"Lobbying, Capitalism And The State"
By Jon Kofas
29 May, 2015
According to public opinion polls, about two thirds of Americans believe that lobbyists have too much power and lobbying is at the core of the policy making decision process. This means that powerful interest groups, namely, US and foreign corporations as well as foreign governments such as Israel and China prevail in policy that does not advance the interests of the American people, but often harms them. Of course, there are also advocacy lobbies dealing with the welfare of the elderly, education, science and culture, the environment, and other issues such as gay marriage that reflect the trends of the particular period. However, when we compare the preeminent influence of the defense industry lobby with all of the small and weak groups advocating diplomatic solutions to crises and arms – from nuclear to conventional – reduction, the defense industry prevails every time as it has from the late 19th century until the present.
One could argue that right-wing propagandists like Charles Krauthammer and Robert Samuelson advance valid arguments in favor of lobbying and believe that indeed it is “democracy in action”. This means that “democracy” is limited to those that can afford lobbyists while the rest must suffer the results of public policy often to their detriment. The larger question is how lobbies pose a threat to a modern democracy and alienate the majority of the people outside the services of lobbyists who have become a fixture in politics. This issue goes beyond ideological and political convictions to the practical matter of how one defines national interest. If the few large banks, insurance companies, and multinational corporations are the “national interest”, then by all means what is good for corporate America is good for all Americans, regardless of statistics showing massive capital concentration and steady decline of the middle class in the last three decades.
“What is good for corporate America is good for all Americans” is exactly the notion that the media, businesses, most academics and think tanks project to the public. This is what politicians practice, no matter their hypocritical populist rhetoric about “serving all of the people”. Considering that two-thirds of the people are convinced that lobbyists, not the voters, exercise influence over policymakers, then there is a widespread belief that democracy is indeed for sale and always well paid for. One could argue that American democracy was always for sale to business interests because it was founded by men committed to private property rather than social justice, individuals interested in protecting and promoting propertied class rather than the welfare of the entire population. Lobbying is simply a reflection of how the values and structure of the political economy.
Although lobbying as we know it today had its start during the last quarter of the 19th century, the history of lobbying in the US goes back to the Founding Fathers. Most of them were concerned about narrow or special interests prevailing over the “general will” as French philosopher Jean-Jacques Rousseau defined in a book by the same title where he outlines a version of social democracy that differs substantially from the Liberal model of John Locke whose goal was to promote propertied interests through a strong legislative branch. Although Locke was interested in preventing tyranny by Absolutist monarchs, he did not have a notion of the collective or general will as did Rousseau and was only interested in preventing tyranny at the expense of the propertied classes. This mindset prevailed among the Founding Fathers. Clearly, there were no advocates with any sort of political power for African slaves, Native Americans, women, non-Western European immigrants, and for workers and peasants. These people were either completely outside of political life or barely on the margins.
The framers of the US Constitution were white males representing the propertied classes of the late 18th century, but envisioned an open society where bourgeois opportunity rooted in merit would take hold in America as opposed to a system rooted in special privileges because of birth-right as was the case with the European aristocracy and/or links to the government that would favor one interest group over the other. At least this was the ideal, though in reality the First Amendment of the Constitution provided the window special interests needed to exert inordinate influence and prevail over the general will. While there was some lobbying at the central government level in the 19th century by banking, industrial, mining and railroad groups, most of the lobbying took place at the state and local levels, accounting for enormous political corruption as evidenced by cronyism in larger cities from Boston to Chicago where “machine politics” took hold.
During the Gild Age (1870-1900), which coincided with the American industrial revolution and the Westward Movement and Reconstruction, there was indeed enormous corruption, partly owing to lobbying. Politics became increasingly a business of catering to business of those politically connected at the expense of the rest of society from consumers to labor organizers demanding safe working conditions and fair wages so they could live above the poverty level.
