Plutocracy

A plutocracy (from Ancient Greek πλοῦτος (ploûtos) 'wealth', and κράτος (krátos) 'power') or plutarchy is a society that is ruled or controlled by people of great wealth or income. The first known use of the term in English dates from 1631.[1] Unlike most political systems, plutocracy is not rooted in any established political philosophy.

"Merchant prince" redirects here. For powerful businesspeople, see captain of industry. For the computer game, see Merchant Prince.
"Plutocrats" redirects here. For the 2012 book, see Plutocrats (book).
Not to be confused with Plutonomy.

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Usage

The term plutocracy is generally used as a pejorative to describe or warn against an undesirable condition.[2][3] Throughout history, political thinkers and philosophers have condemned plutocrats for ignoring their social responsibilities, using their power to serve their own purposes and thereby increasing poverty and nurturing class conflict and corrupting societies with greed and hedonism.[4][5]

Examples

Historic examples of plutocracies include the Roman Empire; some city-states in Ancient Greece; the civilization of Carthage; the Italian merchant city-states of Venice, Florence, Genoa; the Dutch Republic; and the pre-World War II Empire of Japan (the zaibatsu). According to Noam Chomsky and Jimmy Carter, the modern United States resembles a plutocracy though with democratic forms.[6][7] Paul Volcker, a former chair of the Federal Reserve, also believed the U.S. to be developing into a plutocracy.[8]

One modern, formal example of a plutocracy, according to some critics,[9] is the City of London.[10] The City (also called the Square Mile of ancient London, corresponding to the modern financial district, an area of about 2.5 km2) has a unique electoral system for its local administration, separate from the rest of London. More than two-thirds of voters are not residents, but rather representatives of businesses and other bodies that occupy premises in the City, with votes distributed according to their numbers of employees. The principal justification for this arrangement is that most of the services provided by the City of London Corporation are used by the businesses in the City. Around 450,000 non-residents constitute the city's day-time population, far outnumbering the City's 7,000 residents.[11]

In the political jargon and propaganda of Fascist Italy, Nazi Germany and the Communist International, Western democratic states were referred to as plutocracies, with the implication being that a small number of extremely wealthy individuals were controlling the countries and holding them to ransom.[12][13] Plutocracy replaced democracy and capitalism as the principal fascist term for the U.S. and Great Britain during the World War II.[13][14] In Nazi Germany, it was often used as a dog whistle term for Jewish people in their antisemitic propaganda.[13] Joseph Goebbels, the Reich Minister of Propaganda, found the term to be particularly favorable, describing it as "the main concept at which the ideological struggle will be aimed".[15]

United States
Further information: Income inequality in the United States § Effects on democracy and society
See also: American upper class and Wealth inequality in the United States

Some modern historians, politicians, and economists argue that the U.S. was effectively plutocratic for at least part of the Gilded Age and Progressive Era periods between the end of the Civil War until the beginning of the Great Depression.[16][17][18][19][20][21] President Theodore Roosevelt became known as the "trust-buster" for his aggressive use of antitrust law, through which he managed to break up such major combinations as the largest railroad and Standard Oil, the largest oil company.[22] According to historian David Burton, "When it came to domestic political concerns, TR's bête noire was the plutocracy."[23] In his autobiographical account of taking on monopolistic corporations as president, Roosevelt recounted:

...we had come to the stage where for our people what was needed was a real democracy; and of all forms of tyranny the least attractive and the most vulgar is the tyranny of mere wealth, the tyranny of a plutocracy.[24]

The Sherman Antitrust Act had been enacted in 1890, when large industries reaching monopolistic or near-monopolistic levels of market concentration and financial capital increasingly integrating corporations and a handful of very wealthy heads of large corporations began to exert increasing influence over industry, public opinion and politics after the Civil War. Money, according to contemporary progressive and journalist Walter Weyl, was "the mortar of this edifice", with ideological differences among politicians fading and the political realm becoming "a mere branch in a still larger, integrated business. The state, which through the party formally sold favors to the large corporations, became one of their departments."[25]

