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Campaign finance refers to money that is spent for purposes of political competition. In modern liberal democracies, such funds are not necessarily devoted to election campaigns. When senior scholars James Pollock and Louise Overacker began analyzing the role of money in politics, they started in the United States, looking at the money spent to influence the outcome of a federal election. Their starting point has dominated perception of the subject ever after. “Campaign funds” is the subject heading under which the Library of Congress catalogs all books dealing with money in politics and the classification is the major target of any U.S. scholar who approaches the subject.
During the second half of the twentieth century, U.S. political scientist Alexander Heard tried to bridge the glaring gap of perception between U.S. and foreign scholars when he created the broader term, costs of democracy. Arnold Heidenheimer, a European researcher, added the term party finance, and Europeans may have applauded this enlargement of perception. However, American author Delmer Dunn returned to the traditional trail and many others followed in the footprints of their forebears. To this day, for U.S. scholars, campaign finance is the name of the game.
Regulation of campaign funds varies among the democracies. Some (like the United States) regulate the flow of contributions into campaign coffers. Some limit candidate spending only, as the United Kingdom did between 1883 and 2000.Very rarely a political finance regime (like the Canadian system) stipulates rules for contributions and expenses, for candidates and parties. Currently, no democracy provides for full transparency of all campaign funds.
Raising Campaign Funds
The financial support of policies, politicians, and parties is an expression of economic and political freedom, not necessarily the consequence of influence peddling or corrupt exchanges. Individual donations in small amounts provide about half of the total funds raised in the United States and Canada, much less of it in Germany and the United Kingdom. Only in the Netherlands and Switzerland, European politicians can collect a comparable share from signed-up party members. Even the traditional left-of-center mass-membership parties raise less than a quarter of their funds from this source.
Various alleys have been explored successfully to glean grassroots funding: recruiting party members, lotteries, direct mail drives, Internet or neighborhood solicitation, and social events at the local level. Whereas personal (door-to-door and peer) solicitation for political contributions was more frequent in the 1960s, it has been superseded by computerized mass mailings since the 1970s, and Internet appeals more recently. A public benefit program (preferably matching funds or tax credits) can ensure that political fundraising will not fall victim to competing nongovernmental organizations or charities. Because matching funds and tax credits require financial contributions by individual citizens, they are more suitable to participatory democracy than direct public subsidies (flat grants), which do not require specific efforts by parties or candidates.
Money from the business community (corporate donations) is no longer a real danger in most democracies. Both means of raising plutocratic funding (direct contributions as well as institutional fundraising) have declined, mostly because their proceeds have been substituted by public subsidies. Due to political action committee money and independent expenditures, the United States may be the most important exception to that rule.
A comparatively new source of political funding is public subsidies. As with any other kind of funding, specific problems accompany them (such as rules for access and distribution). However, in combination with other sources of revenue as well as rules to enforce fairness and legitimacy (e.g., the matching principle), according to Canadian scholar Khayyam Paltiel, state aid is a means of political funding that no modern democracy should forgo.
Levels And Items Of Campaign Spending
Knowledge of political spending has improved much during recent decades, but it is still limited to a few countries. In the two biggest democracies of our time (India and the United States), the bulk of all money spent for political purposes is deployed for campaigning. Any guess between 75 and 90 percent of the total funds available for political competition can be an adequate measure for the share of campaign funds. However, not even in Canada or the United Kingdom, two other important Anglo-Saxon democracies, do campaigns devour a comparable share of all political funds. In any Parteienstaat, partitocrazia, or party democracy of continental Western Europe (e.g., Germany, Italy, and Austria), most funds devoted to politics are used to pay for the routine operations of parties on the ground and in that nation’s capital.
Many observers suggest that, over time, campaign spending has exploded. Paid television advertising, new campaign technology, and growing numbers of salaried experts are seen to have caused unavoidable financial needs. Political competitors may sink significant amounts of money into such items just because—thanks to citizens’ generosity, public subsidies, or corrupt exchanges—they can afford to do so. Surprisingly enough, current levels of political spending fall short of earlier peaks. In gross domestic product adjusted terms, U.S. presidential campaigns cost less than 30 cents per citizen in the 1920s, in the 1950s, and in 2000; about 35 cents in the 1990s; some 50 cents in the Nixon years (1968–1972); and 80 to 95 cents for Franklin Roosevelt’s reelection bids in 1936 and 1940.This supply-side theory of expenditure can be demonstrated for the United States, the United Kingdom, Canada, Germany, Japan, and Austria. In these countries, per capita expenses are now much lower than they used to be, due to shrinking revenue possibilities. This is quite in line with earlier observations made by Pollock, Overacker, and Heard.
Spend And Win?
Journalists and scholars have frequently claimed that money wins elections. Clearly, people who spend more and more money on political competition expect that this will have some sort of impact. With the current commercial style of campaigning, money seems to be much more relevant today than in the times of mass parties and machine politics. Money buys access to communication (newspapers, radio, television, billboards, telephones, and mailings).
Statistical analysis in examining campaign finance has been greatly enhanced by the use of computers and the wealth of available data. For the 1979 Canadian election, Seymour Isenberg found evidence of a clear relationship between being first and spending the most, and he confirmed this for the 1980 election. Using more data and different modeling, Gary Jacobson also found “a clear connection between campaign spending and election results” in the United States. However, evaluating English constituencies, Ronald Johnston found no indication “that the level of spending is a major, let alone a dominant influence on the result.”
Based on spending data and election results, spending is frequently analyzed as the cause of voting. However, it may well be that donating is a means of support and a bellwether of expected success, whereas spending is just a consequence of cash at hand, not the cause of success. Thus, a simple correlation between political money and electoral success is misleading. Campaign money is most productive when other factors make winning possible—and if so, it is definitely the voters’ choice and not the politicians’ cash that will decide the outcome of an election.
- Alexander, Herbert E. Financing the 1960 Election. Princeton, N.J.: Citizens’ Research Foundation, 1962.
- Financing Politics. Money, Elections, and Political Reform, 4th ed. Washington, D.C.: Congressional Quarterly Press, 1992.
- Heard, Alexander. The Costs of Democracy. Chapel Hill: University of North Carolina Press, 1960.
- Magleby, David B., Anthony Corrado, and Kelly D. Patterson, eds. Financing the 2004 Election. Washington, D.C.: Brookings Institution Press, 2006.
- Nassmacher, Karl-Heinz. The Funding of Party Competition: Political Finance in 25 Democracies. Baden-Baden, Germany: Nomos Verlag, 2009.
- Overacker, Louise. Money in Elections. New York: Macmillan, 1932.
- Paltiel, Khayyam Z. “Campaign Finance: Contrasting Practices and Reforms. In Democracy at the Polls: A Comparative Study of Competitive National Elections, edited by David Butler, Howard R. Penniman, and Austin Ranney, 138–172. Washington, D.C.: American Enterprise Institute, 1981.
- Pollock, James K. Party Campaign Funds. New York: Knopf, 1926.
- Sridharan, Eswaran. “Electoral Finance Reform:The Relevance of International Experience.” In Reinventing Public Service Delivery in India: Selected Case Studies, edited by Vikram K. Chand, 363–388. New Delhi: Sage Publications, 2006.
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