The deterioration of politics as a mechanism promoting big business was something that middle class critics pointed out during the Progressive Era when many viewed lobbying as a detriment to democracy. The response by Republican and Democrat Progressives was to rationalize government, that is to say, expand it through more and larger bureaucracies and make it more merit-based so it could better serve capitalism as a whole, including balancing the interests of disparate sectors. A major goal of the Progressives was the overall growth of the capitalist economy with the state as the pillar of support while at the same time protecting the consumer to a small degree and addressing some needs of the middle class that viewed big business as predatory. This was at least the theory. In practice, it did not work because Gilded Age monopolies and oligopolies, which many Progressive critics decried, continued to prevail in formulating public policy, while government remained their protector.
From the outbreak of WWI until FDR took office, capitalism reverted to Gilded Age practices that helped bring about the Great Depression. Throughout the 1920s, lobbying became more organized and intensive. Operating in a pro-business climate, lobbyists used more high-pressure tactics to secure passage of legislation by targeting committees and regulatory commissions. With capitalism collapsing in 1929, the New Deal and WWII entailed greater regulatory measures and centralization of government. However, the trend to restore the preeminent role of business in public policy returned with the Truman administration. The Cold War followed by the “war on terror” became the pretext to permit as much laissez-faire latitude as possible so that capitalism becomes stronger.
Lobbyists and influence peddlers on behalf of capital became the new saints of the system from the Reagan-Thatcher decade in the 1980s until the present, despite mini-recessions in the 1980s and 1990s, and a major one in 2008. The Reagan myth of “big government is the enemy”, implying big business is “our friend”, was a signal to corporate lobbying that government was on their side ready to privatize public services, offer contracts, subsidies, and reduce taxes for the upper income groups. This was music to the ears of lobbyists, Democrat and Republican alike whose task Reagan made easier. The downfall of the Soviet bloc was an even greater boost to corporate lobbyists because they could argue that capitalism has endured the test of time and it is the only option in the world.
The absolute triumph of the market under globalization and neoliberal policies was so prevalent that not even after major scandals involving lobbyists from the 1990s until the present and even the global recession that lasted four years (2007-2011) made any difference to governments and politicians that more regulation was needed to address structural problems owing to laws and regulatory loopholes intended to permit banks, insurance companies and finance capital to amass capital at the risk of undermining capitalism. Because the state (taxpayer money and income transfer from the lower and middle class to the wealthy) was always available to bail out the clients of the lobbyists, why implement a rigid regulatory system, and even after some regulatory measures, why enforce them?
Ideology and Lobbying
The ideological orientation of the individual determines where they stand on lobbying as a detriment to democracy or simply a right of freedom of expression. What are the determinants of such ideological orientation is another topic for analysis, but the “dominant culture”, as projected through the media and educational institutions, plays a major role. Academic works rooted in classical Liberal or neoliberal thought about lobbying try to justify it in the same manner as the Supreme Court, using the First Amendment issue as the pretext for influence peddling by corporate interests. While the Supreme Court provides the legitimacy of lobbying and apologists of the system justify it using various ideological and political arguments, in the last analysis it is the power of capital that makes lobbying the force that it is in society.
Politicians, academics, the media and lobbyists argue that lobbying is simply another dimension of public affairs and a reflection of “democracy in action”. After all, environmental, gay rights, universities, the elderly via AARP, and all sorts of groups are just as free to lobby as are big banks and defense companies. Of course, the issue is one of scale and resources when comparing Wall Street to educational, social and environmental groups. Moreover, it is also one of institutional and ideological commitment to preserve the status quo and faithfully serve capital because politicians view capitalist lobbies as contributing to the economy, while the AARP, educational, social, and environmental lobbies are generally deemed as “costing” the economy. In essence, however, the real costs result from lobbying that seeks direct and indirect monetary privileges from the state so it does not contribute its share to the fiscal system.
Lobbyists have such power that it is difficult for a political candidate to win office going against powerful capitalists who have the means to finance campaigns and buy influence at all branches and all levels of government. Similarly, it is difficult for journalists, academics, think tanks and consultants to speak out against corporate lobbying because they know corporate interests enjoy wide influence in everything from and arts and universities seeking grants and foundation funds to the media interested in promoting the neoliberal ideology that results in capital accumulation. Individual self interest dictates that one remain silent at the very least, or join the lobbying crusade at most because behind it is big capital.
