The Rich and the Democratic Party
The Democratic Party has a long history of supporting checks on elite privilege, protection for disadvantaged groups, and some amount of economic redistribution. Well before the New Deal, one of the most important constituencies within the Democratic Party was farmers, who were the major social force behind Woodrow Wilson’s “New Freedom” program, which included the creation of the Federal Trade Commission, a modestly progressive income tax, and the Federal Reserve — which when it was created was as much about providing credit to farmers as it was about protecting Wall Street banks. (Sanders 1999) During the Great Depression, the Democratic Party of Franklin D. Roosevelt enacted sweeping federal programs — especially the Social Security Act, the National Labor Relations Act, and the Fair Labor Standards Act — which provided for unemployment insurance and old age pensions, and which guaranteed the right to organize a union to bargain for better wages, benefits, and working conditions. In the 1960s, the Democratic Party of Lyndon Johnson created Medicaid and Medicare, establishing federal medical insurance for the poor and the elderly.
Between the major Democratic defeats of the 1980s and the 2000s, however, Democrats gradually shed their commitment to redistributive policies, and embraced much of the pro-free-market ideology of the Reaganesque Republican Party. There are many explanations for this shift. When the Democratic Leadership Council in the late-1980s started advocating for shedding the New Deal legacy, their principal claim was that the American electorate had moved substantially to the right. Supposedly left-wing candidates like George McGovern and Walter Mondale had gotten crushed in general elections. Thus the party had to tack to the center to stay competitive. But for the last decade or more the evidence has been mounting that at least Democratic voters are to the left of Democratic elected officials (Page and Gilens 2017), while the deepening of party polarization suggests that there are vanishingly few relatively conservative voters who can be won over to the Democrats if the Democrats simply refrain from redistributionist policy stances. Though there are now some signs that the Democratic Party — particularly after the success of Bernie Sanders’s presidential campaign and after the shock victory of Donald Trump — is attempting to return to an earlier, Rooseveltian mode, there is no certainty that this is where the new equilibrium will lie.
While there is little disagreement among analysts that the Democratic Party has shifted to the right on economic issues, there is little agreement as to what explains this. And lurking beneath the competing explanations are competing understandings about how democratic political systems work in capitalist economies.
What is at issue here is the extent to which Democrats are willing to embrace policies that are unpopular with either the affluent, the very rich, or particular capitalist interests, and to a certain degree, the extent to which Democrats support policies openly favored by these groups. Although in the 1990s Democrats moved towards a position of outright hostility towards their poor and working class supporters as part of a strategy of actively wooing the affluent, the superrich and specific capitalist interests, by the 2000s and especially by the 2010s, my sense is that most elected Democrats recognized that policies in favor of poor and working class Americans were broadly popular, but they were constrained by their unwillingness to court the ire of these other groups.
In this post I’m going to try to clarify what at least some of the different explanations are, and what the evidence provided for those explanations is.
First, who or what are the affluent, the rich, the superrich, and specific capitalist interests?
I consider the affluent those with family incomes roughly in the top 20% of the income distribution, who overwhelmingly have college degrees. These are people with incomes above $100,000, but well below the threshold of being properly rich. Few have large amounts of wealth. And few of them give more than small amounts of money in political contributions. Their political power mostly comes from the fact that they vote in very high numbers, that they consume large amounts of political information, and that candidates for office themselves often come from this group.
The rich are the 1%, roughly. In addition to high incomes they also often have high wealth. They contribute significantly to political campaigns, though whether they do so in pursuit of the interests of the firms or industries they work in, or in service of political causes that they happen to support, is a subject of debate.
The superrich are the .01% of income earners. This group includes the billionaire megadonors who have become increasingly important to campaigns. They have essentially limitless wealth and spend extravagant sums on politics.
Finally specific capitalist interests are firms or industry associations that give campaign contributions, that lobby, and that (in many cases) employ large numbers of workers in particular places.
