Plutocracy
Plutocracy, sometimes called plutarchy, describes a society governed or controlled by people of great wealth or income. One of its most striking witnesses is a man who belongs to the group being described. Warren Buffett, an investor and philanthropist counted among the wealthiest people in the world, spoke to CNN in 2005. He said: "It's class warfare, my class is winning, but they shouldn't be." He repeated the charge in a November 2006 interview with The New York Times, saying the rich class was the side making war. Is that an exaggeration, a fair description, or simply a loaded word? Rule by the rich has been blamed on empires and merchant republics, and it is still alleged today. The label has been used as a scholar's diagnosis and as a weapon of propaganda. So what exactly is being claimed when a society is called a plutocracy, and who has been willing to say it?
The year 1631 marks the first known use of the word in English, yet it has never belonged to any school of political thought. No philosopher built a theory of plutocracy and then recommended it. The word works as an accusation, used to warn about a condition the speaker finds undesirable. It counts as a form of oligarchy, meaning rule by the few, where the few are defined by their money.
Americans have even coined a variant. "Dollarocracy" is an anglicised twist on the older word, and it can point to a specifically American kind of plutocracy.
Historians and commentators point to a long list of past cases. The Roman Empire is on it, along with some city-states of Ancient Greece and the civilization of Carthage. The Italian merchant cities of Venice, Florence and Genoa appear too, as does the Dutch Republic. Japan before the Second World War completes the list, with the zaibatsu as its example.
One institution that still operates in the open is described by some critics as a plutocracy in formal, legal terms.
The City of London covers about 2.5 square kilometres. It is also called the Square Mile, and it corresponds to the modern financial district. Its local administration runs on an electoral system that is separate from the rest of London.
More than two-thirds of the City's voters are not residents. They represent businesses and other bodies that occupy premises there, and votes are distributed according to the number of employees. The arithmetic of the place explains why. Around 450,000 non-residents make up the day-time population, while only 7,000 people actually live there.
Defenders offer a practical justification. Most of the services provided by the City of London Corporation are used by the businesses in the City, so those businesses get a voice. Some critics see in the same arrangement a modern formal example of plutocracy.
The word has also been used by regimes whose aim was to dismiss democracy altogether.
In the political jargon of Fascist Italy, Nazi Germany and the Communist International, Western democratic states were called plutocracies. The implication was that a small number of extremely wealthy individuals controlled these countries and held them to ransom.
During the Second World War, the term replaced "democracy" and "capitalism" as the main fascist word for the United States and Great Britain.
In Nazi Germany it also served as a dog whistle for Jewish people in antisemitic propaganda. Joseph Goebbels, the Reich Minister of Propaganda, found the word especially useful. He described it as "the main concept at which the ideological struggle will be aimed".
An American president had already turned the same word against the tycoons of his own country.
Theodore Roosevelt earned the nickname "trust-buster" for his aggressive use of antitrust law. He broke up major combinations, including the largest railroad and Standard Oil, the largest oil company. Some historians, politicians and economists argue the United States was effectively plutocratic for at least part of the Gilded Age and Progressive Era. They date that stretch from the end of the Civil War to the start of the Great Depression.
The historian David Burton put Roosevelt's priorities this way: "When it came to domestic political concerns, TR's bête noire was the plutocracy." Roosevelt himself, recalling his fight with monopolistic corporations, wrote that the least attractive and most vulgar of all tyrannies was "the tyranny of mere wealth, the tyranny of a plutocracy."
The Sherman Antitrust Act dates to 1890. After the Civil War, industries had reached monopolistic or near-monopolistic concentration. A handful of very wealthy corporate heads were gaining influence over industry, public opinion and politics.
The progressive journalist Walter Weyl called money "the mortar of this edifice". In his account, politicians' ideological differences faded, and the state "became one of their departments."
A later economist, Paul Krugman, listed three conditions that let this system take hold.
In his book The Conscience of a Liberal, Paul Krugman devotes a section to "The Politics of Plutocracy". His first factor was exclusion. The poorest quarter of American residents, meaning African-Americans and non-naturalized immigrants, could not vote.
His second was money. The wealthy funded the campaigns of the politicians they preferred.
His third was corruption at the ballot box. Vote buying was "feasible, easy and widespread". Ballot-box stuffing and intimidation of the other party's voters were common too.
The United States instituted progressive taxation in 1913. Shamus Khan argues that in the 1970s, elites used their growing political power to lower their own taxes. Today, he says, they succeed in cutting their bills with what the political scientist Jeffrey Winters calls "the income defense industry".
Winters is also the source of a phrase that later researchers would borrow, "civil oligarchy".
In 1998, Bob Herbert of The New York Times gave American plutocrats a name: "The Donor Class". He defined it 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."
The word has since been stretched to cover societies rooted in state-corporate capitalism, or ones that put the accumulation of wealth above other interests. Noam Chomsky and Jimmy Carter both say the modern United States resembles a plutocracy, though one that keeps democratic forms. In 2018, Paul Volcker, a former chair of the Federal Reserve, said he believed the country was developing into one.
Kevin Phillips was an author and a political strategist for Richard Nixon. He describes the United States as a plutocracy built on a "fusion of money and government."
The Nobel Prize-winning economist Joseph Stiglitz wrote a 2011 Vanity Fair article titled "Of the 1%, by the 1%, for the 1%". Its argument was that the wealthiest 1% increasingly rule the country. More than half the members of the U.S. Congress are millionaires.
In April 2014, two political scientists released a study that tried to measure the problem.
