Democracy before Dollars: The problems with money in Australian politics & how to fix them

By Joo-Cheong Tham
Professor, Melbourne Law School

There is a deep paradox at the heart of representative democracy: it is a form of rule by the people that distances itself from the people.

The central justification for representative government is popular sovereignty. As the Universal Declaration of Human Rights proclaims, ‘(t)he will of the people shall be the basis of the authority of government’.  Yet as representative, not direct, democracy,  there is structured distance between ‘the people’ and those who exercise governmental power.

The aspiration of representative democracy is that this distance is bridged by strong mechanisms of accountability and responsiveness, as well as an ethos based on the public interest, all of which seek to ensure that government officials rule ‘for the people’. The obvious risk is that this distance becomes a gulf and that public officials govern for a few, rather than ‘for the people’ — that an oligarchy operates rather than a democracy.

It is a startling fact that many Australians believe — and increasingly so — that government functions as an oligarchy.  Survey evidence shows that perceptions that ‘[p]eople in government look after themselves’ and ‘[g]overnment is run for a few big interests’ have risen significantly since the 2000s, so much so that in 2017 more than 70% of respondents agreed with the first statement and more than half with the second.

And since 2016, there has been a 9% increase in perceptions that federal members of parliament are corrupt (85% saying ‘some’ are corrupt, 18% responding that ‘most/all’ are corrupt).

Capitalism vs democracy

These perceptions of oligarchy would have surprised Plato who had Socrates say that ‘democracy comes into being after the poor have conquered their opponents, slaughtering some and banishing some, while to the remainder they give an equal share of freedom and power’.  Surviving the passage of time is, however, the insight that democracies carry the risk of class domination. But it is the wealthy, rather than poor, who are controlling the levers of power. The most potent danger of oligarchy in contemporary times is plutocracy.

A risk is not, however, an inevitability. Whether democracies warp into plutocracies turns fundamentally on how society is organised. And here, democracy fights with one hand tied behind its back in economies organised according to capitalist principles - where the means of production, distribution and consumption are privately owned and driven essentially by the profit motive.

This occurs, firstly, because democratic principles are not seen to apply to the private sector – a most significant part of society — even though power is routinely exercised by private entities . Notably, in most workplaces, there is a system of ‘private government’  where the power of employers over their workers can often be dictatorial, where, as John Stuart Mill puts it, the great majority are ‘chained . . . to conformity with the will of an employer’  - and yet we are socialised to consider this as a realm where democracy should not travel.

And in the ‘public’ sphere where democratic principles (popular control; political equality; the public interest) are supposed to apply, these principles are in constant threat of being subverted. Under capitalism, what Albert Einstein considered ‘the predatory phase of human development’, ‘the members of the legislative bodies are selected by political parties, largely financed or otherwise influenced by private capitalists who, for all practical purpose, separate the electorate from the legislature’.

Indeed, businesses have power through direct contributions to parties — and through ownership of the means of production, distribution and exchange. It is power through ownership (private property rights) that gives rise to what Lindblom in the classic study, Politics and Markets, described as the ‘privileged position of business’.

This implies tremendous power in the market and in the political sphere. Businesses have power in the political sphere because political representatives rely heavily on the decisions of businesses for their electoral success. As Lindblom has observed, ‘[b]usinessmen cannot be left knocking at the doors of the political systems, they must be invited in.’

These dynamics profoundly shape understandings of the ‘public interest’. For Einstein, they meant that ‘the representatives of the people do not sufficiently protect the interests of the underprivileged sections of the population’.  Their effects can, in fact, be deeper — when the ‘public interest’ is equated to the demands of the most powerful businesses, the corruption of representative systems by capitalism is well underway, if not complete.

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This article was originally published in the Australian Quarterly, Volume 90, Issue 2, Apr-June 2019.


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