The Golden Rule : Book Review

[RoyGBiv]

I wrote this review prior to the 2000 election. I've been revisiting some of my writings prior to this period and examining how my style and opinions have evolved since that time. While a discussion of how this fits into that task is beside the point here, I thought I'd share this. Based on a casual analysis, Ferguson's theory seems more prescient today than it did then.

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Thomas Ferguson, Golden Rule: The Investment Theory of Party Competition and the Logic of Money-Driven Political Systems (Chicago: University of Chicago Press, 1995. Pp. 432).

The rise of Franklin D. Roosevelt to the Presidency and the consolidation of the Democratic Party as the dominant party in American government inaugurated a new era in American politics, replacing the Republican dominated system that had existed since the 1896 election (pp. 114). This realignment occurred amidst the maelstrom of the Great Depression, which had had devastating consequences for many of the world’s economies and governments, but arguably affected the United States most severely (pp. 114). This fact by itself might lead some to conclude that the time for a change in political systems had come and that the mass of voters responded. Thomas Ferguson, political scientist from the University of Massachusetts at Boston and author of Golden Rule disagrees. According to Ferguson, what best explains this realignment period is that Roosevelt was able to build a new and unique type of political coalition that included “capital-intensive industries, investment banks, and internationally oriented commercial banks” (pp. 117). The voters themselves were secondary to this process. What happened, according to Ferguson, was that during the economic boom of the post-WWI era, fundamental changes in the US economy began a breakdown of the coalitions that developed in 1896, and by the 1930’s when the Depression hit its deepest levels, these coalitions broke down completely, and a new power base formed.

The theory that explains the political realignment of the 1930’s is applicable to all of American politics, according to Ferguson. This book provides an intricate explanation of that theory. Through a series of long essays, Ferguson first defines the theory and then applies it to various historical periods, focusing extensively on the New Deal era and eventually examining the 1988, 1992, and 1994 election cycles. Calling it the investment theory, Ferguson explains that who holds the real power in government can be determined by tracing who finances the political candidates, or, more simply put, by following the gold. The American political system is dominated by investor blocs that have the resources to finance candidates and thus exert their influence over both the political process and the policy decisions of political parties. Voters, unable to pool their resources to form an effective investment bloc, have little say in the decisions their elected representatives will make. The investment theory also posits that the only real competition that exists among political parties occurs when there is a reshuffling of business interests that cause new coalitions to form. Only then do voters have any real choice, but regardless, their choices are limited to those the investor blocs give them.

Ferguson’s thesis is convincing in many ways, especially when applied to the New Deal era, an examination of which constitutes the most significant portion of this book. In the second chapter “From ‘Normalcy’ to New Deal,” Ferguson, using a vast number of sources which he refers to via footnotes that are explained at the end of each essay, meticulously traces how the 1896 coalitions began slowly disintegrating and then how new ones arose and found their voice in the election of Roosevelt. He addresses the competing view that “workers, blacks, and poor” were at the center of this new coalition and actually responsible for these changes by explaining that the coalition that emerged was composed of business interests that were not as hostile to the wants and needs of these groups as the Republican coalition that had existed before had been (pp.117). They were thus willing to allow the implementation of such things as the Social Security system and other reforms that benefited the common people. Chapter Four, which is essentially Ferguson’s defense of his own theory and its applicability to the New Deal era against critics that emerged after the original publication of those essays, makes his case even more convincing. By providing a statistical analysis that supports his earlier claims in addition to addressing specific criticisms and detailing how they are flawed, Ferguson adds strength to his argument that makes it difficult to deny.

While the examination of the 1988 election and the application of the investment theory to certain other historical eras are also convincing for similar reasons, chinks in the theory’s armor begin to form when Ferguson discusses the 1992 and 1994 elections. The election of Bill Clinton in 1992 is most problematic. Ferguson explains that the Democratic candidate’s campaign can only be understood by understanding a process that had been occurring over the last decade. While doing this, he asserts that Democrats “could have tried to rally the millions of middle-class and poor Americans” that were negatively affected by Ronald Reagan’s policies and implies that one reason for Clinton’s success was that they did this (pp. 292). This strongly suggests that an appeal to voters and not merely moneyed investment blocs is a part of the political process, which flies directly in the face of Ferguson’s thesis. Similarly, for the 1994 election cycle, Ferguson examines the public’s attitudes towards the Republican’s Contract with America, which would not appear to have been necessary if political power is as divorced from voter opinion as his earlier essays argue.