Campaign finance
Campaign donations are absolutely dominated by the rich. In 2012 the top 0.01% of households by income took home 5% of all income earned in the United States (already a staggeringly high number) but were responsible for 40% of all campaign contributions in federal elections. That’s about 25,000 extremely rich households giving 40% of all the money raised by federal candidates, PACs, 527s, etc. (Bonica et al. 2013) This represents a substantial increase over time. Bonica et al. (2013) report that directors and executives of Fortune 500 companies donate regularly and in relatively large amounts.
The figure (from (Bonica et al. 2013)) shows that since 1980, Democratic reliance on contributions from the superrich to fund their campaigns has increased, such that by 2012 these donors represented some 30% of the entire federal fundraising of the Democratic Party and affiliated PACs and 527s. Large donors, who gave more than $1500 per cycle but who are not members of the .01% of households by income, gave another quarter. These individuals are the rich, as opposed to the superrich. Small donors — here defined as donations coming from households that gave less than $1500 in the course of an election cycle — were only responsible for about 30%. People giving more than just a few hundred dollars in political donations, meanwhile, are likely to be very well off. Finally non-labor PACs, which are mostly pro-choice groups, environmental groups, gay rights groups and the like that themselves rely on donations from wealthy individuals, along with corporate PACs, were responsible for another 10% or so. Labor PACs — essentially the only way that working class people are able to contribute to political campaigns — represent a very small fraction of total giving at the federal level (though labor PAC contributions almost certainly make up a much higher share of Democratic fundraising at the state level, especially in states with large public employees unions).
That the Democrats are increasingly reliant on contributions from the superrich to fund their election campaigns is obvious from this data. The question, of course, is what those donors hope to accomplish with their donations.
The two main theories are that donors are either engaging in “investment” or “ideological” giving. Investment means that donors are looking for politicians and parties to support the policies that they favor — either policies that generally benefit people of their class, or policies that specifically benefit the firms or industries from which they derive their incomes. Ideological giving implies that donors give either because they agree with the ideology of the party to which they are giving, or because they are attempting to influence the overall ideological orientation of the party through their giving.
Motivations can be difficult to discern from data. Some indication is given from this picture.
The picture shows that donations from the three groups listed flow to politicians who hover around the ideological center of their respective parties, with small donors tending more towards the far left or far right. Donors are apparently quite partisan in their preferences. The authors believe that the data shows that the Forbes 400/Fortune 500 list are not pursuing interests narrowly to the benefit of their firms — if they did that they would show far more hedging between both parties. In fact, they say, most boardrooms are split between Democrats and Republicans, and this helps maintain access to politicians of both parties. Instead, the donors are ideologically motivated.
The superrich obviously cluster around the Republican party — and not necessarily around its fringes. On the Democratic side, top .01% donors are somewhat to the “left” of the general run of Forbes 400/Fortune 500 contributors. Small donors are further to the left still. But as the authors explain, the liberal/conservative ideology here is a composite measure of all kinds of different issues. Some of these donors may be ardently in favor of action to address climate change, or in support of reproductive rights, or civil rights, or other major planks in the Democratic Party platform. One cannot infer that they support strongly redistributive measures, or measures that would aggressively regulate industries from which they derive their incomes. In fact it seems that the opposite is likely.
