This chapter examines the relationship between business and policy making. It outlines and explores, theoretically and empirically, the mechanisms of business power and influence over policy making. Here the term business refers to private profit-making institutions (firms) and the class of people that own or manage those institutions. The first half of the chapter theorises business power and influence. It argues that both are variable forces in politics. The second half examines changing business engagement, power and influence in the context of British policy making since the 1980s. This period has witnessed a great many policy transformations – a clouding of the boundaries between the public and private sectors, changing business–government relations, fluctuating economic fortunes and economic restructuring. These transformations, the chapter concludes, fail to make sense unless we consider the role of business in British politics over this period.

Business power and the policy process: from plural to privileged interests

The issue of the importance of business power to policy outcomes has divided the main theoretical traditions in policy analysis; most markedly classical pluralism – which suggests that power is diffuse and that political actors operate on equal, or potentially equal, terms – and elite and Marxist writings – which maintain that business is a privileged interest capable of accessing policy making and exercising power in ways not open to other groups. These divisions gave way to a loose consensus from the 1970s, however (see Dunleavy and O’Leary, 1987, ch 7; Marsh, 1995), as even the high priests of classical pluralism, Robert Dahl and Charles Lindblom, came to argue, business is a privileged interest in capitalist democracies:

The biggest shift made by pluralists, in accepting the privileged interest thesis, was their recognition of the importance of structural power to business influence on policy outcomes.