Courting Campaign Money

The Supreme Court has overruled 5 to 4 the previous limit on total campaign contributions in the US. In the McCutcheon v. Federal Election Commission case, The Court eliminated the limits on the total campaign contributions an individual could make to candidates and committees per election. Previously, in the Citizens United case, the Court struck down the limits on campaign funding and electioneering by corporations, labor unions, and nonprofit organizations.

Critics of these rulings say that they transform our democracy into a plutocracy, the rule by the rich, but the United States has always been a plutocracy, and the voters have used democracy to keep the system plutocratic. Wealthy donors could already finance Super PACs – political action committees. The amount of money spent in US elections had been escalating each election for decades.

American political culture has had a mixture of two ideals. The first is democracy, the rule by the people as equals rather than by a king or an aristocracy. The second ideal is liberty, especially freedom of speech. When the rich can influence candidates and elections by spending huge amounts of money, the ideal of liberty clashes with the egalitarian ideal of democracy.

Political speech is the most important of all, and the speech that most needs to be free of restrictions. Just as the government should not limit how many times one may give a speech, or how many editorials one may write on a topic, the government should not limit how much one spends to propagate speech.

Proposals to have the government finance campaigns also clash with free speech, if private financing is again limited. Governmental funding entrenches the established parties, and it forces the taxpayers to finance political ads which they may well detest.

Unfortunately, along with democracy and liberty there has been a third political idea in the USA. Economists call it “rent seeking.” In classical political economy, “rent” meant the yield of land. The classical economists knew that landowners receive rent in exchange for nothing, since the title holders did not create the land. They broadened the term to “economic rent,” which means any gains beyond what is needed to put resources to their most productive use.

Then economists in the branch called “public choice,,” which applies economics to voting and politics, recognized that the subsidies and privileges that special interests receive from government are economic rent, since it is loot taken from the public in exchange for less than nothing. Hence, when special interests seek favors from government, they are rent seekers.

The modern use of “rent” has become so far removed from its landed origin, and the land factor so much subsumed under capital, that economists no longer appreciate that the biggest rent seekers are the landed interests who obtain the implicit subsidy as the land rent generated by public goods paid for by taxes on labor.

Because superficial appearances trump the understanding of implicit reality, the reflexive reaction to the corruption of rent seeking is to limit campaign money. That then clashes with free speech. But the reason there is a clash between free speech and democracy is that we have inherited an antiquated 19th-century model of voting that is no longer appropriate to the 21st century world of mass democracy combined with great state power.

Public-choice economists such as Mancur Olson have recognized that the way to limit the rent seeking disease of democracy is to vote in small groups rather than in large groups. In a large country, the small groups should federate rather than become a large single group.

The demand for campaign money dissolves when people vote in tiny local districts. The district councils send representatives to a higher-level (or broader-level) council. With such a bottom-up small-group voting system, we would have much fewer political ads in the mass media.

The mass-democracy model has been grafted world-wide, and it has not brought social peace, as we have witnessed in place such as Egypt and Ukraine. But one day, mass democracy will be regarded as a relic like we today regard the former power of monarchs and aristocrats.

(Note: this article is also at

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