The evidence is scant that corporations directly attempt to influence electoral outcomes. Corporate political spending is a fraction — less than 10% — of corporate lobbying expenditures. Corporations are generally far more interested in the specifics of regulation than in the types of left-right issues that get debated in federal elections, and lobbying is a far more effective, and less controversial, way to make their voices heard than direct spending on elections. (Bonica 2016) As Hacker and Pierson put it, “organized groups care deeply what voters do, and they frequently try very hard to shift elections their way. But they also are shrewd and experienced enough to place the competition for votes in proper perspective. This explains why even with the recent explosion of campaign funding, only a modest share of the billions that interest groups spend on politics is directly connected to electoral contests. The vast majority goes instead to efforts to shape mass and elite opinion and to lobbying, where real spending has doubled in just a decade. For powerful groups the true center of action is in Washington, not the swing states.” (Hacker and Pierson 2014, 649)
Thus the most likely story about the influence of campaign finance on the ideological orientation of the Democratic Party would go like this:
Democrats are increasingly dependent on the rich and the superrich to fund their federal election campaigns. The individuals who are contributing to Democrats are not motivated to do so because they want Democrats to support policies that favor the rich — if that was what they wanted, they would do better to contribute to Republicans, and the evidence shows that 90% of rich donors contribute only to one party. Instead they contribute because they are fervent supporters of core Democratic issues, like environmental regulation, support for reproductive rights, gay rights, and so forth. We can infer, however, that these donors do not particularly support strong redistributive measures, or, for example, stringent regulation of industries like entertainment, technology, and finance, from which many of them derive their incomes. (Page and Gilens 2017, 103ff) In most cases these donors probably do not need to make open threats to Democratic politicians to get them to see things from the donors’ point of view. Democratic politicians know that they should not bite the hand that feeds them, and therefore avoid supporting or even discussing strongly redistributive measures. Democratic candidates who do talk openly and assertively about such issues — like Elizabeth Warren and especially Bernie Sanders — essentially get none of their money from the rich or the superrich, as Thomas Ferguson and his co-authors have shown. (Ferguson, Jorgensen, and Chen 2018)
Organization- or Policy-centered Explanations
An increasingly influential strand of political science analysis argues that political parties are best understood as “long coalitions of intense policy demanders.” (Bawn et al. 2012) This theory overlaps with campaign finance explanations. But whereas the evidence from campaign contributions is that contributors are more ideological than strategic, the organization-centered approach stresses that the most important players in American politics are organized groups, that American political parties are mostly assemblages of organized groups acting in coalition with each other, and that what organized groups want are specific policy outcomes.
The organization- or policy-centered approach can tell us a lot about why the Democrats have moved to the right. As Hacker and Pierson write, “The severe decline of organized labor in the United States and the increasing scope of unregulated finance was, in significant part, a political outcome driven by the failure to update policy [that is, “drift”]. In each area, there were alternatives that would have resulted in more equal
outcomes that had prominent advocates. The opponents of such reforms, possessing formidable and growing
organizational resources, mobilized effectively to stop them.” (Hacker and Pierson 2014) As organized labor got weaker, its strength within the Democratic Party obviously diminished. In tandem with the weakening of labor, the Democratic Party increasingly sought to woo business interests. These interests almost always contributed to both parties. Whereas business influence on the Republican Party tended to push it even further to the right, business influence on the Democratic Party served as a form of “insurance” against the Democrats adopting more redistributionist positions.
Political system explanations
The U.S. has what is called a “majoritarian” political system, characterized by first-past-the-post, winner-take-all elections (FPTP). In such systems, representation is on the basis of one representative per geographical district. The winner — even if that person gets only a plurality of the vote — gets elected, and the loser or losers get nothing. This is distinct from proportional representation (PR), in which parties are allocated seats in legislatures on the basis of the share of votes across districts (or within multimember districts) that their party receives. FPTP systems are almost always two-party duopolies. This is because in places where support between the two major parties is relatively closely divided, a third party candidate stands a good chance of taking votes from the party closer to it politically or ideologically, and thus throwing the election to its ideological or political opponent. Voters generally know this, and thus rarely cast votes for third party candidates.
There are some theoretical and empirical reasons to believe that two-party systems favor governments of the right, but I don’t find them especially persuasive, especially for the U.S. case. The theoretical argument is based on the idea that in two-party systems, one party is dominated by the working class, one party is dominated by the rich, and the middle class has to choose which way to go. The intuition is that the middle class leans to the right in these situations because it fears that a working class majority will vote to tax the rich and the middle class in order to get redistribution towards the working class. (Iversen and Soskice 2006; Döring and Manow 2017) The implication is that a large middle class presence within the working class party wouldn’t make the party less oriented towards the interests of the working class from the get-go. This seems patently wrong. It is contradicted by the findings of Thomas Piketty and others, who show that over time the traditional parties of the working class have attracted more and more of the educated and affluent, at the same time as their policies have become less redistributionist. (Piketty 2018) Two-party systems may not necessarily favor governments of the right; instead they contribute to forcing even the working class party to the right in order to attract the votes (or the contributions) of the affluent. In any case the political system explanation does not answer the causal question of whether the Democrats moved right because some important groups became Democrats, or whether the Democrats moved right in order to attract some important groups. Probably both are true.
