- 13 Dec 2018 10:21
#14971841
The central claim of the Investment Theory is that since ordinary citizens cannot afford to acquire the information required to invest in political parties, the political system will be dominated by those who can. As a result, the investment theory holds that rather than being seen as simple vote maximizers, political parties are best analyzed as blocs of investors who coalesce to advance candidates representing their interests.
The real market for political parties is defined by major investors, who generally have good and clear reason for investing to control the state....Blocs of major investors define the core of political parties and are responsible for most of the signals the party sends to the electorate.
The role of political parties
Contrary to the median voter theorem where political parties have traditionally been seen as vote maximizers who will seek out the position of the 'median voter' on any particular issue, the Investment Theory holds the real area of competition for political parties is major investors who have an interest in investing to control the state.
This is because, in situations where money is important, political parties must take positions that enable them to attract the investment required to run successful campaigns. This is the case even if those positions are not supported by the majority of the population, since it is futile for a party to adopt even a popular position if it cannot afford the expense of communicating that position to the electorate in an election campaign. In fact the Investment theory predicts that in many cases political parties are more likely to try and change the position of the public to match those of its investors than vice versa.
Instead political parties will try to assemble the votes they need through appeals to the electorate on issues that do not conflict with the interests of their investors. Vigorous debate may take place on issues where an opposing bloc of investors is able to mobilize and advertise their position. A further consequence of this theory is that in policy areas where large investors agree on policy, no party competition will take place. This is the case regardless of the views of the general population, unless ordinary citizens are able to become major investors in their own right through expenditure of time and income.
Since investors cannot guarantee the outcome of an election or know exactly what policies a candidate will implement once in power, they must estimate the chances their investment will be successful. In some cases, this may lead to investors supporting more than one candidate, perhaps in more than one party.
Although the Investment Theory recognizes the importance of financial contributions to political parties, Ferguson notes that direct cash contributions 'are probably not the most important way in which truly top business figures ("major investors") act politically'. Investors are also likely to act as sources of contacts, fundraisers, and as sources of legitimation for candidates, particularly through endorsements in the media.
Although the 'Investment Theory' is largely concerned with financial donations to political parties, Ferguson argues that the theory implies reform must look beyond campaign finance alone. While acknowledging a need for reform of campaign finance, 'if only to prevent more and more of society's resources going down a black hole', Ferguson suggests, that no matter how diligent the regulators are, wealthy investors will doubtless find new ways to corrupt the political system.
Instead, since the problem of money influencing politics stems from the cost of information, Ferguson argues the solution might come from finding ways for regular citizens to share these costs. Since it is inefficient for individuals or even groups of individuals to cope with this problem on an individual basis, Ferguson proposes that the cost must be subsidized by the state.
While the United States (and other nations) already subsidize some of these costs, for example in providing public finance to political parties, franking mail or providing staff to politicians, this rarely takes place on a scale that actually does the public any good. Instead, this funding merely subsidizes parties that the rich control, with the effect that public money merely leverages the contributions of major investors.
The Solution
A democracy voucher is a method of public financing of political campaigns. These would provide every eligible voter with $100 in taxpayer-funded vouchers to donate to the candidates of their choice. The goal is to incentivize candidates to take heed of a broad range of citizens – homeless people, minimum-wage workers, seniors on fixed incomes – as well as the big-dollar donors who often dictate the political conversation.
The real market for political parties is defined by major investors, who generally have good and clear reason for investing to control the state....Blocs of major investors define the core of political parties and are responsible for most of the signals the party sends to the electorate.
The role of political parties
Contrary to the median voter theorem where political parties have traditionally been seen as vote maximizers who will seek out the position of the 'median voter' on any particular issue, the Investment Theory holds the real area of competition for political parties is major investors who have an interest in investing to control the state.
This is because, in situations where money is important, political parties must take positions that enable them to attract the investment required to run successful campaigns. This is the case even if those positions are not supported by the majority of the population, since it is futile for a party to adopt even a popular position if it cannot afford the expense of communicating that position to the electorate in an election campaign. In fact the Investment theory predicts that in many cases political parties are more likely to try and change the position of the public to match those of its investors than vice versa.
Instead political parties will try to assemble the votes they need through appeals to the electorate on issues that do not conflict with the interests of their investors. Vigorous debate may take place on issues where an opposing bloc of investors is able to mobilize and advertise their position. A further consequence of this theory is that in policy areas where large investors agree on policy, no party competition will take place. This is the case regardless of the views of the general population, unless ordinary citizens are able to become major investors in their own right through expenditure of time and income.
Since investors cannot guarantee the outcome of an election or know exactly what policies a candidate will implement once in power, they must estimate the chances their investment will be successful. In some cases, this may lead to investors supporting more than one candidate, perhaps in more than one party.
Although the Investment Theory recognizes the importance of financial contributions to political parties, Ferguson notes that direct cash contributions 'are probably not the most important way in which truly top business figures ("major investors") act politically'. Investors are also likely to act as sources of contacts, fundraisers, and as sources of legitimation for candidates, particularly through endorsements in the media.
Although the 'Investment Theory' is largely concerned with financial donations to political parties, Ferguson argues that the theory implies reform must look beyond campaign finance alone. While acknowledging a need for reform of campaign finance, 'if only to prevent more and more of society's resources going down a black hole', Ferguson suggests, that no matter how diligent the regulators are, wealthy investors will doubtless find new ways to corrupt the political system.
Instead, since the problem of money influencing politics stems from the cost of information, Ferguson argues the solution might come from finding ways for regular citizens to share these costs. Since it is inefficient for individuals or even groups of individuals to cope with this problem on an individual basis, Ferguson proposes that the cost must be subsidized by the state.
While the United States (and other nations) already subsidize some of these costs, for example in providing public finance to political parties, franking mail or providing staff to politicians, this rarely takes place on a scale that actually does the public any good. Instead, this funding merely subsidizes parties that the rich control, with the effect that public money merely leverages the contributions of major investors.
The Solution
A democracy voucher is a method of public financing of political campaigns. These would provide every eligible voter with $100 in taxpayer-funded vouchers to donate to the candidates of their choice. The goal is to incentivize candidates to take heed of a broad range of citizens – homeless people, minimum-wage workers, seniors on fixed incomes – as well as the big-dollar donors who often dictate the political conversation.
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