Historical Background
When class politics was at its height, in the period between the two World Wars (1918-1939) and in the aftermath of the Second World War (1945 onwards), 'big business' felt itself obliged in a number of industrialised countries to confront what it saw as the dangers of Soviet-inspired Communism and of the disruptions of organised trade unionism. At this time, 'big business' not only made hefty payments to anti-socialist and social-democratic parties and their candidates, it also tended to act in a collective fashion.
In some countries, special organisations were formed to collect money from businesses that could then be conveyed as a lump sum to the parties and candidates that 'big business' sought to sponsor. Khayyam Paltiel sums up the phenomenon of what he calls 'conveyors and sponsors' (i.e. intermediary organisations to collect corporate political payments) as follows:
...the growing concentration of the business sector helped produce the sponsor and conveyor organizations linked to the peak industrial groupings and federations of Europe and Japan. Conveyor associations organised to channel and distribute funds from business associations to anti-social democratic parties appeared well before World War I in Imperial Germany ... [During] the Weimar Republic, sponsor groups were formed by industrialists to back specific parties favourable to their needs. Similar practices were adopted and continued into the post-1945 period in Japan, Norway, France (the Conseil National du Patronat Francais), the United Kingdom, and numerous countries with strong neocorporatist traditions of functional representation.30
An example of the corporatist model of business-versus-trade union financing of politics is shown by the behaviour of English mine-owners in the aftermath of the Mineworkers' strike and the General Strike of 1926:
In 1928, the West Yorkshire Coal-Owners' and South Yorkshire Coal-Owners' Associations were both subscribing officially and liberally to Conservative Party funds; many coal-owners had no doubt supported the Conservative Party before but they had not been sufficiently unanimous in their support to subscribe collectively. 31
The consolidation of business support for the Conservative Party was seen in the formation in 1948 of British United Industrialists, an organisation that acted as the collecting point for corporate payments to the party.
From the 1950s onwards, the role of such collective funding bodies has tended to decline. Corporations are now more likely to contribute on an individual basis and without the intervention of intermediary bodies. Advantages that could accrue to the donor business itself seem somewhat more likely to be the motive for political payments in the modern era than general considerations of class struggle.
Current Examples of Corporate Contributions
Direct contributions to parties from business enterprises remain a significant source of financing in some countries, though they are generally less important than in the past.
In Canada, 40 percent of the 500 largest financial enterprises made an annual contribution to a political party in 1983-90. Contributions from corporations to the federal organisation of the Progressive Conservative Party rose in real terms (1989 values) in election years from CAN$9.4 million in 1979 to $13.6 million in 1984 to $15.1 million in 1988. This represented about half of the party's total income. The proportion of income coming from corporations to the Liberal Party was approximately the same, but the New Democratic Party obtained less than 10 percent of its income from business.32
In Britain, business donations have virtually all been made to the Central Office of the Conservative Party. Constituency associations have been less dependent on such payments. The proportion of Conservative central income derived from corporations declined from about three-fifths in the 1970s to one quarter in the early 1990s. As corporate payments became a less healthy source of money, the party turned increasingly to individual businessmen for the personal donations that are summarised in the entry on the plutocratic approach, see also Plutocratic Approach.
In a country such as Brazil, corporate donations and gifts from individual plutocrats seem to be indistinct, but they are in combination a vital source of funds. According to Roberto Aguiar:
...campaigns are funded mainly by bankers, industrialists, traders, and livestock breeders. Firms providing specialised services to the state have been, on the whole, particularly generous in contributing to political parties and candidates.33
New Channels for Corporate Political Payments
A common feature of democratic politics in recent decades has been to subject corporate donations to increasingly strict regulations, if not to ban them altogether. In some countries corporate payments have been discredited by scandals. A consequence is that, on the surface, business payments seem to have declined in significance. Nevertheless, there is clear evidence that what has occurred in a number of countries has been the establishment of new channels for business payments for political purposes. A common response to regulation has been the search for loopholes.
In (West) Germany, the corporate donations that were a vital source to the Christian Democratic Union in the 1950s appeared to decline in significance as a consequence of legal rulings about their tax status and as a result of generous public funding of party organisations and party foundations. However, the Flick scandal, which came to light in the early 1980s, revealed the existence of a mass of illegal business donations.
According to Erhard Blankenburg, the widespread nature of the abuses relating to corporate political payments was illustrated by the fact that between 1982 and 1988, preliminary proceedings had been opened in more than 1,800 cases, involving all the major political parties except The Greens and a good part of Germany's corporate elite. Few of the cases were taken to court 'as most of them were either dismissed or settled by fines in a plea-bargaining fashion.' 34
In France, the development of clandestine channels of business payments to parties and candidates following the legislation of 1995 which banned them is a theme of Yves-Marie Doublet.35
There are similar processes of evasion in India, Japan, South Korea, Spain and Sweden.36 According to an assessment cited by Professor Randhir B. Jain, the ban of company donations introduced by the government of Indira Gandhi 'played ... hell with the system and also with business ethics and morality.' Since the Right Wing opposition could no longer receive business donations on a legal basis,
...other methods of raising money were discovered ... Licenses and permits were unabashedly hawked. Dubious foundations and organizations were created with a view to raising and soliciting funds. Leading industrial houses, known for their impeccable business morality ... eventually buckled under in the race for survival... Although the ban on company donations was removed by Prime Minister Rajiv Gandhi, the damage done to political life ... with repeated allegations and counter-allegations of bribery and kickbacks (as in the Bofors affair) has been irreparable.37
Rei Shiratori makes a contrast between regulations and reality in Japan. One method of evading control on corporate political donations has been that
Many politicians try to circumvent the regulations set forth by the Political Fund Control Law. They hold fund-raising parties frequently and ask companies and industrial federations to buy large numbers of tickets since this money is not considered a political donation. Politicians set up as many political support organizations as possible since these organizations function as channels through which political funds can be introduced.38
According to Pilar del Castillo, '[t]he rules of party finance in Spain prescribe a dominant role for public funding ... By imposing a strongly statized system and condemning private financing, continuing private financing operates outside the control of the established mechanisms of the law. This system fosters irregularities and corruption that would be less likely to develop in a framework of complete freedom and disclosure.'39 She describes the role of middlemen who mediate between parties and business interests, negotiating exchanges of clandestine business money for political influence.
In Sweden, the process has been different. Despite the ending of direct business contributions to the Conservative Party in 1977, company money still plays a role in political life. Corporations do not contribute to parties but, instead, conduct publicity campaigns that have clear, though indirect, political and partisan implications.
Draft Only
