Capitalism v. Democracy: Money in Politics and the Free Market Constitution

Capitalism v. Democracy: Money in Politics and the Free Market Constitution

by Timothy K. Kuhner

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Product Details

ISBN-13: 9780804791564
Publisher: Stanford University Press
Publication date: 06/25/2014
Edition description: New Edition
Pages: 376
Product dimensions: 6.00(w) x 8.90(h) x 1.00(d)

About the Author

Timothy K. Kuhner is Associate Professor at Georgia State University College of Law. He teaches mainly in the areas of international and comparative law. Before moving to Atlanta, Tim spent three years as Associate Professor of Anglo-American Law at the University of Navarra in Spain. During this time, he researched the role of money in politics in Western European democracies. Educated at Bowdoin College and Duke Law School, but inspired by foreign viewpoints, Tim brings a wide-ranging, critical perspective to the study of democratic integrity.

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Capitalism v. Democracy

Money in Politics and the Free Market Constitution

By Timothy K. Kuhner


Copyright © 2014 Board of Trustees of the Leland Stanford Junior University
All rights reserved.
ISBN: 978-0-8047-9158-8


The Question Raised by America's Design

THE PRESENT MOMENT HAS ACQUIRED A RARE CONSTITUTIONAL quality, as though the essence of the country has become unstable and is on the verge of being redefined. Some say this is eternally the case—that citizens in a democracy can always exercise their political rights to bring about the changes they desire, and that a degree of instability is in the nature of a system of elected lawmakers. This view fails to admit that these fundamental ingredients—"citizens," "political rights," and "political representation"—are vulnerable to radical shifts, their meanings dependent upon the ideologies of those in power. Democracy is heading towards new meanings whose contours run deep in the waters ahead.

Sensational threats to democracy spring up to the surface and clamor for attention, but a different focus is now required. This is not the time to marvel at the faces of the FBI agents who found $90,000 in Congressman William Jefferson's freezer. Nor is it the time to compare Jack Abramoff's boyish, admiring grin as he shook hands with President Reagan with his disdainful scowl years later as he strode into federal court, prepared to plead guilty to the corruption of public officials. It would be useless to inspect the private wine lockers at the Capitol Hill Club where an engraved plaque once read, "Brent Wilkes"—Wilkes, the defense contractor who contributed to the more than $2.4 million in bribes that Representative Randy Cunningham accepted. Focusing on bribery and other obvious forms of corruption—the rule breakers—recalls the bromide "rearranging the deck chairs on the Titanic."

The gravity of the moment is a function of what is legal, not what is illegal. In order to perceive democracy's vulnerability, we must leave the criminals aside, as colorful as they are, and train our eyes on the nation's present course. What sorts of citizens are becoming most influential and how do they exercise their political rights? Just one couple, the Adelsons, single-handedly prolonged Newt Gingrich's 2012 presidential primary run through $20 million in donations to a pro-Gingrich superPAC. The Adelsons went on to donate an additional $130 million to other political organizations, roughly the same amount that each presidential campaign spent in the 2000 election. One hundred and fifty-nine other individuals, corporations, and interest groups have followed the Adelson playbook, giving $1 million or more. Other, more creative spenders, such as the Koch brothers, have propelled their preferred causes and candidates to prominence through funneling hundreds of millions of dollars into a variety of organizations and candidates. Meanwhile, one nonprofit association, ALEC, has succeeded in having thousands of bills based on its model legislation introduced in state legislatures. Noting that approximately 17 percent of its bills get passed, ALEC bragged to its members that their donations were "a good investment," adding that "nowhere else can you get a return that high." In 2010, AT&T, Pfizer, and Reynolds American agreed, contributing between $130,000 and $398,000 each to ALEC's treasury.

And what about the course that lawmakers are setting for political representation? During the 2009 debate on health care legislation in the House of Representatives, more than a dozen officeholders gave speeches ghostwritten by lobbyists who bundle contributions for their reelection campaigns. In a time of tornados, record-setting heat, and melting icecaps, lawmakers postpone emissions regulations and weaken environmental protections at the behest of entrenched companies. As with natural disasters, so too with financial ones. On the same day they voted on the financial overhaul bill, legislators collected campaign money from the financial firms with the strongest interest in the outcome. The same pattern occurs in other policy areas, as members of important congressional committees tend to take in 10 percent to 30 percent more donations during their tenure, "rais[ing] money from many of the same industries affected by their work."

