The small firm continues to pervade political debate, proposed as an important part of the answer to issues including globalisation, competitiveness, unemployment and economic growth. The Political Economy of the Small Firm by Charles Dannreuther and Lew Perren suggests that the small firm, considered as discursive construction, is able to do so much because it is “transient and contested, varying by place, time and political purpose” (p. 1). The book aims to trace this discursive construction and its subsequent exploitation through an historical analysis of political debate.
The early part of the book provides a useful context through the development of an analytical framework that draws on a range of theoretical ideas, including Institutional Theory, Varieties of Capitalism and the Regulation Approach. This framework allows the authors to analyse the findings produced by a rigorous linguistic analysis of 200 years of British Parliamentary debate, with Britain considered as a liberal market economy. This is a key value of the book's approach, taking a long historical perspective and allowing the analysis to more clearly appreciate the construction of the concept of the small firm in different socio-historical and political contexts. This analysis identifies three key eras: 1803-1969, the era of the shopkeeper and exclusion of the small firm; 1970-1980, the construction of the small firm; and 1980-2004, the exploitation of this small firm construct. Detailing each of these eras and their implications constitutes the bulk of the book.
The authors demonstrate how, prior to the 1970s, the small firm was largely excluded from political debate, excepting the occasional mention of shopkeepers, for example in debates around post-war rationing, but these were still relatively small in number. Small firms were more a concern of local politics and “small firm” as a category lacked definition and forms of voice and representation, especially in a context of increasing centralisation and government coordination. During this time the political significance of small firms and their exclusion was in epitomising “the traditional, parochial, exploitative and inefficient economy that the modernisers sought to eradicate” (p. 96). When small firms did eventually emerge in the political debate in the 1960s it was in relation to tax loop holes.
The book's second era, tracing the subsequent explosion of interest and political establishment of the small firm is centred on the Bolton Committee and its 1971 report, characterised here as a technocratic-led exercise. This committee was formed from the emergence of a small business voice, eventually in the form of the Confederation of British Industry (CBI), and louder calls for revision of the tax system. This increasing attention and pressure led to the creation of an independent inquiry to be focused predominantly on helping dynamic, innovative small firms. The book explains how the Bolton Committee accordingly produced a functionalist definition of the small firm in its terms of reference that was heavily influenced by the agendas of the political elite, legitimised the CBI as a representative voice of small business and framed these firms in terms of their contribution to the wider economy. The small firm construct that was produced was romanticised, picturing small firms as entrepreneurial and fundamentally independent and allowing the construct to be incorporated into a growing prominence in political debate where it maintained an “ideological ambiguity [that] allows it to be used politically” (p. 121).
The authors then demonstrate how Bolton's romanticised and functionalist construction of the small firm was taken up by politicians and the section detailing the third era explores the “invention, capture and exploitation of this idealised constituency” (p. 130). This demonstrates the different ways in which this construction of the small firm has been deployed by different political agendas, from the individualism of Thatcher to the proposed inclusion and social justice of New Labour. This demonstrates the construct's durability and flexibility but, further, the authors argue for the small firm as a “central instrument in the transformation of state-society relations in the UK” (p. 130), focusing on individualisation and capitalist accumulation, as well as normalising the liberal market economy. For example, the book relates how the increasing concerns of reducing regulation in relation to small firms has introduced the means by which primary legislation could be amended by secondary legislation not requiring the assent of Parliament. In this way, the book extends the reach and relevance of its analysis to generate insights into a broader understanding of political economy in Britain.
Small firms have become viewed as central to Britain's knowledge-based, liberal market economy and part of an increasingly broad range of political debates. Further, Dannreuther and Perren argue that “the political construction of the small firm has helped to sustain the British capitalist regime over the past 200 years” (p. 164), both in its exclusion pre-1970 and its subsequent creation and exploitation. Their long exclusion left small firms without definition and without regulation, allowing poor pay and working conditions, whilst their later exploitation in political discourse has allowed politicians to legitimise their activities and ambitions, for example through the ways in which “[r]isk was rhetorically dissipated from the centralised state to the individual through the device of small firm policy” (p. 167).
While there are limitations in the case study's focus on British political debate, the authors point to some national differences and early proponents of small firms in some European countries such as the Catholic church. They also suggest that, in coordinated market economies, small firms are constructed more in relation to other social actors and, clearly, this is an area requiring further research and development. A weakness for the book lies in the alternative concept of the “entrepreneur” and related terms, which were excluded from the study (e.g. as potential synonyms for small firms) because such terms occupy “very different semantic spaces” (p. 54). The authors suggest that the construction of the entrepreneur is more individualistic than the small firm which is more collectivistic. However, the distinction suggested between the two concepts is not clearly explained or evidenced and the ways in which they overlap and influence one another is not always clear, for example in the discussion of individualisation as well as in some of the book's supporting references. Further, the authors do not deal in any detail with the political discourse around enterprise culture, although it is acknowledged that the small firm construct helped to maintain “the hegemonic project of the enterprise state” (p. 172).
Overall, this book is well-written and clearly argued with a strong methodological and theoretical foundation. It provides fresh, fascinating insights and innovative perspectives on what continues to be an important and relevant discussion. It is a valuable book for all those engaged in policy and research on small firms.