There are some other political system explanations that I think capture important truths. One is that as the size of the American government increased, and as the U.S. government took on more and more responsibilities, it helped birth more and more groups with particular interests attempting to shape policy outcomes in their favor — usually by trying to get the government to keep doing whatever it was that enabled those interests to come into existence in the first place. What this means is that any effort to change policy immediately runs into the powerful resistance of myriad organized groups. The effect is something that scholars call “drift,” which is to say, preservation of the status quo not because it’s popular but because no one was able to mobilize enough power to change it. (Hacker and Pierson 2014) The implication is that even if Democratic elected officials favor redistributionist policies, it’s extremely difficult to get them enacted. The lack of progress probably leads to demoralization among the voters who would have benefited from such policies. Something like this was surely one of the things at work in the early years of the Obama presidency and must have contributed to especially low Democratic turnout in 2010, especially coming off of the very high Democratic turnout of 2008.
And that takes us to “demographic explanations.”
Demographic explanations
What I am calling “demographic” explanations have to do with changes over time in who votes for which parties, or with the policy preferences of people whose party affiliations have stayed the same. Such changes could be, and are, influenced by myriad factors, so the trick is determining which are important.
One of the most important demographic factors in American elections is the abysmal voting rates of poor people. Actually poor people strongly favor Democrats when they vote, but their low participation rates give Democrats a structural disadvantage, while also reducing the size of the constituency within the Democratic Party that would push for policies that favor the poor. Furthermore, high levels of immigration have increased the share of the low-income population that is made up of non-citizens, which contributes to the low rates of political participation among the poor. (Bonica et al. 2013)
Again the causal story here is unclear. Have Democrats moved right because poor people’s rates of political participation have declined? Or have poor people stopped voting because the Democrats have moved right? The answer is, probably, some of both.
Another important demographic change has to do with the persistence of Democratic Party loyalty among people whose families were working or middle class in earlier generations. Many people are Democrats because their parents and grandparents were, and while their parents and grandparents might have been drawn to the Democrats because it was the party of working people, if their children and grandchildren have grown more affluent, they may feel a loyalty to the Democrats but no particular commitment to redistribution. I think this is a factor in the Democratic Party’s rightward drift, perhaps especially among Jewish Americans, who remain overwhelmingly Democratic, but who are also on average more affluent than most Americans. In contrast Catholic Americans, also an important part of the New Deal coalition who have seen their economic fortunes increase over time, moved substantially over to the Republican Party over disagreements with the Democrats on both economic and social/cultural issues.
It is difficult to get a good measure of how dependent Democrats are on affluent votes because most data is based on exit polls. Exit poll respondents answer questions to pollsters about how much money they make, but one could easily find grounds for doubting the veracity of this self-reporting. The categories are not at all helpful for gauging the importance of very high-income people, as they only ask respondents if they make above $250,000. Exit polls are also plagued with sampling problems, and so it is very difficult to extrapolate from that data to answer the question, for example, of what the income (much less wealth) distribution was across the nearly 66 million people who voted for Hillary Clinton in 2016. Slightly more granular data comes from looking at election results by county, and then matching counties with income data from the U.S. census (See the useful though difficult to read infographics here). Here the problem is that some of the richest counties in America (like New York county) also contain extremely high numbers of poor people. The best approach would be to match electoral precincts with census tracts, which are often roughly the same size and far more homogenous in their demographic characteristics. I have seen a map based on such an attempt, but have not been able to track down the data, which I think would be extremely revealing.
