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Investment Elections – Street, Davis, Ferguson and Albert


I came across this guy Ferguson’s ‘Investment Theory of Politics’ a couple of times in Chomsky material and was curious – but not enough to buy, read and store a book. I doubt any local Japanese libraries would have the books that explain how business alliances control what candidates and views are presented for public consumption. But then following up on a Paul Street blog and article pointed me to a Mike Davis article that quotes Ferguson. And I realized I got the same kind of information and analysis in conversational tone from Zmagazine’s "Obama election interview" with Michael Albert and Lydia Sargent.  Mike Davis’ coverage of ‘Obama at Manassas’(or Bull Run) is old so you wonder if the ‘Green Deal’ for high tech is still online and in the running after the expensive Wall Street bailouts and Af-Pak war expenses.. The Sargent/Albert  interview has two  great no-brainer questions, that lead you to the conclude for yourself what you get from the explanation. Obvious stuff once you focus on the right question..

…[H]ow do these candidates win an election? They don’t win based on substance and they know it. Candidates are essentially competing for donors and to be treated better by the media elite. While the public is a factor—they have to get some people to pull the levers—what they really have to do is get the donations that enable them to plaster themselves in front of everybody’s face and to appear jovial and inspiring and so on. The more money they have, the better they are able to cajole the media, by their expenditures and by their alliance with elites inside the media….

Describe how candidates go about winning. What are their strategies

The main thing is to win the race for investments, getting wealthy people to donate to your campaign. Then to win the race for positive media attention—to keep alive a derivative support among the population largely based on that media activity, by saying things that people will like or at least not dislike, determined by polls.

What you don’t do is obvious. Suppose the random person on the street was running for president—doesn’t have 6,000 advisors, doesn’t have the cream of the mental crop trying to figure out a strategy, but is just going to think for herself. She is going to assess what to do to win the election. Well, she looks at the last elections and discovers 50 percent are not voting. So what should she do to win the election? It seems pretty obvious: appeal to that 50 percent. If the 50 percent who’ve been voting continue to split very nearly down the middle, as they have in election after election, then all she has to do is appeal to the 50 percent and get a reasonable number to vote and she becomes president of the United States. 

What’s interesting is that neither candidate does that. Why? Because to appeal to that 50 percent would require that you convince them that you’re telling the truth and that you’re going to do something that will affect the lives of poorer, less powerful constituencies. You have to convince them that you are for real. Not only that, in doing so, you have to inspire and invigorate them, you have to give them incentive to vote. Well, there’s a danger there. You might also give them the incentive to pay attention to what’s going on in society. You might give them a feeling they can actually have a say and have an effect. Then you’ve unleashed real participation or a desire for it in part of the population. 

Well, both parties are totally opposed to doing that. So it’s a fight in which the two boxers come into the ring and they both agree not to use one hand. If either one of them used the second hand, that boxer would win. But they both agree not to do what’s necessary to get that sector of the population excited and involved and working for their candidate, trying to win.

When some weird situation evidences the possibility that a candidate would have that effect, that candidate tends to be destroyed by the media. Why? Because the media is not interested in the population becoming inspired and participating in the life of society, thereby pushing it in a direction that would benefit the largest part of the population.

The answer about strategy is roughly this: appeal to the rich and powerful, get them to give their money. Don’t upset the media. If you can, appeal to the media so you are portrayed in a fashion that’s consistent with what you are trying to accomplish in terms of manipulating people into voting for you. By all means do not appeal to most of the population; do not appeal to the 50 percent who are not voting.

Here’s Mike Davis on how Obama won his election, referring to Ferguson’s scholarly explanation of the same thing Michael Albert is, accessibly, talking about above….

Obama has allied with technology icons to lay the cornerstones of an economic renaissance based on massive public investment in ‘Green Infrastructure’. So far this is the flagship idea of the new Administration, the one that owes least to Clinton precedents and most closely resonates with the idealism of the campaign’s volunteers and the expectations of supporters in the big tech centres. The near constant presence of Google ceo Eric Schmidt at Obama’s side (and inside his transition team) has been a carefully chosen symbol of the knot that has been tied between Silicon Valley and the presidency. The dowry included the overwhelming majority of presidential campaign contributions from executives and employees of Cisco, Apple, Oracle, Hewlett-Packard, Yahoo and Ebay.

But the promise of Green Keynesianism may turn out differently than imagined by radical economists and environmental activists. A fundamental power-shift seems to be taking place in the business infrastructure of Washington, with ‘New Economy’ corporations rapidly gaining clout through Obama and the Democrats while Old Economy leviathans like General Motors grapple with destitution and welfare, and energy giants temporarily hide in caves. The unprecedented unity of tech firms behind Obama both helped to define and was defined by his campaign. Through his victory, they have acquired the credit balance to ensure that any green infrastructure will also be good industrial policy for their dynamic but ageing and cash-short corporations.

