               D.2 What influence does wealth have over politics?

   The short answer is: a great deal of influence, directly and
   indirectly. We have already touched on this in [1]section B.2.3. Here
   we will expand on those remarks.

   State policy in a capitalist democracy is usually well-insulated from
   popular influence but very open to elite influence and money interests.
   Let's consider the possibility of direct influence first. It's obvious
   that elections cost money and that only the rich and corporations can
   realistically afford to take part in a major way. Even union donations
   to political parties cannot effectively compete with those from the
   business classes. For example, in the 1972 US presidential elections,
   of the $500 million spent, only about $13 million came from trade
   unions. The vast majority of the rest undoubtedly came from Big
   Business and wealthy individuals. For the 1956 elections, the last year
   for which direct union-business comparisons are possible, the
   contributions of 742 businessmen matched those of unions representing
   17 million workers. This, it should be stressed was at a time when
   unions had large memberships and before the decline of organised labour
   in America. Thus the evidence shows that it is "irrefutable" that
   "businessmen contribute vastly greater sums of money to political
   campaigns than do other groups [in society]. Moreover, they have
   special ease of access to government officials, and they are
   disproportionately represented at all upper levels of government."
   [David Schweickart, Against Capitalism, pp. 210-1]

   Therefore, logically, politics will be dominated by the rich and
   powerful -- in fact if not in theory -- since, in general, only the
   rich can afford to run and only parties supported by the wealthy will
   gain enough funds and favourable press coverage to have a chance (see
   [2]section D.3 for the wealthy's control of the mass media). Of course,
   there are many countries which do have labour-based parties, often
   allied with union movements, as is the case in Western Europe, for
   example. Yet even here, the funds available for labour parties are
   always less than those of capitalist supported parties, meaning that
   the ability of the former to compete in "fair" elections is hindered.
   In addition, the political agenda is dominated by the media and as the
   media are owned by and dependent upon advertising from business, it is
   hardly surprising that independent labour-based political agendas are
   difficult to follow or be taken seriously. Unsurprisingly, many of
   these so-called labour or social-democratic parties have moved to the
   right (particularly since the 1980s). In Britain, for example, the New
   Labour government which was elected in 1997 simply, in the main,
   followed the policies of the previous Conservative Governments and saw
   its main funding switch from unions to wealthy business men (sometimes
   in the form of "loans" which could be hidden from the accounts).
   Significantly, New Labour's success was in part dependent on support
   from the right-wing media empire of Rupert Murdoch (Blair even
   consulted with him on policy, indicating his hold over the government).

   Then there are the barriers involved once a party has gained office.
   Just because a party has become the government, it does not mean that
   they can simply implement their election promises. There are also
   significant pressures on politicians from the state bureaucracy itself.
   The state structure is designed to ensure that real power lies not in
   the hands of elected representatives but rather in the hands of
   officials, of the state bureaucracy which ensures that any pro-labour
   political agenda will be watered down and made harmless to the
   interests of the ruling class. We discuss this in [3]section J.2.2 and
   will not do so here.

   To this it must be added that wealth has a massive indirect influence
   over politics (and so over society and the law). We have noted above
   that wealth controls the media and its content. However, beyond this
   there is what can be called "Investor Confidence," which is another
   important source of influence. This is "the key to capitalist
   stability," notes market socialist David Schweickart. "If a government
   initiates policies that capitalists perceive to be opposed to their
   interests, they may, with neither organisation nor even spitefulness,
   become reluctant to invest [or actually dis-invest] in the offending
   country (or region or community), not if 'the climate for business is
   bad.' The outcome of such isolated acts is an economic downturn, and
   hence political instability. So a government . . . has no real choice
   but to regard the interests of business as privileged. In a very real
   sense, what is good for business really is good for the country. If
   business suffers, so will everyone else." [Op. Cit., pp. 214-5]

   Hence Chomsky's comment that when "popular reform candidates . . . get
   elected . . . you get [a] capital strike -- investment capital flows
   out of the country, there's a lowering of investment, and the economy
   grinds to a halt . . . The reason is quite simple. In our society, real
   power does not happen to lie in the political system, it lies in the
   private economy; that's were the decisions are made about what's
   produced, how much is produced, what's consumed, where investment takes
   place, who has jobs, who controls the resources, and so on and so
   forth. And as long as that remains the case, changes inside the
   political system can make some difference -- I don't want to say it's
   zero -- but the differences are going to be very slight." This means
   that government policy is forced to make "the rich folk happy"
   otherwise "everything's going to grind to a halt." [Understanding
   Power, pp. 62-3] As we discuss in the [4]next section, this is
   precisely what has happened.