In any case, it is clear that Democrats are relying more and more on affluent voters. This is visible in exit polls, which show Democrats doing better among upper-income groups; in Congressional representation, where Democratic candidates represent a majority of the most affluent districts; and in county-level election returns, which show Democrats performing better in counties with relatively high median incomes.
As many people have pointed out, the shift seems to be driven by the preferences of highly-educated voters. Highly educated voters strongly side with the Democratic Party on many issues, including women’s rights, gay rights, action on climate change, and so forth. They often self-identify as “liberal.” In America education correlates closely with income, so many of these educated voters are also earning high incomes. They also tend to cluster in places with other educated voters, creating some echo chamber effects. But even if education is what is driving these voters towards the Democrats, the fact is that they are generally much better off than the average Americans, comprising a very large share of what I am calling the “affluent” — that is, the top 20% or so of earners.
As Eric Levitz has pointed out, many of these voters are not hostile to redistribution as such. In fact they tend to favor higher taxes on the very wealthy, increases in the minimum wage, and so forth. This group therefore does not obviously pull the Democratic Party to the right. But I think nevertheless that the growing prominence of this group in the Democratic electorate has the effect of preventing the Democrats from supporting policies that would more directly favor poor and working class Americans, and thus they contribute to the sense among many voters that the Democrats privilege the concerns of the affluent in their policies.
There are two issues here. One has to do with what we might call “welfare for the upper-middle class.” The other has to do with the ways that certain policies to benefit poor and working-class Americans would directly harm this group.
Affluent Americans are among the largest beneficiaries of government benefits of any group, mostly through the tax code. From the mortgage interest deduction, which enables people with mortgages on houses worth as much as $750,000 to deduct their interest payments from their gross income, to various types of tax-advantaged savings accounts (retirement accounts, college savings accounts, and so forth), well-off but not super-rich families pay far less in taxes than they otherwise would. These tax benefits help such households build wealth, and as such they are extremely popular. These same benefits are, of course, available to less well-off households. But most working class Americans barely save anything at all, not because they don’t have adequate tax incentives for doing so, but because they simply don’t make enough money to be able to put anything away. The more that already-affluent people take advantage of these sorts of savings to build wealth, the more wealth inequality is likely to increase. Furthermore these tax advantages cost the federal government money, and thus contribute to the sense that there isn’t money for other priorities. (My friend Anusar Farooqui has an extremely helpful post on this, here.) A frequently cited example is Obama’s proposal to end the 529 college savings program and replace it with a program much more targeted at helping the children of working and middle class families attend college. The uproar from wealthy Democrats was swift and decisive. Powerful Democrats like Nancy Pelosi, who represents an extremely affluent district, made clear they were having none of it. (Reeves 2017) It is also telling that the “progressive” candidate running in a southern California district is basing her campaign on the fact that her Republican opponent voted to raise taxes on the residents of the district through his support for the Trump tax bill. That bill did increase taxes on some of those constituents by capping the mortgage interest tax deduction and severely limiting the local- and state- income tax deduction. The latter plank is a problem for progressives because it is going to increase pressure for tax and spending cuts in high-tax states and municipalities. But lowering the cap on mortgage interest deduction was basically the one progressive thing in the whole outrageous bill.
As important as opposition to ending tax policies that benefit them is how affluent Democrats help put certain types of policies out of consideration altogether. In defense of their property values and their segregated schools, the affluent are openly hostile to measures to increase affordable housing and residential integration. I will have more to say about this specific issue in other posts, but for now the point is that Democrats never even entertain some of the measures that make obvious economic sense in our current world where existing homeowners in a few metropolises are capitalizing on extraordinary increases in property values, helped by governments’ inability to build enough new housing. These would include, in particular, land taxes. They are out of the question because many of the places where property values are rising fastest — metropolitan areas like Boston, San Francisco, New York, Washington, Seattle, and so forth — are strongly Democratic.
