Economic inequality and campaign finance are two of the hottest topics in America today. Unfortunately, the topics are typically discussed separately, but they are actually intertwined.

The rise of US economic inequality that economist Thomas Piketty chronicles in his renowned book Capital in the Twenty-First Century – starting in the late 1970s and continuing through today – coincides remarkably with the US Supreme Court’s decision of Buckley v. Valeo. That decision extended constitutional protection to spend vast sums of money to elect candidates for political office. In 1976, Buckley seismically altered the election process; it opened the “money gates,” flooding elections with torrents of dollars.

Interestingly, in defending the congressional legislation that regulated both presidential and congressional candidates, Congress itself bluntly asserted the interest of preventing corruption. Having endured the Watergate scandal and the Nixon impeachment crisis, Congress had witnessed the devastating power of corruption. Unfortunately, the Court partially accepted and partially rejected this interest; it split the baby and in so doing, it produced a grossly deformed law bearing no resemblance to the systemic approach of the original legislation.

Treating campaign financing as free speech, Buckley upheld congressional limitations on contributions to political campaigns, but struck down limitations on a candidate’s personal and total campaign expenditures. Contributions were only a symbolic expression of support for a candidate, and contribution limitations advanced Congress’s primary purpose of eliminating political corruption or its appearance. Importantly, the Court also invalidated limits on independent expenditures made by others, including Political Action Committees (PACs). Theoretically, these regulations did not deter political corruption as they concerned expenditures made independent of the candidate and his or her campaign.

The opinion equated spending money to elect a candidate with speaking, and this laid the foundations for allowing a very small group of people to dominate the entire political system. Considerable data shows that wealthy campaign donors share certain common interests, as one would expect, driven by their common economic situations. Contrary to the warnings of the great political philosopher Michael Walzer in Spheres of Justice, the political sphere is not separated from the eco­nomic one. Instead, Buckley has united them, or in fact empowered the economic sphere to subjugate the political sphere.

As elementary democratic theory would suggest, control of the political process translates into control over law. Predictably, a few short years after Buckley was decided, legislative policy began to turn sharply toward property interests as evidenced by the astonishing and temporally correlated rise in income share of the top 0.1 percent, to levels not seen in many years; indeed, the current extreme concentration of income in the top 0.1 percent has not existed for a century.

Piketty has shown that, from the First World War through the mid-1970s, income inequality decreased colossally in the US. However, it then suddenly boomeranged and now rivals its level witnessed in the early twentieth century. The graph below, chronicling the income share of the top 0.1 percent, shows a dramatic ascent of their fortunes shortly after Buckley was decided.

Read more at Oxford University Press OUPBlog