Does Money Matter? Credible Commitments and Campaign Finance in New Democracies: Theory and Evidence from Brazil

How important is money to the electoral process? With the spread of competitive elections around the world in the last twenty-five years this question is increasingly important in comparative politics. Yet, despite the potentially critical role of campaign finance, research on it remains confined largely to the U.S. Surprisingly few studies explore campaign finance comparatively, and fewer still explore campaign funds in new democracies.1 No studies use candidate-level campaign finance information for less developed countries or new democracies. Scholars assume that money influences elections in the U.S. and so direct their energies toward determining how.2 However, in a recent article on the impact of money on Russian elections, Daniel Treisman argued that it can not be assumed that money exerts the same influence in newer democracies.3 He argued that scholars must first determine whether money influences elections in newly democratic countries before asking how it influences elections in them and that money ought to play a far less significant role than is commonly assumed. This argument is provocative. Treisman contends that in contrast to well-established democracies newer democracies possess poorly institutionalized political markets. In an institutionalized market credible contracting commitments are likely. In contrast, in poorly institutionalized markets contracting is difficult because buyers and sellers have little guarantee that the terms of the contract will be fulfilled. In terms of campaign funds, in a poorly institutionalized political market consumers of government services (potential campaign financiers) will not invest in potential producers of government services (candidates for office) because they are relatively more uncertain that they will get what they pay for. The main implication of this argument is that little money will be supplied for electoral campaigns.4 Treisman illustrates this general theoretical point by disputing the notion that money has played a critical role in recent Russian presidential and parliamentary elections. This argument raises a number of questions. Most important, should comparativists be skeptical that money unduly influences elections in newer democracies, or should they accept the conventional wisdom? Is there something qualitatively different about newer democracies that makes money less likely to be important than in established democracies? Given the critical importance of understanding the factors driving elections in new democracies, and given money's assumed powerful role in well-established democracies, these questions merit exploration.