Now, it’s possible that the opposition of the affluent to measures that would aid especially the urban poor and working class does not have an effect on the overall makeup of the Democratic Party, because the losers in this situation are mainly the poor and working class who live in big, wealthy cities. These are people who vote overwhelmingly for Democrats. They are not leaving for the Republicans over Democrats’ failure to support more progressive housing policy. But their increasingly precarious housing may be contributing to declining political participation. If poor and working class people make up a declining share of Democratic votes, then Democratic politicians will feel less need to craft policies that speak to their needs, especially when those policies would necessarily conflict with the interests of affluent Democrats. Also, Democrats may feel that they can afford to do without these voters, since the places where they live vote for Democrats no matter what.
Corresponding to the Democrats’ increasing reliance on affluent voters is their decreasing reliance on working class voters. I won’t go into it here, but there’s no question that white Americans who do not have a college education now — especially with the rise of Trump — vote Republican by large majorities. Without such voters Republicans would not be nationally competitive. Democrats’ share of voters who this description (which, it should be clear, does not represent anything like a socially homogenous or distinct group) has been on the decline since the 1960s. But while it was once a cause for concern, the process has proceeded far enough that Democrats now often face insurmountable odds of winning in districts where white voters without a college degree are in the majority. The two-sided result is that the Democratic Party has radically shrunk as a geographic force, and with this shrinkage there are fewer power centers within the Democratic Party pushing for the Party to take any corrective measures.
How much the Democratic Party’s decreasing dependence on working class voters has led the Party to favor policies that would benefit working class voters is an open question, and again one of causality. Did the departure of working class voters remove pressure for the Democrats to support pro-worker policies? Did Democrats’ decreasing emphasis on pro-worker policies contribute to the departure of working class voters from the Democratic fold? Again, these processes were probably happening simultaneously, but in mutually reinforcing ways.
Asymmetric Polarization Explanations
Grossmann and Hopkins (2016) have a very interesting book on “asymmetric polarization” — the fact, by most measures, that Republicans have moved much further to the right than Democrats have moved left. Their basic argument is that the Democrats and the Republicans are very different kinds of parties, with very different kinds of bases. Essentially, the Republican Party is the home of a conservative ideological movement. That movement does not think of itself as comprised of any particular identifiable group, except the group called “Americans.” They think that the problem with America is that other people think of themselves as members of specific groups with specific interests, who go as claimants to the government, which in turn doles out benefits to those particular groups in exchange for political support. Democrats, meanwhile, are not in the main ideological “liberals.” Instead, they are people who believe that the Democratic Party represents “people like me.” They might explain “middle-class people,” “women,” and so forth.
Loyal Democrats — those who voted for Clinton as well as those who voted for Sanders — have positions on economic policy that are to the left of what Hillary Clinton herself stands for. Yet in most cases this doesn’t seem to have dampened their affection for Hillary Clinton at all. In other words, Democratic voters may be to the left of their elected officials on economic issues, but it’s not obviously that this has a very strong effect on their voting behavior. For the Democratic Party as a whole, this would meant that Democratic voters are willing to tolerate a much higher level of ideological deviation from Democratic elected officials before those officials cross the threshold of no longer representing “people like me.” Grossmann and Hopkins place a lot of emphasis on the fact that many Democrats are single-issue voters. So in other words being able to claim that you are pro-woman might require nothing more than that you are consistently pro-choice. This is probably not helped by the fact that advocacy organizations liberally dispense endorsements to Democratic candidates regardless of whether they score a 70% on the organization’s report card or 100%.
I’m not sure that single-issue voting is a sufficient explanation for this asymmetry, for one thing because it leaves the phenomenon of single-issue voting itself unexplained. Whatever the explanation, Democratic voters do not seem to demand a particularly high level of ideological fealty from their elected officials. This leaves them a great deal of flexibility to accommodate the demands of donors, affluent voters, and so forth.
