Party Identification, the Policy Space and Business Donations to Political Parties
| DOI | 10.1177/0032321719841243 |
| Date | 01 May 2020 |
| Published date | 01 May 2020 |
| Subject Matter | Articles |
https://doi.org/10.1177/0032321719841243
Political Studies
2020, Vol. 68(2) 293 –310
© The Author(s) 2019
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DOI: 10.1177/0032321719841243
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Party Identification, the
Policy Space and Business
Donations to Political Parties
Iain McMenamin
Abstract
Political finance scholars have paid little attention to the partisan preferences of business donors.
This was because business donors were overwhelmingly concerned with the left-right dimension
and enjoyed stable relationships with centre-right parties. These parties are increasingly tempted
by economic nationalism. This new ideological flux provides an opportunity to measure the extent
to which donors are party identifiers or react to changes in the policy space. Dramatic shifts in
party policy on both the left-right and globalisation dimensions and a relatively transparent political
finance regime make the United Kingdom a particularly apposite case to study this question.
I analyse 19,000 donations to the Conservative Party and show that business donors reacted
strongly to recent shifts on both the left-right and globalisation dimensions. Thus, centre-right
parties may not be able to rely on party identification and their left-right position to maintain
business funding. Economic nationalism is likely to cost centre-right parties money.
Keywords
Brexit, political finance, business and politics, Conservative Party, policy space, political parties
Accepted: 20 February 2019
Capitalism can be a problem for democratic politicians. The concentration of economic
power that capitalism produces challenges the political equality on which democracy is
premised. The relationship between capitalism and democracy can be particularly contro-
versial in political finance (Scarrow, 2007: 193), where business money can give an impor-
tant advantage to favoured candidates and parties (Fisher, 1999; Jacobson, 1998).
Nevertheless, scholars of political finance have paid little attention to the party political
preferences of business. This was for the very good reason that there was so much stability
in the policy space relevant to business and the relationships between political parties and
their business funders. The left-right dimension was the only dimension of party competi-
tion considered by business, and parties tended not to switch places on this continuum.
School of Law and Government, Dublin City University, Dublin, Ireland
Corresponding author:
Iain McMenamin, School of Law and Government, Dublin City University, Dublin 9, Ireland.
Email: iain.mcmenamin@dcu.ie
841243PSX0010.1177/0032321719841243Political StudiesMcMenamin
research-article2019
Article
294 Political Studies 68(2)
This stability made it difficult to assess the strength and nature of business preferences and
whether business donations to parties were a rational choice or a relatively automatic party
identification. The policy space for business is no longer stable and its party political pref-
erences can no longer be taken for granted.
The consensus on economic globalisation is breaking down. Centre-right parties
have to decide whether to adopt nationalist positions on multilateral economic govern-
ance. This represents the emergence of a second policy and ideological dimension
(Inglehart and Norris, 2016) that is vital to business. Political parties may be positioned
close to business on the left-right dimension, but far from business on the globalisation
dimension. This puts business in the difficult political situation of having to decide
whether the left-right or globalisation dimension is most important. This dilemma is
particularly acute for business funders of political parties. Contemporary British poli-
tics offers special opportunities to study this issue. The Conservative Party committed
itself to a so-called ‘Hard Brexit’ that almost inevitably involves reduced access to the
largest market for UK business, along with disruption of long-established supply
chains. The Labour Party has its most left-wing leader since at least 1983 and the radi-
cal left is increasingly prominent at all levels of the party. This is distressing for a busi-
ness sector that has relied on and bankrolled the Conservative Party as its political
representative for a century and, not so long ago, enjoyed the Labour Party also making
a claim to be the ‘Natural Party of Business’. The funders of the Conservative Party
need to make up their minds as to which is more frightening: the left-wing politics of
Jeremy Corbyn’s Labour or the nationalist foreign economic policy of Theresa May’s
Conservative Party.
In the new more complex and fluid policy space, donations to political parties can
provide new insights into the preferences of donors and indeed into whether policy posi-
tions, or party identification, drive donations. Britain’s system of political finance regula-
tion offers a clearer insight than most because it is relatively permissive and transparent.
It is permissive in that there is little constraint on the size, purpose and timing of dona-
tions. They represent their donors’ intentions, not the effects of regulation. It is transpar-
ent in that the source and size of many donations are reported. I study 19,000 donations
to the Conservative Party between 2001 and the end of 2017. My equations show that
Corbyn’s election was associated with a very large influx of donations to the Conservative
Party and the Brexit vote was associated with a smaller drop in donations. This suggests
a major constraint on the longer term adoption of a nationalist agenda by the Conservative
Party. The Tories risk sacrificing their party’s finances and, therefore, some of their
electability, for the sake of a nationalist position in foreign economic policy. This result
raises the question of the relative salience of the two dimensions to business sectors in
other countries where national populism appears to be on the rise.
The article proceeds by locating this work in the literature on business and political
finance. It argues that an analogy between business donations to parties and electoral
behaviour is a useful way to approach political finance in an era of ideological change.
Next, I argue that the United Kingdom is a good case because the recent policy shifts by
both major parties offer variation on the independent variable, and the political finance
regime allows a relatively clean measure of the preferences of donor businesses. In the
empirical section, I study business and individual donations from 2001 to 2017. I also
study the impact of the media prominence of the ‘Hard’ and ‘Soft Brexit’ options in the
Brexit era. The conclusion summarises implications for political finance theory and party
competition in established democracies.
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