What Montesquieu missed: Why democracy must be protected from economic power

Montesquieu’s central argument was that to safeguard democracy from tyranny, political power must be divided, separating the judicial, legislative and executive arms of government. By dividing political power across these independent institutions, democracies created a system in which each branch constrained the others. This principle has endured because it works.

Yet the twenty-first century presents a form of tyranny that Montesquieu could never have imagined. He could not have foreseen a world in which corporations generate revenues larger than the GDP of sovereign states, financial institutions hold governments to ransom, or technology companies influence the information consumed by billions of people. The greatest threat to democracy today is not the concentration of political power. It is the concentration of economic power.

Karl Marx recognised this problem. He argued that economic power ultimately determines political power because those who own capital shape the institutions of the state. His diagnosis that wealth can capture politics was remarkably prescient and deserves more credit than it often receives. His prescription, however, proved disastrous.

Communism sought to eliminate private economic power by transferring ownership to the state. Instead of dispersing power, it concentrated both economic and political authority in the same institution. The result was precisely the tyranny Montesquieu had warned against. History has demonstrated that abolishing markets is not the answer. But neither is pretending that markets cannot undermine democracy.

The missing separation of powers

Montesquieu taught us to separate powers within the state. The twenty-first century requires us to separate power within the state and between the state and the economy. This is the missing separation of powers.

Democracies around the world are struggling with this issue. The concentration of economic power has been unprecedented over the past 50 years and will probably increase with AI. So we urgently need constitutional arrangements that prevent economic power from capturing political power.

This is particularly relevant for South Africa. The democratic transition of the 1990s rightly sought to address centuries of racial exclusion by broadening ownership and participation in the economy. Black Economic Empowerment emerged from an understandable and necessary objective: to create a more inclusive capitalist system.

Yet over time, aspects of BEE evolved in ways that were never intended. Rather than broadening ownership throughout society, many transactions concentrated wealth among politically connected elites. It was more expedient and valuable to transfer equity to influential individuals than to build genuinely competitive black-owned enterprises or expand employee ownership.

Economic and political elites

Political influence became an economic asset. Commercial success became linked not merely to innovation, productivity or customer value, but to proximity to political authority. Economic and political elites became intertwined.

State Capture exposed this dynamic in its most extreme form. Private interests did not seek to replace the democratic state; they sought to capture it. Procurement, regulation, licensing and public appointments became vehicles for private enrichment.

There is an unsettling similarity between the ancien regime and Eskom’s tender corruption, where benefits are sold to the highest bidder. Our constitutional architecture remained largely intact (the exception being dismantling the Scorpions), but economic power distorted its operation from within.

Leveraging access

State Capture was the extreme, criminal version of this problem. A subtler and more common version has been playing out recently with Resolve Communications, the lobbying and public affairs firm chaired by former opposition leader Tony Leon. At least six current and former DA representatives have alleged that Resolve leveraged its access to the party to advance the commercial interests of paying clients.

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Resolve and Leon deny any wrongdoing, insisting their conduct is lawful and consistent with international practice, and no criminal act has been established. That is precisely what makes the episode instructive rather than exceptional: nothing about it needs to be illegal to be corrosive. South Africa has no law requiring lobbyists to register, to disclose their clients, or to report which officials they contact and on whose behalf.

Compare this to Canada, widely regarded as the international benchmark, where lobbyists must register, file monthly activity reports, and observe a statutory cooling-off period before former senior political figures can lobby their old colleagues.

Capture, within the law

None of this is an argument that lobbying itself is illegitimate. Representing clients’ interests before the government is a normal feature of any functioning democracy, protected in some constitutions as a form of free expression.

However, when access to power can be bought and exercised without any public record of who is buying it, from whom, and to what end, citizens have no way of distinguishing legitimate advocacy from the quiet, undisclosed capture of public decision-making. The absence of proven bribery does not settle the question; it merely shows how much capture can happen entirely within the law.

This is why Montesquieu’s separation of powers must evolve. If modern democracies are serious about preserving liberty, they must update Montesquieu’s framework. The objective should be simple: economic power must not be permitted to purchase political power.

