Thomas Ferguson's
Golden Rule. That is, it is not "votes" which matter. It is
investors. Investors have shifted both parties to the right (see, for
supporting evidence, Ferguson and Rogers *Right Turn* or Ferguson's
*Golden Rule*).
*Golden Rule: The Investment Theory of Party Competition and the
Logic of Money-Driven Political Systems* (University of Chicago Press,
1995), pp. 381-3:
The Myth of the Median Voter
Let us begin, however, with the investment theory's bedrock claim:
what might be termed the general failure of control by the so-called
median voter (the voter whose strategic position exactly in the middle
of a distribution of voters guarantees a candidate one more vote than
he or she needs to defeat all comers).
The argument can be developed with any degree of detail and formal
vigor. But it is perhaps most easily and convincingly outlined in
terms of a single concrete example designed to demonstrate with the
clarity of a laboratory experiment just how money-driven political
systems can thwart the will of even overwhelming majorities of voters.
Imagine a world in which labor-intensive textile producers command
virtually all pecuniary resources beyond those necessary for ordinary
wage earners to live (a world, that is, in which the so-called
"classical savings function" popularized by Kalecki, Kaldor, and
Robinson applies). Such a situation is perhaps most conveniently
pictured along the lines of some company town of the early industrial
Revolution, but as will shortly be evident, conditions long ago and
far away are not the essence of the problem. A fortiori, neither is
the classical savings function.
Suppose, further, that an election is being staged, in which everyone
votes for one of two political parties. There is only one issue, and
everyone agrees on what it is: passage of legislation that is likely
to lead to 100 percent unionization of the labor force. All wage
earners agree that the law is desirable. All textile magnates (3
percent of the total voting population) vehemently disagree.
What stance do the political parties take?
Analysts impressed by the familiar spatial models of party competition
will of course reply that the parties must head immediately to the
median position at the far right of [the figure below], where
virtually all voters are located.
| * 97%
| *
| *
| *
| *
| *
%Voters | *
| *
| *
| *
| *
| *
| * 3% *
| * *
| * *
-----------------------------------------------
0 100
Desired % Union
The investment theory, however, spotlights a detail that leads to a
dramatically different expectation: *When money matters importantly to
mounting campaigns*, no party can afford to take up the median
position that represents the views of the vast majority, if investors
disagree. The mere fact that votes are out there does not imply that
any party can afford to campaign for them, even if its message is what
they would want to hear.
In this instance, all parties depend on textiles for funding. The
textile industry, of course, will not pay to undermine itself. It thus
subsidizes only candidates opposed to passage of the law. (Readers who
have been exposed only to the median voter model are often inclined to
object: But wouldn't the textile party improve its chances of winning
by embracing unionization? The all-but-irresistible tendency to this
mistaken inference illustrates perfectly how a bad model can blind
social scientists --- and many ordinary people, who intuitively know
better --- to the harsh realities of money-driven political
systems. The short answer is that if the cost of winning the election
really were sponsoring unionization, textiles would, paradoxically,
lose by adopting the "winning" strategy.)
Given that the textile industry is the only source of campaign funds,
all parties must comply with the industry's demand for a union-free
environment, or else they cannot afford to compete at all. Without
collusion or "conspiracy" of any kind, accordingly, each party
*independently* discovers that available funds constrain it to
champion the very same rate of unionization as all others: 0 percent,
ironically, on the far left in [the] figure [above].
The conclusion is sweeping, but while the example is carefully
constructed, it is not contrived. In particular, it does *not*
represent a "special case" dependent on the improbably stark contrast
between the very rich and the very poor, assumed here for simplicity's
sake, or on features unique to unionization as a political issue. (Or,
of course, on the lopsided 97 percent to 3 percent opinion
distribution, which simply defines a case that, on the face of it,
should be a knockdown for the median voter model since an overwhelming
majority consensus has actually crystallized.)
Instead, what is critical are the brute implications of a very
pedestrian fact: that entry into politics (and, for that matter,
subsequent campaigning) is normally very expensive in terms of the
time and incomes of ordinary voters. As a consequence of this
"campaign cost condition," whenever the generic policy interests of
all large investors diverge from those of ordinary people (and there
is certainly no presumption that they should always do so), voters are
checkmated. As long as money matters importantly, and efforts to
offset the costs of political activity by pooling resources confront
high transaction costs or other obstacles, including overt repression,
the electorate can shake, rattle, and roll. But it cannot float an
alternative of its own to force the issue onto the agenda --- even if,
as in this case, the majority comprises an overwhelming 97 percent of
the electorate. By virtue of what my earlier essay summarized as the
"principle of noncompetition across all investor blocs," only
investors can compel (at least one of the) parties to take up an
issue-because only investors can afford to pay the high "replacement
cost" of nonresponsive parties (candidates, etc.).
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