In the U.S., effective national political power is concentrated within the two major parties, both of which rely heavily on large donors due to the high cost of campaigns and the influence of super PACs and dark money groups. This dependence shapes policy outcomes by giving disproportionate influence to wealthy contributors, particularly on economic issues like taxation and regulation 6.
Research shows that government policy aligns more closely with the preferences of the wealthy than with those of average voters 19. A cross-national study examining over 3,000 policy questions across 43 countries found that among the lowest-income citizens, support for a policy change is actually negatively associated with whether that change occurs — meaning when lower-income citizens want something, it becomes somewhat less likely to happen. Those same citizens get their preferred policy barely better than random chance would predict 9.
The system pushes both parties toward dependence on large donors. After the Citizens United v. FEC ruling removed meaningful limits on independent spending, wealthy individuals and corporations gained disproportionate capacity to influence candidates, policy agendas, and public opinion, while alternative political movements were effectively priced out of competition 3.
This is extraction politics: the process by which influence is exercised and economic pressure is translated into policy outcomes that drive wealth extraction. This helps explain why economic inequality continues to deepen even as elections remain competitive 5.
Donor Capture and Policy Convergence
With only two viable parties, concentrated wealth does not need to spread influence across a wide ideological spectrum. It can secure influence within both.
Over recent decades, both parties have grown increasingly reliant on large donors and outside spending, a dynamic that accelerated after Citizens United allowed unlimited independent expenditures by corporations and wealthy individuals. When both parties compete for the same pool of high-dollar funding, policy positions tend to converge in areas such as taxes, finance, trade, and labor, even while diverging sharply on cultural issues 4.
Research across 43 democracies confirms that policy is systematically more responsive to high-income citizens than to anyone else 9. In the U.S. specifically, economic elites and organized business groups exert substantial influence on policy outcomes, while average citizens have little or no independent influence 1.
Blocked Alternatives
The first-past-the-post (FPTP) electoral system — used in U.S. national elections — means the candidate with the most votes wins, even without a majority. This “winner-take-all” structure systematically disadvantages third parties and independent movements for several reasons:
- Spoiler Effect: Voters fear that supporting a third party might split the vote and help elect a less-preferred candidate, leading them to vote strategically for one of the two major parties instead.
- Barriers to Entry: Third parties face steep structural hurdles, including restrictive ballot access laws, lack of campaign funding, and limited media coverage. They must either operate within one of the two major parties — where they risk being marginalized or co-opted — or run independently and likely win no representation despite real public support.
- Duverger’s Law: FPTP systems naturally tend to produce two dominant parties over time. Smaller parties struggle to gain traction because they rarely win seats, even with significant vote shares (e.g., Ross Perot won 19% of the popular vote in 1992 but no electoral votes).
- Policy Consequences: Because only two parties are viable, economic and political power becomes concentrated. This structure favors policies that benefit large donors and discourages bold challenges to wealth concentration, as major parties avoid platforms that threaten elite interests.
In short, the FPTP system entrenches a two-party duopoly, limits political competition, and makes it extremely difficult for movements challenging economic inequality to gain electoral footholds.
Polarization Stabilizes Extraction Politics
Polarization shapes politics by converting disagreements into deep divisions that weaken the majority and concentrate effective power in fewer hands.
Polarization is a form of division that stabilizes the system. It narrows the range of policies and compounds inequality. Research spanning U.S. congressional behavior from 1948 through 2020 documents this dynamic: as polarization increased, especially through the 1990s and 2000s, Congress passed fewer bills overall. When legislation did move, it tended toward larger, more dramatic policy changes rather than steady, incremental reform — producing an increasingly unstable process characterized by long periods of inaction punctuated by moments of high volatility 2.
Separately, a theoretical model examined the relationship between inequality, political participation, and partisan policy, finding that as inequality grows, voting declines relative to donor activity. This shifts the effective political audience toward those with money rather than those with votes, reducing the electoral penalty for partisan policies that serve concentrated interests 7.
In the two-party system, this binary structure amplifies division by channeling conflicts into two-sided splits, which are easier to manage than fragmented opposition. Shared values and economic interests get submerged across partisan coalitions, preventing unified action.