   David Noble provides a good summary of the effects of such indirect
   pressures when he writes firms "have the ability to transfer production
   from one country to another, to close a plant in one and reopen it
   elsewhere, to direct and redirect investment wherever the 'climate' is
   most favourable [to business]. . . . [I]t has enabled the corporation
   to play one workforce off against another in the pursuit of the
   cheapest and most compliant labour (which gives the misleading
   appearance of greater efficiency). . . [I]t has compelled regions and
   nations to compete with one another to try and attract investment by
   offering tax incentives, labour discipline, relaxed environmental and
   other regulations and publicly subsidised infrastructure. . . Thus has
   emerged the great paradox of our age, according to which those nations
   that prosper most (attract corporate investment) by most readily
   lowering their standard of living (wages, benefits, quality of life,
   political freedom). The net result of this system of extortion is a
   universal lowering of conditions and expectations in the name of
   competitiveness and prosperity." [Progress Without People, pp. 91-92]

   And, we must note, even when a country does lower its standard of
   living to attract investment or encourage its own business class to
   invest (as the USA and UK did by means of recession to discipline the
   workforce by high unemployment) it is no guarantee that capital will
   stay. US workers have seen their companies' profits rise while their
   wages have stagnated and (in reward) hundreds of thousands have been
   "down-sized" or seen their jobs moved to Mexico or South East Asia
   sweatshops. In the far east, Japanese, Hong Kong, and South Korean
   workers have also seen their manufacturing jobs move to low wage (and
   more repressive/authoritarian) countries such as China and Indonesia.

   As well as the mobility of capital, there is also the threat posed by
   public debt. As Doug Henwood notes, "[p]ublic debt is a powerful way of
   assuring that the state remains safely in capital's hands. The higher a
   government's debt, the more it must please its bankers. Should bankers
   grow displeased, they will refuse to roll over old debts or to extend
   new financing on any but the most punishing terms (if at all). The
   explosion of [US] federal debt in the 1980s vastly increased the power
   of creditors to demand austere fiscal and monetary policies to dampen
   the US economy as it recovered . . . from the 1989-92 slowdown." [Wall
   Street, pp. 23-24] And, we must note, Wall street made a fortune on the
   debt, directly and indirectly.

   This analysis applies within countries as well. Commenting on Clinton's
   plans for the devolution of welfare programmes from Federal to State
   government in America, Noam Chomsky makes the important point that
   "under conditions of relative equality, this could be a move towards
   democracy. Under existing circumstances, devolution is intended as a
   further blow to the eroding democratic processes. Major corporations,
   investment firms, and the like, can constrain or directly control the
   acts of national governments and can set one national workforce against
   another. But the game is much easier when the only competing player
   that might remotely be influenced by the 'great beast' is a state
   government, and even middle-sized enterprise can join in. The shadow
   cast by business [over society and politics] can thus be darker, and
   private power can move on to greater victories in the name of freedom."
   [Noam Chomsky, "Rollback III", Z Magazine, March, 1995]

   Economic blackmail is a very useful weapon in deterring freedom. Little
   wonder Proudhon argued that the "Revolutionary principle . . . is
   Liberty. In other words, no more government of man by man through the
   accumulation of capital." [quoted by Jack Hayward, After the French
   Revolution, p. 177]

D.2.1 Is capital flight really that powerful?

