On the eve of the election, let’s not forget the influence of ‘dollar-voters’ on the outcome


Pundit: 10 September, 2014


Keywords: Political Economy & History;


A modern society uses two main ways for regulating its public life; politics and the market. In principle the political ideal is ‘one person, one vote’, whereas markets are driven by ‘one dollar, one vote’.


In practice the two domains cannot be easily separated, and one can infringe excessively upon the other. Thus before the mid-1980s, politics was too involved in market decisions. But what about the opposite? Rather than person-voters interfering too much in the market system can dollar-voters interfere too much in the political one?


There is certainly an incentive for them to do so. Half the person-votes are held by half of the adult population, but half of the dollar-votes are held by less than a fifth of the population (with annual taxable incomes in excess of about $60,000).


We make an effort to insulate the political system from dollars, prohibiting bribery and treating, trying to control political donations. (My view is the opposite of the British law before 1872 when voters declared in public and funding was secret; I support transparency for all significant donations.)


Part of the public story is the superiority of the market system compared to the political system. The narrative has a vision of business and the market as progressive forces, held back by unnecessary interventions from politicians and governments. Of course the market is a very old social institution; so the narrative is talking about ‘modern’ markets. But the same is true for the government, for modern government evolved to restrain the excesses of modern markets.


Obviously there are both upsides and downsides from interventions in markets. Governments try to maximise the former and minimise the latter. But that is not a part of the public narrative. Neo-liberalism treats governments as a bloody nuisance, politicians as interfering old noun-deleteds. Business should rule, OK. They think dollar-voters are entitled use their extra weight to overwhelm person-voters.


In his Myth, Politicians and Markets: the Truth Behind the Free Market, author Bryan Gould rejects this narrative, objecting to the way that neoliberalism undermines the democratic process. Instead he argues that government is to offset what an uncontrolled market can do. That is not the message the casual reader gets from the media and the ideologues (and ideologies) it promotes.


Gould’s book about the neoliberal myths focuses on the macroeconomic and financial failures of the unrestrained market while giving much less attention to the failures at the microeconomic level such as environmental depletion, waste and the impoverishing the quality of life. No matter, he faced resource limitations and made choices, but it is well to observe that Gould’s is only half the critique.

It is a vigorous one although it will not convince everyone; neoliberal ideologists are impervious to reason. But open-minded readers will find a compelling story. There are limitations. I often wanted to engage with or elaborate his argument page by page. Perhaps the book should not be read alone, but with a vigorous book-group, a chapter a week.


The group will travel over many topics – financial failure, exchange rate policy, monetarism inequality… and many examples including detailed instances from various countries –  Australia, Britain, China, the EU, New Zealand the US.


Gould’s cri-de-coeur is that ‘very few progressive politicians have analysed their situation preferring to tell themselves that they are merely acknowledging what they have persuaded themselves is inevitable and pretending that this central concession leaves intact their political positions on other issues.’ Despite being a (retired) politician Gould has made no such concessions. He can maintain his political position honestly.


Yet we are still left with a dilemma of where to draw the line between political decision making and market decision making. Lower income inequality – so that there is not as great a discrepancy between person-votes and dollar-votes – would help. Even so, people – even the wealthy – quickly appeal to the government when their interests are infringed by market arrangements. To protect democracy properly we need to be restrained in such incursions. But we need to be equally restraining of the way that dollars influence our politics.