Handbook of Political Party Funding— Few Comments Towards Further Discussion

Democrat and republican finances

Jonathan Mendilow and Eric Phélippeau discuss their new title.

In the Handbook of Political Party Funding we aimed to present a picture of a relatively new field of study which is still in the process of becoming, as well as point to some of the questions that we expect will occupy our attention in the near future. The publication of the volume offers us an opportunity to invite the students of political finance to a dialogue concerning the directions our field had taken so far and where it is heading in a time of rapid change.

Before touching on any substantive issues, we should mention the challenge of method – the lack of agreement on what exactly political finance is and how to measure it. Should we concentrate on parties and the competition among them alone, or also on lobbies and affiliated bodies (e.g. research institutions)? And, related to this, what does a party actually mean? Is it only the ‘central ‘(national) body, or also branches and local volunteer setups and (in countries such as Austria and Israel) even sports clubs? Even if we agree on the ‘what’, we have a problem of ‘how’. How do we calculate party income, and what should be included as campaign expenditures, as against day- to- day activities? How should we treat official accounts filed by parties or state officials? etc. The Handbook did not try to offer any ‘once and for all’ solutions or even a judgment as to what are the proper methods by which to study political finance. We left the choice to the contributors. We thereby produced a billboard, as it were, where students present their research in their own voice. We scrutinized the sources used by the authors and the accuracy of their references, but did not extend our examination to the sources used by the sources, or the methods used by these sources of sources. This would have impeded the publication of the Handbook for years or precluded it altogether. Nevertheless, the problem should not be ignored and what are required are efforts to arrive at broad agreements on the contours of what we study and the methods by which we do so.

As for contents, the Handbook sought scrutinize the legislative frameworks for the financing of political parties in a large variety of representative case- studies of diverse political systems: in addition to the geographical consideration (that is, the discussion of African, Asian , European, American and Australian systems ) we included chapters on competitive authoritarian systems ( Russia and Singapore) and others treating the financing arrangements in the intraparty level (primaries), federal units (e.g. New Jersey in the USA ), and supranational level (European parties ). This, we hoped, will allow for a better understanding of various party funding regimes and their effects on the parties operating under them. In addition to the attempt to reach a better understanding of the circumstances and needs that explain the emergence of specific arrangements, we attempted (with the possible exception of the chapters treating the competitive authoritarian regimes) to draw attention to several common themes.

One is the wrestling with the ‘party funding paradox’: the flouting of the basic tenets of democracy to ensure the democratically vital party competition. A few words of explanation are warranted, even at the risk of retelling a story we all know. In the 1960’s and 1970’s parties began to encounter budgetary problems that could not be resolved by the reliance on membership dues and contributions of affiliated or ideologically close organizations alone. Welfare policies, standardization of norms, and the blurring of traditional cleavages resulted in declining commitments to the ideological issues of the previous era, and parties faced mounting pressures to extend their appeal and reach out to growing numbers of potential supporters. This, in turn, was facilitated by the exponential growth of mass communication media and the increasing sophistication of advertising and polling techniques. One result was a growingly discrepancy between the demand and supply. On the one hand, effective competition required growing dependence on the party apparatus and publicity experts. On the other, reduced voter commitment meant a diminished capacity to raise commensurate funds from the traditional sources of financial support. The answer could lie in ‘plutocratic funding’, the use of public services as funding sources, and outright corruption. All three (possibly overlapping ) solutions reduced dependence on grassroots generosity and the need to maintain costly mechanisms for the ongoing contact with less affluent constituents. Yet solicitation of large funds from corporations and rich individuals means that parties are called upon to cater to the interests of the few. The use of public services as a source of revenue is likely to produce a disparity between what elites and what the governed regard as corruption that erodes trust in government. And criminal corruption may exacerbate the risk. Secrecy is never ensured, and large- scale scandals could well lead citizens to sweeping conclusions concerning the legitimacy of the political systems a whole.

