Capture: When Politics and Business Join

​When political scientists refer to ‘capture’ they usually refer to a situation where business interests take control of the levers of political power alongside politicians.
 
It is a worldwide phenomenon that can be seen, in different forms, from Russia to South Africa and from China to Brazil.
 
This blog outlines three ways of looking at these situations. It points to the difficulty of cure.

.​ Defining ‘capture’
 
An essential element in the concept of ‘capture’ is that it refers to political power that is acquired outside the legitimate channels for exercising political authority in a society. 
 
Businesses may be the prime movers in seeking such powers. However, politicians may also be the instigators of the relationship with business. Either way, citizens are the likely losers. 
 
The ‘exchange’ model
 
The exchange model sees capture as a product of mutual exchange between a politician and business. The politician wants money – for example to fund an election or re-election campaign, to reward followers, or. simply to build their own personal fortune. The business wants influence on political decisions. They do a deal.
 
This model originated in the context of regulation. The regulator wants the information held by businesses. Businesses will accommodate the regulator by offering the information in exchange for influence over regulatory policies. Both business and the regulator end up with and enjoy a cosy relationship.  
 
The advantages of exchange can be generalised to politics as a whole. 
 
The ‘joint enterprise’ model
 
In the joint enterprise model, the politician and the business see themselves as being engaged in pursuing the same goals. What is good for the business is good also for the country and vice versa.  
 
In this model the initiative may come from the politician. The politician wants the rewards that business can offer to themselves or their associates. But they wrap it into a narrative for public consumption.

The story may be that the public interest is being served when the goals of politics also help the goals of business champions in the IT or high tech. or renewable energy sectors..

Or. the narrative may be more general. For example, China’s government talks about the benefits of rising prosperity for all, while drawing a veil over the relationship between the political leadership and business leadership. 
 
The ‘constitutional’ model
 
The constitutional model can be traced back to James Madison and the founding of American democracy.
 
Madison saw an inherent tension in a democracy between giving power to the people and an equal need to respect property rights. On the one hand there was a danger that a populist majority could seize businesses and land. On the other hand, there was a danger that over-powerful property and business interests could use political power for their own ends.
 
Madison’s constitutional ‘solution’ lay in a system of checks and balances where the executive power and the legislative power held each other in check and an independent judiciary held the ring. Capture could occur when these checks failed.
 
Different diagnoses; different ‘remedies’
 
These different ways of looking at capture lead towards different remedies. 
 
In the exchange model it may be possible to break the connection between business money and elections by limiting permissible election expenses and by making political donations by businesses fully transparent so that shareholders can object.
 
The enterprise model is more difficult to address. It favours privatization as one type of preventative. At the same time privatisation can be used by politicians to reward followers and to build channels for remuneration. (As in Russia). At the least, strong standards of corporate governance are called for, including independent boards of directors, as well as an independent competition authority..
 
The constitutional model calls for an identification of weak spots in a constitution. In many countries the problem may originate with weak electoral processes. There is an absence of channels for citizens to show their disapproval and to get rid of the politicians. One party dominance may also be a problem. In such cases, minority parties may need to have their role and voice protected.
 
The ills of capture
 
‘Capture’ undermines the institutions of both politics and the market. The exchange model points to how capture can destroy trust in each. The enterprise model suggests how a focus on goals can destroy the wider values of political association relating to the character of a society. The constitutional model points to the fragility of checks and balances.

One  general lesson is that when we think about the rules of a democratic society they should include rules of corporate governance and rules to prevent corporate dominance, alongside the more familiar rules that relate for example to assemblies.