(This is a Guest Post by Udit Bhatia, in the context of the ongoing electoral bonds case before the Supreme Court).

The case against secret election funding would appear obvious enough that it barely needs drawing out. However, given recent events in the Supreme Court in India, it seems that we can no longer rely on this assumption. This case rests on three premises: (1) The power of the political party in the legislative process (2) The potential impact of private funding on the legislative process and (3) The benefits of transparency in funding.

Political parties elsewhere serve as intermediaries between voters on the grounds and their representatives in parliament. However, representatives retain their autonomy from their party leaders in various ways. They are allowed to break from the party line during legislative votes. In some jurisdictions, party elites have little influence over the re-selection of candidates for elections. This allows legislators to cultivate a strong following among local party members, enabling them to secure nomination to stand for office again through the same party ticket. In doing so, they can cultivate a personal vote that undercuts the power of organised interests acting upon the party machinery. In both respects, the Indian party system allows little autonomy to the legislator vis-a-vis her party. Her ability to cast a dissenting vote is circumscribed through the anti-defection vote. Moreover, party leaders possess a monopoly over the candidate nomination process, and can threaten to de-select any legislator who might question the party line. The party in this context does not act so much as an intermediary between voters and representative. Rather, the party is more adequately characterised as the vehicle of representation.

Having established parties’ pivotal role in the legislative process, let me now turn to where funding fits into the picture. Funding can affect the legislative process in at least two ways. First, it can lead to straightforward quid pro quo. As several commentators have argued, it can lead a party to formulate policies conducive to the interests of its funders. Second, it can also bias policy-makers to the interests of funders even when there exists no straightforward quid pro quo. Policy-making is governed by the tacit social and economic worldview of decision-makers. Even when policy-makers act in their considered view of the public interest, their perspectives can be skewed by latent biases—biases that are a product of the people that have greatest access to, to organisations that they interact most with, to individuals who are best placed to affect their political prospects. Much of the debate over campaign finance in India has focused on straightforward corruption. But we must not lose track of how non-transparent funding affects political actors even if we attribute less morally dubious intentions to both, funders, and those who benefit from secret funding. The latent biases, in turn, can affect the content of policies in various ways. First, it can skew the agenda: decision-makers can become inclined to keep things off the political agenda if they believe this might put off their funders. Second, it can affect how issues on the political agenda are decided. Wealth has implications for political ideology—research elsewhere has shown that large donors are associated with more extreme views than ordinary citizens; they are also more prone to conservative views on distributive justice than the regular voter.

The arguments outlined here give us a strong case for caps on money that parties can receive from private sources. Perhaps their implications are even stronger in that they give us a strong case for eliminating private money from the political process altogether, and turning instead to a model of public financing of parties. However, as long as unlimited private money is there to stay, transparency offers a next-best solution. Transparency can mitigate the problematic impact of secret funding in at least two ways. First, it can make beneficiaries of such funds more reflexive about their actions in anticipation of the public’s reactions. Both, straightforward this-for-that as well as more tacit biases, can be better checked merely by virtue of decision-makers’ knowledge that the public is aware of who funds them and how this influences their favoured policies. Second, where decision-makers fail to refrain from quid pro quo or check their funder-friendly biases, transparency allows voters to punish them through the ballot.

Recent events in the Indian Supreme Court have demonstrated an impoverished understanding of the link between voters, party and the legislature on the one hand, and between donors and political parties on the other. Perhaps now the response to campaign finance reform must be a political one rather than a judicial one. And here lies a further irony—any political attempt to overturn this dubious framework will itself be affected significantly by large donors who have vested interests in retaining this framework.