It is not the case that apologists of lobbying are ignorant of how money buys influence and leaves out the rest of society, any more than it is much of any issue that the vast majority of apologists are acting out of ideological convictions instead of simple self interest. While most of them have something to say about improving the lobbying landscape so that no single lobby becomes too powerful and limits are set so that the business of lobbying is well managed, all of them believe this is the way to conduct business and they view lobbying as another business investment for which society will have to pay the cost.
Operating within the framework of the liberal democratic system, reformers argue that there must be regulatory mechanisms of lobbying to prevent corruption, fraud, absence of disclosure, and conspiracy, all things people in a modern open society associate with authoritarian regimes. This has been the position of reformers from the late 19th century until the present. Meanwhile, all efforts from the Progressive Era until the present to “reform” the lobbying networks have failed if we judge by the fact that lobbyists often set the perimeters of legislation and Congress simply votes to affirm the choice of the lobbies.
Reformers advocating “fixing the broken system” are actually much more dangerous than right wingers or neoliberal apologists of lobbying who blatantly defend it and believe democracy is nothing more than a vehicle for capital accumulation and concentration, and anything against this is simply “un-American”. Reformers are dangerous because they deceive the public into believing there is hope under the existing system despite 150 years of experience that lobbying is an integral part of the political institutional structure and at its core.
Critics that want to abolish lobbying altogether include not just those on the left of the ideological and political spectrum, but some on the right who feel that politicians should be catering to capital without the need for lobbies that add to the cost of business. Entitled “Corruption, American Style”, a FORBES article (1/22/2009) argues that lobbying is not much different than “Third World corruption” where narcotics and other illegal activities are an integral part of the economy. “Con men, swindlers and cheaters pay bribes. Sophisticates hire lobbyists because lobbyists get better, more lasting results while only rarely landing in the slammer. We know intuitively that bribery and lobbying are related, and there are reams of academic papers that try to draw the line between legitimate issue advocacy and corruption."
Beyond the liberal-reformist argument regarding transparency, the issue that some conservative critics are raising is that lobbying in itself constitutes a form of corruption because select companies make payments to select politicians in exchange for specific favors granted. Again, it is not that critics from the right want capitalism weakened, but that they want no cost of passing legislation accrued to capitalists for such work must be carried out by politicians without a quid pro quo. There is also the issue of inter-sector competition involved here. For example, if the pharmaceutical lobby prevails it means that this sector takes a larger share of the economic pie because the rest of the business sectors must pay more in insurance costs to cover health care. If the Israeli lobby prevails, as it does over all other foreign lobbies, then it has a distinct and unfair advantage.
Without a doubt, there is a great deal of hypocrisy in the US where the image the media, politicians and opinion makers project is that official and private sector corruption is something that takes place in Africa, Latin America and Asia, but rarely in the advanced countries. While in many countries “baksheesh capitalism” is a way of life, the US decries such practice while it has legalized and institutionalized a system far worse in the form of lobbying. Whether an Egyptian businessman offers bribes to finance ministry officials to avoid paying taxes or the US corporate lobbies and exchange favors in order to strike a deal with congress and the White House to have a much lower tax rate for repatriation of their overseas profits the net result is exactly the same. In fact, I would argue that lobbying in the US, as well as Europe where it is just as widespread, is as a far more dangerous form of legalized bribery because it presents itself as an integral part of “democracy”.
Arguing that it is not possible reform a system that at its core has corruption as its mode of operation, leftists see lobbying as another dimension of capitalism. Leftist critics who want to abolish lobbying maintain that it is a reflection of the political economy and itself an industry that has a corrosive effect on representative democracy because its operations are intended to have the entire political system catering to the financial elites in society. The issue for these critics is not that the environmental lobby spent $5 million on congressmen while oil and gas lobbyists spent $25 million, so one buys less influence than the other. The issue is lobbying as a reflection of class interests must be abolished because the only ones served are the rich and those whose interested are undermined the poor who have no one representing them.