All of this is perfectly normal, predictable even. Everyone is doing exactly what the system encourages them to do, propelled forward by its momentum and incentives. Because political parties, campaigns, and political speech are almost exclusively privately financed, politicians and parties compete for funds, and the private sources contributing those funds exploit the situation in order to press their interests. As of the 2012 elections, it costs approximately $1 billion to become president, $10 million to become a senator, and $1 million to become a member of the House. Candidates and officeholders depend on friendly donations and outside spending; and to the same severe extent, they fear unfriendly donations and spending. So long as such dependency and fear are operative, the political power of wealthy donors and spenders, corporations, superPACs, lobbyists, and special-interest groups is secure.

Beyond casting donors and spenders in the role of political master, however, candidates and officeholders' tremendous demand for political funds casts donors and spenders in the role of slave. A growing body of evidence shows that limits on donations and expenditures are, in essence, limits on the amount of money that politicians will extort from citizens and businesses. Even former senators have confessed that "donors ... feel shaken down" and that some dynamics behind money in politics are "more like extortion than ... bribery." The discovery that donors and spenders are both political predators and political victims strengthens the cause of campaign finance reform.

Whether they are spending money to pressure officeholders to enact favorable policies or spending money to appease officeholders who might otherwise punish them with unfavorable policies, donors and spenders feel tremendously insecure. What is to stop their competitors from outspending them? How do they know when they have employed sufficient funds to successfully press or protect their interests? Candidates face similar insecurity. How can they be sure that their cash reserves and campaign spending are sufficient to beat out their opponents? Because there is no limit to the total amount of money that campaigns or outside groups can raise and spend, an arms race ensues.

Spending on U.S. congressional and presidential campaigns topped $6 billion in 2012, up from $5.3 billion in 2008, and $4.2 billion in 2004. While each presidential campaign raised over $1 billion in 2012, Obama and McCain raised little more than $1 billion together in 2008. And yet that amount set a record in its time, outstripping the $646.7 million raised by Bush and Kerry in 2004, and more than tripling the $325 million raised by Bush and Gore in 2000. A similar dynamic attends congressional elections. The $448 million spent in House and Senate races in 1988, for example, was six times greater than the amount spent in 1976. And still, this number had tripled by 2006 and quadrupled by 2012, reaching $1.8 billion. For candidates, these trends signal a rising financial bar for obtaining elected office. Interested individuals and groups, on the other hand, face a rising financial bar for obtaining political influence.

The price tags attached to political power have never been so daunting. For the first time ever, both presidential candidates rejected the public financing system passed in the wake of Watergate. Neither candidate was willing to limit himself to public funds in the final stage of the election and risk being surpassed by the other candidate's private funds. When all is said and done, campaigning seems better defined by private fundraisers than public rallies. Consider that President Obama appeared at 221 fundraisers in 24 states in the 2012 election season, a financial regimen that dwarfed his civic regimen of 101 rallies in 10 states during that same period. Romney's fundraising routine was similarly rigorous and notably more informative than his public appearances. Audiences of donors, who commonly paid $30,000–$40,000 each, enjoyed detailed policy descriptions and long question-and-answer sessions. Public audiences, in contrast, were generally privy to nothing more than vague twenty-minute speeches with little or no time for questions.

Various types of financial competition fuel the fundraising imperative. It has long been the case that political actors have to guard against being outspent by opponents within their same grouping—candidates versus candidates, parties versus parties, lobbyists versus lobbyists, and spending groups versus other spending groups. Lately, however, another dynamic has begun to fuel the money race as well: candidates and their parties scramble to avoid being outgunned by superPACs and dark money groups. This risk revealed itself to be formidable in the 2012 election as outside spending reached $1.3 billion, a number equal to or greater than what both presidential candidates had raised in any prior election. Although each candidate aided the formation of one or more friendly superPACs to do battle against his superPAC foes, this only exacerbated the larger trend of candidates and parties being marginalized by unaccountable, private organizations.

