The Theory
There is a category of power that is not government tyranny, not private consolidation, and not the kind of corruption that produces indictments. It is the normalized expectation, understood by participants without being stated, enforced by social and professional consequence rather than law, that access, contracts, permits, and favorable treatment flow through relationship networks, and that those outside the networks pay more and wait longer for the same things those inside obtain easily.
The theory: this informal economy of power is not incidental to American civic life. It is structural, a predictable consequence of the gap between formal democratic equality (one citizen, one vote; equal protection under law; open competitive bidding) and the practical reality that all of those formal mechanisms operate within social and professional networks that are themselves unequally distributed.
If the theory is correct, we should observe: consistent, documentable patterns in which formal mechanisms, bidding, permitting, zoning approval, licensing, produce outcomes correlated with relationship networks rather than merit or need; the persistence of these patterns across geographies and political parties, suggesting structural rather than individual cause; and the normalization of these patterns to the point where participants, when asked, describe them as simply “how things work” rather than as corruption.
The Anti-Federalist writers did not describe this dynamic in these terms. They were concerned with formal governmental tyranny. But the Federal Farmer’s warning, that governance at a distance from ordinary people would serve those closest to it, implies something about proximity that extends beyond geographic distance to social and professional distance. The citizen who does not know the county commissioner, does not attend the chamber of commerce dinners, does not belong to the networks that circulate information about what is available to whom, that citizen is distant from power in a way that is not geographic but is equally consequential.
The Mechanism
The informal economy of power operates through three interlocking conditions.
Relationship as risk reduction. Every decision-maker, the county administrator awarding a contract, the planning board member reviewing a variance application, the bank loan officer considering a small business application, faces uncertainty. The applicant’s character, reliability, and competence cannot be fully assessed from a formal application. Relationship serves as a proxy for that uncertainty. The contractor who has delivered on past county work, whose representative has attended county events, who is known to the administrator’s professional network, presents lower perceived risk than an unknown bidder with an equivalent or lower price. This is not irrational, relationship information is genuinely informative. But it systematically advantages those already inside the network.
Reciprocity as professional norm. In many professional and civic communities, reciprocity, returning favors, supporting allies, facilitating access for those who have facilitated access for you, is not experienced as corruption. It is experienced as professional courtesy, community loyalty, and the normal functioning of relationships. The attorney who refers clients to the title company whose partner serves on the hospital board whose administrator sits on the economic development authority whose director is a college friend of the county executive, none of these relationships involve explicit transactions. Each participant experiences their behavior as normal professional networking. The cumulative effect is that access flows within the network and is withheld, without explicit decision, from those outside it.
Accountability opacity as enabling condition. The informal economy of power requires that its operation not be visible to those outside the network. This condition is increasingly met: local journalism that would report on contracting patterns, zoning approvals, and permit timelines has declined substantially. Public records that would allow pattern analysis are available but require resources and expertise to obtain and analyze that most citizens do not have. The board minutes that record a variance approval do not record the dinner at which the application was discussed informally two weeks before the formal meeting.
The Evidence
Robert Caro and the documented case study:
The most comprehensive empirical account of the informal economy of power in a democratic system is Robert Caro’s “The Power Broker: Robert Moses and the Fall of New York,” published in 1974 and winner of the Pulitzer Prize. The subject is Robert Moses, the parks commissioner, highway authority chairman, and urban renewal czar who shaped New York City and State from the 1930s through the 1960s without ever holding elected office.
Moses’s power did not derive from formal authority. It derived from his control of institutional mechanisms, bond covenants, authority structures, contracting relationships, that no elected official could easily override once established. He built highways through neighborhoods whose residents had no political voice. He designed parks and beaches in ways that limited access by Black New Yorkers. He displaced approximately half a million people through urban renewal projects. He did all of this legally, through public authorities, with formal approval from elected officials who found him impossible to refuse because his institutional control of funding and contracting made opposition more costly than cooperation.
Moses is an extreme case, extreme in scale, in duration, and in the degree to which his power was ultimately made visible by Caro’s investigation. But the mechanism Caro documents, institutional control of contracting and resource allocation, exercised through networks of professional relationship rather than through formal authority, producing outcomes systematically different from what the formal democratic process would suggest, is not unique to Moses. It is the pattern the theory predicts.
New Jersey contracting and the documented correlation:
New Jersey has the most extensively documented pay-to-play culture in local government contracting in the United States. The term “pay-to-play” entered American political vocabulary largely through New Jersey coverage.
The pattern: professional service contracts, legal, engineering, insurance, planning, are awarded by elected officials and their appointees in categories that typically require less formal competitive bidding than construction contracts. Studies of New Jersey contracting have consistently found statistically significant correlations between contributions to county party committees and the subsequent award of professional service contracts by county governments.
The New Jersey Election Law Enforcement Commission has documented these correlations over multiple reporting cycles. The correlations are significant enough to be statistically non-random. They are not proof of explicit exchange, which is why prosecution is rare and difficult, but they are inconsistent with the hypothesis that the distributions are coincidental.