If people wish to defend “Constitutionally-protected” bribery legalized within the lobbying system that is their choice, but they can hardly argue that there is much difference between this system and the one they criticize in Russia or Turkey, for example, where a millionaire bribes public officials. It is true that in the US lobbying is more subtle than the crude bribery methods of other countries. Former officials from the State Department, Defense, Commerce and other agencies become consultants who in turn lobby on behalf of foreign governments and multinational corporations.
Realistically, there is no chance of abolishing lobbying, so reform is about the only option. Campaign finance reform is an issue that comes up every time there is an election as is the role of lobbyists. Unfortunately, nothing has ever been done about this for decades to eliminate the aura of suspicion surrounding lobbying. Yet, there are countless academic and media journals, and books hammering the same old argument about campaign finance reform as though “reforming” corruption, decadence, and deals between lobbyists and politicians will somehow transform it into the panacea of the political system. The “reform” measures that have been passed from George Washington until have done absolutely nothing. After the Supreme Court lifted limits on campaign contributions in the case of McCutcheon v. FEC in April 2014, The Washington Post ran a story about campaign reform in the last two centuries, essentially detailing the futility of reform that in the public mind means improving that which is decadent and corrupt by nature.
Identifying the Lobbyists.
In 2014, there were 11,800 “registered” lobbying groups and they collectively spent $3.4 billion on behalf of their clients. The “official registered” number of US lobbyists is about one-third of their counterparts in Brussels lobbying the EU for favors on behalf of banks and tech companies to energy and commercial fishing. Although lobbying is a brokerage service industry operating under the guise of “informing” Congress and government agencies, it represents the symbiotic relationship between the state and the private sector. To have a better view of how lobbying is actually dominant in the political arena, we need to examine some American lobbyists well known for providing “symbiosis” between government and the private sector.
John Podesta, famous for his connection with both the Clinton and Obama administrations, describes from an overview perspective his company’s services as follows: “Our clients range from small, cutting-edge companies to global corporations, sovereign nations to local municipalities, trade associations to non-profits, and our solutions and strategies for achieving all of their policy goals are innovative and smart. Bloomberg Businessweek calls the Podesta Group a "Beltway Blackbelt," we call ourselves an unmatched team of policy experts that brings decades of experience in all corners of the federal government, and on the campaign trail to bear. We work with Capitol Hill policymakers, recruit third-party allies, connect with the media and build coalitions to champion our clients' agendas - in short, we know how to get things done.”
Besides serving as chief of staff for Bill Clinton and Counselor to Obama, Podesta head of one of the largest lobbying companies, chairs the Hilary Clinton campaign for 2016. He is one of the key people in the Democrat think tank Center for American Progress and a visiting scholar at Georgetown University where other lobbyists have and still are working, just to add a bit of academic legitimacy to a profession that in essence acts as a broker for big business and foreign governments. Although Podesta is a Democrat and used the party to advance his lobbying business, he will lobby for any corporation no matter its political affiliation.
