What Influence Does Wealth Have Over Politics?

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Republished with permission.
Source: The Anarchist Library


The short answer is: a great deal of influence, directly and indirectly.

State policy in a capitalist democracy is usually well-insulated from popular influence but very open to elite influence and money interests. Let’s consider the possibility of direct influence first. It’s obvious that elections cost money and that only the rich and corporations can realistically afford to take part in a major way. Even union donations to political parties cannot effectively compete with those from the business classes. For example, in the 1972 US presidential elections, of the $500 million spent, only about $13 million came from trade unions. The vast majority of the rest undoubtedly came from Big Business and wealthy individuals. For the 1956 elections, the last year for which direct union-business comparisons are possible, the contributions of 742 businessmen matched those of unions representing 17 million workers. This, it should be stressed was at a time when unions had large memberships and before the decline of organised labour in America. Thus the evidence shows that it is “irrefutable” that “businessmen contribute vastly greater sums of money to political campaigns than do other groups [in society]. Moreover, they have special ease of access to government officials, and they are disproportionately represented at all upper levels of government.” [David Schweickart, Against Capitalism, pp. 210–1]

Therefore, logically, politics will be dominated by the rich and powerful — in fact if not in theory — since, in general, only the rich can afford to run and only parties supported by the wealthy will gain enough funds and favourable press coverage to have a chance. Of course, there are many countries which do have labour-based parties, often allied with union movements, as is the case in Western Europe, for example. Yet even here, the funds available for labour parties are always less than those of capitalist supported parties, meaning that the ability of the former to compete in “fair” elections is hindered. In addition, the political agenda is dominated by the media and as the media are owned by and dependent upon advertising from business, it is hardly surprising that independent labour-based political agendas are difficult to follow or be taken seriously. Unsurprisingly, many of these so-called labour or social-democratic parties have moved to the right (particularly since the 1980s). In Britain, for example, the New Labour government which was elected in 1997 simply, in the main, followed the policies of the previous Conservative Governments and saw its main funding switch from unions to wealthy business men (sometimes in the form of “loans” which could be hidden from the accounts). Significantly, New Labour’s success was in part dependent on support from the right-wing media empire of Rupert Murdoch (Blair even consulted with him on policy, indicating his hold over the government).

Then there are the barriers involved once a party has gained office. Just because a party has become the government, it does not mean that they can simply implement their election promises. There are also significant pressures on politicians from the state bureaucracy itself. The state structure is designed to ensure that real power lies not in the hands of elected representatives but rather in the hands of officials, of the state bureaucracy which ensures that any pro-labour political agenda will be watered down and made harmless to the interests of the ruling class.

To this it must be added that wealth has a massive indirect influence over politics (and so over society and the law). We have noted above that wealth controls the media and its content. However, beyond this there is what can be called “Investor Confidence,” which is another important source of influence. This is “the key to capitalist stability,” notes market socialist David Schweickart. “If a government initiates policies that capitalists perceive to be opposed to their interests, they may, with neither organisation nor even spitefulness, become reluctant to invest [or actually dis-invest] in the offending country (or region or community), not if ‘the climate for business is bad.’ The outcome of such isolated acts is an economic downturn, and hence political instability. So a government ... has no real choice but to regard the interests of business as privileged. In a very real sense, what is good for business really is good for the country. If business suffers, so will everyone else.” [Op. Cit., pp. 214–5]

Hence Chomsky’s comment that when “popular reform candidates ... get elected ... you get [a] capital strike — investment capital flows out of the country, there’s a lowering of investment, and the economy grinds to a halt ... The reason is quite simple. In our society, real power does not happen to lie in the political system, it lies in the private economy; that’s were the decisions are made about what’s produced, how much is produced, what’s consumed, where investment takes place, who has jobs, who controls the resources, and so on and so forth. And as long as that remains the case, changes inside the political system can make some difference — I don’t want to say it’s zero — but the differences are going to be very slight.” This means that government policy is forced to make “the rich folk happy” otherwise “everything’s going to grind to a halt.” [Understanding Power, pp. 62–3] 

David Noble provides a good summary of the effects of such indirect pressures when he writes firms “have the ability to transfer production from one country to another, to close a plant in one and reopen it elsewhere, to direct and redirect investment wherever the ‘climate’ is most favourable [to business]... [I]t has enabled the corporation to play one workforce off against another in the pursuit of the cheapest and most compliant labour (which gives the misleading appearance of greater efficiency)... [I]t has compelled regions and nations to compete with one another to try and attract investment by offering tax incentives, labour discipline, relaxed environmental and other regulations and publicly subsidised infrastructure... Thus has emerged the great paradox of our age, according to which those nations that prosper most (attract corporate investment) by most readily lowering their standard of living (wages, benefits, quality of life, political freedom). The net result of this system of extortion is a universal lowering of conditions and expectations in the name of competitiveness and prosperity.” [Progress Without People, pp. 91–92]

And, we must note, even when a country does lower its standard of living to attract investment or encourage its own business class to invest (as the USA and UK did by means of recession to discipline the workforce by high unemployment) it is no guarantee that capital will stay. US workers have seen their companies’ profits rise while their wages have stagnated and (in reward) hundreds of thousands have been “down-sized” or seen their jobs moved to Mexico or South East Asia sweatshops. In the far east, Japanese, Hong Kong, and South Korean workers have also seen their manufacturing jobs move to low wage (and more repressive/authoritarian) countries such as China and Indonesia.

As well as the mobility of capital, there is also the threat posed by public debt. As Doug Henwood notes, “[p]ublic debt is a powerful way of assuring that the state remains safely in capital’s hands. The higher a government’s debt, the more it must please its bankers. Should bankers grow displeased, they will refuse to roll over old debts or to extend new financing on any but the most punishing terms (if at all). The explosion of [US] federal debt in the 1980s vastly increased the power of creditors to demand austere fiscal and monetary policies to dampen the US economy as it recovered ... from the 1989–92 slowdown.” [Wall Street, pp. 23–24] And, we must note, Wall street made a fortune on the debt, directly and indirectly.

This analysis applies within countries as well. Commenting on Clinton’s plans for the devolution of welfare programmes from Federal to State government in America, Noam Chomsky makes the important point that “under conditions of relative equality, this could be a move towards democracy. Under existing circumstances, devolution is intended as a further blow to the eroding democratic processes. Major corporations, investment firms, and the like, can constrain or directly control the acts of national governments and can set one national workforce against another. But the game is much easier when the only competing player that might remotely be influenced by the ‘great beast’ is a state government, and even middle-sized enterprise can join in. The shadow cast by business [over society and politics] can thus be darker, and private power can move on to greater victories in the name of freedom.” [Noam Chomsky, “Rollback III”, Z Magazine, March, 1995]

Economic blackmail is a very useful weapon in deterring freedom. Little wonder Proudhon argued that the “Revolutionary principle ... is Liberty. In other words, no more government of man by man through the accumulation of capital.” [quoted by Jack Hayward, After the French Revolution, p. 177]



Freedom – Equality – Solidarity


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