Chambers of commerce as interest groups

Chambers of Commerce as Interest Groups Joaquim MOLINS Universitat Autònoma de Barcelona Working Paper n.8 Barcelona 1989 Introduction ORGANIZATION AND ARTICULATION OF INTERESTS IN SPAIN (1978-1988) The subject of interest groups in Spain and their relationship to the political system is so complex that any attempt at detailed analysis should be the work of a research team. The objectives of this paper are much more modest. Our aim is solely to contribute to the considerations of some conceptual and methodological problems involved in the study of interest groups and to advance some tentative hypotheses about Chambers of Commerce as interest groups. In contrast to the output of other European countries and particularly the United States, the bibliography on interest groups in Spain is extremely limited. There are a number of reasons for this. First of all, studies of this type are by no means as common in the field of Political Science in Spain as they are in Anglo-Saxon countries. As will be seen somewhat further on in this paper, most of the existing studies stem from other disciplines, particularly sociology and history. But Political Science's late blooming interest is not simply an academic matter. Instead,. it is closely related to the very birth and development of the contemporary Spanish State. Moreover, the incidence of neocorporatist theories should not be overlooked, particularly as regards the most recent studies on interest groups in Spain. We must recognize that when the academic and scientific discussions of the mid-Seventies were exported to Spain they triggered a spate of theoretical and empirical studies which provide an essential basis from which to develop our work, but also present some methodological differences which I think deserve mention here. 1. Interest groups and the discontinuity of the Spanish political system Any study of interest groups in Spain must necessarily take as its principal frame of reference the discontinuity of Spain's political system during the past century. Professor Linz' well-known work on the subject is highly significant (1). In the introduction, he reminds us that in this period of time Spain experienced, "a liberal oligarchic monarchy, a military dictatorship, a short-lived democratic republic, almost forty years of the Franco government and now a democracy in the process of consolidation". The lack of a stable system of political representation and the parallel development of. a party system made it extremely difficult to study the structure of pressure groups and their relationship to political parties and the State's decision-making process. There is little background information available and this makes it hard to advance any working hypotheses. A good deal has been written about the history of the Restoration period, but none of it from the specific angle of Political Science. The material that does exist reveals that there are two different schools of thought as regards the connection between the political elite and interest groups. one school, the leading spokesman of which is Varela (2), maintains that they were autonomous while the other school, whose leading advocate is Tuñón de Lara (3), insists that there were close links between the political elite and the interest groups. Although there are more studies on the organization and actions of interest groups during the II Republic, they are basically descriptive and only provide some rough hypotheses about their actions. Social conflict and political polarization combined with the short-lived Republican experience prevented interest groups from ever really consolidating. The special nature of the channels of political representation that existed during the Franco regime conditioned the study of interest groups and their relationship to the political system at that time (4). The absence of political parties caused the different "families" belonging to the regime to be treated as interest groups. However, as Professor Linz points out, "in many ways these two groups (ACNP and Opus Dei) do not fit the normal definition of the term "interest group" because they are political-ideological groups rather than representatives of social interests" (5). A subsequent work by Hermet (6) shares this viewpoint. "The inner circles of the Franco regime are not permanent committees for different interest groups. They are a complex mixture, not so much specifically based on socio-economic elements as on their formula for government and the type of person they produce" (7). Moreover, some studies point out that the political elite of the Franco years were linked by economic interests (8). In addition, there is other work (9) which reflects the pluralist ideas that inspired the SCRC's Comparative Policy Committee at the end of the Fifties, which, as we shall see later on, had a decisive influence on studies of interest groups. There are also a few theoretical studies on the subject of representing interests (10). 