An alternative was the consideration of parties as ‘public utilities’: agencies providing services in which the public has a vital interest. The state, as an impartial entity representing the citizenry as a whole, would adopt both ‘negative’ and ‘positive’ measures. The former refers to restrictions on spending, specific sources of income, and limitations on the size and timing of contributions. Taken together, they relieve parties by limiting the budgetary race, while assuring each that other contestants would not take advantage of their restraint. At the same time, such regulations constitute a tacit commitment by the collective of parties to avoid practices that would render democracy meaningful only for the few. Regardless of the menu, effectiveness requires regulations to ensure compliance: transparency requirements, enforcement mechanisms, and penalties levied by objective arbitrators. ‘Positive’ measures consist of the provision of public resources. Here too a number of nonexclusive options exist. Allocations could be made for the day- to- day operations of parties, or for the conduct of specific activities; they could be ‘full’ (covering party activity in its entirety) or partial ( allowing parties to augment their income by appealing to nonpublic sources). Subventions could be direct or through matching funds or tax deductions designed to encourage small donor contributions. Underlying all these is the same tacit agreement, with modification of emphasis. Competitors are given the means to conduct democratic activities and are expected to refrain from behaviors that would give ‘unfair’ advantage to those who successfully cater to monetary interests. The weakness of the implicit tradeoff is a key reason for coupling positive and negative measures. But it is incorrect to imagine parties as located between two polls of a single continuum stretching between full public funding and the banning of all nonpublic sources of income at one extreme , and no public subsidies with ‘free for all’ funding on the other. Most political finance regimes combine state subsidies, restrictions on raising and spending money, and rules to ensure compliance. This became the leading pattern in all regions with the exception of Africa (where public subsidies are available to parties in only 46 percent of the states). But the convergence does not mean identity of setups. While most systems avoid the extremes in both continuums, some perch themselves on a single continuum (e.g., adopting negative measures but no public funding), while the choice of various positions along the two bands allows for a large number of conceivable mixes of positive and negative measures. The Handbook sought to examine the circumstances and needs that explain various variants, and to look at their consequences. The chapters include the examination of Meta- system questions as corporate donations to electoral campaigns, the impact of party funding on party activity, or the lessons that practice teach about the famous Cartel Party thesis, and particular system examinations. We hope that future work, both at the case study and comparative levels , will enhance the identification of strengths and weaknesses: what works and what does not, and what are the circumstances that allow for the adoption of the former and avoidance or correction of the latter.

Another theme we hoped to examine is the current pressure for changes in the political finance arrangements of many democracies. The optimistic assumption was that public funding and limitations on plutocratic influence would enable parties to structure the choice on the basis of issues that are pertinent to the needs of the wide citizenry, thereby stimulating political participation and arresting party membership decline. Yet, such expectations failed to materialize. Most democracies experienced persistent decline of party membership, while dependence on central party apparatuses did not abate. This in turn led parties to greater reliance on private donations and to demand the upward adjustment of public funding. Both could lead to wide spread resentments. Especially following the global economic crisis of 2008, public attention began to center on ‘wasteful’ state party subventions and the need to reexamine the positions on the party funding continua. In this sense the USA and Australia offer a pregnant illustration of what a movement along the polls of the party funding multi-dimensional continuum may entail. The two countries differ in several important respects. In the USA, party identification is expressed only through polls and pre-election registration. No party dues are required and no services are offered to members. In Australia, membership involves the payment of dues and formal accreditation of participation in a kind of social association. Membership in both countries declined steadily, but in the USA this had no direct budgetary impact on the parties, while in Australia the impact was both later and smaller than in most other Western Countries. The move towards full public funding in Australia and unrestricted private funding in the USA was consequently not a direct response to pressures to curb spending in times of austerity. In the USA the move resulted in a position close to unrestricted private donation couples with strict regulatory system limiting the sources of such donations. In Australia the move was towards ‘full’ public funding, coupled with relatively lax regulation regarding the source of auxiliary funding. The relative freedom from considerations that are currently at work in many other democracies allows the examination of the consequences of the move along the polls of the political finance continuum free from the context and the exigencies of economic slowdown. While we included excellent chapters on both countries, a further examination of the consequences of such shifts will be necessary (one could argue that Australia is an outlier, but this is not relevant for an examination of the results of the dynamics of change). What, for instance, is the result in terms of the operation of the mechanisms for the transmission of demands from the bottom up, within the parties and between the citizenry and government? To what extent do positions close to the unrestricted private funding poll lead to widespread sense that parties are insensitive to widespread interests where they clash with those of the moneyed few? To what degree is the move towards full public funding commensurate with shifts in widespread perceptions of the degree of power held by ‘regular’ citizens over actual policy making processes? And what are the expected consequences in terms of trust in government? This is connected to the vexing concept of corruption and the possibility of a situation where the wide public considers parties and governments as inherently corrupt regardless of how the concept is legally defined. The inclusion among the introductory chapters of a deliberation of the connection between the type of party funding and public trust in parties and governments we hoped will become part of a much needed discussion.

The final theme we would like to mention concerns the effects of party funding on campaign media and the effect of changes in media technology on party funding. We began the introductory part of the volume with a consideration of the link between party funding and media broadcasting campaigns. We ended the introductory part with a chapter on the novel uses of the social media in the very different 2016 USA presidential campaign, 2015 Israeli Knesset elections, and the intraparty competition in the British Labour Party. This is the least developed theme in the Handbook, mainly because (in the words of the famous song) the future is not ours to see (Que sera sera ) . Yet we hope that this exploratory treatment will become more relevant as time goes by. This is a hope that is not restricted to the nexus between party funding and campaign media or the impact of media renovations . It is equally applicable to the question of trust , the possible movement along the party funding continua , the nature of party funding in sub and supra national systems and in competitive authoritarian regimes,   the broader question of the party funding paradox and the methodological issue of what and how we study . We hope, in other words, that the volume will serve as a picture of a dynamic sphere of study –but also as a catalyst for further discussion.

Jonathan Mendilow, Rider University, US and Eric Phélippeau, Paris Nanterre University, France

Mendilow Hbk Political

Handbook of Political Party Funding is available now.




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