Managing the Risks of Corporate Political Donations: A Utilitarian Perspective
This paper applies a utilitarian analysis to corporate political donations. Unlike the more common rights-based analyses, it is argued that the optimal policy is the one that best satisfies society’s rational preferences concerning donor influence, adequate financing, donor pressure and the cost of maintaining and enforcing the democratic system. This analysis suggests that a ban is best if it would be generally observed and sufficient financing from other sources is available, otherwise a donation cap is a better option. Further, lobbyists should be banned from donating small gifts and drafting bills for candidates. The impact of disclosure and other risk management mechanisms are also considered.
KeywordsUtilitarianism Goodin Corporate political donations Political finance Lobbying
We wish to thank Gordon Boyce, Cary Di Lernia, Lorne Cummings, Dennis Arnold, anonymous reviewers and the delegates of the 6th Australasian Conference on Social and Environmental Accounting Research who provided valuable feedback on earlier drafts of this paper. We also wish to acknowledge financial support of Macquarie University.
- AccountAbility. (2005). Towards responsible lobbying. Available at: www.unglobalcompact.org/docs/news_events/8.1/rl_final.pdf. Accessed 11 May 2006.
- Ackerman, B., & Ayres, I. (2006). The secret refund booth. The University of Chicago Law Review, 73(4), 1107–1129.Google Scholar
- Anderson, S., & Cavanagh, J. (2000). The rise of corporate global power. Available at: http://www.ips-dc.org/downloads/Top_200.pdf. Accessed 19 December 2007.
- Campaign Disclosure Project. (2008). Grading state disclosure 2008: Evaluating states efforts to bring sunlight to political money. Available at http://www.campaigndisclosure.org/gradingstate/GSD08.pdf. Accessed 22 March 2009.
- Centre for Political Accountability. (2005). The green canary: Alerting shareholders and protecting their investments. Available at: www.politicalaccountability.net. Accessed 1 August 2007.
- Clawson, D., Neustadtl, A., & Weller, M. (1998). Dollars and votes how business campaign contributions subvert democracy. Philadelphia: Temple University Press.Google Scholar
- Colvin, M., & Metherell, L. (2012). Political donations data rekindles call for reform. Available at: http://www.abc.net.au/pm/content/2012/s3420798.htm. Accessed 15 February 2012.
- De George, R. (1993). Competing with integrity in international business. Oxford: Oxford University Press.Google Scholar
- Dubs, C. (2005). Political donations by companies: A corporate law perspective. Cross-sections, 1(1), 16–27.Google Scholar
- Dworkin, R. (2000). Sovereign virtue. London: Harvard University Press.Google Scholar
- Egan, T. (1995). Industries affected by endangered species act help a senator rewrite its provisions. The New York Times, 20.Google Scholar
- Ferdinand, P. (2003). Party funding and political corruption in East Asia: The cases of Japan, South Korea and Taiwan. In R. Austin & M. Tjernström (Eds.), Funding of political parties and campaign elections (pp. 55–69). Stockholm: International Institute for Democracy and Electoral Assistance.Google Scholar
- Fogg, K., Molutsi, P., & Tjernström, M. (2003). Conclusion. In R. Austin & M. Tjernström (Eds.), Funding of political parties and campaign elections. Stockholm: International Institute for Democracy and Electoral Assistance.Google Scholar
- Fora.tv. (2007). A troubling nexus: Big money and politics (transcript). Available at: http://fora.tv/fora/fora_transcript_pdf.php?cid=1024. Accessed 6 June 2007.
- Grattan, M. (2005). Political guns for hire. Available at: http://www.theage.com.au/news/Michelle-Grattan/Political-guns-for-hire/2005/05/24/1116700707853.html. Accessed 1 October 2007.
- Gray, R. (2005). Taking a long view of what we now know about social and environmental accountability and reporting. Electronic Journal of Radical Organisation Theory, 9(1), 3–36.Google Scholar
- Gray, R., & Guthrie, J. (2007). Social accounting, mega accounting and beyond: A festschrift in honour of M.R. Mathews. St. Andrews: CSEAR Publishing.Google Scholar
- Hourigan, B. (2006). Who pays? Political donations and democratic accountability. IPA Review, 58(3), 12–15.Google Scholar
- International Accounting Standards Board: (2010). Conceptual framework for financial reporting 2010. London, UK: IFRS Foundation.Google Scholar
- Johnson, M. (2005). Political finance policy, parties and democratic development. Available at: http://www.accessdemocracy.org/library/1949_polpart_johnston_110105.pdf. Accessed 11 June 2008.