   Yes. By capital flight, business can ensure that any government which
   becomes too independent and starts to consider the interests of those
   who elected it will be put back into its place. Therefore we cannot
   expect a different group of politicians to react in different ways to
   the same institutional influences and interests. It's no coincidence
   that the Australian Labour Party and the Spanish Socialist Party
   introduced "Thatcherite" policies at the same time as the "Iron Lady"
   implemented them in Britain. The New Zealand Labour government is a
   case in point, where "within a few months of re-election [in 1984],
   finance minister Roger Douglas set out a programme of economic
   'reforms' that made Thatcher and Reagan look like wimps. . . .[A]lmost
   everything was privatised and the consequences explained away in
   marketspeak. Division of wealth that had been unknown in New Zealand
   suddenly appeared, along with unemployment, poverty and crime." [John
   Pilger, "Breaking the one party state," New Statesman, 16/12/94]

   An extreme example of capital flight being used to "discipline" a
   naughty administration can be seen from Labour governments in Britain
   during the 1960s and 1970s. Harold Wilson, the Labour Prime Minister
   between 1964 and 1970, recorded the pressures his government was under
   from "the markets":

     "We were soon to learn that decisions on pensions and taxation were
     no longer to be regarded, as in the past, as decisions for
     parliament alone. The combination of tax increases with increased
     social security benefits provoked the first of a series of attacks
     on sterling, by speculators and others, which beset almost every
     section of the government for the next five years." [The Labour
     Government 1964-1970, p. 31]

   He also had to "listen night after night to demands that there should
   be cuts in government expenditure, and particularly in those parts of
   government expenditure which related to social services. It was not
   long before we were being asked, almost at pistol-point to cut back on
   expenditure" by the Governor of the Bank of England, the stock
   exchange's major mouthpiece. [Op. Cit., p. 34] One attempt to
   pressurise Wilson resulted in him later reflecting:

     "Not for the first time, I said that we had now reached the
     situation where a newly elected government with a mandate from the
     people was being told, not so much by the Governor of the Bank of
     England but by international speculators, that the policies on which
     we had fought the election could not be implemented; that the
     government was to be forced into the adoption of Tory policies to
     which it was fundamentally opposed. The Governor confirmed that that
     was, in fact, the case." [Op. Cit., p. 37]

   Only the bluff of threatening to call another general election allowed
   Wilson to win that particular battle but his government was
   constrained. It implemented only some of the reforms it had won the
   election on while implementing many more policies which reflected the
   wishes of the capitalist class (for example, attempts to shackle the
   rank and file of the unions).

   A similar process was at work against the 1974 to 1979 Labour
   government. In January, 1974, the FT Index for the London Stock
   Exchange stood at 500 points. In February, the Miner's went on strike,
   forcing Heath (the Tory Prime Minister) to hold (and lose) a general
   election. The new Labour government (which included some left-wingers
   in its cabinet) talked about nationalising the banks and much heavy
   industry. In August, 1974, Tony Benn announced plans to nationalise the
   ship building industry. By December, the FT index had fallen to 150
   points. [John Casey, "The Seventies", The Heavy Stuff, no. 3, p. 21] By
   1976 the Treasury was "spending $100 million a day buying back its own
   money on the markets to support the pound." [The Times, 10/6/76]

   The Times [27/5/76] noted that "the further decline in the value of the
   pound has occurred despite the high level of interest rates. . . .
   [D]ealers said that selling pressure against the pound was not heavy or
   persistent, but there was an almost total lack of interest amongst
   buyers. The drop in the pound is extremely surprising in view of the
   unanimous opinion of bankers, politicians and officials that the
   currency is undervalued." While there was much talk of private armies
   and military intervention, this was not needed. As anarchist John Casey
   argues, the ruling class "chose to play the economic card . . . They
   decided to subdue the rogue Labour administration by pulling the
   financial plugs out of the economy . . . This resulted in the stock
   market and the pound plummeting . . . This was a much neater solution
   than bullets and forced the Wilson government to clean up the mess by
   screwing the working class with public spending cuts and a freeze on
   wage claims . . . The whole process of economic sabotage was neatly
   engineering through third parties like dealers in the currency
   markets." [Op. Cit., p. 23]

   The Labour government, faced with the power of international capital,
   ended up having to receive a temporary "bailing out" by the IMF, which
   imposed a package of cuts and controls, to which Labour's response was,
   in effect, "We'll do anything you say," as one economist described it.
   The social costs of these policies were disastrous, with unemployment
   rising to the then unheard-of-height of one million. And let's not
   forget that they "cut expenditure by twice the amount the IMF were
   promised" in an attempt to appear business-friendly. [Peter Donaldson,
   A Question of Economics, p. 89] By capital flight, a slightly radical
   Labour government was brought to heel.