In "The Politics of Plutocracy" section of his book, The Conscience of a Liberal, economist Paul Krugman says plutocracy took hold because of three factors: at that time, the poorest quarter of American residents (African-Americans and non-naturalized immigrants) were ineligible to vote, the wealthy funded the campaigns of politicians they preferred, and vote buying was "feasible, easy and widespread", as were other forms of electoral fraud such as ballot-box stuffing and intimidation of the other party's voters.[26]

The U.S. instituted progressive taxation in 1913, but according to Shamus Khan, in the 1970s, elites used their increasing political power to lower their taxes, and today successfully employ what political scientist Jeffrey Winters calls "the income defense industry" to greatly reduce their taxes.[27]

In 1998, Bob Herbert of The New York Times referred to modern American plutocrats as "The Donor Class"[28][29] (list of top donors)[30] and defined the class, for the first time,[31] as "a tiny group – just one-quarter of 1 percent of the population – and it is not representative of the rest of the nation. But its money buys plenty of access."[28]

Post-World War II

In modern times, the term is sometimes used pejoratively to refer to societies rooted in state-corporate capitalism or which prioritize the accumulation of wealth over other interests.[32][33][34][35] According to Kevin Phillips, author and political strategist to Richard Nixon, the United States is a plutocracy in which there is a "fusion of money and government."[36]

Chrystia Freeland, author of Plutocrats,[37] says that the present trend towards plutocracy occurs because the rich feel that their interests are shared by society:[38][39]

You don't do this in a kind of chortling, smoking your cigar, conspiratorial thinking way. You do it by persuading yourself that what is in your own personal self-interest is in the interests of everybody else. So you persuade yourself that, actually, government services, things like spending on education, which is what created that social mobility in the first place, need to be cut so that the deficit will shrink, so that your tax bill doesn't go up. And what I really worry about is, there is so much money and so much power at the very top, and the gap between those people at the very top and everybody else is so great, that we are going to see social mobility choked off and society transformed.

When the Nobel Prize–winning economist Joseph Stiglitz wrote the 2011 Vanity Fair magazine article entitled "Of the 1%, by the 1%, for the 1%", the title and content supported Stiglitz's claim that the U.S. is increasingly ruled by the wealthiest 1%.[40] Some researchers have said the U.S. may be drifting towards a form of oligarchy, as individual citizens have less impact than economic elites and organized interest groups upon public policy.[41] A study conducted by political scientists Martin Gilens of Princeton University and Benjamin Page of Northwestern University, which was released in April 2014,[42] stated that their "analyses suggest that majorities of the American public actually have little influence over the policies our government adopts". Gilens and Page do not characterize the U.S. as an "oligarchy" or "plutocracy" per se; however, they do apply the concept of "civil oligarchy" as used by Jeffrey A. Winters[43] with respect to the U.S.

Causation

Reasons why a plutocracy develops are complex. In a nation that is experiencing rapid economic growth, income inequality will tend to increase as the rate of return on innovation increases. [44] In other scenarios, plutocracy may develop when a country is collapsing due to resource depletion as the elites attempt to hoard the diminishing wealth or expand debts to maintain stability, which will tend to enrich creditors and financiers. Economists have also suggested that free market economies tend to drift into monopolies and oligopolies because of the greater efficiency of larger businesses (see economies of scale).

Other nations may become plutocratic through kleptocracy or rent-seeking.

