Domination of Politics by Money

The American Problem Is Domination of Politics by Money, by William Pfaff, IHT

from http://www.commondreams.org

Published on Thursday, January 24, 2002 in the International Herald Tribune

NEW YORK — The case of Enron and its auditors may become spring 2002’s successor to the Monica Lewinsky case, but addressing the scandal fails to address America’s real problem, which is the domination of politics by money.

The Enron affair is one more corporate-political scandal, more baroque than usual in scope and ingenuity. However, nothing in the relationship of Enron to the Bush administration or to government regulators has yet been found to have been illegal. Enron simply provides another demonstration of the role of corporate money in the American system. It is the system that is rotten.

The American political arena has been transformed from a system in which contending opinions and interests competed more or less freely into one that guarantees corporate domination of national economic and social policy, as well as major corporate influence on foreign policy decisions.

Money has been in control since the Supreme Court interpreted campaign spending and contributions to political candidates as forms of constitutionally protected free speech. (This decision, Buckley v. Valeo, occurred in 1976, and concerned spending in a congressional election.) The natural outcome of that decision was to confer victory on most of those who spend the most money on electoral campaigns, and to exclude most candidates who are not supported by corporate or union interests. Those people who have contributed campaign money typically obtain value for their money, since victorious candidates want to be re-elected. That this would be the result seems not to have been considered objectionable by the court’s majority. Corporations exist to make money for their investors and for the managers who direct them. The other purposes that corporations serve, to produce goods and give employment to workers, have in current business doctrine been subordinated to the pursuit of maximum return on capital. So the Enron case in itself is nothing to be surprised about. It is the biggest corporate scandal yet, but only that; there will be more to follow.

Piquancy is added by the intimacy of the company with President George W. Bush and so many members of his administration. Outrage is invoked by the facts that the company paid no taxes in four of the five last years, and that management’s penultimate act was, effectively, to loot its employees’ pension fund.

The only surprise is that the board of directors would have suspended the company’s proclaimed code of ethics so as to permit maneuvers to keep debt off the company’s published accounts and mask its true condition from investors. The board’s conduct is a depressing comment on American society today. The board was composed of an unexceptional body of business and community notables, like most corporate boards. Its members included a former government regulator, a former dean of the Stanford business school, the dean of the University of Texas law school, the former president and the president emeritus of the same university’s cancer center (which benefited from Enron philanthropy).

Most of the 14 directors were associated with institutions that had been supported by company philanthropy, were Enron consultants, were connected with companies owned by Enron or did business with Enron. The composition of this board should have inspired doubt about its independence, but it probably differs little from the boards of other politically well connected companies. That so conventional a group of eminent people was willing to waive the corporation’s ethical code when it became an obstacle to the company’s ingenuity in avoiding taxes says worlds about corporate codes of ethics.

The willingness of Arthur Andersen accountants and lawyers to cover their tracks and shred documents is not that surprising. Questions have been posed about the objectivity of the big accountancy partnerships ever since they went into the consultancy business.

The scandal is only now acquiring legs, as the press closes in on the administration’s many connections with Kenneth Lay and his company. But what really is important and scandalous is that the political system itself now is under the dominant influence of business, mainly the very large corporations and financial interests, to the disadvantage of other groups in society with legitimate claims on government. This has happened before. It happened in the period after the Civil War, when modern American capitalism was being shaped, producing exploitation and abuses that provoked “muckraking” reform journalism and the corporate regulation imposed under the administrations of Theodore Roosevelt.

It happened after World War I, ending in the 1929 crash. New Deal regulation of the securities markets and banking followed, resulting in the post-World War II business model of “stakeholder” capitalism, where employee and community interests were protected.

Today it may be doubted that a new reform is possible. The existing system of unlimited political campaign spending is hated by politicians but suits corporate business. So long as pharaonic sums are required for national political campaigns, a reform majority will not be elected. If spending money remains a form of protected speech, the American system will stay blocked.