There are of course many Republican lobbying firms that are even more blatant in their ties with government than Democrats. In January 2011, Utah Senator Mike Lee hired an energy lobbyist to be his chief of staff, raising questions about such a direct link between politicians and lobbyists. According to the Salt Lake Tribune: “They have also both (the senator and his chief of staff Spencer Stokes) worked for Energy Solutions and Stokes is still registered to lobby for the nuclear services company, which operates a radioactive waste landfill in Utah. Stokes is currently registered to lobby for 18 organizations in the state, including the Utah League of Credit Unions; Management & Training Corp., a private prison company; and a number of energy interests, including utilities and the Utah Association of Energy Users.” Huffington Post, January 3, 2011)
Senator Lee was honest enough to acknowledge through his actions that his office belonged to corporate interests, even while he was in office, no matter what critics thought of him. Other politicians wait until they actually leave office to go to work as lobbyists. This was the case with former Senators Trent Lott (Republican) and John Breaux (Democrat). In 2008, their lobbying firm made one million dollars, which was a mere 13% of their income for the year, serving such a diverse group of clients as AT&T, Northrop Grumman, Nissan North America, Tyson Foods and Shell Oil. According to published reports, the Lott-Breaux lobbying firm actually delivered no service to these companies, and this was by no means the only lobbying firm doing nothing but receiving money from corporate clients who simply wanted these firms on their side. Despite their rather conservative leanings on foreign policy, one of their clients was Russian-owned Gazprombank, Russia’s third largest bank controlled by the Russian state-owned Gazprom energy company against which U.S. imposed sanctions in July 2014. (“Empty Disclosure” by Lindsay Renick Mayer, March 19, 2009; OpenSecrets.org)
For decades, the tobacco lobby enjoyed such massive influence over politicians that it was difficult to secure label warnings, curbs on advertising and marketing campaign through various means from paying motion picture producers to have actors smoke like chimneys to other stealthy means of projecting an image that smoking was great for stress relief and did not cause cancer. When it became too costly for government (taxpayers) and insurance companies as well as employers paying part of the cost for their employees to subsidize cigarette smokers owing to health care costs, then the government began to regulate.
Of course, the massive lawsuits against tobacco companies also helped in this regard. The tobacco lobby represents but one aspect of how very narrow interests intended to maximize profit work against the welfare of the entire society, and how money buys political influence until other capitalist interests converge to oppose the lobby promoting its own cause. The tobacco lobby spent at least $22 million in lobbying in 2014 compared with $73 million in 1998. This does not include money spent by individuals companies on individual political campaigns.
The history of the tobacco lobby may reveal a lot about the “junk food and beverage” industry lobby because of healthcare costs as the common factor. The only political counterweight to powerful lobbying within the context of the market system is the convergence of other capitalist interests against a specific sector that cuts into the profits of several others. It is very revealing that it is not the welfare of the people that government takes into account but inter-sector competition.
Who Benefits from Lobbies?
In 2012, billionaire Republican presidential candidate Mitt Romney revealed that he was taxed at the rate of 14percent. Romney’s tax rate was considerably lower than 47% of Americans who pay higher taxes but do not have the income and assets of billionaires like Romney. This absurdity in poorer people paying tax rates than the rich is the result of lobbying. In 2010, the Sunlight Foundation conducted a study to determine how lobbying yields benefits to corporations. The result is that America’s largest companies enjoyed a tax reduction amounting to $11 billion in 2010 when compared with 2007. The study concludes that return on the lobbying investment on behalf of the companies involved was a staggering 2000%. (“Lobby More, Pay Less” by Lee Drutman. 16 April 2012 Sunlight Foundation.)
Besides the direct tax savings as a result from lobbying activities, corporations also benefit indirectly through subsidies that the government provides for some of the largest companies, including General Electric, Boeing and others of similar magnitude. Such subsidies are not only at the federal level, but also at the state and local levels amounting to billions of dollars annually, all of it in the name of neoliberalism but in essence corporate welfare.
To maintain a plant in Seattle Washington where the model Boeing 777X is made the Boeing Corporation received a staggering $8.7 billion in tax subsidy from the state as a result of lobbying. In addition to lower taxes and corporate subsidies that account for the phenomenon of corporate welfare, corporations also enjoy reduced regulation as a result of lobbying. For example, the food and beverage industry valued at more than one trillion dollars has been lobbying against regulatory measures that would reduce the rate of obesity and the ensuing costs to the health care system. With one-third of the population suffering from obesity and 17% of children, currently the US is number one among advanced nations. Because it is very profitable to make derivative food products from soy and corn used in junk foods, the food/beverage industry has spent enormous amounts on lobbying and campaign contributions to make certain there is no regulatory regime that obstructs this trend.
