Quiet Politics and the Power of Business: New Perspectives in an Era of Noisy Politics *

Unpacking the Concept of Salience

Culpepper argues that his “framework emphasizes the advantages of managerial

organizations under conditions of low political salience. . . . Battles over issues of high salience force managers to seek interest group allies and persuade public opinion, which is why business organizations lose many high profile fights.” ⁸ As Culpepper himself points out in his discussion of executive pay, ⁹ issues may move from low salience to high salience. An example would be the issue of EU membership in the United Kingdom as discussed in the article by Magnus Feldmann and Glenn Morgan. A survey conducted by the polling organization YouGov in the United Kingdom in March 2014 found that when asked to list their top three concerns in the next general election, only 13 percent of adults mentioned Europe. ¹⁰ Yet since 2015 and the Conservative election victory on a manifesto that promised an in/out referendum on the European Union, Brexit has become the defining high-salience issue of British politics. Further it has followed the predicted route in the sense that the voice of pro-Remain business has been frequently drowned out by a range of Brexit-supporting individuals, MPs, and interest groups. Noticeably, it proved impossible to shift the issue back into the domain of quiet politics even with claims from the European Union, various Conservative politicians in the May government, and business organizations that the Withdrawal Treaty and the accompanying Political Declaration required complex detailed technical work that could not be properly conducted in the glare of continuous transparency and noisy legislative politics.

In the article by Mach, David, Ginalski, and Bühlmann on Switzerland, the authors provide two examples of issues that shifted from the sphere of quiet politics to that of noisy politics. The first was the issue of executive pay that emerged following the collapse of Swissair in 2001 and revelations about the high remuneration of managers, even in cases of obvious failure. A popular proposal entitled “Initiative against Fat-Cat Salaries” was raised in 2006 and, after a period of gathering the necessary 100,000 signatures, was debated in Parliament. Business opposed the initiative but was ineffective in its opposition, and in March 2013 the initiative was accepted by 67.9 percent of the voting population. A similar although much smaller defeat for business came with an initiative about restricting foreign workers in 2014, which was supported by the Swiss People’s Party.

In the article by Ibsen, Ellersgaard, and Larsen, the focus is on the alliance between Danish employers and trade unions in manufacturing and how both parties sought to keep negotiations over collective bargaining and other areas of the labor market within the sphere of quiet politics, although doing so was problematic and created a clear category of losers. The authors examine a number of issues where efforts to secure deals through quiet politics were rejected by the trade union members after the salience of particular elements of the deal and the negative effects on particular groups were revealed by the media and opponents within the trade union movement. As salience grew, noisy resistance to the agreements reached by business and the trade unions through quiet politics also grew and led to the defeat of the proposals. These conflicts were a lesson to the leading trade union in the negotiations: it needed to be more careful to avoid being drawn into the arena of noisy politics by ensuring that it took into account the potential losers on its own side, who could be mobilized to oppose measures if their salience was raised.

In their article comparing two FDI-dependent economies, Ireland and Hungary, Dorothee Bohle and Aidan Regan argue that quiet political bargains between multinational corporations and the state underpinned each country’s industrial-enterprise policy regime, which was sustained even when noisy politics threatened to undermine it. In the Hungarian case, the authors argue that the large-scale privatization and sell-off of utilities and other companies to foreign owners led to growing disillusion with the governments of the 2000s, as pay remained low and jobs were dependent on decisions made at corporate head offices outside Hungary. Efforts to ameliorate these consequences by facilitating easy credit to boost personal consumption made Hungary highly vulnerable to the global financial crash of 2008. The currency collapsed, and debts held in foreign currencies such as the Euro and the dollar by the state, banks, and individuals became increasingly onerous. The rise of Fidesz as a nationalist party led by Orbán potentially raised the salience of foreign capital’s role in that process. The authors argue that Fidesz, in government from 2010, has sustained the FDI growth regime and the favorable environment for foreign MNCs, while assuaging nationalist concerns by sponsoring the emergence of a new Hungarian-based business class in various sectors that were vacated by foreign capital. Orbán conducted a noisy nationalist politics increasingly focused on cultural and immigration issues while keeping the core of the FDI growth regime insulated from nationalist criticism in the sphere of quiet politics. Thus multinationals continued to make clear what they required in Hungary in order to continue to grow their investments, and agreement on upgrading the skills of the workforce and therefore their wages provided a common basis for MNC-government cooperation in the sphere of quiet politics. A similar continuity of the quiet politics of the FDI industrial-enterprise regime is described in the Irish case. Here, again, the noisy politics of the financial crisis and severe austerity measures were not allowed to threaten the basic FDI growth model. Contrary to Hungary, Ireland had maintained a national bourgeoisie that controlled local banks, financial institutions, retail, and utilities and benefited from the FDI regime, so that even when the financial crisis hit, there was no nationalist backlash against foreign MNCs.

