Golden Rule: The Investment Theory of Party Competition and the Logic of Money-Driven Political Systems

by Thomas Ferguson

"To discover who rules, follow the gold." This is the argument of Golden Rule , a provocative, pungent history of modern American politics. Although the role big money plays in defining political outcomes has long been obvious to ordinary Americans, most pundits and scholars have virtually dismissed this assumption. Even in light of skyrocketing campaign costs, the belief that major financial interests primarily determine who parties nominate and where they stand on the issues—that, in effect, Democrats and Republicans are merely the left and right wings of the "Property Party"—has been ignored by most political scientists. Offering evidence ranging from the nineteenth century to the 1994 mid-term elections, Golden Rule shows that voters are "right on the money."

Thomas Ferguson breaks completely with traditional voter centered accounts of party politics. In its place he outlines an "investment approach," in which powerful investors, not unorganized voters, dominate campaigns and elections. Because businesses "invest" in political parties and their candidates, changes in industrial structures—between large firms and sectors—can alter the agenda of party politics and the shape of public policy.

Golden Rule presents revised versions of widely read essays in which Ferguson advanced and tested his theory, including his seminal study of the role played by capital intensive multinationals and international financiers in the New Deal. The chapter "Studies in Money Driven Politics" brings this aspect of American politics into better focus, along with other studies of Federal Reserve policy making and campaign finance in the 1936 election. Ferguson analyzes how a changing world economy and other social developments broke up the New Deal system in our own time, through careful studies of the 1988 and 1992 elections. The essay on 1992 contains an extended analysis of the emergence of the Clinton coalition and Ross Perot's dramatic independent insurgency. A postscript on the 1994 elections demonstrates the controlling impact of money on several key campaigns.

This controversial work by a theorist of money and politics in the U.S. relates to issues in campaign finance reform, PACs, policymaking, public financing, and how today's elections work.

Genres: Politics, Economics, Nonfiction, History, Political Science, The United States Of America, Money

432 pages, Paperback

First published June 15, 1995

About the author

This is the disambiguation profile for otherwise unseparated authors publishing as Thomas Ferguson

See also: Thomas Fergusson

Reviews

[Public Scott · Rating 5 out of 5]

This book is excellent - a real wake up call to the realities of modern American politics. The premise of the Golden Rule is simple - he who has the gold makes the rules. It's not a new idea but what Ferguson does here is apply it to the US political economy. What emerges is a clear picture of how, in a money-driven political economy (as we have in the US), competing money interests drive policy. Ferguson shows how the New Deal was only possible because oil interests, capital intensive industry and other big money groups were willing to abide unions and social services because they were getting other things that were important to them.

I first heard about this book because Noam Chomsky recommended it in one of his speeches. The Golden Rule documentary on youtube is also worth checking out. This argument makes sense and you should acquaint yourself with it if you want to understand how American politics actually works. Despite what you may have heard, ours is not a voter-driven system.

[Blair · Rating 5 out of 5]

This is one of the most well researched and scientifically based political science books out there. Instead of trying to look at how relationships or groups or whatever else affect politics it focuses on something much more measurable: money. This book is a bit of an eye opener in the way it traces the business alliances supporting each party through different parts of history. It divides the two political parties into two parties supported by businesses who have differently aligned interests: one party is for capital intensive industries and the other for labor intensive industries. Unfortunately the most recent examples are a couple decades old at this point, but after the many case studies the message is rather clear.
To me this book lays bare how much a facade politics really is and shows how politics is an almost closed loop of business funding politicians, politicians doing lots of things for business which tend to not be in the public interest, then getting reelected because of the lack of other choices/funding for any other candidates. If only corporations could vote too then they wouldn't need us pesky voters anymore.
This is an excellent book for anyone who wants greater insight into how the political system works and where the money goes within it. This is one of those books that even if you don't completely agree with Ferguson's analysis it will really make you step back and take a look to honestly evaluate his argument. It would be great if there was an updated version with a few newer chapters, but regardless this book will always be one of the greats in American political science literature.
It can be a bit heavy for the person not looking to get overwhelmed by the details, but it is still a great book for anyone with a curious mind. If the details bore you you can still get just as much out of the book by skimming/skipping the parts that get a little repetitive or technical. This is more of an academic work than one meant for the public which can make it a little dry at times, but it is well worth the effort.

[Thomas Ray]

JK467 F47 1995 Memorial Library

[Adam · Rating 5 out of 5]

A disclaimer: I only read the first chapter, the conclusion, the postscript, and the appendix of this book. These are the parts that focus on the theory itself in idealized and theoretical terms. The rest of the book, chapters 2-6, I chose to skip due to time constraints, and consists of historical applications of the theory. For someone interested in the history of the New Deal, the 1988 and 1992 elections (the latter being apparently of interest to modern politics, since the 2008 election was supposedly a rehearsal of it), these chapters would certainly be worth reading.

A review:

Ferguson's theory makes everything make sense, both historically and politically. After years of being inundated with the notion that voters have been controlling US politics for the entirety of our history but feeling that this understanding was false and hollow, the investment theory of elections brings a refreshing clarity and focus to the area. Historically, we now know where to look to find the driving forces in political events. It resolves what for me was a lingering doubt about the capacity of ideas and ideologies to independently impel economic, concrete forces in history. My understanding of this relationship is now considerably clearer: the ideology of the populace is not dependent on economic forces, as I had once thought; the reason it is not the driving force in supposedly democratic elections is merely because economic inequality prevents the people from having a real influence on those elections.

This is the political implication of the book, which Ferguson could have made more of. The book is clearly meant for an audience of political scientists, and I think a popularization of his conclusions is called for (and may already exist?) Anyway, what Ferguson wants us to understand is that big business controls politics; that this is most emphatically NOT a democracy. The 'golden' rule the country, as it were (and of course this doesn't only apply in the US).

In order for democracy to exist, real, deep election reform is necessary, reform that heavily subsidizes politics in a way that makes campaigning available to everyone, not just those willing to carry out the policies of rich investors. Until this reform takes place, the interests of our government will be entirely at odds with those of most voters, and thus the policies it enacts will be, to varying degrees, harmful to those voters. The examples of this are almost limitless, but see for example the government's position on climate change, food reform, healthcare, foreign policy (particularly the defense budget itself), pollution regulation, etc.

[Joseph Bronski · Rating 3 out of 5]

Interesting historiography, obviously not quantitative but a good theory nonetheless, albeit non-biological. I suspect some policy domains are elite determined and others are not (e.g., foreign policy vs. age of consent). Elites may differ from the masses to differing degrees in different domains (e.g., tax preference vs. feminism preference). In this light, the book mostly focuses on elite determined policies regarding cotton trading and so on, and basically ignores the origins of leftism, which seems to not be due to elites but rather due to a genetic bottom-up/whole-pyramid process.

[Rob]

I am way too ignorant about economics to understand half of this book.

[David · Rating 5 out of 5]

excellent. how the rich rule.