Friday, June 13, 2008

A Modest Proposal on Political Funding

Political parties in a liberal electoral system need money. Indeed anyone who has spent any time with professional politicians will know that the one thing they like more than applause is money. Money buys promotional opportunities, it allows them to publish political information (what was once called propaganda), it pays for staff, for office equipment, phone calls and so on. Money makes it possible for politicians to promote their agenda to the public effectively.

Under current conditions it is almost inevitable that the main contenders for political power will gravitate towards the small number of donors who can provide them with large sums of money. Political activity costs more as party membership declines while a shrinking membership also reduces party revenues. As aggregators of political contributions by individuals, trade unions are important investors in the political system but they pale into insignificance when compared with the private donors so beloved of the three main parties.* Given their pivotal role in sustaining the activities of the main parties, it is reasonable to assume that these large-scale private investors will want to have some sort of influence on party policy, or that they will favour those parties that most closely conform to their agenda. While the purchasing of honours is one symptom of this dependence on rich individuals, it is the tendency of the main parties to conform with the wishes of these major investors that should worry us most.

After a series of funding scandals we have heard renewed calls for the state support for political parties. At the moment the idea seems to be to allocate public funds on the basis of electoral performance. This seems inadequate as a response. Though it will strengthen the position of the main parties relative to the major donors, there is no guarantee that it will lead to a political system that is more responsive to the electorate. Indeed, America shows how quite high levels of public subsidy can support a political system that reliably favours a tiny minority of large-scale private donors.

What would work better than the state allocation of political funds? The best suggestion I have seen is for each tax-payer to receive a rebate on their bill that could be allocated to the political party of their choice. Each voter would have the same sum to spend promoting political activity. and political parties wouldn't be required to register with the state, of course. They'd just have to register if they wanted to receive funds via this route. NGOs and civil society groups could create political campaign bodies that would promote their agenda in the political arena, whether or not they fielded candidates.

(The idea of a discretionary contribution by tax-payers comes from Thomas Ferguson's Golden Rule: Investment Theory of Party Competition and the Logic of Money-driven Political Systems. But it would be unsafe to assume that this post accurately summarises his position ...).

By breaking the link between votes cast and political funding this approach would encourage voters to provide financial support to groups that most closely addressed their concerns - concern over 'wasted votes' forces many of us to vote for parties that are the 'least bad' of those parties considered to be electorally viable, rather than for parties whose policies we actually agree with. The major parties would retain formidible advantages, but would be faced with effective competition for public funds (and therefore for access to public debate) by new entrants. Actually voting for these parties would remain problematic - but political activity enabled by this money would help new entrants to overcome voter concerns. This more open forum for public debate would of course provide opportunities for anti-democratic parties of various stripes. But it would also force a greater degree of responsiveness on the major parties, or else foster new parties that are willing to address issues of substance and thereby undermine the appeal of these anti-democratic groups.

In the context of the current two-party system, Labour and the Conservatives will naturally compete for private funds to support their activities. Their competition for votes will never be allowed to make them unacceptable to the constituents that they absolutely must win over - the major private investors in the political process. We can therefore look forward to an ever increasing emphasis on the 'character' of political leaders, and to political campaigning that restricts itself to matters in which the major backers have little or nothing at stake. Those looking for an explanation as to why the political classes are now almost hysterically silent about the structure of the British economy might begin by asking who benefits from the current arrangements and the role they play in party funding.

This move would by no means mark the demise of the money interest. Private investors will continue to be extremely important political actors in a capitalist society. But they will no longer be able to hold veto power over those parties that enjoy sustained access to the public. Political discussions could be expected to include contributions from those who wish to see the current arrangement reformed or made anew. How loudly we hear from those who wish to see a new political settlement in Britain will depend on our willingness to make their voices more generally audible.

Of course, we need to establish how much political activity we want to fund in this way. Current levels of expenditure by political parties could be matched by this method of funding without costing very much at all - we could pay for a much higher level of political activity for sums that would remain individually trivial. I haven't done the arithmetic, but I will do if I have more than say 3 comments to this post, preferably not from the same person.

*This is true even if the unions provide the bulk, or a significant proportion, of the funding for one of the main parties, as we have seen under New Labour. In the United States unions provided the post-war Democratic party with the bulk of its funds until the mid-seventies, while managing to do little more than to protect the rather modest achievements of the New Deal era. The reasons for this are complex, and I don't propose to go into them in detail here. But there is an obvious problem with aggregating political decisions - the aggregators can come to have strong incentives to maintain arrangements that benefit themselves but not those on whose behalf they act. Robert Brenner has written about the ways in which the Democrats contained the unions in this piece in the New Left Review.

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