Overall, the articles reveal that salience is socially constructed through agenda-setting power and bottom-up mobilization. Policy issues are not inherently quiet or noisy, although the probability of noise is lower the more technical an issue gets. But even technical issues can become noisy (and distorted), like the tripartite breakdown in Denmark in 2012 as shown by Ibsen, Ellersgaard, and Larsen in this issue. It is therefore important in the current context to pay attention to how issues move from low to high salience and from quiet to noisy politics. Actors within the sphere of quiet politics may find it hard to sustain this position under a variety of conditions. Scandals can make issues more salient, as can broader crises, most notably the global financial crash. Those who are excluded or lose out as a result of the deals reached in quiet politics can influence policymaking by drawing it into the domain of noisy politics and using populist tropes about “establishment conspiracies” to undermine the actors within the sphere of quiet politics, as happened in the United Kingdom with the Brexit debate. The rise of populism is particularly challenging to quiet politics, although, as the Hungarian example shows, it does appear possible to endorse the discourse of “the people versus the elite,” while insulating a core set of policies that are not populist from noisy politics. Finally, it is clear that high and low salience indicate not just polar opposites but a dimension along which issues move and where noisy or quiet politics varies in extent. Thus the noisy politics of Brexit and the high salience of EU membership permeate the whole of the UK political system and have generated uncertainties across multiple policy areas, whereas in Switzerland noisy politics over referenda (on immigration and other issues) takes place within a broader, relatively stable political context. Similarly some forms of quiet politics on technical standards are relatively unlikely to become highly salient, whereas the quiet politics of finance as practiced up to the 2008 financial crash always had the potential to increase in salience and become noisy because of the wide range of interests and populations affected by the financial system. Salience and how it varies must therefore be considered in relation to the issues being discussed and their potential for politicization and conflict.

Responses to Increasing Salience and Noisy Politics

Many of the case studies in this issue support Culpepper’s proposition that business interests have to compete on a more equal footing with other interests, once politics becomes noisy. However, just because an issue becomes of high salience and noisy politics it does not necessarily mean that business and its allies in the sphere of quiet politics will lose out. On the contrary, as many studies of the instrumental power of business have pointed out, business has a range of advantages when it comes to shaping public policy. ¹¹ Its financial resources enable it to engage in multiple lobbying efforts with elected politicians and to offer a range of inducements to elected officials to support its proposals. In most countries, there are political parties that present themselves as defenders of business and will therefore also be ideologically predisposed to support business even in conditions of noisy politics. Business interests are often well represented in the press and broadcast media, sustaining a form of ideological hegemony in public debate that favors business-based explanations of crises, crashes, and growth regimes. ¹² The fact that it does not win every policy battle, therefore, does not negate business’s powerful role in shaping and framing public debates.

The articles in our collection, however, go further in analyzing the strategies of business under conditions of noisy politics. Mach, David, Ginalski, and Bühlmann, in particular, suggest that the Swiss business elite is developing a new set of strategies to deal with noisy politics. They draw on the idea of the structural power of business, as opposed to its instrumental power to lobby and shape debates. By structural power, they refer to the ability of capital to decide where and when to invest. Governments continuously take this capacity into account when developing their policies, as so much else in terms of employment, the welfare state, and physical infrastructure depends on capital’s continuing to invest. Although some authors argue that “capital strikes” are based on the decisions of particular firms focused on their own interests, others see such strikes as a collective endeavor, often prefigured by threats and warnings from business associations as well as individual firms about the negative effects on investment of particular decisions. ¹³ Mach and colleagues argue that Swiss business leaders are no longer closely engaged with national politicians, preferring to involve themselves in transnational business circles and associations. Business representatives, rather, have more actively developed a rhetoric of fear to counter demands from the left, trade unions, and environmental groups or from right-wing populist parties that would, according to them, threaten the economy.