Ideology/Worldview explanations
No account of the rightward shift of the Democratic Party would be complete without discussing the broader ideological assault that right-wing forces have been waging since at least the 1970s. I won’t go into it here, but the basic point is that at least some part of what drove Democrats to downplay redistributionist themes and minimize the pursuit of redistributionist policy goals must have been the perception that such goals were unpopular. Part of why they were unpopular was that the Right has waged a systematic, extremely well-funded campaign to undermine any idea of social solidarity or public goods; to discredit the government as an instrument of social justice, including through exploiting racial suspicion and animosity to portray the government as a tool to rob the deserving to bestow gifts upon the (racially other) undeserving; and to extol the virtues of private wealth creation. The success of this effort lies in the creation of an alternative media universe (especially Fox News), the funding of intensely ideological think tanks, but also in a comprehensive program of cadre development, funded especially by the Kochs and their network of ideological donors. The fruits of this effort are most visible in the judiciary, where it seems that every judge appointed to the federal bench during Republican administrations is a product of the Federalist Society, an organization that aspiring jurists join in law school, and which promotes their careers in numerous ways.
Part of the story here is also one of asymmetry. There has simply been nothing remotely comparable on the American left. MSNBC grows shriller by the day, but there is next to no ideological content to their coverage, except antipathy towards Republicans and support for mainstream liberal positions on most issues. Mainstream membership organizations within the Democratic coalition certainly recruit ambitious college students as interns, but their work focuses on their particular issue area, with little attention to any broader programmatic agenda, much less to the comprehensive approach to worldview that characterizes the various tentacles of the Koch octopus. Part of this is a legacy of the Cold War and anti-communism as well as the legacy of the ideologically-charged 1960s and 1970s. The former meant that people who in earlier generations would have understood themselves as socialists felt they had to suppress any whiff of ideological non-conformity in order not to jeopardize their livelihoods. The latter affected activists coming out of mass movements, who had to find ways to support themselves once the mass movements petered out. Whatever the explanation, ideology was strongly disfavored, perhaps especially within the labor movement, where it was most desperately needed.
With the field of ideological struggle left almost entirely to the right, especially around issues of political economy, it stands to reason that the general attitude towards political-economic questions in the electorate as a whole would shift to the right, and that the Democratic Party — never an ideological party to begin with — would move right with it. Only in the aftermath of the 2007–2009 financial crisis, and really only after the emergency of Occupy in 2011, did the mood in the country as a whole begin to shift in the other direction. This has clearly exercised some pull on the Democrats, which suggests that ideological explanations are an important part of the overall story.
Capitalism and capitalist power explanations
The last category I want to address is probably the least discussed. This has to do with how democratic politics operates within a capitalist economy. Two aspects of capitalism are crucial for this discussion. The first is that under capitalism, a number of things depend on capitalists continuing to put their capital to work. The first and most important is employment. Under capitalism, most people earn their livelihood by going to work on behalf of a private employer. If that private employer chooses, he or she can go on strike — that is, shut down operations, or (more commonly) refuse to invest in expanding operations that would put more people to work. Closely related to employment is taxation. As unemployment increases, tax receipts decrease and tax expenditures (on unemployment benefits and the like) increase. Governments often collect a variety of taxes from businesses, and when businesses do less business, governments collect less taxes. Both employment and taxation act as a kind of standing blackmail against politicians, especially politicians who represent districts or states where a particular firm or sector employs large numbers of workers: pursue policies that we consider satisfactory, or see unemployment spike and the government’s fiscal position deteriorate. Politicians assume that if voters hold politicians accountable for anything, it’s the basic health of the economy. They assume it to such an extent that the blackmail almost never has to be made explicit.
This basic fact about democratic politics under capitalism is a necessary corrective to campaign finance-centered accounts. Do members of Congress from Michigan support policies favorable to the auto industry because auto companies give them big checks? Or do they do so because the auto industry employs large numbers of workers at good wages and pays large amounts in taxes? Even if campaigns were entirely publicly financed, wouldn’t we expect that members of Congress from states with large fossil fuel industries would usually oppose measures to regulate those industries? The largest private employer in New York State is JPMorganChase. No doubt the financial industry’s contributions to Chuck Schumer and the party committees he controls are useful for maintaining the Senator’s loyalty on key questions. But even a left-winger in Schumer’s position would find it difficult to support policies that openly target an industry that employs large numbers of New Yorkers and pays enormous amounts in taxes.