2. Neocorporative theories and the study of interest groups Reestablishment of democracy meant a radical change in the channels of political representation available to the various social groups and in the role played by these groups. It is generally acknowledged that political parties not only occupied the political limelight and monopolized the media but were also the focus of academic interest during the first stage of the new system. It was not until the 1980's and the onset of social pacts and the debate on neocorporative practices that the various social groups began to attract the interest of the academic world. Professor Linz inspired two studies (11) which use a pluralistic approach to analyze how labor organizations and employers' associations were established within the context of political transition. But the most extensive body of work on interest groups examines them within the context of neocorporatism (12) and the organization and behavior of various professional groups (13) Schmitter is considered the father of neocorporatist theories. His first articles (14) signaled the start of considerable production on this subject, which is still being added to today (15). In Spain a team led by Professor Prez Diaz participated in a study on "The Organization of Business Interests" which embraced most of the Western industrial countries (16). The introduction to this study states: "This is not an illustration or empirical example of collective corporate action viewed from traditional angles such as the theory of pressure groups or lobbies" (17). The study aimed to differ from traditional pluralistic theory in its point of departure and even claimed to advance a new concept. Other authors (18) appear more cautious when defining the conceptual framework of new studies. They favor an evolutionary theory somewhere between pluralism and corporatism, carefully pointing out the unanswered questions that might prevent the consolidation of these new tendencies. Nevertheless, they are all agreed on the need to carry out specific studies on interest groups and the relationships between them and the decision-making process or processes in the various public administrations. On an international level the controversy about the significance of corporatism and its relationship to pluralism is intense. Almond (19) and Berger (20) can be considered among the leading exponents of the two opposing stances. In examining the general lines of various corporatist studies, Berger makes it clear that he does not agree with the studies produced in the 1970's. "The main problem is how interests are shaped by socioeconomic, historical, organizational and political processes. And the problem of the kinds of organization, far from being a question of tacit adaptation to the circumstances, is analyzed as part of the actual problem of defining these interests" (21). "They analyze the particulars of the national historical background, the role of the State and the inherent instabilities in the way the system of representation operates." (22). On the other hand, Almond writes on these same studies with the viewpoint that corporation is a variety of pluralism and maintains that the differences of focus stem from the change in academic and cultural perspective: in the Sixties these studies were cultivated by U.S. academics working in the field of Political Science. Now most of the work on the subject is coming out of Europe and being done by sociologists and historians. Nevertheless, the root of the controversy lies in the hypothetical differences in methodology. Almond defends the pluralists from the typical accusations: on the one hand, that they paid little or no attention to history, government policies and intra-organizational factors; on the other, that they considered all groups as equals in terms of their power to exercise pressure and also defended the "social status quo". To a certain extent, this controversy has been repeated in the recent debate on the role of the State (23). As Robert Salisbury (24) points out, since the Seventies the field of Political Science has been adjusting its studies on pressure groups to the changing conditions in advanced capitalist societies and incorporating the theoretical and methodological advances of the scientific community. Recently Salisbury (25) has produced a work in which he applies the theory of conflict and coalition to the study of interest groups. There have also been attempts to compare "pressure" in Western democracies and genuinely Socialist countries (26). Other new and interesting approaches include applying theories of political choice to pressure groups (27) as well as interacting studies on the political elite and interest groups (28). Only with a detailed knowledge of the different interest groups and how they are organized, how representative they are and how they influence public decision-making will it be possible to advance in the discussion about the theoretical and methodological differences between pluralism and corporatism. Chambers of Commerce in Catalonia 1.