Such a strategy, the authors argue, has the potential to unify the Swiss business elite and was successful in shifting popular views on a proposal to increase the inheritance tax (which would have funded a lower retirement age). Business argued that the tax would lead to investment withdrawal, and as a result the referendum proposal was soundly defeated. Similarly, there was widespread support for the state’s bailing out UBS in the immediate aftermath of the global financial crisis for fear of how its collapse would affect the wider economy.

This finding is similar to that of a recent study on Germany. In her discussion of business’s effectiveness in conditions of noisy politics, Eileen Keller describes how EU capital requirements were loosened following a noisy campaign by German banks and businesses. The German banks convinced a wider group of business actors and unions that the issue was important for them as well; in other words, they were able to increase the salience to a wider public of what might have been perceived as a technical issue very specific to banks and their profitability. By framing the debate as one that would affect the availability of credit to small and medium enterprises in the German context, they argued that the capital requirements would have adverse consequences for a larger group of actors. This threat made loosening the requirements more appealing to politicians concerned about enhancing their electoral popularity. ¹⁴

By contrast, the article in this collection by Feldmann and Morgan suggests that such tactics are not always going to work. In the case of the 2016 Brexit referendum, businesses that publicly supported Remain sought to frame the debate in terms of the economic losses that would result from a withdrawal. They developed what Mach and his coauthors call a “rhetoric of fear.” But in the British context, far from being effective, this effort was labeled Project Fear by Brexit supporters and was continually criticized and undermined as a false representation of the situation. A massive effort in the Brexit-supporting press to repudiate these claims was relatively unsupported by any expert opinion, other than a small group of economists clustered around the former Thatcher adviser, Patrick Minford. After the referendum, as the possibilities of a no-deal exit grew, further protestations about the potential damage to the British economy by such a move continued to be undermined as Project Fear. Gradually the discourse mutated into a wholesale dismissal of these economic concerns. In addition, the Conservative Party was seen trying to maintain its traditional pro-business alliances while explicitly espousing what many business representatives saw as antibusiness policies in favor of populist rhetoric about national identity and sovereignty, even if that meant an economic cost. “F**k business,” in the words of Boris Johnson when he was foreign secretary.

In contrast to the Swiss case, in the United Kingdom, the noisy politics of Brexit seemed to disable business associations such as the Confederation of British Industry. Not only was business losing the policy battle; it was increasingly being undermined as the legitimate voice of capital. “Maverick” capitalists such as Tim Martin, the owner of Wetherspoon pubs, were given a platform to articulate their anti-EU views. The ability to make new free trade treaties with growing economies in Asia and with the United States, together with a big boost to infrastructure and scientific research, was increasingly presented as the alternative, even though large companies and most economists saw that the short- and medium-term damage of withdrawal from the European Union could not be compensated for by these measures. Why was the ability of business to leverage structural power and project fear so different in the UK and the Swiss cases? This question leads us to our final argument about the contribution of these articles.

The Changing Structure of Business: Fragmentation and Its Impact

In his original contribution, Culpepper focuses on business as a relatively homogeneous entity that has an interest in quiet politics in order to achieve its goals. What the articles in this collection show is that it is important to problematize business unity and to place it in the context of changing forms of capitalism on global and national scales. The articles examine this issue through two questions. The first question is, Who are the members of the business elites? The second is, To what degree are they interconnected and connected to other actors? From the longitudinal perspective embedded in all the articles, we are able to see that over time, the nature of the business elite changes and with these changes goes a shift in how business engages in quiet or noisy politics.

The article by Mach and his colleagues on Switzerland reveals that as Swiss capitalism became more international in its strategies and in the locations where the various parts of its globally diversified businesses were located, there was concomitant change in the business elite. Key characteristics of that elite in the 1960s and 1970s were that they were predominantly Swiss (male) citizens with law or economics degrees from Swiss universities. They worked for companies that were predominantly Swiss-owned and they participated in Swiss society not just through their management roles but also through their positions in business interest associations, in local politics, and often in the Swiss military. ¹⁵ During the 1990s and onward, as Swiss companies became more internationalized and financialized, the composition of the senior management groups changed. The number of non-Swiss international managers rose; Swiss managers more often had overseas education and experience as well as university-level qualifications in business and management. Their focus was increasingly full-time on their company roles, and their participation in Swiss civil society dropped. Insofar as they engaged with business associations, those groups were increasingly international in scope rather than Swiss. The connections that had made for the depth and strength of quiet politics in Switzerland in the previous period were undermined, making it more difficult for business to keep issues from moving into the terrain of noisy politics. However, what was crucial was that within Swiss business a new unity now existed, built around a commitment to international expansion that in turn improved businesses’ options to exit Switzerland if need be. Unity based on structural power could be usefully employed in the terrain of noisy politics by putting forward a strong unified voice and framing on economic issues (as described in the previous section), enabling it to win a number of referenda that threatened business power.

