the crises of the post-1980 period – including the massive breakdown of 2008 – to occur.

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.

The paper examines the degree of interlocking directorships across the major Eurozone economies. It uses the major stock market indices in France, Germany, Italy, the Netherlands, and Belgium to identify the top of the corporate elite in each country. For the period of 2005–2008, it studies transnational links between European companies. The paper draws attention to a number of features of these interlocks. Firstly transnational interlocks remain relatively low but secondly they do vary considerably. An important issue here is the degree of bilateral integration which is occurring between some countries within the Eurozone, for example France and Belgium, and the degree to which other countries, most notably, Italy are increasingly disconnected, whilst the two most powerful economies, France and Germany, are very weakly connected. This variability reflects a series of structural divides between big business in the Eurozone that makes it difficult for this corporate elites to be cohesive at the European level.

Two core assumptions set network theory apart from other perspectives and direct research into specific strategic and organizational topics.