I won’t defend the claim here, but I think there are good reasons to believe that fear of something like a “capital strike” is part of what lead the Obama administration to back away from more ambitious measures to attack the foreclosure crisis in 2009. (Young, Banerjee, and Schwartz 2018) In particular, the administration feared that if it took too aggressive a stance towards the banks, the banks would simply refuse to lend, and in so doing economic recovery would stall. Ironically, the Obama Administration did use kid gloves with the banking sector, and the industry reciprocated by basically refusing to lend for the duration of Obama’s term, instead using the Federal Reserve’s various assistance measures as a way to repair balance sheets and hoard cash. Industry representatives were not shy in blaming banking regulation for the slowness of the recovery.
In historical terms, the asymmetry of left-right polarization has interacted with long-term trends in the American economy to facilitate a Democratic “drift” to the right. The most important of these is probably the decline of organized labor, which is a product of a vicious cycle between economics and politics. Technological developments in all advanced capitalist societies have meant that mining and manufacturing — once the most densely organized sectors of the American economy — can produce greater output while employing fewer workers. Heavily unionized sectors also faced cost pressures from overseas competitors in a process that policy certainly accelerated, but which was almost certainly inevitable to some extent, unless the U.S. took active measures to prevent the spread of manufacturing technologies to developing countries. Labor’s numbers were therefore always likely to decline from their mid-century peaks. To arrest these declines, or at least slow them, labor would have needed to make changes to labor law and a more robust federal commitment to full employment, a reality that became clear in the mid-1970s. But since the realization set in at a moment when labor was already on the decline, the labor movement was essentially bargaining from a position of weakness. Labor could not credibly threaten to bolt the Democratic Party if Democrats failed to pass labor law reform in the late 1970s, especially once Republicans nominated the fiercely anti-labor Ronald Reagan in 1980. Democrats therefore had little to fear, and labor law reform was allowed to die. This picture contrasts sharply with 1935, when a Democratic Congress passed sweeping changes to labor law on the heels of massive and militant worker uprisings in 1934. Then a substantial number of Democratic politicians believed that workers would go into open rebellion if the law was not changed to guarantee the right to organize and collectively bargain. In the absence of policy change in the late 1970s, the legal environment continued to favor an employers’ offensive. Labor needed new laws more and more, but was getting weaker and weaker, making changes to the law ever less likely. Meanwhile, the weaker organized labor became, the less it was able to resist policy that was directly assisting in making it weaker still — especially Clinton-era policies like NAFTA and the decision to allow China to join the World Trade Organization. This process reached its pitiful dénouement in 2008–2009, when Obama promised his labor allies, who invested massively in his election, that he would pass the Employee Free Choice Act, only to let it die without ever even coming up for a vote. Preoccupied with the fight over health care reform and the fiscal stimulus, Obama’s team did not expend any political capital to move wavering Democratic Senators in order to achieve a filibuster-proof majority of 60 votes.
The decline of the labor movement fits neatly into organization-centered explanations of the Democratic Party’s rightward shift. The point here is that labor’s decline has to be seen in broader political-economic context.
Concluding thoughts
Increasing dependence on the rich and the superrich for campaign contributions; the changing strengths and weaknesses of different organized groups; the growing complexity of the American state and political system and therefore its resistance to policy change; an ideologically forgiving voting base; the absence of a strong left ideological pole in American society, in contrast to the extraordinarily well-funded and organized multi-generational campaign from the right; and the intrinsic power of private capital in a capitalist political economy all have contributed to the rightward shift of the Democratic Party, overlapping to a substantial extent with the decline of organized labor, a phenomenon that can be seen as a shorthand summary of all the rest. In future posts I’ll discuss the wisdom (or not…) of trying to reverse this trend.
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