Money does not have a hold over politics

Steve Davies

March 17, 2020

In the last decade or so there has been an ever more vocal concern, amounting to panic, over the influence of money and donations on politics. The common perception is that elections and politicians are effectively bought and sold by the people and organisations that give donations and contributions to campaigns.

This would mean that ideas and the quality of candidates, policies and grassroots campaigning, are of secondary importance. What ultimately matters, it would seem, is how much money you have. This, in turn, means that the sources of that money control the political agenda.

The causes and arguments they support will get attention and will be politically successful while those that they do not fund (usually, it is assumed, because they are against their interests) will languish or fail. If money is what determines success in politics, then the political process will be dominated by and work in the interests of the well-heeled.

These will be wealthy individuals but, more importantly, institutions with large resources such as corporations but also trade unions and confederations or organisations of smaller firms or interests. This is a vision of a politics that is dominated by vested interests in other words.

The concern about the influence of money on the political process became particularly acute following the United States Supreme Court decision in the Citizens United case, which determined that corporations (the term understood to include entities such as trade unions and corporate non-profit organisations as well as profit-seeking companies) were legal persons with the same rights as actual physical persons, including free speech.

This was widely seen as a decision that handed over control of politics to large corporate interests. Concerns of this kind are not expressed only in the United States however and are found in many countries, not least the United Kingdom.

The complaint is often made by people seen as being on the progressive or left side of politics and alarm about the role of private money is often seen as being one of the big issues for contemporary left-wing politics. In reality, the same argument is made by people from other parts of the political spectrum, so this is not simply a concern of one section of it.

Among the populist right, there is a widespread belief that the political system is controlled by globalist firms and individuals pushing a socially liberal and globalist agenda. The pattern of paranoia and obsessive interest in certain individuals is found among both kinds of political activist.

The American left has turned Charles Koch into a manipulator who is corrupting American democracy but the same kind of role and control is ascribed to George Soros by people on the populist right on both sides of the Atlantic.

Classical liberals and moderate conservatives also have these concerns. For them, the policy debate is dominated by vested interests who thwart free-market ideas and promote a particular intellectual agenda, again working through the mechanism of money.

There is a general belief that money matters in politics and that it determines the course and content of politics. The first part of this is undeniable. Clearly, money does matter. It is also obvious that there are indeed what we may call political investors, individuals and organisations who stand to gain or lose from the outcome of the political process and therefore try to push it in a certain direction or away from another one by investing in politics.

As well as people motivated by self-interest, there are others whose motivations are ideological and not reducible in this way. This is clearly the case with both Charles Koch and George Soros for example. What does not follow from that is the further claim that therefore political investors drive the outcome of political argument and debate or set the limits of what can and cannot be discussed.

That is a claim that needs support from actual evidence, not least the outcome of elections and the kinds of policies and arguments that are raised and put forward in political debate. Here, the evidence is very clear: while money is an important factor, it is actually not the determinative one or even the most important.

Other things matter more when you come to explaining how and why people vote the way they do or why politicians and political parties run or particular platforms or make the arguments that they do.

This should become clearer if we think about what it is that money actually does; in other words, what the mechanism is by which it is supposed to direct the content and outcome of politics. Supposedly, politicians and parties are bought by donors who make campaign contributions as well as funding things like political infrastructure.

It is, however, the campaign contributions that hold centre-stage. What, though, are they spent on? When people complain that politicians are bought, they do not usually mean that a simply bribe has been handed over, for deposit in a bank account.

They mean that the politician’s campaign has been funded and the (often unspoken) assumption is that the best-funded candidate will win. Most of these contributions are now spent on two things. The first and largest is television advertising.

Since the 1960s in the US and the 1970s access to television has been the main way that politicians communicate with the public. For reasons both technical and to do with the way the industry is organised, this is very expensive.

The growth of social media has undermined the formerly dominant position of television in political communication but has in its turn spawned an industry of public relations experts who claim to be masters of the dark art of using targeted advertising on platforms and manipulating Twitter to advance their clients’ agendas or make trouble for there opponents.

All this, again, comes with a hefty price tag. The problem is that the evidence for the effectiveness of these forms of communication is slight and what we have increasingly suggests that their effectiveness, whatever it may have been, is diminishing.

Recently, we have seen an archetypal demonstration of the reality that money cannot simply buy political success. In the Democratic primary elections on Super Tuesday this year, Michael Bloomberg spent $500 million of his own money and got an almost zero return in both votes and delegates.

Senator Joe Biden, written off as a lost cause a few months ago and so strapped for cash that he did not bother to spend any money in several states, had a convincing victory. This included comfortable wins in states where he had spent no money and where consequently there was no advertising and no use of social media.

Nor is this a one-off. Four years ago Hilary Clinton spent $4 for every $1 spent by Donald Trump and yet, as we all know, he was the winner. In the Brexit referendum in the UK in 2016, Remain outspent Leave by a considerable margin and yet it lost. In the subsequent election in 2017 the Conservatives outspent Labour by a margin, but actually lost seats and votes where it mattered.

All this empirical evidence suggests that we should question the belief that money determines the outcome and content of elections, at least in the gloomy and extreme form that we often find. If the argument is that the candidates who have the most money will normally win, one major exception can be explained but several ones, all in major contests cannot.

This all leads to the refreshing conclusion that, while money certainly helps, it is not enough by itself. To win you also need to have a candidate and arguments or policies that resonate with and speak to key groups of voters.

You require an effective campaign using old fashioned methods of communication such as public speeches, door-to-door canvassing and leafleting. We can see this in the cases of both Trump in 2016 and the Labour party in 2017.

Trump was widely derided for his reliance on large public rallies but it turned out that these were highly effective in mobilising his base and getting his message across. In 2017, it was public meetings and old-fashioned door-knocking that turned out a body of new voters for Jeremy Corbyn and Labour.

Subsequently, in 2019, it was an effective and focussed campaign by the Conservatives that undid Labour’s previous revival, along with their own errors. All of this should cheer up the people who have been wailing that money has bought our politics.

The evidence increasingly is that it is an old-fashioned argument and public communication that excites and motivates voters and that ideas rubbished by the entire establishment can still be successful.

Some respond by saying that the outcomes were still determined by money except that it was dark or concealed and covert. This is close to a circular argument in which the conclusion is assumed at the start. The critical point is that it cannot be disproved since ‘dark money’ like ‘dark matter’ is invisible and undetectable except by its results. Maybe, though, something else is causing those results?

The current gloom is, in fact, bad for those who believe it and makes them politically less effective. For one thing, if money determines who wins and your side doesn’t have it why even try? Apart from defeatism, thinking that money is the only key will also lead to bad tactics and strategy, with much resources simply wasted on communications that are actually ineffective.

You can actually see the quadrennial US elections as a device to get politically motivated billionaires to waste their money and to transfer money from donors to the advertising and public relations industries. Above all, the increasingly mistaken obsession with money and its influence provides a ready-made excuse for political failure and stops people from looking at what they might have got wrong.

As long as that is the case they won’t improve. This is true, as indicated earlier, for people of all political persuasions and, perhaps, everyone needs to think a bit less about money and up their game in other ways.


Written by Steve Davies

Dr Steve Davies is Head of Education at the Institute of Economic Affairs.


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