Where parties get their money from

A disclosure regime must take into account the dual function of parties as public agents and as independent voices

Money is the scourge of politics. No matter how honourable the aspiration, how noble the programme, how inspired the candidates, no election gets off the ground without the requisite funding. And once money intrudes, the stains of corruption and undue influence abound.

Every democratic system confronts this central dilemma. As the scale of government increases, the stakes in politics increase as well. Costs of campaigning mount and the sheer organisation required to sustain a vibrant political party demands access to copious funding.

The risks of corruption surely demand some system of regulation, including the disclosure of party financial records under the Right to Information Act. So ruled the Central Information Commission, and this week ordered India's major political parties to open their books for public review. Predictably, the political parties squawk at the intrusion into their affairs, even as their hands go out for increased government support for their political efforts.

Two models of political parties are in tension. On one view, parties are part of the state administration of elections. As such, they are no different than other common carriers whose monopoly or dominance in providing rail service or electrical power is the product of state licence. Alternatively, the parties are rights-bearing entities with claims of privileged autonomy from state intrusion for their freedoms of association and political proselytising. With common carrier status comes the demand for regulatory review and control over the range of licensed activities. But to the extent that parties maintain vigilance over state conduct, their right to challenge is compromised by any regulatory oversight. That is the ever-present tension in modern political organisations. And the tension derives from where the parties get their money.

Party funding can come from only two sources: the private and the public. Historically, political parties were private associations that fought to retain their independence from state control, precisely so that they could take up the central task of challenging governmental authority. Each measure of oversight compromised the liberty interest in organising a political opposition.

That world of autonomous political parties is collapsing. The mass organisations of labour or small business that once sustained democratic parties around the world are in decline. The money has to be found somewhere, and the two immediate sources are the state and wealthy individuals, each of which poses problems for the traditions of liberty and equality that undergird a democracy.

Political parties increasingly turn to the state for either direct subsidy, or at least underwriting, of the costs of campaigning. Paradoxically, as the popular sources of support for political parties wither, the established parties use their position in government to shore up their institutional role. That has been the experience in all the old democracies of Europe with the exception of Britain. With every state contribution comes greater state involvement in decisions over who gets funding, for what purpose, and on what basis.

The liberty side of democratic politics is compromised by the incessant demands for state support. Where the state has taken over all or nearly all the funding of political activity Spain and Mexico are the leading examples the administration of politics becomes all-encompassing. The accounting ledgers and the decisions of how to spend money and how much to pay party functionaries are all subject to review by government agents. With state subsidies comes state vigilance.

Party independence also has costs for democracy. Democracy gives each citizen one vote, but differences in wealth, stature, influence all erode the equal dignity at the heart of liberal values. Private money introduces the disparities of the market into the political domain. Reliance on private wealth to underwrite politics threatens the democratic commitment to equality as surely as state involvement compromises the autonomy at the root of liberty.

All democratic societies must balance these competing concerns. The United States hews close to the liberty side of the equation, allowing restrictions on contributions but not on expenditures by candidates, or even independent groups. Canada draws a line almost exactly the opposite and in pursuit of equality, limits expenditures while protecting most individuals' ability to contribute. The UK limits the expenditures of candidates and independent actors, but protects the ability of the parties to conduct their parliamentary campaigns. Each of these approaches is under constant pressure from court review, generally by individuals seeking greater ability to advocate for particular issues or views.

The CIC's directive falls in the one area where regulation has been the least legally problematic: the disclosure of sources of revenue for the parties and the use of party resources, particularly where obtained from any form of public subsidy. Here, the regulation does not rise to the level of a prohibition on fund raising, and does not inhibit the party from vigorously engaging in the electoral battlefield. But disclosure does provide information that itself informs the public debate about the views and loyalties of candidates and parties. Most likely, Indian voters, like their counterparts around the world, will have neither the time nor the inclination to comb governmental records for dirt on party finance. But opposition parties and the press will happily fill the void and will further identify the influences that lurk in the byzantine financial backwaters of politics.

Further, the CIC was careful to limit its ruling to the six major parties in India. Supporters of smaller parties tend to be more vulnerable to reprisals and the directive leaves them outside the new disclosure regime. Perhaps, over time, the CIC will conclude that contributions below a certain threshold need not be reported and that an excess of public scrutiny might actually deter broader citizen engagement with politics, especially through small contributions that bear no risk of corruption. While the details are to come, a disclosure regime may carefully walk the line between the two functions of parties as public agents in the electoral arena and as independent voices in democratic politics.

The writer is Reiss Professor of Constitutional Law at the New York University School of Law, US

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