There is an obvious historical analogy. Just as General Electric’s Gerard Swope (the Steve Jobs of his day) and a bloc of advanced, capital-intensive corporations, supported by investment banks, enthusiastically partnered with Roosevelt to create the ill-fated National Recovery Administration (nra) in 1933, so too have Schmidt and his wired peers, together with the ever-more-powerful congressional delegation from California, become the principal stakeholders in Obama’s promise to launch an Apollo programme for renewable energy and new technology. [65]

We should note that this realignment of politics by economics fits awkwardly within the Keys-Burnham paradigm, which asserts the primacy of public opinion and the durability of voter blocs. A ‘silicon presidency’, on the other hand, is perfectly accommodated by Thomas Ferguson’s ‘investment’ theory of political change which privileges political economy and class struggle within capital as modes of explanation. Analysing New Deal case-studies in his 1995 book, Ferguson—an intellectually supercharged descendant of Charles Beard—concluded that business elites, not voters, usually determine both the nature and course of electoral realignments. [66]

    The fundamental market for political parties usually is not voters. As a number of recent analysts have documented, most of these possess desperately limited resources and—especially in the United States—exiguous information and interest in politics. The real market for political parties is defined by major investors, who generally have good and clear reasons for investing to control the state . . . During realignments . . . basic changes take place in the core investment blocs which constitute parties. More specifically, realignments occur when cumulative long-run changes in industrial structures (commonly interacting with a variety of short-run factors, notably steep economic downturns) polarize the business community, thus bringing together a new and powerful bloc of investors with durable interests. As this process begins, party competition heats up and at least some differences between parties emerge more clearly. [67]

But what has suddenly mobilized the self-identified New Economy as an ‘investor bloc’ in Ferguson’s sense? And why Obama?

One answer is straightforwardly cultural: Obama ‘gets’ and likes tech and entrepreneurs. As Joshua Green pointed out in the Atlantic, the young candidate exemplifies the legendary outsider who reinvents American politics in his own garage and then launches a history-changing ipo with the help of visionary venture capitalists. In addition, Obama—unlike Hillary Clinton, who seemed more at ease in Hollywood—came to the mountain (or rather, Mountain View) and listened. He discovered a volcano on the verge of eruption. No sector of the corporate workforce, bosses as well as employees, has probably been more outraged by the endless carnage in Iraq, the wanton incendiarism of Rove’s culture wars, the attacks on immigrants, and the Republicans’ contempt for evolutionary and earth sciences. [68]

But there were obviously deeper, more selfish priorities. Even before the crash, revered seers like Andy Grove (ex-ceo of Intel) were expressing fear about declining investment and innovation in the technology heartlands. As Business Week later summarized in a special report: ‘Federal funding of advanced computer science and electrical engineering research has dropped off sharply since the late 1990s, as has the number of Americans pursuing computer science degrees. And large technology companies are putting less emphasis on basic research in favour of development work with quicker payoffs’. [69]

This is some of the more recent Noam Chomsky mentions of Thomas Ferguson.

It could be argued that no party speaking for the public would be viable in a society that is business-run to an unusual extent. Evidence for that is substantial. At a very general level, evidence is provided by the predictive success of political economist Thomas Ferguson’s "investment theory" of politics, which holds that policies tend to reflect the wishes of the powerful blocs that invest every four years to control the state. More specific illustrations are numerous. To mention just one, for 60 years the US has failed to ratify the core principle of international labor law, which guarantees freedom of association. Legal analysts call it "the untouchable treaty in American politics," and observe that there has never even been any debate about the matter. And many have noted Washington’s dismissal of conventions of the International Labor Organization as contrasted with the intense dedication to enforcement of monopoly pricing rights for corporations ("intellectual property rights"). There is much to explore here, but this is not the place.

And on Noam Chomsky explains The Investment Theory of Elections on DemocracyNow! also.

AMY GOODMAN: Why do you think Obama chose to surround himself?

NOAM CHOMSKY: Because those are his beliefs. I mean, his support comes from the—his constituency is basically the financial institutions. Just take a look at the funding for his campaign. I mean, the final figures haven’t come out, but we have preliminary figures, and it seems to be mostly financial institutions. I mean, the financial institutions preferred him to McCain. They are the main funders for both—you know, I mean, core funders for both parties, but considerably more to Obama than McCain.

You can learn a lot from campaign contributions. In fact, one of the best predictors of policy around is Thomas Ferguson’s investment theory of politics, as he calls it—very outstanding political economist—which essentially—I mean, to say it in a sentence, he describes elections as occasions in which groups of investors coalesce and invest to control the state. And he takes a look at the formation of campaign contributors, and it gives you a surprisingly good prediction of what policies are going to be. It goes back a century, New Deal and so on. So, yeah, it can predict pretty well what Obama is going to do. There’s nothing surprising about this. It’s the norm in what’s called political democracy.

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