A more pressing problem with this book is Ferguson’s writing style. Obviously, with the publication of this book he has made an important contribution to the field of political science and has provided a foundation upon which historians can build analyses of various periods of American history. However stylistic concerns make understanding his work more difficult than it should be. For example, throughout the work Ferguson uses parenthetical commentary in instances for which a footnote would have been more appropriate. Some of these are of such length that the reader can too easily lose track of the argument he is making before Ferguson ends the parenthetical and continues with the main sentence. Additionally, such as in the first full paragraph on page 146, he uses parentheses when commas would have been grammatically correct. Ferguson also has a tendency to write excruciatingly long sentences, one such example being a sentence beginning on page 19 and extending to page 20 that is 162 words long, contains two parenthetical comments and three asides set off by dashes. These issues make the work laborious reading, which could lessen its appeal to many.

Overall, Ferguson argues his case well despite the minor problems of applying his theory to all facets of the American political system. A background in political science and American history will certainly be helpful to many readers, especially in those sections in which the author refers to “statistical significance” or attempts to apply his theory to other historical periods other than the ones he examines in detail. This is an important work that requires significant effort to understand, but that understanding sheds light on how the American political system works and why American history has progressed in the manner it has.

[Pithy Cherub]

1. The content is highly topical

and relevant to the dawn of the new age. Without reading his work, my assumption is that the opening of the investment opportunity door to the mass public has caused some shifts in the coalitions we are now seeing. It would be interesting to see if he feels the financing of candidates from the small investor (like us) heralds a new age in political influence or just a burp. The tensions in 1992 were around race and the distribution of wealth - or lack thereof. Wonder if the rise of a big 1992 & 1996 political contributor, Perot, to use his personal vast wealth to promote his own agenda was also a harbinger of things to come. Many candidates are selecting self-financing rather than the traditional big donor base. That might be where the sequel should be as big donors are becoming not necessary for the exceedingly wealthy pol on one hand and being rendered not necessary by the small investor class that has given rise to financing candidates that more reflect their views.

A "Woe is Me: The Last of the Bigtime Political Donors" wouldn't be a bestseller - but it would make the people who participate feel that they matter.

You wrote a great review - he must write like he speaks.

[RoyGBiv]

2. Sorry for the late reply ...

I was on vacation and not near a computer.

With regard to his writing, I've never heard him speak and so don't know precisely the comparison you make, but if his speaking style is dry and difficult to follow, then yes. If I had given a more unvarnished opinion intended for a non-academic audience, I would have suggested he dictate his ideas to some more talented writer he had known since birth, and thus understood him on an instinctual level, and left the writing to that person. He is a prime example of an obviously intelligent individual who has almost no ability to communicate his ideas. I believe much of the criticism of his work is based in the fact that the expression of his ideas is so difficult to understand, even for a well educated individual.

To suggest an answer to your question, based on my reading of the book and other writings relevant to it, I think he would believe small investor influence is pretty much a burp. In his defense of his theory in the context of the '92 and '94 election cycles he actually comes close to saying this. I noted in the review that he apparently made an argument for those periods that cut at the base of his own theory, and he does, yet at the same time he defends that theory against this inconsistency at the same time he makes it. That is, he claims that these cycles contained variables that were not typical. The problem with either proving or disproving his theory is that he's basically right. The '92, '94, and '96 cycles were in fact unusual, but at the same time this fact cuts at the base of a theory that is presented so as to explain the political system no matter the variables. Viewed another way, the variables are a part of the process of coalition change, which he explains convincingly in great detail when discussing the 1896-1933 period. As you can see just from my explanation, the matter becomes somewhat convoluted, a sort of "chicken or the egg" argument.

I was enlightened by this book and the subsequent study it inspired. The seminar course I was taking at the time ended up revolving almost entirely around it. What I can say is that for the period the theory was initially intended to describe, Ferguson is very convincing, and he does a pretty good job of playing it backward. (The discussion of the 1860 election in the context of this theory was particularly good, I thought, and that's my area of expertise.) Moving it forward into the modern era, however, is problematic.