Does money control politics in democracy?

Capitalism has been controlling democracies since Athens invented both concepts 2,500 years ago. A dictator can afford to ignore rich people's demands, but a politician in a democratic country relies on money to get elected and then reelected, so s/he is under constant pressure to please the people who have the money. The influence of money has been pervasive and often obvious in all western countries since they became democratic, but there is a real danger that it escalates as the capitalist system becomes more and more efficient. The USA is the only country in which significant controls are in place to curb the power of a company (AT&T, then the largest company in the world, was forced to split, Bill Gates, then the richest man in the world, was forced to help his competitors compete against Microsoft, and countless penalties are slammed every year against companies that employ unfair business practices, and, most important, consumer groups are powerful, and laws encourage individuals to sue large companies). By comparison, neither Europe nor Japan have any mechanism to check the power of businesses: monopolies are routinely tolerated (and often subsidized by the government, particularly in France and Italy), there are virtually no consumer groups and laws discourage individuals from suing companies. The influence of money on politics can be broken down in three areas: influence of rich individuals/families; influence of large companies; and influence of lobbies.

1. Relationship between the richest people and politics

With the exception of Italy, the relationship between wealth and political power is not obvious at all. In fact, it is almost obvious the opposite. This website http://www.rich-bastards.com/d-RichLists.htm has the list of the richest men of the world. The USA is the one where the correlation with power is LEAST evident (the wealthiest Americans are in software and retail, hardly Bush's favorite fields). And I'm not sure what you conclude from the fact that one of the richest men in Japan runs golf courses or one of the richest men in France runs perfume companies or that one of the richest men in Britain runs a Formula One team. (For those who persist in thinking oildriven, it will be interesting to realize that the only non-Arab country in which oil magnates are among the richest people is Russia. But that also hardly works, because Putin is putting them in jail one after the other.)

The richest people in the world (2002):

Bill Gates $40.7 billion (Microsoft) Warren Buffett $30.5 billion (Investments) Karl & Theo Albrecht $25.6 billion (Albertson's, Germany) Paul Allen $20.1 billion (Microsoft) Prince Alwaleed Bin Talal Alsaud $17.7 billion (Kingdom Holding, Saudi Arabia) Lawrence Ellison $16.6 billion (Oracle) Jim C Walton $16.5 billion (Wal-Mart) John T Walton $16.5 billion (Wal-Mart) S Robson Walton $16.5 billion (Wal-Mart) Kenneth Thomson & family $14.0 billion (Thomson, Canada) 2. Relationship between largest companies and politics

The largest companies are listed at http://www.fortune.com/fortune/global500 but that doesn't work too well either, because the largest American companies (with the exception of Walmart and Ford) are owned mainly by small shareholders (eg, mutual funds or pension funds), due to the popularity of the stock market with ordinary Americans, It is true that the largest European companies are owned by individuals, families or the government itself: Carrefour (Europe's largest retailer) is owned by the Defforey family, IFI/Fiat is owned by the Agnelli family, PSA Peugeout (Europe's second largest car manufacturer) is owned by the Peugeot family, BMW is owned by the Quandt family, Bosch is owned by the Bosch family, Pinault-Printemps Redoute is owned by the Pinault family, Auchan (one of the largest worldwide retailers) is owned by the Mulliez family, etc. But ownership of large companies is too diluted in the USA to pinpoint who "controls" them.

Between 2000 and 2002, the 20 million small businesses in the USA (business with less than 20 employees) made up 98% of all the businesses in the country, accounted for 50-55% of all business sales, and produced 38-39% of

the nation's GNP. (See, for example, this article). This is not true in other parts of the capitalist world (Europe, Japan) where most of the GNP is controlled by the government itself and by large conglomerates.

Many of the small businesses in the USA invest their profits in the stock market. So, at the end of the day, small businesses control most of the economy AND they also own pieces of large corporations. The opposite is not true.

So, at best, the economic power that controls the USA is in the family-owned businesses, not in the large corporations.

3. Relationship between lobbies and politics.

The system of lobbies is largely an American invention. Groups of interest open offices in Washington and spend money to convince senators and representatives (and sometimes the president himself) to pass this or that law. Two of the most powerful lobbies (in terms of money spent in Washington) are the pensioners' lobby and the NRA (National Rifle Association). Now, one may not like elderly people or gun owners, but these two lobbies represent ordinary Americans, not large corporations. (No gun manufacturer ranks among the USA's top companies). Another powerful lobby is the media companies, that maintain (2003) 284 lobbyists in Washington, specifically the National Association of Broadcasters (NAB) and the National Cable Television Association. Other powerful lobbies include the workers' unions and the farmers. The tobacco industry also has, traditionally, a strong lobby in Washington, but that hardly proves the point here, because Washington has passed one law after the other against the tobacco industry. Then there are ethnic lobbies, such as the Cuban and the Jewish lobby. The truth is that there are so many lobbies, representing so many different interests, that no lobby can prevail all the time against all other lobbies. So the USA seems to have created a system that, precisely because it encourages the formation of all sorts of lobbies, is largely protected from the disproportional influence of just one lobby. That explains why laws against business interests (such as laws against tobacco or retail food) pass more easily in the USA than in other countries. Gun-control laws have not been passed because, fundamentally, it is the American pubblic (the NRA) that is opposed to them: the influence of gun manufacturers is only a component

(not the major one) of pro-gun lobbying.

As a footnote, the power of lobbies is much stronger and uncontrolled in international arenas. The Transatlantic Business Dialogue (founded in 1995 and including 150 large corporations from the USA and Europe) plays a key role in controlling international trade laws around the world. The International Chamber of Commerce (founded in 1919, based in Paris, and including thousands of large corporations from over 100 countries) is the single largest and most influential international corporate lobby group, responsible for many decisions taken at the World Trade Organization, the G8 and the United Nations, besides successfully opposing the Kyoto Protocol, the Convention on Biodiversity and the Basel Convention against trade in toxic waste. The World Economic Forum (made of 2,000 corporate executives, politicians and scholars, and held in Davos, Switzerland) controls virtually all international institutions and several governments of the most powerful countries (for example, the World Trade Organization was their idea). The European Roundtable of Industrialists (collecting corporate executives from Europe's largest multinationals) has been the main driver behind the privatization program in western European countries (energy, transport, telecommunication, postal), behind the reforms of labour and welfare laws, and behind the program for European monetary union laid out in 1991 at Maastricht. In the USA, the most powerful lobby representing the interests of large corporations (regardless of industry sector) is probably the Business Roundtable (founded in 1972), which successfully lobbied in favor of the NAFTA (North American Free Trade Agreement) agreement with Canada and Mexico, and in favor of trade with China.

Does money control politics in democracies? It depends on how democratic the democracy is. In the USA, where individuals have more control over public affairs, that influence is diluted, and ultimately it is not clear who controls what. In Europe and Japan, where individuals have little control over the institutions, that influence is much stronger. In emerging democracies that control is much greater.