Luck, Systematic Luck and Business Power: Lucky All the Way down or Trying Hard to get What it Wants without Trying?
| Published date | 01 December 2013 |
| Author | Andrew Hindmoor,Josh McGeechan |
| DOI | 10.1111/j.1467-9248.2012.00981.x |
| Date | 01 December 2013 |
| Subject Matter | Article |
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P O L I T I C A L S T U D I E S : 2 0 1 3 VO L 6 1 , 8 3 4 – 8 4 9
doi: 10.1111/j.1467-9248.2012.00981.x
Luck, Systematic Luck and Business Power:
Lucky All the Way Down or Trying Hard to get
What it Wants without Trying?post_981834..849
Andrew Hindmoor and Josh McGeechan
University of Queensland
Keith Dowding argues that business is systematically lucky in a capitalist society because it often gets what it wants
without trying due to the way society is structured. But what ought to count here is not only how society is structured
but why it is structured in certain ways and this means grappling with the dynamics of the structure–agency dialectic.
Dowding overestimates the degree to which business is systematically lucky and underestimates the degree to which
it is powerful because he fails to recognise the way in which business can shape the structures whose existence allows
it to get what it wants without trying.We examine the position of two very different groups: British farmers and US
bankers. British farmers were systematically lucky in the post-war years in the sense that they benefited from events
outside their control. The US banking sector was lucky in 2008 because it was ‘too big to fail’. But the banks had
previously used their power to shape this outcome.
Keywords: business power; luck and power; banking
How powerful is business in capitalist societies? This is a hardy perennial of political science:
a question that has engaged the interest of Marxists, pluralists, neo-pluralists, rational choice
theorists, historical institutionalists and, no doubt, sundry others (for reviews see Dunleavy
and Dryzek, 2009; Smith, 2009). In a series of books and articles, Keith Dowding offers a
fresh perspective on this debate by arguing that business is not simply powerful but lucky.
‘Capitalists are ... lucky that what is in the interests of government is also, by and large, in
their interests as well’ (Dowding, 1996, p. 74). Business is systematically lucky because
government wants economic growth and therefore has good reasons to adopt policies that
encourage business investment. As a result, business can get a lot of what it wants without
trying. The late Brian Barry (2002; 2003) disagreed – forcefully. He argued that what
Dowding called luck was really just power. Governments only give business what it wants
to avoid being punished. To characterise this relationship as one of luck is, Barry argues, a
mistake.
At first glance, this looks like a disagreement over words. Dowding says systematic luck
and Barry says power but they nevertheless both agree that governments need business
investment to sustain political support and this means that business can get a lot of what it
wants.Whether this relationship is then described as one of luck or power would not seem
that important. But there are important issues at stake here about how power is measured
and defined and how we go about explaining why some groups are more successful than
others. As we also argue in the final part of the article, the debate between Dowding and
Barry bears directly upon the distinction conventionally drawn within the business power
literature between instrumental and structural power. The debate between Dowding and
Barry is worth taking seriously and deserves a second look.
© 2012 The Authors. Political Studies © 2012 Political Studies Association
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In this article we argue that Dowding draws the wrong conclusions from his own
argument about the difference between power and systematic luck and that Barry is right
about the power of capitalists but for the wrong reasons. We agree with Dowding that
there is an important difference between getting what you want because you have tried
and getting what you want without trying and that it is reasonable to describe this as the
difference between being systematically lucky and being powerful. But if, as Dowding
suggests, business is systematically lucky because of the way society is structured, we need
to examine why society is structured in certain ways. We need, in other words, to
examine not simply choices within structures but the dynamics of the structure–agency
dialectic and the ways in which structures are created, perpetuated and occasionally
transformed by agents (Archer, 1995). Our basic claim here is that business can exercise
power by fashioning structures whose existence allows it to get what it wants without
trying. In other words, it is precisely because we share Dowding’s conviction that trying
is important that we think Dowding overestimates the degree to which business is
systematically lucky and in effect underestimates its power. To this extent we think Barry
is right to be wary of Dowding’s claim that business is systematically lucky rather than
powerful. But we think Barry is right for the wrong reasons. There is a meaningful
distinction to be drawn between systematic luck and power. Indeed it is because business
is powerful that it appears to be lucky.
