Writers in the late 1950s and early 1960s were struck by the limited development of business organizations in the USA. The groups claiming to speak for the general interests of business were notoriously weak. Both the Chamber of Commerce and the National Association of Manufacturers (NAM) were regarded as highly ideological associations with little to contribute to the discussion of complex policy issues. One authority found substance in the rumour that the NAM was the ‘kiss of death’ for a cause which it supported.1° Neither did trade associations seem stronger. In their magisterial study of the impact of business on American trade policy, Bauer, Pool and Dexter” found that trade associations were accorded little prestige. Business executives regarded the staff of the associations as people incapable of `making it’ in business, while the lobbyists of trade associations were by and large dependent on the goodwill of politicians already disposed to support them. Politicians were more likely to complain about the paucity of information provided by both trade associations, or about the failure of trade associations even to contact undecided Representatives and Senators than to complain about pressure from them. The picture of trade associations painted by Bauer, Pool and Dexter is more of organisations anxiously trying to maintain membership than of organisations exerting pressure successfully on politicians.
The weakness of trade associations and ‘umbrella groups’ representing the general interest of business contrasted with the growth of such organisations in Europe and Japan. The USA lacked interest-group representatives who were recognised by the government, Congress, the media and the public as the authoritative voice of business. Instead, the business organisations of the USA seemed weak, ideological and bitterly divided.
This organizational weakness represented, ironically, political strength. Business organized little to protect its collective interests in the USA in the 1950s because its collective interests were little challenged. A variety of factors contributed to the political strength of business. Opinion polls showed a high degree of public confidence in business executives and major companies. The Eisenhower Administration not only pursued pro-business policies, but at the highest levels was overwhelmingly recruited from the ranks of business executives. In Congress, a pro-business conservative coalition of Republicans and southern Democrats controlled the agenda, and its southern Democrat members benefited from the workings of the ‘seniority system’ under which the most senior members of the majority parties received the tremendously powerful chairmanships of Congressional committees. Moreover, though their legality was sometimes questionable, contributions to the campaigns of both Republicans and Democrats of business executives or stockholders were the most important source of election campaign funds for both parties. A general assault on business was not, therefore, to be feared.
A number of factors in the late 1960s and 1970s convinced American business executives that more vigorous action was needed to protect their collective interests. There was a very sharp decline in confidence in business and business executives amongst the public, exceeding the rate of decline of trust in other American institutions. The balance of power in Congress changed in a way which favoured conservatives less and liberals more, while public-interest. groups seeking legislation protecting the environment and public from harmful side-effects of business activity scored notable triumphs, reflecting a considerable upsurge in their membership, funding and prestige. The Watergate affair brought disgrace to not only President Nixon but also to those business executives who had made illegal contributions to his election campaign, generally under pressure from the Administration and fearful of government harassment if they did not comply. New campaign finance laws both reduced the possibilities for illegal campaign contributions by business executives and created new opportunities for pressure groups to raise funds for election campaigns through the PACs.
The factor which above all else caused alarm in business circles was the increased impact of government regulation. One of the largest-ever increases in government regulation occurred between 1967 and 1976. This entailed not only a fivefold increase in the number of staff employed in the regulatory agencies and a similar increase in their budgets, but also a dramatic increase in the impact of regulation on business. Regulatory agencies had been a feature of American government since the late nineteenth century. Most of the older regulatory agencies had been concerned with the prices and conditions of service of a single industry. The regulatory agencies created in the 1960s and 1970s were generally concerned with the regulation of factors such as pollution and safety which cut across industries, and were often referred to as the social regulatory agencies.
The social regulatory agencies such as the OSHA or the EPA brought the power of federal government to bear on the day-to-day operations of businesses for the first time. Until their creation inspectors encountered by business executives had, by and large, been officials of state governments. The officials of the federal social regulatory agencies were made of sterner stuff than most state officials. The new social regulatory agencies gained a reputation for toughness and even for adopting an adversarial approach to business. Moreover, the regulations evolved by the social regulatory agencies to protect the environment were extremely costly to business, forcing executives to divert a substantial proportion of investment funds to meeting their requirements.
In brief, the growth of regulation in the 1960s and 1970s seemed to business executives to constitute a dramatic and threatening extension of the power of government. Both the cost and extent of regulation seemed likely to increase, moreover, as time passed. New regulatory agencies, and new regulations from them, seemed all too likely to be created because the liberal Democratic triumphs in the elections following the downfall of President Nixon seemed to suggest the future dominance of politicians critical of business. American business executives, for the first time since the New Deal, feared that government posed a threat to interests shared by a wide variety of business, or what might be termed business’s common interests.