   Capital will not invest in a country that does not meet its approval.
   In 1977, the Bank of England failed to get the Labour government to
   abolish its exchange controls. Between 1979 and 1982 the Tories
   abolished them and ended restrictions on lending for banks and building
   societies:

     "The result of the abolition of exchange controls was visible almost
     immediately: capital hitherto invested in the U.K. began going
     abroad. In the Guardian of 21 September, 1981, Victor Keegan noted
     that 'Figures published last week by the Bank of England show that
     pension funds are now investing 25% of their money abroad (compared
     with almost nothing a few years ago) and there has been no
     investment at all (net) by unit trusts in the UK since exchange
     controls were abolished.'" [Robin Ramsay, "Mrs Thatcher, North Sea
     and the Hegemony of the City", pp. 2-9, Lobster, no. 27, p. 3]

   This contributed to the general mismanagement of the economy by
   Thatcher's Monetarist government. While Milton Friedman had predicted
   "only a modest reduction in output and employment will be a side effect
   of reducing inflation to single figures by 1982," the actual results of
   applying his ideas were drastically different. [quoted by Michael
   Stewart, Keynes and After, p. 179] Britain experienced its deepest
   recession since the 1930s, with unemployment nearly tripling between
   1979 and 1985 (officially, from around 5% to 13% but the real figure
   was even higher as the government changed the method of measuring it to
   reduce the figures!). Total output fell by 2.5% in 1980 and another
   1.5% in 1981. By 1984 manufacturing investment was still 30% lower in
   1979. [Steward, Op. Cit., p. 180] Poverty and inequality soared as
   unemployment and state repression broke the back of the labour movement
   and working class resistance.

   Eventually, capital returned to the UK as Thatcher's government had
   subdued a militant working class, shackled the trade unions by law and
   made the welfare state difficult to live on. It reversed many of the
   partial gains from previous struggles and ended a situation where
   people had enough dignity not to accept any job offered or put up with
   an employer's authoritarian practices. These factors created
   "inflexibility" in the labour market, so that the working class had to
   be taught a lesson in "good" economics (in part, ironically, by
   mismanaging the economy by applying neoclassical dogmas in their
   Monetarist form!).

   Needless to say, the situation in the 21st century has become worse.
   There has been a "huge rise in international borrowing . . . in
   international capital markets since the liberalisation moves of the
   1970s, and [a] significant increase in foreign penetration of national
   central government bond markets." This means that it is "obvious that
   no central government today may follow economic policies that are
   disapproved of by the capital markets, which have the power to create
   an intolerable economic pressure on the respective country's borrowing
   ability, currency value and investment flows." [Takis Fotopoulos,
   Toward an Inclusive Democracy, p. 42] We discuss globalisation in more
   detail in [5]section D.5.

   Unsurprisingly, when left-wing governments have been elected into
   office after the 1980s, they have spent a lot of time during the
   election showing how moderate they are to the capitalist class ("the
   markets"). This moderation continued once in office and any reforms
   implemented have been of a minor nature and placed within a general
   neo-liberal context. This was the fate of the British Labour government
   of Tony Blair, while in Brazil the government of Lula (a former lathe
   operator, labour union leader and Brazil's first working-class
   president) was termed "Tropical Blairism" by left-wing critics. Rather
   than use popular mandate to pursue social justice, they have governed
   for the rich. Given the role of the state and the pressures governments
   experience from capital, anarchists were not surprised.

   Of course, exceptions can occur, with popular governments implementing
   significant reforms when economic and political circumstances are
   favourable. However, these generally need popular movements at the same
   time to be really effective and these, at some stage, come into
   conflict with the reformist politicians who hold them back. Given the
   need for such extra-parliamentary movements to ensure reforms
   anarchists consider their time better spent building these than
   encouraging illusions about voting for radical politicians to act for
   us (see [6]section J.2 for details).

D.2.2 How extensive is business propaganda?

   Business spends a lot of money to ensure that people accept the status
   quo. Referring again to the US as an example (where such techniques are
   common), various means are used to get people to identify "free
   enterprise" (meaning state-subsidised private power with no
   infringement of managerial prerogatives) as "the American way." The
   success of these campaigns is clear, since many American working people
   (for example) now object to unions ing too much power or irrationally
   rejecting all radical ideas as "Communism" (i.e. Stalinism) regardless
   of their content. By the 1990s, it had even made "liberal" (i.e. mildly
   reformist centre-left policies) into a swear word in some parts of the
   country.