- Chambers of Commerce as a subject of study The impact of neocorporatist theories and Spain's experience with social pacts makes the various social powers and their activities a subject of undeniable interest. Media reports about interest groups and their real or imagined activities are beginning to appear and there is a noticeable increase in books that tend to popularize the lobbyist's activity or profession (30). I personally feel that Spain lacks empirical studies on pressure groups. Some of the recent work on employers' associations (31) mentions the role of the Chambers of Commerce and this should be contrasted with earlier studies on the subject. Examining the role of Chambers of Commerce first implies formulating a series of working hypotheses which should be tested throughout the study (32). Chief among them are whether or not Chambers of Commerce are superimposed on employers' associations, duplicating their activities and serving the same clientele; whether the two types of organizations represent the same interests and whether there is a possibility of conflict between them. Secondly, and given the fact that membership in Chambers of Commerce is compulsory, a study of what causes certain companies to be active members and what kind of incentives the Chambers give them should replace the usual study on the "logic of membership". Thirdly, and because of their peculiar legal status as public corporations and the fact they are consulting agencies, we can not only identify their positions on different pieces of proposed legislation and on the actions of the various public administrations but can also measure their capacity to pressure these administrations. Last but not least, we can identify the connections between the political elite and Chamber of Commerce leaders. 2. - Chambers of Commerce and the CEOE (Spanish Employers' Association) (apropos of the discussion on Chamber of Commerce income) The discussion on the 1989 Budget Act gave us an opportunity to test one of our first working hypotheses. Chamber of Commerce income largely consists of a percentage of corporate taxes (until recently this was 2%). Furthermore, a small surcharge on the licenses required to engage in industrial or trade operations goes to the Chambers, although this accounts for a very small percentage of their total income. The announcement that the proposed budget for 1989 (33) would cut this percentage to 1% triggered an interesting press campaign and caused the various Parliamentary groups to take sides on the issue, thus providing us with fresh information. We shall begin with a summary of how Parliamentary discussions and the press campaign were timed. ITable1 Press Campaign Reports opposed to the Chambers: 26-IX, 10-X, 25-X Reports in favor of the Chambers: 30-IX, 12-X, 7-XI Unbiased reports: 11-X, 16-X, 31-X, 10-XII (Final agreement) The foregoing tables and information gleaned from meetings with members of the Barcelona Chamber of Commerce enable us to establish the nature of the negotiations between the various key organizations and identify their respective pressure activities. Confrontation between the Chambers of Commerce and the CEOE dates back to before the Budget was presented and was caused by the refusal of several companies to pay their dues to the Chamber (34). It was then that the government announced its plan to cut the fee in half. There was an immediate public outcry. Most of the Parliamentary groups announced that they were in favor of maintaining the status quo. It should be noted here that the Socialist members of Parliament proposed an audit of the Chambers' financial statements which was virtually identical to the proposals made by AP and MC. A first attempt at pressure and negotiations involved the Chambers of Commerce, the Government and three Parliamentary groups and resulted in recognition of the need for audits. At the same time the press began reporting on the Chambers' "surplus treasury" (35). Negotiations between the key organizations continued and when amendments were presented to the Senate, the Socialists presented one that was “justified for technical reasons” and proposed that the percentage be increased to 1.5% with 0.5% going to a Chamber of Commerce Export Promotion Plan to be proposed to the Council of Chambers and regulated by the Ministry of Economy and the Treasury. The Socialists' proposed amendment coincided in part with the amendments proposed to Congress by AP and MC, but further proposed increasing Government Control over Chamber of Commerce operations. It should also be noted here that two of the new groups proposing amendments (DC and PL) justified their proposals with a supporting text, the content of which was literally identical to that of the Socialists. This is a typical example of pressure group action (here, the Chambers of Commerce themselves) when faced with pending legislation. The Chambers negotiated directly with the Government and also through the Opposition groups in Parliament while the media voiced opinions both for and against the issues involved. R. Martinez' study (36) contains information on the business community's attitude towards the pending legislation. The use of different channels of contact are shown below (37): Table2 3. - Chambers of Commerce: Their organization and powers Although some authors trace their origins to the trade guilds that existed before the Liberal revolution, Chambers of Commerce in Spain first appeared as such during the 19th century Restoration (39) and coincided with the first attempts at voicing special interests (40). In the beginning membership was not compulsory, but legislation enacted at the beginning of this century (41) established what were to be the essential legal characteristics of the Chambers: they were to be public corporations and membership would be compulsory. This