See also

References
  1. "Plutocracy". Merriam Webster. Retrieved 2 June 2017.
  2. Fiske, Edward B.; Mallison, Jane; Hatcher, David (2009). Fiske 250 words every high school freshman needs to know. Naperville, Ill.: Sourcebooks. p. 250. ISBN 978-1402218408.
  3. Coates, Colin M., ed. (2006). Majesty in Canada: essays on the role of royalty. Toronto: Dundurn. p. 119. ISBN 978-1550025866.
  4. Viereck, Peter (2006). Conservative thinkers: from John Adams to Winston Churchill. New Brunswick, New Jersey: Transaction Publishers. pp. 19–68. ISBN 978-1412805261.
  5. de Tocqueville, Alexis (1985). Boesche, Roger (ed.). Selected letters on politics and society. Translated by Toupin, James. Berkeley: University of California Press. pp. 197–198. ISBN 978-0520057517.
  6. Chomsky, Noam (6 October 2015). "America is a plutocracy masquerading as a democracy". Salon. Retrieved 13 February 2015.
  7. Carter, Jimmy (15 October 2015). "Jimmy Carter on Whether He Could Be President Today: "Absolutely Not"". supersoul.tv. Retrieved 13 February 2015.
  8. Sorkin, Andrew (23 October 2018). "Paul Volcker, at 91, Sees 'a Hell of a Mess in Every Direction'". New York Times. Retrieved 28 October 2018.
  9. Atkinson, Rowland; Parker, Simon; Burrows, Roger (September 2017). "Elite Formation, Power and Space in Contemporary London". Theory, Culture & Society. 34 (5–6): 179–200. doi:10.1177/0263276417717792. ISSN 0263-2764.
  10. Monbiot, George (31 October 2011). "The medieval, unaccountable Corporation of London is ripe for protest". The Guardian. Retrieved 1 November 2011.
  11. René Lavanchy (12 February 2009). "Labour runs in City of London poll against 'get-rich' bankers". Tribune. Archived from the original on 15 January 2015. Retrieved 17 January 2015.
  12. "The Editors: American Labor and the War (February 1941)". marxists.org. Retrieved 28 August 2015.
  13. Blamires, Cyprian; Jackson, Paul (2006). World Fascism: A Historical Encyclopedia, Vol. 1. ABC-CLIO. p. 522. ISBN 978-1-57607-940-9.
  14. Herf, Jeffrey (2006). The Jewish Enemy: Nazi Propaganda During World War II and the Holocaust. Harvard University Press. p. 311. ISBN 978-0-674-02175-4.
  15. As quoted in Boelcke, Willi A. The Secret Conferences of Dr. Goebbels: October 1939-March 1943, edited by Willi A. Boelcke; trans. Ewald Osers. London: Weidenfeld and Nicolson, 1970.
  16. Pettigrew, Richard Franklin (2010). Triumphant Plutocracy: The Story of American Public Life from 1870 to 1920. Nabu Press. ISBN 978-1146542746.
  17. Calvin Reed, John (1903). The New Plutocracy. Kessinger Publishing, LLC (2010 reprint). ISBN 978-1120909152.
  18. Brinkmeyer, Robert H. (2009). The fourth ghost: white Southern writers and European fascism, 1930-1950. Baton Rouge: Louisiana State University Press. p. 331. ISBN 978-0807133835.
  19. Allitt, Patrick (2009). The conservatives: ideas and personalities throughout American history. New Haven: Yale University Press. pp. 143. ISBN 978-0300118940.
  20. Ryan, James G.; Schlup, Leonard, eds. (2003). Historical dictionary of the Gilded Age. Armonk, N.Y.: M.E. Sharpe. p. 145. ISBN 978-0765603319.
  21. Viereck, Peter (2006). Conservative thinkers: from John Adams to Winston Churchill. New Brunswick, New Jersey: Transaction Publishers. pp. 103. ISBN 978-1412805261.
  22. Schweikart, Larry (2009). American Entrepreneur: The Fascinating Stories of the People Who Defined Business in the United States. AMACOM Div American Mgmt Assn.
  23. Burton, David Henry (1997). Theodore Roosevelt, American Politician. ISBN 9780838637272. Retrieved 28 August 2015.