   This is unsurprising and its roots can be found in the success of sort
   of popular movements business propaganda was created to combat. As
   Chomsky argues, due to popular struggles, "the state has limited
   capacity to coerce" in the advanced capitalist countries (although it
   is always there, to be used when required). This meant that "elite
   groups -- the business world, state managers and so on -- recognised
   early on that they are going to have to develop massive methods of
   control of attitude and opinion, because you cannot control people by
   force anymore and therefore you have to modify their consciousness so
   that they don't perceive that they are living under conditions of
   alienation, oppression, subordination and so on. In fact, that's what
   probably a couple trillion dollars are spent on each year in the US,
   very self-consciously, from the framing of television advertisements
   for two-year olds to what you are taught in graduate school economics
   programs. It's designed to create a consciousness of subordination and
   it's also intended specifically and pretty consciously to suppress
   normal human emotions." [Chomsky on Anarchism, p. 223]

   This process became apparent in the 1960s. In the words of Edward
   Herman:

     "The business community of the United States was deeply concerned
     over the excesses of democracy in the United States in the 1960s,
     and it has tried hard to rectify this problem by means of
     investments in both politicians and informing public opinion. The
     latter effort has included massive institutional advertising and
     other direct and indirect propaganda campaigns, but it has extended
     to attempts to influence the content of academic ideas . . . [With]
     a significant portion of academic research coming from foundations
     based on business fortunes . . . [and money] intended to allow
     people with preferred viewpoints to be aided financially in
     obtaining academic status and influence and in producing and
     disseminating books." ["The Selling of Market Economics," pp.
     173-199, New Ways of Knowing, Marcus G. Raskin and Herbert J.
     Bernstein (eds.), p. 182]

   Wealth, in other words, is employed to shape the public mind and ensure
   that challenges to that wealth (and its source) are reduced. These
   include funding private foundations and institutes ("think-tanks")
   which can study, promote and protect ways to advance the interests of
   the few. It can also include the private funding of university chairs
   as well as the employment of PR companies to attack opponents and sell
   to the public the benefits not only of specific companies their
   activities but also the whole socio-economic system. In the words of
   Australian Social Scientist Alex Carey the "twentieth century has been
   characterised by three developments of great political importance: the
   growth of democracy, the growth of corporate power, and the growth of
   corporate propaganda as a means of protecting corporate power against
   democracy." [quoted by Noam Chomsky, World Orders, Old and New, p. 89]

   By 1978, American business was spending $1 billion a year on grassroots
   propaganda. [Chomsky, Op. Cit., p. 93] This is known as "Astroturf" by
   PR insiders, to reflect the appearance of popular support, without the
   substance, and "grasstops" whereby influential citizens are hired to
   serve as spokespersons for business interests. In 1983, there existed
   26 general purpose foundations for this purpose with endowments of $100
   million or more, as well as dozens of corporate foundations. One
   extremely wealth conservative, Richard Mellon Scaife, was giving $10
   million a year through four foundations and trusts. [G. William
   Domhoff, Who Rules America Now?, p. 92 and p. 94] These, along with
   media power, ensure that force -- always an inefficient means of
   control -- is replaced by (to use a term associated with Noam Chomsky)
   the "manufacture of consent": the process whereby the limits of
   acceptable expression are defined by the wealthy.

   Various institutions are used to get Big Business's message across, for
   example, the Joint Council on Economic Education, ostensibly a
   charitable organisation, funds economic education for teachers and
   provides books, pamphlets and films as teaching aids. In 1974, 20,000
   teachers participated in its workshops. The aim is to induce teachers
   to present corporations in an uncritical light to their students.
   Funding for this propaganda machine comes from the American Bankers
   Association, AT&T, the Sears Roebuck Foundation and the Ford
   Foundation. As Domhoff points out, "[a]lthough it [and other bodies
   like it] has not been able to bring about active acceptance of all
   power elite policies and perspectives, on economic or other domestic
   issues, it has been able to ensure that opposing opinions have remained
   isolated, suspect and only partially developed." [Op. Cit., pp. 103-4]

   In other words, "unacceptable" ideas are marginalised, the limits of
   expression defined, and all within a society apparently based on "the
   free marketplace of ideas."