For large corporations in the domain of energy – coal, natural gas and oil – as well as chemical and pharmaceutical industries, lobbying is important to maximize profit by lowering costs owing to environmental regulation. The banking industry is just as active in lobbying government to permit greater freedom of its activities. (Mathew Sherman, “A Short History of Financial Deregulation in the United States”. Center for Economic Policy Research, 2009). As a result of lobbying efforts, Republicans and Democrats proceeded with banking deregulation in 1994. The result was the banking crisis of 2008 when the banks brought down not just the US economy but the world economy. All the risk rested with the taxpayers while the profits went to the bank executives and wealthy investors.
Deregulation meant massive bank profits at the cost of destabilizing the economy, but it does not stop there. Banks have been used as conduits to transfer billions in black market money emanating from narcotics to massive and chronic bribing involving FIFA international soccer games. The Justice Department’s FIFA investigation is looking into how Wall Street, including CITI and J.P. Morgan, were involved in the multi-million dollar money laundering operations of FIFA. Despite the hundreds of billions that banks have paid in fines and despite the crash of 2008, which started with Lehman Brothers in late 2007, they continue to lobby for less regulation and prevailing because of the money they spend to buy political influence.
Besides corporations deriving benefits as a result of lobbying, one of the most controversial lobbies in modern history is that representing Israel. One reason for its preeminent influence has been the combination of media, political and business support as well as voting power that make it very difficult for any politician to resist its pressures. Although the Israeli lobby acts on behalf of a foreign government, its success is that it presents its agenda as “the national interest of the US”, as though the US is an appendage of Israel and not a sovereign nation. Through its alliances with right-wing and Christian fundamentalist influence peddlers, and especially with defense industry and its lobbyists, the Israeli lobby has been able to create what many critics and supporters believe is the most powerful lobby organization in American history. One reason is the reluctance of most people to criticize because of fear they may be labeled anti-Semites. The question is whether this has helped to further the broader interests of the US or harmed them by helping to drag the country into regional Middle East conflicts and costing American taxpayers trillions of dollars from the 1940s to the present.
In September 2004, a number of media outlets dealt with the Israeli lobby and its links to Douglas Feith, Undersecretary of Defense for Policy. Fellow neo-conservatives well-connected with the Jewish lobby, Richard Perle and Paul Wolfowitz made sure Feith secured the Pentagon job, though it is not known the degree to which they were involved with the Israeli lobby and handing over official confidential documents to Israelis. Feith and his office were involved in an intelligence breach compromising US foreign and defense policy, but a pro-Israel administration refused to move forward with the case.
Neo-cons, some of whom are Jewish, were well connected to vice president Dick Cheney's office and to ultra-right wing Christian fundamentalists, all defenders of the Israeli lobby. Although the Justice Department investigated Feith and his office staff, it never found him guilty of anything. However, the issue is much larger than the specific perimeters of this case involving Feith who went on to work for pro-Israel causes including lobbying against the US-Iran nuclear deal. At the core of the controversial Israeli lobby is not the lobbyists working on behalf of the government in Tel Aviv under the cover of American conservatism, but U.S. foreign policy.
Politicians, the media, and pundits analyzing/propagating in the media have no problem with the Israeli lobby, focusing instead on China and its rising influence through lobbying efforts. There are many books and articles on the controversial Israeli lobby that many regard as sacrosanct and others decry as a situation where a tiny country largely determines US foreign policy from Truman to the present. The Israeli lobby is not the only one influencing US policy, and it must not be used as a pretext for the structural problems of lobbying. There are many other foreign lobbies pushing for everything from improved trade to arms deals and economic aid. One reason that the governments of Taiwan and Kuwait funded most of the Memorial Day activities in Washington in 2015 is because they want continued preferential treatment from US in trade, investment, foreign and defense policy.