By the end of the 2012 election, superPACs and dark money groups had raised more than the national party committees themselves. While the size of individual donations to candidates and parties is limited by law, the majority of superPAC funds came in the form of seven-figure checks. And while parties, candidates, and even superPACs must disclose the identities of their donors, dark money groups, such as Karl Rove's Crossroads GPS, do not have to do so. As one dark money group told potential donors, "[N]o politician, no bureaucrat, and no radical environmentalist will ever know you helped ... the only thing we plan on reporting is our success to contributors like you." As a result of this strategy, the people and interests behind $400 million in 2012 election spending will never be known. This even holds true for spending by the U.S. Chamber of Commerce, a nonprofit that serves as a political front for unlimited corporate cash. In recent years, for example, Prudential Financial donated $2 million to the Chamber as part of its efforts against stricter financial regulations, and Dow Chemical donated $1.7 million to oppose the push for greater security at chemical facilities. The need to raise private funds did not end with the general election. Bruised and battered by the money race, President Obama solicited unlimited corporate and individual donations to fund his 2013 inauguration. The invitation sent to campaign donors spelled out categories of donations between $10,000 and $1 million. As the amount increases, so do the perks, which include varying degrees of access to exclusive receptions and meetings, and varying numbers of tickets to the inaugural ball. While the administration expected some donors to keep on giving after the election, other donors lined up to demand a reward—most notably, bundlers of significant campaign funds who now stand at the front of the line for diplomatic appointments as ambassadors to choice foreign nations. The same occurred after the 2008 election when "[n]early 80 percent of those who collected more than $500,000 for Obama took 'key administration posts,' as defined by the White House."


Power, exclusiveness, and distortion are among the themes common to these diverse examples of money in politics. In terms of power, nobody goes so far as to claim that money alone is sufficient for political success. Many well-funded candidates lose elections, and many wealthy spenders and interest groups have failed to get their way in elections and lawmaking. Money is necessary for political success, however, and in increasingly high sums at that. Officeholders spend roughly half their time raising funds for their reelection campaigns, and the feasibility of candidacies, meanwhile, is judged by fundraising ability. No candidate or politician can afford to alienate his or her donor base. Moreover, money has extraordinary power in certain contexts, such as lifting unpopular candidates to prominence, prolonging campaigns, influencing the legislative agenda, and saturating media markets with whatever political messages are favored by wealthy spenders—or even by just one wealthy spender.

After power comes exclusiveness. Even in the context of donations to political campaigns and parties, where legal limits on money in politics are strongest, only one-third of one percent of citizens contributes over $200. And yet those donations constitute the vast majority of all the money raised by candidates and parties in federal elections. In the case of superPACs and dark money groups, where limits are weakest, 200 millionaires and billionaires (0.000063 percent of the population) stand behind roughly 80 percent of all the money spent. In the end, 0.37 percent of the population supplies approximately 70 percent of all the money in politics. It is little wonder that most Americans feel disenfranchised. Political freedoms appear trivial unless buoyed by significant cash; and when raised up in this way, political freedoms become a means of dominating those who lack financial resources.

Exclusion and domination at the individual level give way to distortion at the level of the system itself. The experience of self-governance and the outputs of the policymaking process cannot help being colored by the money race. Although they contain many shades of gray and do not always fall neatly within the lines, the hues and the basic forms they compose are evident. Candidates who are successful at fundraising go further; outside spending groups shape the debate; interest groups with deep pockets enjoy greater access, if not sway; organizations with a larger lobbying budget receive more attention than their competitors; congressional activity reflects the priorities of donors and spenders ... and so on. When systematized and repeated in countless contexts, the conversion of financial power into political power distorts self-governance. What does democratic integrity mean in the system as we know it today? How do popular sovereignty and political accountability work in such a system? What is the present-day status of political equality?

To begin to answer such questions is to realize that American democracy is charting a precarious course, its regard for ordinary citizens dubious, its values open to question, its purposes uncertain, its nature shifting, and, ultimately, its legitimacy jeopardized. The problem is much less a function of individual instances of acute corruption than it is a widespread system of corruption, broadly understood. The question is not who cheats democracy, but who lawfully owns it. After all, the $90,000 in a particular officeholder's freezer matters less than the billions of dollars invested in officeholders' campaigns and their associated superPACs. The few lobbyists who con their clients are less significant than the thousands who bring their clients excellent returns on their political investments. Could the occasional legislative provision produced in conjunction with a bribe possibly matter more than the hundreds of thousands of provisions produced through an opaque interest-group process? Attention should be focused on the market for political power, the privileged position of the wealthy and corporations therein, and the laws produced thereby.


Excerpted from Capitalism v. Democracy by Timothy K. Kuhner. Copyright © 2014 Board of Trustees of the Leland Stanford Junior University. Excerpted by permission of STANFORD UNIVERSITY PRESS.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.

Table of Contents

Preface ix

1 The Question Raised by America's Design 1

2 Free Market Democracy 33

3 Corporations Speka 65

4 Consumer Sovereignty 90

5 Why Capitalism Governs Democracy 141

6 Plutocracy 189

7 Capitalism and Democracy Reconciled 237

Notes 289

Bibliography 341

Index 351

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