Customer Reviews

Golden Rule: The Investment Theory of Party Competition and the Logic of Money-Driven Political Systems (American Politics and Political Economy Series)

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Thomas Ferguson argues the US two party system functions as a mediator between conflicting business interests. Through case studies (primarily the New Deal era) Ferguson persuasively backs his argument.

During the New Deal era, Ferguson contends the Democratic party was controlled by capital intensive "free trade" multinational businesses vs the Republican party which was dominated partly by labor intensive "protectionist" industry.

Who were the multinational interests? (siding with Democrats) Major oil companies/ Rockefeller dominated banking e.g.,standard oil,chase manhatten. General Electric was also a major player.

Who were the labor intensive/protectionist interests? (Siding with Republicans)Textiles,Steel,Domestic oil producers and rubber manufacturers. Capital intensive Chemical industries led by Dupont lobbied for protection due to competition from Germany....Also JP Morgan due to interlocks with certian holding companies which partly separated Morgan Interests from Rockefeller financial interests.

A fascinating study! The capital intensive industries favored labor mediation/social welfare while the labor intensive industries lobbied against. Ferguson follows the paper trail which shows GE interests strongly influencing the creation of the national labor relations board while the Social security act was the brainchild of Rockeller interests. From ferguson's point of view, business reacted to class conflict by creating top down business oriented reforms in reaction to labor unrest.

Much more to Ferguson's research. I highly recommend this book. Don't let the copywrite fool you...Ferguson's work is a timeless classic and will be used as source for years to come.

The central foundational principle of the capitalist nation-state is that it is a reflection of its economic constituencies. Those who own and control the means of production shape the state in the form that they desire. This truism - that money runs politics - is the central argument of Thomas Ferguson's "Golden Rule." He begins by asking what are political parties? They are organizations composed of blocs of major investors who come together to advance favored candidates in order to control the state. They do this through direct cash contributions and by providing organizational support through the making available of sources of contacts, fundraisers and institutional legitimation. Candidates are invested in like stocks. For them electoral success is dependent on establishing the broadest base of elite support. Candidates whom have best *internalized* investor values see their "portfolios" grow exponentially at the expense of candidates who have not internalized these values. So what you have is a filtering system in which only the most indoctrinated and business friendly of the intellectual class advance to state power. The higher you go up the ladder the more you've appealed to elite interests. Representatives of the major investors are also often chosen to fill political appointments after a favored candidate has achieved office. This political-economic model helps explain why the state largely functions to serve elite business interests on the domestic and international stages.

Of course, corporate interests vary and evolve. Capital-intensive corporations tend to invest in Democratic politicians. Labor-intensive corporations tend to invest in Republicans. That's because capital-intensive corporations can afford to sit in a party which also represent organized labor. The AFL-CIO rarely poses a threat to Wall Street; and vice-versa. So what would we expect from a system like this? One thing we would expect is that on issues which the public cares about but on which there is cross-party investor agreement no party competition will take place. That means that the issues the public is most interested in will not appear on the agenda. The polls have been pretty consistent on this point. Major public interest revolves around issues having to do with trade agreements, in favor of a single-payer health care system, increased spending for education, slashing the Pentagon budget and many other issues. At times the population has been able to organize successfully and force popular issues onto the agenda despite business opposition.

Ferguson details how the growth, development and fall of major industries correspond to the growth, development, and fall of their political parties. He examines the rise and fall of five major investment bloc party systems - the Federalist vs. Jeffersonian, the Jacksonian, the Civil War party system, the system of 1896 and the New Deal. The latter is dealt with in much detail. The book, while highly informative, is not without its flaws. Ferguson's prose is obtuse and very, very dry. The charts are helpful but the ideas could have been presented in a more compact form. Regardless of these reservations, this book is very important for an understanding of how our political system functions and deserves a large audience, discussion and action.