New Jersey has passed pay-to-play reform legislation multiple times. Each reform has produced adaptation rather than elimination: the contribution vehicles change, the legal structures evolve, the correlation persists. This is the predicted behavior of a structural dynamic rather than a response to individual actors.
The revolving door at every level:
The Center for Responsive Politics (OpenSecrets.org) tracks the post-service employment of federal officials. Its data consistently shows that approximately 50 percent of members of Congress who leave office and enter the private sector do so in roles, lobbying, government relations consulting, strategic advisory, that directly apply the relationships and institutional knowledge built in public service.
The pattern holds at the state level, though the data is less systematically compiled. State legislative staff, agency officials, and elected representatives move into state-level lobbying and government relations at similar rates. At the county level, the movement is less formalized, there is no county-level equivalent of OpenSecrets, but the pattern is locally visible to anyone who follows county government over time: the former county administrator who joins the engineering firm that holds the county’s infrastructure contract, the former planning director who joins the land use law firm that represents applicants before the planning board.
The mechanism at every level is the same: public service builds relationships and institutional knowledge that are commercially valuable to entities that transact with the public institution. The former official monetizes those relationships in the private sector. The private entity gains access and insight. The ordinary citizen, who lacks the former official’s relationships and the private entity’s resources, is at a structural disadvantage in accessing the same institutions.
The local news absence as the enabling condition:
The Pew Research Center’s annual newspapers fact sheet documents the closure of approximately 2,500 local newspapers since 2005 and the loss of approximately 57 percent of newspaper newsroom employees since 2008. The Local News Initiative at the University of North Carolina has mapped communities with no local news coverage at all, counties where no journalist regularly attends government meetings, reviews public records, or reports on how public money is spent.
The connection to informal power is structural: the informal economy of power requires opacity to function. In communities with active local journalism, contracting patterns that deviate significantly from merit become visible and generate accountability pressure. In communities without it, the patterns operate without visibility and normalize without challenge.
A 2018 study published in the Journal of Finance found that municipal bond yields were higher, reflecting greater perceived risk, in communities without local newspapers than in comparable communities with local journalism. Bond markets, which price information systematically, found the absence of local journalism to be a measurable accountability deficit. If the informal economy of power were not real, its exposure to journalism would not affect the pricing of government debt.
The Counter-Arguments
The most serious counter-argument is definitional: the theory conflates legitimate relationship-building with corruption, and the line between the two is genuinely contested.
Professional relationships serve legitimate functions. The contractor who has a track record with a county government is a lower-risk choice, not merely a politically connected one. The attorney who is known and trusted in a community provides services whose quality can be assessed through that reputation in ways that a cold bid cannot capture. The planner who has worked with a community over years understands its priorities in ways that a newcomer does not. These are real advantages that explain, partially and legitimately, why relationship matters in procurement and professional services.
The theory does not claim that all relationship-based outcomes are corrupt. It claims that the structural conditions, low accountability visibility, high relationship advantage, limited formal constraints on discretionary awards, produce systematic patterns that cannot be fully explained by legitimate relationship advantages and that create structural disadvantage for those outside the network regardless of their merit.
The Conclusion
The evidence supports the theory at the level of pattern and structural condition, not at the level of specific transactions. The Bell, California and New Jersey contracting evidence shows that the patterns exist and are statistically non-random. The Caro evidence shows the mechanism at work in exhaustive empirical detail in a specific case. The local news data shows that the enabling condition, opacity, is increasingly present across American communities.
What the evidence does not show, and cannot show without transaction-by-transaction investigation, is the proportion of informal power outcomes that reflect legitimate relationship advantage versus the proportion that reflect the exclusion of equally or more qualified outsiders. That proportion varies by community, by domain, and by the specific actors involved.
The structural conclusion: the informal economy of power is real, persistent, and predictable from the structural conditions that exist widely across American civic life. It is not universal. It is not uniformly corrupt. It is the water that many citizens swim in without recognizing it as water, the ambient condition that explains why formal mechanisms that should produce equal access consistently produce outcomes that favor the networked over the unconnected.
The citizen who has tried to get a variance, a contract, a permit, or an appointment and found the process opaque, slow, and seemingly indifferent to the merits of their case is not imagining things. They are experiencing a structural reality that operates beneath the threshold of formal corruption and above the threshold of legitimate relationship dynamics, in the space where most of the actual decisions about access and resources in American civic life are made.
Naming it is the beginning of the only available remedy: transparency that makes the patterns visible, civic engagement that builds the countervailing relationships, and journalism that attends the meetings where the informal decisions precede the formal ones.
Robert Caro, “The Power Broker: Robert Moses and the Fall of New York”, Alfred A. Knopf, 1974. Mancur Olson, “The Logic of Collective Action”, Harvard University Press, 1965. New Jersey Election Law Enforcement Commission, “Pay-to-Play” reports, multiple years. Pew Research Center, “Newspapers Fact Sheet”, 2023 edition. Pengjie Gao, Chang Lee, and Dermot Murphy, “Financing Dies in Darkness?”, Journal of Finance, 2018. Center for Responsive Politics (OpenSecrets.org), “Revolving Door” database, current.