Division fractures potential coalitions that could challenge extraction politics. Citizen energy is directed into partisan infighting rather than collective demands for accountability and effectiveness. Cultural conflicts dominate public debate, and this helps conceal systemic transfers like public asset privatization or regulations that redirect billions annually to concentrated interests.
Rising income inequality itself increases legislative polarization. Research using state-level data from 1993 to 2013 finds that higher inequality shifts chamber medians rightward — moderate Democratic legislators tend to lose their seats to Republicans — further reducing the appetite and capacity of legislatures to pass redistributive policy 8.
This dynamic is self-reinforcing: division enables extraction to proceed with limited resistance, and successful extraction deepens divides by exacerbating inequality. Within the two-party framework, polarization thus stabilizes the economic status quo, perpetuating wealth concentration.
Billionaire Influence in National Politics
Since the 1990s, national political competition has increasingly resembled a contest among oligarchic factions, as billionaires began funding large portions of party infrastructure and running for office themselves 10.
Geographic and other forms of political sorting weaken public power by dispersing shared economic interests across opposing party coalitions. By organizing politics around partisan division, the two-party system redirects public pressure into partisan conflict and weakens collective action.
Americans divide intensely over cultural and identity-based issues — debates over symbolic policy disputes that generate enormous heat while structural questions about economic concentration receive comparatively little sustained public attention. This displacement of focus from economic structure to cultural conflict serves the broader dynamic this article describes: shared economic interests remain unaddressed while political energy is absorbed elsewhere.
Wealth Extraction Drivers
The two-party system operates within a broader set of economic forces. The deeper drivers of wealth concentration include financialization, the decline of union membership, technological change, and global supply-chain restructuring, all of which shifted bargaining power away from workers and toward capital over several decades. Legal and constitutional changes, particularly in campaign finance, amplified the political effects of those economic shifts.
The American two-party system has proven a reliable structure for sustaining wealth extraction.
Notes on Evidence and Uncertainty
Certain relationships described here — such as between inequality and polarization — demonstrate correlation or causation based on cited research; causation may involve additional factors not fully isolated by available data. The overall link between the two-party system and wealth extraction remains interpretive, with direct evidence uncertain. This article explores a plausible structural argument, not a proven causal chain.
Sources and Further Reading
- Gilens, Martin and Benjamin Page. “Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens.” Perspectives on Politics, Vol. 12, No. 3, September 2014. https://doi.org/10.1017/S1537592714001595
- Brock, Clare and Daniel Mallinson. “Political Polarization May Slow Legislation, Make Higher-Stakes Laws Likelier.” Penn State University, January 2024. Published in Policy Studies Journal. https://doi.org/10.1111/psj.12519
- Roosevelt Institute. “15 Years After Citizens United: Big Money’s Grip on Our Democracy.” 2025. https://rooseveltinstitute.org/publications/15-years-after-citizens-united-fact-sheet/
- Brookings Institution. “Can Billionaires Buy Democracy?” 2023. https://www.brookings.edu/articles/can-billionaires-buy-democracy/
- Brookings Institution. “America Has Two Economies — and They’re Diverging Fast.” 2019. https://www.brookings.edu/articles/america-has-two-economies-and-theyre-diverging-fast/
- Red, Blue & Real. “The Auction Block Democracy: Fundraising, Representation, and the Two-Party System.” 2025. https://dittany.com/articles/p1-the-auction-block-democracy/
- Vlaicu, Razvan. “Inequality, Participation, and Polarization: Economic Origins of Partisan Policies.” Inter-American Development Bank, 2020. https://doi.org/10.18235/0005264
- Voorheis, John, Nolan McCarty, and Boris Shor. “Unequal Incomes, Ideology and Gridlock: How Rising Inequality Increases Political Polarization.” NYU Law, March 2016. https://www.law.nyu.edu/sites/default/files/upload_documents/Nolan%20McCarty%20Paper%20Polarization_draft_shared%20031616.pdf
- Schakel, Wouter, Mikael Persson, and Anders Sundell. “The Economic and Cultural Dimensions of Unequal Policy Representation.” Socio-Economic Review, Vol. 23, No. 2, April 2025. https://doi.org/10.1093/ser/mwae043
- Inter Economics. “The Politics of American Inequality.” Vol. 55, No. 1, 2020. https://www.intereconomics.eu/contents/year/2020/number/1/article/the-politics-of-american-inequality.html