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After the gratifying experience of editing my first documentary “The Evilness of Power”, I’ve dedicated these last few months to a new documentary called “Golden Rule: The Investment Theory of Politics”. It is based on a book by Thomas Ferguson, a renown economist at UMass, who proposed a new way of looking at the American political scene. It’s about the influence of investors on the political system, particularly in the United States. It examines the high costs of political participation for average voters, and the buying of elections through contributions, as well as direct and indirect influence from businesses, law firms, the elite media etc. Invariably, the candidate with the most financial backing always wins, and in this regard, members of Congress earn the highest rates of return in recorded history on their portfolios, because stock market prices reflect major investor knowledge of campaign contributions, and they’re given inside information.
Naturally, the elite media and other institutions of indoctrination always pay attention to the balance of business power in society, and this is reflected in public opinion and voting patterns. Unlike businesses, government has a certain democratic potential, so the corporate media preempt it by obscuring the true workings of the electoral process.
Although governments always maintain some independent elite prerogatives, in capitalist societies their main function is to manage and protect the collective interests of business — particularly big business. This means managing the sometimes conflicting interests of competing blocs of businesses e.g. those which are more or less protectionist, or more or less labor-intensive, more or less linked to the financial sector etc. Since the conditions that allow certain industries to prosper and form new blocs change (e.g. the change from coal to oil at the beginning of the 20 century, market deregulation at the century’s end etc.) and since the influence of organized labor and popular movements can be considerable, the blocs of investors that control different parties also change depending on the period — sometimes retreating to one party or instituting a dictatorship.
These last options tend to be adopted with the growth of labor and leftist movements; or in the Third World in reaction to any policy that threatens investors (e.g. nationalizations). But as long as the power of labor is relatively weak, dictatorships or single parties are not generally necessary or beneficial. Of course, all businesses have common interests. None is going to, for example, favor labor unions or higher and higher taxes. But one single party doesn’t enable the breadth and disparity of business interests to be fully articulated.
Generally, what we call “left” and “right” parties are nothing more than blocs of investors with some conflicting interests; which allow them different levels of compromise with a relatively weak labor movement. For example, in the 19th century, almost all businesses were very labor-intensive. The change from coal to oil created a technological revolution which allowed many businesses to produce with fewer workers (in technical terms, less wages as a percentage of value-added).
Politically, this meant that these new or renovated capital-intensive businesses (many of them also less protectionist) had a greater tolerance for labor unions. A union in a labor-intensive industry (i.e. w/more workers) is very expensive for the owner. This explains why capital intensive industries were more in favor of the social democratic “New Deal” of the 1930s (e.g. oil, paper, international banks) while older labor-intensive industries (e.g. textiles, rubber, steel etc.) were against it.
Of course, this doesn’t mean that these new or renovated industries were favorable to workers in a true sense. In a society where business owners control capital, the substitution of workers for machines is another weapon in their arsenal. Fewer workers means fewer problems.
The growth of the financial sector (from the 70s onward) meant that its influence on the political system also grew, especially on the so-called “left” parties such as the Democrats in the United States. Hence the trend of deregulation, the recent financial bailout, and Obama’s victory. With the proliferation of speculation and emphasis on large short-term profits, many financial institutions have adopted almost 19th-century labor-management relations. This largely explains the erosion of social democratic policies.