All entries for Wednesday 28 October 2009

October 28, 2009

Why Do Ordinary People Make Political Donations?

The other night I dined with a colleague who is doing research on what makes people give money to good causes. The good cause in his research was cultural -- a European city opera house. It reminded me of a time when I had to ask the same question, but the good cause was a political one (so, a good cause only because it was one that I happened to believe in). The following story illustrates how different people gave money to the same cause for varying reasons. These differences were exposed when a technological innovation lowered the cost of giving money.

The year was 1977, as near as I can fix it looking back. I was treasurer for the city organization of a revolutionary left wing party. Then as now, communism and revolution were pretty unpopular, so there were few members and little cash. Still, we were not an absolutely negligible force, with a dozen branches across the city and a total membership in the low hundreds. Among those members were a number of esteemed and influential figures in the city's trade unions and other organizations, widely respected for their experience and dedication to the community.

Financially, we operated on a knife edge. The class struggle was expensive. It cost money that went on printing, postage, phone calls, train and bus fares, and the petty cash of meetings and demonstrations. The party itself required upkeep: more mailshots and meetings, the maintenance of a city centre building that was a legacy of more prosperous past times, and a substantial contribution to the party's headquarters in London.

We scraped the money together from various sources. There were membership dues, but these were only weakly enforced since we were always desperate to retain members whatever their circumstances. A considerable proportion of the members were low in income and advanced in years. Among them was vast shared experience, however, of raising money in labour intensive but convivial ways: social events, bring and buy sales, and selling newspapers and raffle tickets. There were others that we visited at home, spending hours chatting and chewing politics over a pot of tea, coming away with small donations and dues. 

Change was forced on us by new demands and new possibilities. The dream of our city party secretary was to be a professional revolutionary. Together we made his dream happen. But there was a price to be paid, and often enough he and his family were the ones that paid it. He spent much of his time raising his own wages. The wage rate was low, and not infrequently it was not paid in full. Meanwhile, the revolution was on hold.

A solution appeared in the form of the standing order. I don't recall whose idea it was; it wasn't mine. But it worked. It began when one or two of the wealthier comrades pledged money on a monthly basis. But they didn't just promise it, and then wait for us to come round and collect it; they signed up for the bank to pay it automatically, every month, direct from their accounts to the party's.

If they could do it, so could others. The idea spread. Soon we had a sheaf of standing orders, all bringing the money in as regular as clockwork. At the top of the range, we still had the original clutch of orders that each brought in £15 or £20 a month, plus a few new ones. Many more that we won over were made out for just £1 or £2 a month -- but because they were many, they counted just as much, or more. I don't remember the total, but this was a lot of money in those days.

The local party's financial situation was transformed. The city secretary's wages were paid, if not in full, then at least in part with greater reliability. He had more time for the revolution. For a while, things hummed.

Politically, the outcome was far from simple. To me, as an economist, what I saw in the standing orders was a pure efficiency gain: a dramatic reduction in the party's internal transaction costs. To raise money, you now had to pay just the fixed cost of one-time persuasion to get that signature on the form. After that, the money flowed without resistance. There was no longer a need for time-consuming social rituals and renewal of vows with our comrades and friends. Under the old system, that had to be done time after time; now, it had to be done just once, and then the standing order did the rest.

What the economist in me saw as a pure gain was felt by others as a direct loss. Why did we not come visiting any more? To these comrades, often retired or unemployed and perhaps at risk of social isolation, the hours that we formerly spent chatting at home with them over a pot of tea were not a cost but a pleasure. In fact, that was the main reason they parted with their pounds. If we didn't visit, they didn't pay. Likewise, they paid up their 50 pences to come to our sales and socials because it was their pleasure to do so, to come together, fraternize, and complain about the buses and the balance of forces in the world.

Others felt a different loss: our new income stream from the standing orders made the time and effort they previously put into those sales and socials, and the skills and experience they brought to bear on these activities, worth less than before. The party's increased financial efficiency literally devalued their contributions. Their enthusiasm wilted. They gave less money and less effort. Somehow, for them, it was all less fun.

There was also a rebalancing of status among the city party's constituent organizations. The standing orders caught on quicker with the younger, more middle-class, single-no-kids, high-salary comrades at the university, where the branch was soon contributing far more than its share to party funds. The branches in the engineering factories and more traditionally working-class, family-minded neighbourhoods lagged behind, and still fell into arrears.

No doubt all this would have mattered less if the financial faultlines had not become entangled with social and political divisions. This is roughly what happened: with considerable variance, the keenest proponents of the financial revolution had a tendency to be more middle class and also more liberal, more attuned to new agendas of what today would be called "equality and diversity," less accepting of traditional, male-dominated, trade union militancy, and quite distinctly less sympathetic with the cause of the Soviet Union.

To the traditionalists, many (but not all) of whom were of the older generation, it must have seemed like we were buying up their party. We were liquidating their networks, their ways of doing things, and their values. And the bank was helping us to do it!

This is how I see it now. People that join political parties have mixed motivations. One motive is to achieve the party's political programme. Another is to mix with comrades who think the same and form solidaristic ties with them. No doubt the balance varies from one person to another, and perhaps also through each person's life course. 

It is easy to suppose, for example, that long term political goals might loom larger on average for younger people that are full of optimism and have many years in front of them, than for older people with less time and lower expectations. Of course, that's just a speculation. All the members were highly selected for being socially and politically deviant, so it must be a case of "Generalize with care!"

Think of party members as of two types. In one type, the political programme is the dominant motive. In the other type, it's the desire for comradeship. In my story, before standing orders came along, the two types of members coexisted in a mutual equilibrium. But standing orders, by dramatically lowering the cost of raising money, destroyed the equilibrium and put the two types of members at odds with each other.

The Type 1 party members saw the standing orders as a pure gain, making the party a more efficient instrument for achieving its programme. The Type 2 members were the party animals. They saw the standing orders as a detriment, because it made the party a less efficient provider of affective ties.

I like the way I've set out this story, but I'm not completely sure that I have it right. For one thing, I might have forgotten stuff. I have probably oversimplified. Specifically, I'm implying that I was one of the pure idealists -- someone who believed in a programme and wanted to work for it as effectively as possible. That might not be true. I also recall that I had a strong personal loyalty to our city secretary, so it might be that I too was motivated by comradeship, but towards a different set of comrades from the more traditionalist party members -- the ones I have called the party animals.

And, of course, I accept that the party animals did have political ideals -- often subtly different from mine, it has to be said. The memory that makes me think I'm onto something, though, is how clearly I recall the sense of loss that many of them expressed that we didn't have to give them hours and hours of time and conversation any more, just to get their 50 pences. If they wanted comradeship now, they had to get out and come looking for it, not have it brought to them on a plate of biscuits.

If I'd understood this then, would I have behaved differently? Maybe, but it would not have changed the outcome. The reason is that our cause was doomed, something I did not know at that time. Nothing was going to change that. But there's another story.

I am a professor in the Department of Economics at the University of Warwick. I am also a research associate of Warwick’s Centre on Competitive Advantage in the Global Economy, and of the Centre for Russian, European, and Eurasian Studies at the University of Birmingham. My research is on Russian and international economic history; I am interested in economic aspects of bureaucracy, dictatorship, defence, and warfare. My most recent book is One Day We Will Live Without Fear: Everyday Lives Under the Soviet Police State (Hoover Institution Press, 2016).

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