At the end of a public lecture on astronomy, Bertrand Russell was famously challenged
by a member of the audience: ‘what you have told us is rubbish: the world is really a flat
plate supported on the back of a giant tortoise’. Russell then asked: ‘but if that is the
case then what is the tortoise standing on?’ To which the person replied: ‘you’re
very clever but it’s tortoises all the way down’. Dowding argues that business is system-
atically lucky because it can get what it wants without trying and that it gets what
it wants without trying because of the way society is structured. But are capitalists
lucky all the way down? We argue that this depends on whether (and to what extent)
they have shaped the structures that subsequently allow them to get what they
want without trying. We consider two very different examples. British farmers were
systematically lucky because they were lucky all the way down. In the 1940s they
got what they wanted because they benefited from structural changes over which
they had no control. The contrasting case is that of the US banking industry. In
2008 when the credit bubble burst, the banking industry’s losses were effectively
socialised. The industry did not get everything it wanted. Some bonus payments
were capped and some executives were sacked. But the banks got a lot of what they
wanted and they got it without trying because the government believed that the banks
were too big to be allowed to fail. Does this mean that the banks were systematically
lucky? In our view it does not. By 2008 the banks had become too big to fail at least
in part as a result of regulatory changes for which the banks themselves had lobbied. ‘The
[banking] system that failed so miserably didn’t just happen. It was created. Indeed many
people worked hard – and spent good money – to ensure that it took the shape that it
did’ (Stiglitz, 2010, p. xxiv). The banks were not systematically lucky in 2008. They were
powerful. They tried hard to ensure that they did not have to try hard to get what they
wanted.
© 2012 The Authors. Political Studies © 2012 Political Studies Association
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A N D R E W H I N D M O O R A N D J O S H M cG E E C H A N
Luck, Systematic Luck and Power
Power is a central concept within the study of politics. Dowding and Barry have each made
significant contributions to our understanding of the nature and distribution of power.
Dowding’s work on power reflects his broader commitments to methodological individu-
alism and rational choice theory. His commitment to methodological individualism means
that he is averse to explanations of social phenomena given in terms that cannot be reduced
to propositions that contain references to individuals alone and not social wholes
(Dowding, 1991, p. 10). As such he is suspicious of arguments in which power is attributed
to particular kinds of structure – such as, for example, capitalism per se rather than to
individual capitalists. In his view structural power arguments fail to recognise that power is
exercised through individuals who must choose to act in certain ways. In order to study
power within society we should therefore focus upon actors’ resources: the information
they possess; the legitimacy they enjoy; their ability conditionally and unconditionally to
change other actors’ incentive structures; and their reputation – and the choices they make
about how and when to deploy these resources (Dowding, 1991, pp. 70–9; 1996, pp. 54–5;
2003, pp. 312–6). This analysis can be facilitated by the use of a rational choice framework
in which it is assumed that actors are rational utility maximisers.
Dowding is quite clear in arguing that business – whether acting individually or
collectively – is powerful. Businesses possess considerable resources which they can use to
secure policy concessions from governments. This is the kind of business power described
by Robert Dahl (1961, pp. 240–3) in Who Governs? when he suggests that businesses in
New Haven attempted to influence the political process through campaign contributions,
lobbying and threats to exit and invest elsewhere. It is also the kind of business power
analysed under the label of rent seeking within rational choice theory (see Hindmoor, 2006,
pp. 155–74, for a review). In Dowding’s (1996, p. 5) terms, business possesses considerable
‘social power’ because it can deploy its resources to...
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