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What are the benefits of campaign finance reform?

(Flickr under Creative Commons license from user 401 (K 2012)

Recently, Ray LaRaja and Brian Schaffener made a fascinating contribution to this blog outlining recent developments in party funding research. They essentially asked three questions:

  • Whether party funding reform can help tone down political polarization.
  • If states were to increase their funding of political parties, how it should be done.
  • How we can design a system that can allay public fears of corruption.

Such questions keep party funding reformers up at night. I cannot necessarily provide solutions. But there might be some useful information in lessons learned from research on Europe, and more specifically, Great Britain.

The overwhelming trend among European nations is to increase state funding for political parties, as you can see in the timeline below, with source data from van Biezen and Kopecký.

Britain and the U.S. are the exceptions in the developed world. The government does not pick up much of the bill. Academics explain that British exceptionalism as the result of British citizens persistently preferring volunteerism over statism. A system of membership and donations is preferred to state funding — despite the many times in which Britons perceive corruption within this model.

A system in which party membership and small individual donations make up most of a political party’s annual budget is undoubtedly preferable to one in which parties are propped up by the government. It is, however – especially considering the Europe-wide downturn in party membership – a utopian vision.

But does national funding for parties reduce polarization?

LaRaja and Schaffener remain unconvinced. Other studies tend to corroborate this skepticism.

One scholar, Andrew B. Hall, studied five state legislatures and found that public funding for parties actually increased polarization. In these systems, small donations are matched with state funds. Small donations tend to come from party members, who, in turn, tend to be more extreme than the party elite – and, what’s more important, more extreme than the pool of potential voters.

We see this currently in Great Britain with the election of Jeremy Corbyn as the leader of the Labour party. He is widely supported by grass-roots membership, less so by the parliamentary party.

Polarization and state finance has also been studied elsewhere in Western Europe. Munich-based political scientist Michael Koβ shows that reform tends to happen when politics is more collegial. Again we can look to Britain to see why this might be.

Polling consistently shows that the public believes large donations can buy political favors. However, the proposed solution – a cap on donations, offset with the introduction of increased funding by the state – remains publicly unpopular. Politicians have a better chance of surviving the damage at the polling booth if both or all parties have backed the reforms.

But if the logic behind reform is to strengthen democracy, that might be contradicted by having (1) parties colluding to (2) introduce an unpopular reform which (3) increases the amount of funding they receive (4) from the taxpayer. In fact, it might actually increase the anti-establishment and anti-political feeling that some believe these reforms should quell.

But even if you reject that argument, Democrats and Republicans are widely considered to be especially ideologically opposed just now. If funding reform tends to take place when the political climate is congenial, now might not be the moment.

So would state funding of political parties decrease corruption?

There is little evidence that introducing significant state funding will reduce corruption, and more importantl, perceptions of corruption. Just because you have state funding doesn’t mean your country is, or is perceived to be, less corrupt.

Take Denmark, which for the past three years has been at the top of the Transparency International (TI) Corruption Perceptions Index. Despite being a supposed beacon of integrity, Denmark has recently had its party finance legislation criticized by the Group of States against Corruption (GRECO) — particularly, its failures to meet the obligation to be transparent.

Denmark has a robust system of state subsidy of party finances, with upwards of 75 percent of funding provided by public money. As the GRECO criticism shows, this does little to allay fears of corruption in the system or to improve the standing of the parties with the public.

Another TI indicator, the Global Corruption Barometer, reported that 54 percent of the public believed that political parties were somewhat to entirely “run by a few big entities acting in their own best interests.”

If reformers genuinely want to strengthen democracy, promising that public funding would deliver too much might disappoint, leaving citizens with still more anti-establishment and anti-political feelings.

There are many reasons to enact reform. Certainly many people believe that politicians have better things to do with their time than begging for donations from a few rich backers. That does not mean, however, that the unique challenges reform presents should be ignored (a potential increase in political polarization being one).

But those pushing for reform shouldn’t overpromise or expect too much. They should be considered within a wider package of reforms that address political disillusionment. If introduced as the attempt to reduce anti-democratic and anti-establishment feeling, or worse to reduce corruption in politics, they will disappoint.

Sam Power is a doctoral researcher at the Sussex Centre for the Corruption, University of Sussex. His research is focuses on party funding regimes and corruption in Western Europe.