How Money Controls Politics: Thomas Ferguson Interview
Thomas Ferguson (born 1949) is an American political scientist and author who studies and writes on politics and economics, often within a historical perspective. He is a political science professor at the University of Massachusetts Boston and a member of the advisory board for George Soros' Institute for New Economic Thinking. He obtained his Ph.D. from Princeton University. A contributing editor for The Nation and a contributing writer to The Huffington Post, he is a frequent guest and economic commentator on numerous radio and television programs. He is known for his investment theory of party competition. According to Noam Chomsky, Thomas Ferguson was warned while at MIT that his research might get him denied tenure at the Political Science Department. In Chomsky's account, Ferguson was told If you ever want to get tenure in this department, keep away from anything after the New Deal; you can write all of your radical stuff up to the New Deal, but if you try and do it for the post-New Deal period, you're never going to get tenure in this department. Although not explicitly mentioned, the research was ostensibly the investment theory of party competition. The Investment theory of party competition (sometimes called the Investment theory of politics) is a political theory developed by University of Massachusetts Boston professor Thomas Ferguson. The theory focuses on how business elites, not voters, play the leading part in political systems. The theory offers an alternative to the conventional, voter-focused, political alignment theory and Median voter theorem which has been criticized by Ferguson, et al. The theory states that, since money driven political systems are expensive and burdensome to ordinary voters, policy is created by competing coalitions of investors, not voters. According to the theory, political parties (and the issues they campaign on) are created entirely for business interests, separated by the interests of numerous factors such as labor-intensive and capital-intensive, and free market and protectionist businesses. In rare cases, labor unions sometimes act as major investors such as with the creation of the Labour Party in Britain, but are generally overshadowed by corporations. However, this is different from a corporatist system in which elite interests come together and bargain to create policy. In the investment theory, political parties act as the political arms of these business groups and therefore don't typically try to reconcile for policy. Within this framework, the Democratic Party is generally said to favor internationalist capital-intensive businesses (along with labor unions) while the Republican Party favors nationalist, anti-union, labor-intensive businesses. Labor-intensive investors made up much of the early political systems in the 18th and 19th centuries. Industries such as textiles, rubber and steel favor economic protectionism with high tariffs and subsidies. Since these businesses are mainly responsible for their domestic market, they are opposed to a Laissez-faire economy open to foreign competition. These industries are also heavily against labor unions since unionization increases the price of their goods. This is said to be responsible for the anti-union policies throughout much of the 18th and 19th centuries when these businesses controlled much of the economy. Due to industrialization and new markets in the 20th century, capital-intensive investors became the new economic order after the realignment of the Great Depression. Industries such as oil, banks, tobacco (and General Electric) along with labor formed the New Deal Coalition. Capital-intensive industries have almost no percent of their value added based on labor and are therefore open to unionization, which, Ferguson states, is why pro-labor policies such as the Wagner Act were passed under the New Deal. These investors also favor international competition and reduced tariffs which is said to have led to the Reciprocal Tariff Act (in response to the Smoot-Hawley Act).