By contrast, Feldmann and Morgan, drawing from Mark Mizruchi’s framework, ¹⁶ emphasize that the processes of globalization and financialization undermined the unity of British business, which had been on display in its almost universal support for EC membership in the 1975 referendum. In the 2016 referendum, by contrast, although many of the largest firms and business associations supported Remain, a number of businesses supported Brexit, and many others remained silent for fear that they might offend customers or politicians and find their reputations challenged in the increasingly aggressive anti-EU newspapers. The focus on shareholder value had become deeply embedded in British capitalism by the 2000s and had firms increasingly to attend very directly to their own interests, ¹⁷ and if those were not well served by Remain then they were either silent or against. Here divisions between sectors and between firm-level strategies were important. While the mainly foreign-owned car industry had been using the United Kingdom as a point of access to the EU market and had built up supply chain networks reflecting that goal, other manufacturers, such as JCB and Dyson, prioritized markets outside the European Union and were therefore supportive of Brexit. Elements of hedge fund management were supportive of getting out from under the threat of tightening EU regulation over the City of London. Some smaller companies were also resentful of EU regulation and sought freedom from what they perceived as the burdens of EU bureaucracy. Feldmann and Morgan argue that this fragmentation became more noticeable and exacerbated as Brexit moved into the terrain of noisy politics. It was impossible to forge a single business voice in the way Mach and his coauthors describe as occurring in Switzerland. As a result, what had been close relations between government and business, as represented by large firms and the main business associations, became increasingly ineffective and incapable of delivering a business-friendly vote in the referendum or, after the referendum, a business-friendly withdrawal agreement.

The theme of fragmentation is explored from a different angle in the article on Denmark by Ibsen, Ellersgaard, and Larsen. Most important, through their network analysis of overlapping memberships on boards and other important Danish institutions, they show that the sphere of quiet politics is structured in a way that places certain organizations—on the employers’ and the trade unions’ side—at the core of a political elite network. The agreements reached in the sphere of quiet politics involve the inclusion of some groups and the exclusion of others. The consequences are potentially problematic because those excluded may seek to raise the salience of certain issues and draw them into the sphere of noisy politics, where decisions might be reopened and reworked against the interests of the insiders. The authors suggest that these dynamics in turn arise from the sort of growth regime Denmark established in the 1980s, based on the export of high-quality goods, particularly in the manufacturing of engineering machinery. Drawing on Lucio Baccaro and Jonas Pontusson’s discussion of growth regimes, ¹⁸ they argue that the sphere of quiet politics has essentially been dominated by the cross-class alliance of employers and trade unions from those industries, which has sought to manage the competitiveness of their products through controlling wages and investing in technical skills of the workforce. Other trade unions in the public sector and construction have been compelled to follow these agreements, even though they have been excluded from the negotiations, because to do otherwise would damage the Danish growth regime. However, their acquiescence runs the risk that the excluded may at some point decide to engage in noisy politics.

Bohle and Regan take a more explicitly growth regimes perspective in their focus on FDI-oriented growth regimes as central to the quiet politics of both Ireland and Hungary. Like Ibsen, Ellersgaard, and Larsen, they show that the FDI-oriented growth regime involves favoring certain groups and sectors and results in potential for conflict with those who are excluded. In the Hungarian case, FDI-oriented growth around MNC supply chains in car manufacturing was at first complemented by a wider opening of the economy to overseas investment, which left little room for the emergence of a local business community and left employees increasingly at the mercy of foreign investors. Although credit expansion in the 2000s offered some improvement for the local population, the potential for an emerging nationalism and an anti-FDI movement began to destabilize politics, a process made worse by the impact of the global financial crisis on Hungary. ¹⁹ Orbán’s Fidesz party sought to maintain the FDI growth regime by bolstering the technical skills of the workforce and thus moving Hungarian plants up the value chain. Upgrading was expected to lead to improved wages for workers in the FDI sector. At the same time, Orbán balanced the FDI sector with the creation under a nationalist, populist ideology of a local Hungarian bourgeoisie in the nontradable sector, thereby creating businesses more directly dependent on the government.

