There should be some control over money for politicians, so that they have enough to operate but are not unduly influenced by donors.
A paper prepared for the Organisation for Economic Co-operation and Development (OECD) in 2016, entitled Financing Democracy, identified the role of money in democratic politics as both an enabler and a risk to fairness. As has been pointed out (6.3.5.4), a democracy cannot function properly without an effective opposition – but funding and access to resources are necessary for this to happen. On the other hand, money can be used to give one party an unfair advantage over another. The OECD paper goes through the arguments for and against different types of funding. Its main findings are as follows:
· Finance is a necessary component of the democratic processes.
· Money enables the expression of political support.
· It enables competition in elections.
· However, money may be a means for powerful narrow interests to exercise undue influence e.g. newly elected officials maybe pressured to "return the favour" to corporations.
· Infrastructure and urban planning are particularly vulnerable to the risk of policy capture.
· Consequences include inadequate policies that go against the public interest.
For a democracy to work properly, people should be informed of the policies of the politicians whom they are asked to support. During an election, this is usually done by advertising and the advertisements have to be paid for. Campaign funding is therefore essential. There are various ways of doing this, and the report has produced “a Framework on Financing Democracy for shaping the global debate, providing policy options and a mapping of risks”.
There are democratic benefits in a system of government grants that incentivise political parties to attract a large number of individual members. Political parties and election campaigns can be funded by allocating government funds, by membership fees paid to political parties, by political donations, or by a combination of these methods. The OECD paper analyses several options for government funding, including equal amounts for each party above a threshold size, or payments based on past votes received, or proportional to party membership, or proportional to a party's total income including donations up to a modest ceiling.
Governments can also bar certain organisations from giving, and this can put opposition parties at a disadvantage. For example, the British Conservative Party tried to increase its chances of staying in power by legislating to reduce the funding available to the Labour Party – as described in an editorial, The Guardian view on fair play in politics: a Conservative coup:
“Under the guise of requiring more democracy and transparency, the bill makes it harder for unions to collect membership fees and allocate them for political causes.”
The Labour Party relies on trade-union funding, whereas the Conservative Party gains most of its funding from wealthy individuals and corporations.
Many European countries restrain political donations but wealthy donors can give large amounts in Britain, as described in George Monbiot’s article: Billionaires bought Brexit – they are controlling our venal political system. There are limits on how much can be spent on British elections, though, as the Full Fact charity has reported: Democratic deficit? The rules on election spending.
Political donations are much higher in America following the Citizens United vs. FEC ruling, which “effectively opened the door for corporations and unions to spend unlimited amounts of money to support their chosen political candidates, provided they were technically independent of the campaigns”.
The ‘Citizens United’ ruling was highly contentious. Much has been written about its impact, including Jane Mayer’s book, Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right. It describes how billionaires – most notably the libertarian Koch brothers – have influenced the American political system.
Political donations can be made in order to promote a particular ideology or legislative outcome, but in some cases the giver is seeking financial benefits. Such concessions are the subject of the next sub-section (6.4.5.2).
(This is an archive of a page intended to form part of Edition 4 of the Patterns of Power series of books. The latest versions are at book contents).