  24. "Roosevelt, Theodore. 1913. An Autobiography: XII. The Big Stick and the Square Deal". bartleby.com. Retrieved 28 August 2015.
  25. Bowman, Scott R. (1996). The modern corporation and American political thought: law, power, and ideology. University Park, Pa.: Pennsylvania State University Press. pp. 92–103. ISBN 978-0271014739.
  26. Krugman, Paul (2009). The conscience of a liberal ([Pbk. ed.] ed.). New York: Norton. pp. 21–26. ISBN 978-0393333138.
  27. Kahn, Shamus (18 September 2012) "The Rich Haven't Always Hated Taxes" Time Magazine
  28. Herbert, Bob (19 July 1998). "The Donor Class". The New York Times. Retrieved 10 March 2016.
  29. Confessore, Nicholas; Cohen, Sarah; Yourish, Karen (10 October 2015). "The Families Funding the 2016 Presidential Election". The New York Times. Retrieved 10 March 2016.
  30. Lichtblau, Eric; Confessore, Nicholas (10 October 2015). "From Fracking to Finance, a Torrent of Campaign Cash - Top Donors List". The New York Times. Retrieved 11 March 2016.
  31. McCutcheon, Chuck (26 December 2014). "Why the 'donor class' matters, especially in the GOP presidential scrum". "The Christian Science Monitor. Retrieved 10 March 2016.
  32. Barker, Derek (2013). "Oligarchy or Elite Democracy? Aristotle and Modern Representative Government". New Political Science. 35 (4): 547–566. doi:10.1080/07393148.2013.848701. S2CID 145063601.
  33. Etzioni, Amitai (January 2014). "Political Corruption in the United States: A Design Draft". Political Science & Politics. 47 (1): 141–144. doi:10.1017/S1049096513001492. S2CID 155071383.
  34. Westbrook, David (2011). "If Not a Commercial Republic - Political Economy in the United States after Citizens United" (PDF). Louisville Law Review. 50 (1): 35–86. Archived from the original (PDF) on 2 May 2014. Retrieved 30 April 2014.
  35. Full Show: The Long, Dark Shadows of Plutocracy. Moyers & Company, 28 November 2014.
  36. Transcript. Bill Moyers Interviews Kevin Phillips. NOW with Bill Moyers 4.09.04 | PBS
  37. Freeland, Chrystia (2012). Plutocrats: the rise of the new global super-rich and the fall of everyone else. New York: Penguin. ISBN 9781594204098. OCLC 780480424.
  38. Freeland, Chrystia (15 October 2012). "A Startling Gap Between Us And Them In 'Plutocrats'" (Interview). National Public Radio. Retrieved 12 April 2023.
  39. See also the Chrystia Freeland interview for the Moyers Book Club (12 October 2012) Moyers & Company Full Show: Plutocracy Rising
  40. Stiglitz Joseph E. "Of the 1%, by the 1%, for the 1%". Vanity Fair, May 2011; see also the Democracy Now! interview with Joseph Stiglitz: "Assault on Social Spending, Pro-Rich Tax Cuts Turning U.S. into Nation 'Of the 1 Percent, by the 1 Percent, for the 1 Percent'", Democracy Now! Archive, Thursday, 7 April 2011
  41. Piketty, Thomas (2014). Capital in the Twenty-First Century. Belknap Press. ISBN 067443000X p. 514: "the risk of a drift towards oligarchy is real and gives little reason for optimism about where the United States is headed."
  42. Martin Gilens & Benjamin I. Page (2014). "Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens" (PDF). Perspectives on Politics. 12 (3): 564–581. doi:10.1017/S1537592714001595.
  43. Winters, Jeffrey A. "Oligarchy" Cambridge University Press, 2011, pp. 208-254
  44. Piketty, Thomas (2013). Capital in the Twenty-First Century. Harvard University Press. ISBN 9781491534649.

Further reading
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