Chapter 10

The Architecture of Stratification: Social Class and Inequality

Corporate Interlocks

The ruling class in this country is quite homogenous: similar family and educational backgrounds, similar levels of attainment in government and business. Such homogeneity provides members of the ruling class not only with increased opportunities for social contact but also with increased opportunities for sharing knowledge and mutually beneficial activities.¹

Retired government leaders are often appointed to corporate boards. Government officials frequently call on business leaders for advice. Persons of wealth are routinely invited to become U.S. ambassadors. Former cabinet members become highly paid business consultants. Top corporate executives are often given cabinet posts or other advisory positions within the government. Such traffic in personnel has become so heavy that Congress had to pass a law setting time limits and restricting permissible contact between ex-government officials and their successors.

Certain prestigious professions have also been able to take advantage of class connections. A few years ago, in response to reports that doctors' incomes were falling, several bills were introduced in Congress that would give doctors new ways to make money.² One bill relaxed restrictions on doctors' ability to operate laboratories and own companies to which they can refer patients and proposed to allow them to set their own fees for Medicare patients. Another limited the amount of money malpractice victims could be awarded in lawsuits against doctors.

Ironically, at the same time that Congress was attempting to improve the financial well-being of middle- and upper-class physicians, it was fighting (unsuccessfully) to block a bill that would increase the minimum wage.

Members of the ruling class often act as corporate interlocks, serving simultaneously on the boards of directors of several large corporations.³ A study by a Senate subcommittee on government affairs found that, of the top 245 large corporations in the United States, 123 shared at least one board member with, on average, 62 of the remaining 122 corporations. For instance, Morgan Bank shared directors with such corporations as Ford, Eastman Kodak, IBM, Procter & Gamble, Sears Roebuck, General Motors, General Electric, Bethlehem Steel, and Prudential Insurance.⁴

The individuals who function as corporate interlocks are in a position to exercise influence over several major firms simultaneously. Because credit is a crucial resource for almost any large corporation, for instance, the inclusion of a banking executive on its board of directors can help ensure adequate financing in the future.⁵

Although people are forbidden by law to serve on the boards of competing corporationsóFord and General Motors, for instanceóeven legal corporate interlocks still can have a substantial impact on the economy and subsequently our personal lives. Interlocks reduce competition among corporations in general. Thus, a relatively small number of corporate giants have come to dominate the economy. Through this domination they have obtained tremendous political and economic influence.

What is important about this inner circle from an institutional perspective is that, instead of being concerned with the interests of a single organization, these companies are unified in their concern for the long-term interests of business as a whole. They come together as a community, sharing similar values and goals.⁶

And when individual members of this inner group find their way into positions of political influence, they can speak for the interests of the entire corporate world rather than the narrowly defined interests of one corporation.

¹Eitzen, D. S., Jung, M. A., & Purdy, D. A. 1982. "Organizational linkages among the inner group of the capitalist class." Sociological Focus, 15, 179-189.

²Gottlieb, M. 1995. "Plan would give doctors new ways to make money." New York Times, October 31.

³Mizruchi, M. 1996. "What do interlocks do? An analysis, critique, and assessment of research on interlocking directorates." Annual Review of Sociology, 22, 271-298.

⁴United States Senate Committee on Governmental Affairs. 1978. Interlocking directorates among the major U.S. corporations. Washington, DC: U.S. Government Printing Office.

⁵Useem, M. 1978. "The inner group of the American capitalist class." Social Problems, 25, 225-240.

⁶Domhoff, G. W. 1983. Who rules America now? A view from the eighties. Englewood Cliffs, NJ: Prentice-Hall.