Matti Ylönen: "The balance of power between labour and capital has shifted to benefit capital"

Matti Ylönen is a lecturer of World Politics and Global Political Economy in the University of Helsinki. We sat down with Matti to discuss the power of consultants in politics, mirroring today's political economy through the history of ideas and the monopolisation of digital platforms.
Matti Ylönen studies the power of consultants and public affairs companies in politics, the monopolisation of digital platforms, as well as corporations as political actors.



Your interests lie in evolutionary economics, corporate power, tax havens, global development and the political role of consultants and lobbyists. Can you describe what you are currently working on? 

My broadest long-term research interest revolves around how different forms of private power is exercised. I study the role of businesses as political actors from different perspectives, including tax planning and the politics of regulation. A few months ago, my new book on the power of public affairs firms in Finnish politics was also published. This book continues my long-standing research on the role of private consultants in politics. While the topic has been broadly researched by media studies scholars, as a political scientist, I am interested in delving into the aspect of power in even more detail.

We found that there are several factors that have contributed to the rise and growth of the lobbying industry in the 2010s. On the one hand, the Finnish business environment has changed from a previously corporatist system, which consisted of a few prominent firms that all knew each other, to a more international system. The corporatist Finland was organised by interest groups negotiating with each other, while now, the international system relies on networks of a broader range of actors.

Moreover, the increasing number of political advisers that typically change every four years have created a recruitment pool of consultants for public affairs firms. The cut-back measures in the media industry have also made journalists more prone to entering the lobbying business for which they are useful since they have detailed information on how media works in practice. 

These changes are strongly connected to economic globalisation: Finnish companies have been sold to foreign owners and foreign companies have moved to Finland. Moreover, there is a general atmosphere in which regulations in many industries have been removed or it is assumed that they will be removed in the future. In the sectors in which deregulation is expected to occur, strong lobbying interests are involved, including by large foreign companies.

Can you tell us more about your teaching in the GPC Programme in the  University of Helsinki? 

In the GPC programme I teach the course ‘Explaining the Scope for Differences in Global Political Economy’ and ‘Governance of the World Economy and its Future’.  In my teaching, I seek to incorporate classic works as a way of understanding the roots of different issues and ways of thinking. I am highly interested in examining current debates by mirroring them through the history of ideas. For example, I could ask students to analyse current topics through the lens of 18th century frames of industrial policy debates and to identify similarities and differences, as well as to analyse the contexts in which concepts arise.

So, which theories of political economy do you see as useful for understanding the times that we are now living in? 

I do not strongly adhere to any specific school but I do believe that the heterodox field of thought provides us with various useful tools for analysis. For example, in my book on digital economy and the power of corporations from a few years ago, I incorporate the analysis on the monopolisation of large corporations by Thorstein Veblen from the early 19th century. In my teaching, I use a wide variety of works from John Maynard Keynes to Immanuel Wallerstein and contemporary scholars. For example, Keynes’ The Economic Consequences of Peace (1919) is still relevant today in understanding the dynamics of peace, war and national debts.

Marxist economic theory can be used to analyse the driving forces of capitalism and how corporations constantly need new profits and new consumers. Rosa Luxemburg’s theorisation on the need to bring new areas of life into the realm of capitalism in order to increase profits, is also powerful. Moreover, the work of J.K. Galbraith and early 20th century thinkers can be useful to understand the debate on the regulation of digital monopolies. For example, in her 2017 article; Amazon’s antitrust paradox, Lina Khan studies early 20th century antitrust and anti-monopoly debates in this context. These are just some examples of the variety of sources I employ in my lectures.



How do you see the global political landscape at the moment? What changes have you seen in the past years?  

This is a fascinating and challenging time to teach global political economy because we are clearly in the midst of a transformation. However, being in the eye of the storm, we can not name the transformation yet, since we do not know where it will lead. The pandemic and the Russian invasion of Ukraine have accelerated the process of the decoupling of the economy. By this, I refer to the breakdown of supply chains and the regionalisation of the economy.

The ruptures and problems in supply chains signal a struggle for resources in the future. Such contestations will surely intensify due to climate change and to the constantly growing need for rare materials of which there is a limited amount on earth. Another factor contributing to this is the longer term trend of the erosion of the hegemony of the US and the rise of China and other emerging economies.

At the same time, we are faced with the growing importance of  the digital economy. I have researched the rise of the platform economy and its tendency for monopolisation, which exemplifies the "winner takes it all" phenomenon: those who are able to gain a dominant position in a certain sector on a platform through which money, data and the business flows, also collect the rewards in a disproportionate manner.  

You speak about monopolisation but in political debates we hear a lot of talk about free markets. So, is the free market ideology and narrative a myth, is there no such thing as a free market economy?

The free market is often used as a slogan, but for me, this slogan and the idea of markets as either free or not free, is too blunt a tool. The rules of the market will always favour one entity or actor over another. We will never have rules that would allow for the market to treat a small shoemaker and a large corporation like Amazon in the same way. Inevitably, the question of who can enter and function in the market and under which conditions are political decisions. For this reason, it is important that the debate is not only left to experts but that active public debate also occurs.

So if we think about lobbying and the other aspects that we have discussed, towards which direction do you see the political decision-making heading? 

Previously, politics was organised through the conflict between labour and capital but as the amount of areas to be regulated constantly increases, the business sector is hiring more lobbyist, while the opposing force doesn’t grow in a similar way. Therefore, for example in the case of Finland, while the central labour unions take a stand on many issues, they do not have the power to confront the corporate interests. They do not have their own army of lobbyists. This means that the balance of power between labour and capital has shifted radically to benefit capital.

Democracy should never be understood as just processes and formal institutions but rather we should also ask who has the resources to create knowledge in our society and what kind of knowledge is being produced and disseminated. Here we come to the domain of the resources of independent researchers, research institutions and the ability of the civil society and journalists to function properly.

Last question, is there any good book or movie that you would want to recommend?

How China Escaped Shock Therapy: The Market Reform Debate (2021) by Isabella M. Weber is a recent book that very much impressed me. It interestingly discusses China in the 1980s and the internal debates on whether or not to embark on similar shock therapy ventures of de-regulation and privatisation as those implemented in Poland and Russia after the Cold War.  

Another book that I highly recommend is How to Make an Entrepreneurial State, Why innovation needs bureaucracy (2022) by Rainer Kattel, Wolfgang Drechsler, and Erkki Karo. This book is a highly important contribution on the role of well-functioning public governance and the Entrepreneurial State, which is a concept that economist Mariana Mazzucato has made famous during the past few years.