- Korten, D. C. (2001). When corporations rule the world. San Francisco: Berrett-Koehler.Google Scholar
- Lascelles, D. (2005). The ethics of influence: Political donations and lobbying. London: Institute of Business Ethics.Google Scholar
- Leigh, A. (2004). Blind trusts for political gifts are a surer bet than trusting blindly. The Sydney Morning Herald.Google Scholar
- Leong, S. (2009). Submission concerning the electoral reform green paper 2008. Available at: http://www.pmc.gov.au/consultation/elect_reform/pdfs/sub19.pdf. Accessed 8 August 2009.
- Lourie, D. (2009). Rethinking donor disclosure after the proposition 8 campaign. Southern California Law Review, 133(1), 133–172.Google Scholar
- McNamee, M. J., Sheridan, H., & Buswell, J. (2001). The limits of utilitarianism as a professional ethic in public sector leisure policy and provision. Leisure Studies, 20(3), 173–197.Google Scholar
- Nace, T. (2003). Gangs of America—The rise of corporate power and the disabling of democracy. Available at: http://gangsofamerica.com/read.html. Accessed 22 June 2009.
- Nassmacher, K.-H. (2003a). The funding of political parties in the Anglo-Saxon Orbit. In R. Austin & M. Tjernström (Eds.), Funding of political parties and campaign elections (pp. 33–52). Stockholm: International Institute for Democracy and Electoral Assistance.Google Scholar
- Nassmacher, K.-H. (2003b). Introduction: Political parties, funding and democracy. In R. Austin & M. Tjernström (Eds.), Funding of political parties and campaign elections (pp. 1–19). Stockholm: International Institute for Democracy and Electoral Assistance.Google Scholar
- Newport, F., & Carroll, J. (2007). Most say that presidential candidates should refuse lobbyist money. Available at: http://www.gallup.com/poll/28543/most-say-presidential-candidates-should-refuse-lobbyist-money.aspx. Accessed 18 June 2011.
- Norton, A. (2011). Democracy and money: The dangers of campaign finance reform. Available at: http://www.cis.org.au/images/stories/policy-monographs/pm-119.pdf. Accessed 13 June 2011.
- Orr, G. (2004). Australian electoral systems—How well do they serve political equality? Available at: http://democratic.audit.anu.edu.au. Accessed 7 October 2007.
- Pava, M. L., & Krausz, J. (1995). Criteria for evaluating the legitimacy of corporate social responsibility projects. National conference on ethical issues in finance, University of Florida, January 1995. Google Scholar
- Ramsay, I., Stapleton, G., & Vernon, J. (2000). Political donations by Australian companies. Available at: http://cclsr.law.unimelb.edu.au/research-papers/Monograph%20Series/Political%20Donations%20final.pdf. Accessed 28 March 2007.
- Select Committee on Electoral and Political Party Funding. (2008). Electoral and political party funding in New South Wales. Available at: http://www.parliament.nsw.gov.au/Prod/parlment/committee.nsf/0/1CA6D5A89FABD975CA25746D00063640. Accessed 24 November 2008.
- Sitkoff, R. H. (2003). Politics and the business corporation: Do politicians want donations more than corporations want to give them? Regulation, 26(4), 30–37.Google Scholar
- Smith, A. (1998). An Inquiry into the nature and causes of the wealth of nations. Oxford: Oxford University Press.Google Scholar
- Smith, B. A. (2003). Campaign finance reform: Searing for corruption in all the wrong places. Available at: http://www.cato.org/pubs/scr/2003/finance.pdf. Accessed 6 October 2007.
- Standing Senate Committee on Legal and Constitutional Affairs. (2006). Issue 6—Evidence, September 8, 2006. Available at: http://www.parl.gc.ca/39/1/parlbus/commbus/senate/Com-e/lega-e/06evc-e.htm?Language=E&Parl=39&Ses=1&comm_id=11. Accessed 11 February 2008.
- Stark, A. (2010). Business in politics: Lobbying and corporate campaign contributions. In G. G. Brenkert & T. L. Beauchamp (Eds.), The Oxford handbook of business ethics (pp. 501–532). New York: Oxford University Press.Google Scholar
- Stephan, M. (2002). Environmental information disclosure programs: They work but why? Social Science Quarterly, 83(1), 190–205.Google Scholar
- Tham, J.-C. (2003). Campaign finance reform in Australia: Some reasons for reform. In G. Orr, B. Mercurio, & G. Williams (Eds.), Realising democracy: Electoral law in Australia (pp. 114–129). Sydney: The Federation Press.Google Scholar
- Unerman, J., Bebbington, J., & O’Dwyer, B. (2007). Sustainability accounting and accountability. Oxon: Routledge.Google Scholar
- Woodstock Theological Center. (2002). The ethics of lobbying: Organized interests, political power, and the common good. Washington DC: Georgetown University Press.Google Scholar
- Young, S., & Tham, J.-C. (2006). Political finance in Australia: A skewed and secret system. Available at: http://democratic.audit.anu.edu.au/papers/focussed_audits/20061121_youngthamfin.pdf. Accessed 8 March.