   This process has been going on for some time. For example "[i]n April
   1947, the Advertising Council announced a $100 million campaign to use
   all media to 'sell' the American economic system -- as they conceived
   it -- to the American people; the program was officially described as a
   'major project of educating the American people about the economic
   facts of life.' Corporations 'started extensive programs to
   indoctrinate employees,' the leading business journal Fortune reported,
   subjected their captive audiences to 'Courses in Economic Education'
   and testing them for commitment to the 'free enterprise system -- that
   is, Americanism.' A survey conducted by the American Management
   Association (AMA) found that many corporate leaders regarded
   'propaganda' and 'economic education' as synonymous, holding that 'we
   want our people to think right'. . . [and that] 'some employers view. .
   . [it] as a sort of 'battle of loyalties' with the unions' -- a rather
   unequal battle, given the resources available." These huge PR campaigns
   "employed the media, cinema, and other devices to identify 'free
   enterprise' -- meaning state-subsidised private power with no
   infringement on managerial prerogatives -- as 'the American way,'
   threatened by dangerous subversives." [Noam Chomsky, Op. Cit., pp.
   89-90 and p. 89]

   By 1995, $10 billion was considered a "conservative estimate" on how
   much money was spent on public relations. The actual amount is unknown,
   as PR industry (and their clients, of course) "carefully conceals most
   of its activities from public view. This invisibility is part of a
   deliberate strategy for manipulating public opinion and government
   policy." The net effect is that the wealth of "large corporations,
   business associations and governments" is used to "out-manoeuvre,
   overpower and outlast true citizen reformers." In other words: "Making
   the World Safe from Democracy." [John Stauber and Sheldon Rampton,
   Toxic Sludge is Good for You!, p. 13, p. 14 and p. 13] The public
   relations industry, as Chomsky notes, is a means by which "the
   oppressors . . . instil their assumptions as the perspective from which
   you [should] look at the world" and is "done extremely consciously."
   [Propaganda and the Public Mind, p. 166]

   The effects of this business propaganda are felt in all other aspects
   of life, ensuring that while the US business class is extremely class
   conscious, the rest of the American population considers "class" a
   swear word! It does have an impact. The rise of, say, "supply-side"
   economics in the late 1970s can be attributed to the sheer power of its
   backers rather than its intellectual or scientific merit (which, even
   in terms of mainstream economics, were slim). Much the same can be said
   for Monetarism and other discredited free-market dogmas. Hence the
   usual targets for these campaigns: taxes, regulation of business,
   welfare (for the poor, not for business), union corruption (when facing
   organising drives), and so on. All, of course, wrapped up in populist
   rhetoric which hides the real beneficiaries of the policies (for
   example, tax cut campaigns which strangely fail to mention that the
   elite will benefit most, or entirely, from the proposed legislation).

   Ironically, the apparent success of this propaganda machine shows the
   inherent contradiction in the process. Spin and propaganda, while
   influential, cannot stop people experiencing the grim consequences when
   the business agenda is applied. While corporate propaganda has shaped
   the American political scene significantly to the right since the
   1970s, it cannot combat the direct experience of stagnating wages,
   autocratic bosses, environmental degradation, economic insecurity and
   wealth polarisation indefinitely. The actual objective reality of
   neo-liberal capitalism will always come into glaring contrast with the
   propaganda used to justify and extend it. Hence the rising budgets for
   these activities cannot counteract the rising unease the American
   people feel about the direction their country is taking. The task of
   anarchists is to help the struggle, in America and across the globe, by
   which they can take their country and lives back from the elite.

References

   1. file://localhost/home/mauro/baku/debianize/maint/anarchy/secB2.html#secb23
   2. file://localhost/home/mauro/baku/debianize/maint/anarchy/secD3.html
   3. file://localhost/home/mauro/baku/debianize/maint/anarchy/secJ2.html#secj22
   4. file://localhost/home/mauro/baku/debianize/maint/anarchy/secD2.html#secd21
   5. file://localhost/home/mauro/baku/debianize/maint/anarchy/secD5.html
   6. file://localhost/home/mauro/baku/debianize/maint/anarchy/secJ2.html
