The Fundamentals of Campaign Finance in the U.S.: Why We Have the System We Have by Diana Dwyre and Robin Kolodny

CHAPTER 1
 Democracy and Capitalism
 I hope we shall take warning from the example and crush in it’s [sic] 
birth the aristocracy of our monied corporations which dare already 
to challenge our government to a trial of strength and bid defiance to 
the laws of our country.
 — Thomas Jefferson, “Letter to George Logan,” November 12, 18161
 Thomas Jefferson’s warning 200 years ago rings true today in many citi-
zens’ concerns about the influence of “big” money in American elections. 
The complaints have grown louder in the wake of the 2010 Citizens United 
Supreme Court case, which gave corporations the First Amendment right 
to spend unlimited amounts of money in elections.2 Why does the United 
States have this campaign finance system? Why are campaigns funded pri-
marily by private money in the U.S., rather than publicly funded by tax-
payers? Why are wealthy people and groups permitted to spend so much 
to influence the outcome of elections? Why are there different campaign 
finance rules for different elective offices? To answer such questions, it is 
important to understand the fundamentals of what is often considered to 
be a complicated and confusing campaign finance system.
 Many Americans are easily turned off by the discussion of money in 
politics, especially the different categories used to describe the ways money 
is raised and spent. It is not only difficult to tell what is legal and what 
is not, but the regulations themselves seem to have no clear logic. This 
is not the case. The U.S. campaign finance system is confusing, but it is 
not irrational. One reason the public is confused is the piecemeal nature 
of campaign finance policymaking, implementation, and enforcement. 

Moreover, the focus of campaign finance regulation changed over time 
from preventing corruption to protecting free speech. Additionally, our 
federal system of elections has different regulations in place for contests 
at the national, state, and local levels, even when those contests appear on 
the same ballot, and the separation of powers within government has led 
to the development of different campaign finance systems for each type 
of elective office. Furthermore, the jargon used to discuss how candidates, 
parties, citizens, interest groups, corporations, trade associations, unions, 
nonprofit corporations, and other stakeholders participate in financing 
elections is bureaucratic to say the least.
 Most books about campaign finance tell us what is wrong with the 
system, and some suggest how to fix it. We think it is important to under-
stand why we have the campaign finance system we have. The nature of 
democracy itself, the American capitalist economic system, the content of 
the U.S. Constitution and how it is interpreted, the structure of our gov-
ernmental institutions, the competition for governmental power, and the 
behavior of campaign finance actors all shape the system we have. Under-
standing why the campaign finance system has developed the way it has 
allows us to explain, for example, why reform is so difficult and why the 
reforms that have been adopted often have unintended consequences. We 
present the U.S. campaign finance system as it is, not as we would like it 
to be. We are not antireform, per se, but we note that campaign finance 
reforms have generally not helped to achieve the balance reformers favor, 
and we argue that the broad characteristics of the U.S. system help us 
understand why.
 In this first chapter, we discuss some of the fundamentals that shape 
the U.S. campaign finance system and constrain what changes to the sys-
tem are possible. We begin by assessing the most basic of these funda-
mentals: democracy. Each democracy chooses an electoral system. A basic 
element of electoral systems is the decision to ask voters to choose among 
individual candidates or among political parties. The choice determines 
how campaigns will be conducted. Next, we evaluate how the economic 
system influences a democracy, particularly how the system of capitalism 
in the U.S. provides a campaign finance system based primarily on pri-
vate sources of money. Moreover, campaign finance in the United States 
is a unique policy area in which those who make campaign finance laws 
are the very people who are most affected by the laws— elected officials 
in the U.S. Congress, state legislatures, and city halls— and who will run 

The Fundamentals of Campaign Finance in the U.S.: Why We Have the System We Have by Diana Dwyre and Robin Kolodny