The foreign lobbying process involving millions of dollars exchanging hands means that policy is not made based on the merits of the case, but on who pays and who does not. As the case of Senators Trent Lott and John Breaux illustrate, these people are hired guns for just about anyone that the US government would permit as “legitimate”. The issue of money is at heart of the Israeli lobby as well as less influential ones that know the way to buy policy is to pay for it and use other lobbies, especially the defense industry
In 2007 the Justice Department reported there were approximately 1,700 lobbyists representing more than 100 countries before Congress, the White House and the federal government all required to register under the Foreign Agents Registration Act (FARA). The Department of Justice has never enforced FARA evenly, and only used it when targeting countries it does not favor. Such selective enforcement of FARA is a reflection of the overall policy toward lobbying. The bottom line here is that the absence of political will results in the absence of enforcement of the law because the goal is to perpetuate a lobbying system that perpetuates the political regime serving the existing political economy and social structure.
All efforts at reform have come after the failure of some well-known lobbyists were involved in scandals or failing to register as such, or disclosing their firm represents foreign governments and they did not register as foreign agents. In 2006, Jack Abramoff, one of the most powerful lobbyists pleaded guilty to charges of fraud, corruption and conspiracy. This was a very big case that revealed the depth of corruption in the business. U.S. Government Accountability Office research of lobbying acknowledges that regardless of laws and enforcement, the system is flawed. During the Clinton administration, for example, of the 13,500 people lobbying Congress, 10,000 were not even registered as such! This does not include individuals working for corporations that lobby politicians individually.
Although this is hardly intended as an excuse, lobbying is not something that takes place only in the US. The European Union has its own set of problems with various forms of lobbying ranging from cronyism to money directly from companies and wealthy individuals to politicians in all countries from France to Greece. In some respects, the EU is as bad if not worse than the US, which simply confirms that lobbying is a universal phenomenon under capitalism and hardly a unique political or cultural trait in America. According to Transparency International only 7 out 19 EU countries even have laws and regulations on lobbying, and most of that is not working.
This explains everything from tax breaks for the rich to massive capital transfers and illegal activities involving money changing hands from businesses to politicians and public officials. This is not a problem confined to the periphery southern and Eastern European countries, but actually found at the northwest core countries where capitalism thrives and where most of the corruption takes place because of the headquarters for some of the world’s largest banks and multinational corporations with a history of corruption. When we trace the money trail that finds its way to politicians, government ministers and public officials, we realize that legislation and regulatory measures pass because “greased wheels” are behind it.
Nevertheless, EU politicians like their US counterparts try their very best to argue that everything they do, including tax reductions and tax loopholes for the wealthy “is best for society” and there is no other way. There are an estimated 30,000 lobbyists in EU headquarters Brussels, Belgium spending more than one billion euros to buy political influence. Their influence over policy impacting everything from trade and monetary policy to energy and shipping is estimated at 75%. (UK The Guardian, May 8, 2014) The interesting thing about all of this is that the EU taxpayers are actually subsidizing the lobbyists who secure subsidies for their clients.
The issues before critics of lobbying include transparency, consumer protection, degradation of the environment, health and safety, equal access to politicians, and a regulatory regime that is intended to result in enforceable and ethical conduct on the part of both lobbyists and those in government. This is the reformist camp of critics that has its ideological roots in the late 19th century when the Industrial Revolution and finance capitalism needed to enjoy greater control of public policy so they could realize greater profits. Reformers believe in rationalizing capitalism so it can work best in a pluralistic society where the middle class needs protection, especially in the 21st century when communications means are so readily available and it is difficult to conceal the role of lobbies.
Businesses and foreign governments create coffers and slush funds to elect or reelect politicians, or at least influence their voting on specific issues or to prevent measures from passing because they would cut into their profits. Through political action committees and through loopholes and favors from politicians, lobbyists provide the financing and media influence politicians need to win or stay in office. Most of this is legal, some of it is not and we do not know to what degree, but the lobbying system as a whole is a reflection of how the political economy operates. Lobbying is built into the capitalist system to further strengthen and concentrate capital and maintain the social order. Efforts of reformers to rationalize the economy and balance interests of various sectors of production along with the interests of social classes in order to maintain a pluralistic society that politicians can still call “democracy” are a distraction for the benefit of the public that needs to believe we live in a democracy.
Jon Kofas is a retired university Professor from Indiana University.
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