legislation established that they would be "consulting agencies to the Public Administration" and "shall necessarily express their opinions on projects, trade agreements, reform of Customs duties, +X'Xsals and ordenances, the Commercial Code, social legislation and, in general, all issues in which the State affects the interests they represent" (42). When the II Republic was proclaimed the Chambers issued a statement that illustrated their position vis-a-vis the new regime: "The Chambers of Commerce, Industry and Navigation act autonomously to promote, protect and defend the interests they represent. They are by nature official corporations and as such are at all times on the side of the politically constituted powers" (43). Throughout the Republican era the Chambers made various public declarations which expressed their concern over the socioeconomic situation (44). In the 1940's the vertical trade union attempted to integrate the Chambers of Commerce, but without much success. However, the Chambers were weakened and placed under Government Control (45). In the 60's, when the economy began to be less heavily regulated, the Chambers were permitted to elect their own representative bodies (46). The history of the Chambers of Commerce has not always developed parallel to the history of the rest of Spain. The traditional protectionist interests of Catalan industry contrasted with the free trade practices in other sectors of the economy. The link between the political elite and the employers' associations has also been historically different. In the mid-Sixties one sector of the business community acted through the Economists' Association (Círculo de Economía) to renew the Chambers' governing bodies (47), although without much success as regards the Catalan Employers' Association (Fomento de Trabajo). Although not many studies have been made on the Catalan Employers' Association (48), it can still safely be said that its interests did not always coincide with those of the Chambers of Commerce and that its publicly expressed attitudes towards Catalan autonomy differed from the views of the Chambers (49). When the Statute of Catalan Autonomy was passed, the State powers over the Chambers of Commerce were transferred to the Catalan Government, the Generalitat de Catalunya. (50) The last Chamber of Commerce elections were held at the end of 1986. The next elections are scheduled for the end of 1990. 3.1. Chambers of Commerce: Their authority and jurisdiction We shall not make a detailed study of the Chambers' authority and juridisction here, but shall instead give a general description of their principal functions, stressing those directly related to representing and defending particular interests. Certain powers are delegated to the Chambers of Commerce and exercised on behalf of the Government. Among them are the powers to issue certificates attesting to the origin of merchandise, legalize signatures and invoices and issue temporary export certificates. These are all things that facilitate international trade and have traditionally been the province of the Chambers of Commerce which also promote foreign trade, arrange trade fair exhibits and organize trade missions, either independently or in collaboration with the Administration. Members of the Chambers of Commerce who take part in these activities directly benefit from belonging tc the Chamber. Other operations involve offering logistic support to promote business activities (the Chambers of Commerce provide technical and legal information, arrange training programs, provide information on new markets and technologies). Use of these services varies greatly and depends a good deal on the size and type of the individual business firm. Big businesses have their own facilities for these services, while the very smallest businesses are barely aware of the services offered by the Chambers. Only a small percentage of Chambers of Commerce voting members directly benefit from any of these activities. As part of their general business promotor activities, the Chambers of Commerce are partners in the mixed public/private corporations which manage the trade shows in every Spanish city. A good example of this is the Barcelona Trade Fair, the President of which is a member of the Chamber of Commerce's Executive Committee. The Barcelona City Council and the Generalitat de Catalunya are also partners in the Fair. Recently the Barcelona Chamber of Commerce and other public corporations have begun appearing before the Barcelona Court of Arbitration as arbitrators in equity (52). But it is their role as consultants to the Administration which makes them the subject of study as interest groups. Legislation (53) empowers them to "appear before all types of authorities, agencies and corporations" and “exercise actions and file all types of appeals with executive and judicial authorities” (54). This means that the Chambers should be consulted on all pending legislation related to economic and social issues. They are also entitled to -and actually dofile declarations relative to local government budgets, city planning projects and fiscal regulations (55). 3.2. Chambers of Commerce: their internal structure and representation Table 2 Table 3 Table 4 Table 5 Table 6 Table 7 Table 8 Table 9 Table 10 Table 11