In the Irish case, the quiet politics around MNCs and the FDI growth regime was accompanied by opportunities for Irish-owned businesses in the financial services, utilities, and nontradable sectors, in part stimulated by easy credit in the 2000s and a consequent consumer and housing price boom along the lines described by Crouch as “privatised Keynesianism.” ²⁰ The financial crash affected this part of the Irish economy directly, and the state’s decision to take over the debts of bankrupted banks led to a severe fiscal crisis, which led to severe cuts to public expenditure and the salaries of state workers. The resultant austerity and crash in property values left many people with negative equity, suffering declining wages or unemployment. Although the cuts inflicted deep wounds in Ireland, the peculiar structure of politics and the electoral duopoly of two moderate right-wing parties—Fine Gael and Fianna Fáil—meant that even the noisy politics of austerity was relatively contained. ²¹ However, the FDI sector remained in the sphere of quiet politics. During the austerity period and afterward it actually became more influential, in part because of the low corporate tax levels that encouraged the entry of a new generation of IT platform-based firms such as Google and Amazon, and in part because of a further upgrading of IT training in Ireland.

The articles in this collection, therefore, point to the need to include, in any analysis of business power and quiet politics, the ways businesses cohere or fragment and at what level. ²² Successful quiet politics requires a consistent business voice; however, it does not require that all businesses are represented. Indeed, it may be that where new or different growth regimes are emerging there will inevitably be some exclusions, while the firms and in some cases the trade unions most central to making the new growth regime work negotiate in quiet to make the model effective. Those outside the arena of quiet politics may lose out in the process and as a result may seek to regain some leverage by dragging issues into the sphere of noisy politics and making them more salient to the wider public. Whether they are able to do so depends on how the benefits of the growth regime are distributed and whether the core actors can maintain control of the ideological frame in which their interests can be equated with the interests of other groups in society. Where fragmentation reaches deep, as is the case in the United Kingdom, business finds it increasingly difficult to be effective in either quiet or noisy politics. Where, as in Switzerland, business can develop new forms of unity given changes in the structure of firms and managers, it can still be highly influential in noisy politics, even if it is less engaged in quiet politics. Understanding these changes in the nature of business is therefore an essential part of rethinking the dynamics of quiet and noisy politics.

Conclusions

The framework developed by Culpepper has been central to the analyses in the articles in this special issue. On the basis of those analyses, we offer three contributions to the framework. First, we show that salience is not an inherent property of a policy area but is socially constructed. Second, we show a variety of strategies by business when they try to keep politics quiet. Third, we show that strategies are affected by the structure of business, which varies across types of capitalism. In general, business does prefer to work in conditions of quiet politics, but the articles in this issue point to the difficulty of sustaining quiet politics in the current period and in certain countries.

The salience of issues to the general public and to politicians can change very quickly for a range of reasons. Business may have to work harder in the future to keep a sphere for quiet politics. It may also have to develop new strategies and tactics to deal with the sphere of noisy politics if this is growing in extent, which seems likely given the rise of populism, antiestablishment movements, social media, calls for transparency, and an overall increased partisanship in politics since the days of “the end of history.” All of these changes are also occurring where the possibilities for business unity are increasingly under threat from the forces of globalization, financialization, and shareholder value. These processes drive the interests of firms and sectors in different directions and make agreement on broad societal issues more difficult. Growth regimes, although they may necessitate cooperation, usually start around a particular set of actors and exclude others. Managing to make a social bloc cohesive and dominant in these circumstances is becoming increasingly problematic, ²³ particularly in countries such as the United Kingdom, which have gone furthest in financialization and globalization. Business unity constructed around the use of instrumental power and quiet politics may be increasingly less viable as noisy politics becomes more dominant. However, by no means does that indicate any absolute decline in business power. Instead it may presage two things. First, the structural power of business magnified and amplified in the public realm may return more directly as an influence on policy. If populism and noisy politics fail to provide the answers they claim, the value of a certain form of business-friendly economic competency that listens to and maintains the confidence of business may be revived. Second, business may decide that it needs to switch venues and be more involved in international settings that have traditionally been strongly characterized by efforts at quiet politics and policymaking through networks of expertise, although here the sort of creeping politicization of supranational institutions such as the EU and the WTO, a process exacerbated by Trump’s antagonism to these institutions, may make a change of venue difficult. ²⁴