The Politics of the USA:
A radical theory of what is unique about the USA

Back to History | Back to the world news | by Piero Scaruffi

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 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 oil-driven, 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):

  1. Bill Gates $40.7 billion (Microsoft)
  2. Warren Buffett $30.5 billion (Investments)
  3. Karl & Theo Albrecht $25.6 billion (Albertson's, Germany)
  4. Paul Allen $20.1 billion (Microsoft)
  5. Prince Alwaleed Bin Talal Alsaud $17.7 billion (Kingdom Holding, Saudi Arabia)
  6. Lawrence Ellison $16.6 billion (Oracle)
  7. Jim C Walton $16.5 billion (Wal-Mart)
  8. John T Walton $16.5 billion (Wal-Mart)
  9. S Robson Walton $16.5 billion (Wal-Mart)
  10. Kenneth Thomson & family $14.0 billion (Thomson, Canada)

2. Relationship between largest companies and politics

The largest companies are listed at 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.

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    Post scriptum: a reply to a reader who inquired about the right-wing conspiracy.

    A vast right-wing conspiracy? Of course there is one, made of oil industry, tobacco industry, pharmaceutical industry, defense industry, the Cuban community, the religious conservatives, etc. But there is also a vast left-wing conspiracy, made of high-tech industry, huge media empires, the farming industry, the workers' unions, the academic establishment (which controls a good chunk of the wealth of the country), the Jews, the large hispanic population, the african-american community, the consumer groups (when you put these together, they all control trillions of dollars). And within each conspiracy there are many other interest groups: Jews and Blacks tend to support different candidates, despite the fact that both tend to vote Democratic. And within each there are more and more and more. Who gets elected president has a huge economic impact. Look carefully at what happens to governors and senators, who represent giant interests: the fight to get elected is bloody, because the interests at stake are enormous. Even the most powerful companies and men can be destroyed in a matter of months. Look at what happened to Trent Lott in 2002. He was considered the second most powerful man in the world, he represented the oil and defense industries, and his party under his leadership had just won the elections. And? One little mistake and he had to resign. Look at what happened to Enron in 2002, a company which had the right friends in the White House: it went bankrupt. So much for the power of the "establishment". Look at what happened to Nixon, who enjoyed the support of all the major industries in the USA and even the support of the majority of Americans (for withdrawing from Vietnam): he had to resign for a crime that in Europe would have been ignored. Giant companies worth billions of dollars have disappeared within a few years because the political mood changed. There is an Enron every year: they had the best connections (the vicepresident in person). So what? Pulverized. Countless industrial giants have completely disappeared, despite having strong connections in Washington. At one point, AT&T's revenues were greater than Italy's GNP. And? A judge forced AT&T to split, and today is not even in the top 10. The richest man in the world, Bill Gates, has been forced by ordinary judges to give its competitors the tools that they can use to compete against him. Giant companies have been devastated because ordinary people have so much influence on their government: think what consumer organizations did to the tobacco industry, which was one of the most powerful industries for about a century. I was here when consumer groups forced the houses to pass legislation mandating labels on all food. You have no idea how much the food industry lobbied. There were ads almost daily on tv. The pressure on the houses was gigantic. Still, the consumer groups prevailed and today each food must have a label that tells you how dangerous it is. This cost billions to the food industry. In the USA, ordinary poor citizens routinely sue large corporations and... win! In Europe it is virtually impossible. In the USA, large corporations have to be extremely careful when a customer complains: the system is biased in favor of the consumer, not in favor of the corporation.

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