This begins with political funding. Canada has demonstrated that democracy functions perfectly well without corporate and trade union donations. Parties rely primarily on individual contributions, which are subject to strict annual limits, while campaign expenditure is tightly controlled and independently monitored. Other countries, like Germany, provide public funding for election campaigning. South Africa should learn from both.

Lobbying

Lobbying regulation belongs alongside campaign finance reform as a foundational safeguard, not an afterthought. South Africa should require anyone paid to influence government decisions to register on a public database, disclose their clients and periodically report which officials and departments they have engaged and on what issues.

Former ministers, MPs and senior political staffers should face a defined statutory cooling-off period before they may lobby their former colleagues on behalf of private clients.

This does not depend on proving that any individual arrangement is corrupt. The point, as the comparative experience of Britain’s various lobbying scandals and Canada’s own case law makes clear, is that undisclosed access is itself a distortion of democratic equality between citizens who can pay for a seat at the table and those who cannot, irrespective of whether money changes hands improperly in any single instance.

But campaign finance and lobbying disclosure are only two avenues through which economic power enters politics. Public procurement remains one of our greatest vulnerabilities.

Government contracts should be awarded through fully transparent digital procurement systems, with every tender, evaluation, contract, beneficial owner and payment publicly accessible. Independent procurement authorities, not politicians, should oversee major contracts. Officials involved in procurement should enjoy security of tenure, while bidders found guilty of corruption should face lengthy exclusion from future government business.

A bulwark between markets and politics

Equally important are the institutions that stand between markets and politics. An independent central bank protects monetary policy from short-term political incentives and financial pressure. A strong competition authority prevents excessive concentration of economic power and preserves competitive markets. Sector regulators ensure that industries compete fairly and consumers are protected. Independent revenue authorities safeguard the integrity of the tax system. Financial regulators that maintain confidence in capital markets.

These institutions are often dismissed as bureaucratic bodies, an unnecessary cost centre with key personnel making regular cameo appearances in the private sector. They are far more important than that. They provide the constitutional bulwark that separates economic power from political power. Their independence should therefore be treated with the same seriousness as judicial independence.

Few people would accept politicians appointing judges on the basis of personal loyalty. Yet democracies routinely tolerate attempts by governments or powerful commercial interests to influence regulators, weaken competition authorities or pressure central banks. The threat is identical.

Once institutions designed to constrain economic influence become dependent on either politicians or large corporations, democracy begins to erode. The United States presents a tragic example in this regard. Its democracy withstood two centuries only to be undermined by the Supreme Court ruling Citizens United v FEC (2010), which removed limits on corporate political influence. One dollar, one vote – one could say.

Separation of power across society

The challenge of constitutional democracy in the twenty-first century is therefore no longer simply the separation of powers within the state. It is the separation of power across society.

South Africa is well positioned to lead this conversation. Our Constitution already establishes a network of independent institutions, like the Public Protector, supporting constitutional democracy.

But these institutions require more than constitutional recognition. They need adequate funding, world-class expertise, transparent appointments and legal protections against both political interference and commercial capture and, as the Resolve episode shows, that protection must now extend to the informal, unregulated channels through which access itself is quietly monetised.

This is not an argument against business. Competitive markets remain the greatest engine of innovation, prosperity and opportunity ever devised. Nor is it an argument for expanding the state. History repeatedly demonstrates that unchecked governments are no less dangerous than unchecked corporations. Rather, it is an argument for recognising that liberty depends on preventing either form of power from dominating the other.

Montesquieu taught us that freedom requires institutional checks on political authority. Marx reminded us, albeit imperfectly, that economic power can also dominate society. The task for modern democracies is to synthesise these insights.

The defining constitutional question of our age is no longer simply, “Who governs?” It is, “Who holds power — and who ensures that no one holds too much of it?”

The democracies that answer that question well will be those that preserve both political freedom and economic dynamism. Those that fail will discover that tyranny does not always wear a crown. Sometimes it wears a suit. DM