Democratic elections and democratic governance involve a mixture of high ideals and, all too often, dubious or even sordid practices. Election campaigns, political party organizations, pressure groups, and advertising all cost money. This must be found from somewhere. The financing of political life is a necessity—and a problem.
The frequency with which new laws concerning campaign and party finance are enacted is testimony to the failure of many existing systems of regulations and subsidies. Hardly a month goes by without a new scandal involving political money breaking out in some part of the globe. In Belgium in 1995, Willi Claes was obliged to resign as secretary-general of NATO amid a lurid affair which had begun four years earlier when a fellow leader of the Belgian Socialists, André Cools, was shot to death outside his home because of his involvement in a scheme in which French and Italian arms manufacturers made political contributions to the Belgian Socialists in return for military contracts. In Ukraine in the fall of 2000, online journalist Georgi Gongadze lost his life in part because he had been looking into allegations that business oligarchs were involved in corrupt dealings related to political financing.
Despite a stream of stories like these from around the world, and despite an increasing flow of academic studies, political financing and the abuses thereof remain shrouded in mystery. Many commonly heard notions surrounding them are unproven or wrong. This is partly because “political finance” takes so many forms and is difficult to define, and partly because there remain large gaps in research (especially about political money in emerging democracies). I cannot hope to offer an exhaustive treatment here, but I will attempt to sketch a survey and summary of the current state of knowledge about the subject.
We may first want to ask: “What is ‘political finance’?” The narrowest definition is “money for electioneering.” Since political parties play a crucial part in election campaigns in many parts of the world, and since it is hard to draw a distinct line between the campaign costs of party organizations and their routine expenses, party funds may reasonably be considered “political finance,” too. Party funding includes not only campaign expenses but also the costs of maintaining permanent offices, carrying out policy research, and engaging in political education, voter registration, and the other regular functions of parties.
Beyond campaigns and parties, money is spent on direct political purposes in many other ways. A full account would require us to study a) political “foundations” and other organizations which, though legally distinct from parties, are allied to them and advance their interests; b) the costs of political lobbying; c) expenses associated with newspapers and media that are created and paid to promote a partisan line; and d) the costs of litigation in politically relevant cases. Clearly, the number of channels through which money may be poured into politics not only leads to problems of definition and research, but makes political financing difficult to control as a practical matter as well. As soon as one channel of political money is blocked, other channels will be used to take its place.
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