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The Corporate Outer Circle Goes to Washington

Trump and the Divided Politics of the Corporate Elite

Trump’s background in business is, by now, very familiar: Trump owns and manages the Trump Organization, a privately held real estate and development conglomerate. The Trump Organization’s control over billions of dollars in assets and thousands of employees make Trump a member of what sociologists call the corporate elite. These wealthy people — mostly white men — direct the nation’s largest corporations and control investment decisions as well as, indirectly, affect where most of the rest of us work and how much we get paid.

Critically, these elites have also long held a central role in American government through the occupation of key elected and appointed posts. For example, nearly 75% of the first Obama administration’s White House advisory committees had at least one corporate director in its ranks. The ties between the corporate elite and the American government — on both sides of the political aisle — have long been so close and so overlapping that some have suggested that our democracy is really run by and for elites.

Putting the Trump administration into this context helps us see a central puzzle: can we actually understand the Trump moment as a conflict playing out between corporate elites on the stage of American politics?

Unlike many past corporate elites in government, Trump is what we might call the corporate outer circle. Trump controls the Trump Organization, yet he lacks many of the trappings of the truly elite in the corporate world — he, for instance, has neither held a coveted seat on the board of a publicly traded Fortune 500 company like General Electric or 3M, nor sat on a major business policy planning group like the Business Roundtable. These boards of directors and policy planning organizations have long been hubs of information and connection in the corporate world.

Meanwhile, now disavowed members of the administration like Rex Tillerson and Gary D. Cohn, and even current Treasury Secretary Steven Mnuchin, are much closer to real insiders — members of the corporate inner circle — with deep formal ties across the corporate community and within crucial business policy planning organizations that formulate corporate responses to pressing social and political problems. Tillerson, for instance, served as CEO and Chairman of the Board of Exxon Mobil and Vice Chairman of the Business Council, a leading policy planning organization for the corporate community. These members of the inner circle have, as recently as 2011, been much more likely to serve on federal advisory committees.

Why are these divisions important? For one, social science research has linked these ties within the corporate world to the politics of individual elites. Members of the so-called inner circle are often more politically pragmatic and forward-looking than elites that remain at the periphery of the corporate world, like Trump and many members of his administration. For instance, in our research, we trace the political strategies of the corporate inner circle since 1980. Using records of political donations, we consider the level of political activity of inner circle elites, how unified their activity is, and what types of political candidates their donations favor. Here, we show that inner circle elites who have more board memberships contribute a higher share of their political donations to incumbent members of Congress, a common measure of political pragmatism.

This relationship between embeddedness in the corporate community and politics exists because, among other things, elites may learn to see their interests from multiple perspectives as they join the boards of corporations in other industries. How does this process work? For example, Andrew Liveris is a CEO and board member of DowDupont. Liveris also serves on the boards of directors of IBM and CitiGroup. Through these three board memberships, Liveris is exposed to the ideas, information, and perspectives of dozens of elites in three different industries. Because of this interaction, elites that serve on multiple boards tend to hold more similar opinions and to enact political strategies that are more pragmatic and forward-thinking in the sense of ensuring the broadest corporate interests.

In this view, Trump and his administration are distinctive in their status as corporate outsiders compared to former members of the Trump team and even compared to members of former administrations (including the Obama administration). Some of these fissures between Trump as a corporate outsider and members of the corporate inner circle may even be playing out publicly. Trump criticized Tillerson, for instance, for his “establishment” views on foreign policy, and clashed with Cohn over the imposition of tariffs. Indeed, the tariff debate continues within the administration along similar fault lines, now with Mnuchin holding the line for “free trade.” Perhaps the most public example of this rift occurred last year when Trump disbanded his business advisory councils after numerous high-profile corporate insiders resigned. Notably, the cascade of resignations included many veteran corporate insiders like Andrew Liveris (CEO of DowDuPont as well as board member of IBM and CitiGroup) and Doug Oberhelman (former CEO of Caterpillar and board member of Eli Lilly, among others).

Viewing Trump and his administration this way delivers two crucial insights into the current state of American politics. For one, the Trump administration has continued the strong pattern of corporate influence in (some might even say dominance over) American government. Second, to understand the current political moment, we might ask not “do elites dominate?” but “which elites dominate and with what consequences?” To answer these questions, we — as citizens and researchers — must have a better understanding of the cleavages that animate the corporate community, for both the insiders that have long steered policy debates, and the outsiders who have risen to power. But, perhaps, we must also raise the most pressing question of all: are these really the questions we should have to ask of our democracy?

Jen Heerwig is an assistant professor of sociology at SUNY-Stony Brook and a Russell Sage Visiting Scholar for 2018-2019. Her work examines the political behavior of elite donors in the American campaign finance system.

Joshua Murray is an assistant professor of sociology at Vanderbilt University where he studies the effects of globalization on the politics of corporate elites.

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Jennifer Heerwig

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