Martin Gilens of Princeton University and Benjamin Page of Northwestern University published their study in April 2014. Their analyses suggested that "majorities of the American public actually have little influence over the policies our government adopts." They did not call the United States an oligarchy or plutocracy per se. They did apply Jeffrey Winters's concept of "civil oligarchy" to it. Other researchers say the country may be drifting towards oligarchy, because ordinary citizens have less impact on policy than economic elites and organized interest groups.
Chrystia Freeland, author of Plutocrats, argues that no cigar-chomping conspiracy is needed. The rich, she says, drift toward this outcome by "persuading yourself that what is in your own personal self-interest is in the interests of everybody else." That reasoning can justify cutting spending on education to shrink the deficit and keep a tax bill from rising. Her worry is that the gap between the very top and everyone else is now so wide that "we are going to see social mobility choked off and society transformed."
The economist Thomas Piketty offers a structural explanation. In a nation growing rapidly, he argues, income inequality tends to rise as the return on innovation increases.
Updated
Common questions
What is a plutocracy?
A plutocracy, also called a plutarchy, is a society ruled or controlled by people of great wealth or income. It is considered a form of oligarchy, which means rule by the few.
When did the word first appear in English?
The first known use of the term in English dates from 1631.
Why do critics call the City of London a plutocracy?
More than two-thirds of the City's voters are not residents. They represent businesses and other bodies that occupy premises there, and votes are distributed according to employee numbers. Around 450,000 non-residents make up the daytime population, against 7,000 residents.
Why was Theodore Roosevelt called the trust-buster?
He used antitrust law aggressively to break up major combinations, including the largest railroad and Standard Oil, the largest oil company.
What did Gilens and Page conclude in 2014?
Their analyses suggested that majorities of the American public actually have little influence over the policies the government adopts. They did not call the United States an oligarchy or plutocracy per se, but applied Jeffrey Winters's concept of civil oligarchy.
All sources
53 references cited across the entry
- 3BookFiske 250 words every high school freshman needs to knowEdward B. Fiske et al. — Sourcebooks — 2009
- 4BookMajesty in Canada: essays on the role of royaltyDundurn — 2006
- 5BookJournalism and the Future of DemocracyDenis Muller — Springer Nature — 9 August 2021
- 6NewsAmerica is a plutocracy masquerading as a democracyNoam Chomsky — 6 October 2015
- 7NewsJimmy Carter on Whether He Could Be President Today: "Absolutely Not"Jimmy Carter — 15 October 2015
- 8NewsPaul Volcker, at 91, Sees 'a Hell of a Mess in Every Direction'Andrew Sorkin — 23 October 2018
- 9JournalElite Formation, Power and Space in Contemporary LondonRowland Atkinson et al. — September 2017
- 10NewsThe medieval, unaccountable Corporation of London is ripe for protestGeorge Monbiot — 31 October 2011
- 11NewsLabour runs in City of London poll against 'get-rich' bankersRené Lavanchy — 12 February 2009
- 13BookWorld Fascism: A Historical Encyclopedia, Vol. 1Cyprian Blamires et al. — ABC-CLIO — 2006
- 14BookThe Jewish Enemy: Nazi Propaganda During World War II and the HolocaustJeffrey Herf — Harvard University Press — 2006
- 15As 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.
- 16BookTriumphant Plutocracy: The Story of American Public Life from 1870 to 1920Richard Franklin Pettigrew — Nabu Press — 2010
- 17BookThe New Plutocracy (1903)John Calvin Reed — Kessinger Publishing, LLC (2010 reprint)
- 18BookThe fourth ghost: white Southern writers and European fascism, 1930-1950Robert H. Brinkmeyer — Louisiana State University Press — 2009
- 19BookThe conservatives: ideas and personalities throughout American historyPatrick Allitt — Yale University Press — 2009
- 20BookHistorical dictionary of the Gilded AgeM.E. Sharpe — 2003
- 21BookConservative thinkers: from John Adams to Winston ChurchillPeter Viereck — Transaction Publishers — 2006
- 22BookAmerican Entrepreneur: The Fascinating Stories of the People Who Defined Business in the United StatesLarry Schweikart — AMACOM Div American Mgmt Assn — 2009
- 23BookTheodore Roosevelt, American PoliticianDavid Henry Burton — Fairleigh Dickinson Univ Press — 1997
- 25BookThe modern corporation and American political thought: law, power, and ideologyScott R. Bowman — Pennsylvania State University Press — 1996
- 26BookThe conscience of a liberalPaul Krugman — Norton — 2009
- 28JournalOligarchy or Elite Democracy? Aristotle and Modern Representative GovernmentDerek Barker — 2013
- 29JournalPolitical Corruption in the United States: A Design DraftAmitai Etzioni — Jan 2014
- 30JournalIf Not a Commercial Republic - Political Economy in the United States after Citizens UnitedDavid Westbrook — 2011
- 33BookPlutocrats: the rise of the new global super-rich and the fall of everyone elseChrystia Freeland — Penguin — 2012
- 34InterviewA Startling Gap Between Us And Them In 'Plutocrats'Chrystia Freeland — National Public Radio — 15 October 2012
- 36NewsThe Donor ClassBob Herbert — 19 July 1998
- 37NewsThe Families Funding the 2016 Presidential ElectionNicholas Confessore et al. — 10 October 2015
- 38NewsFrom Fracking to Finance, a Torrent of Campaign Cash - Top Donors ListEric Lichtblau et al. — 10 October 2015
- 39NewsWhy the 'donor class' matters, especially in the GOP presidential scrumChuck McCutcheon — 26 December 2014
- 41Piketty, Thomas (2014). Capital in the Twenty-First Century. Belknap Press. p. 514: "the risk of a drift towards oligarchy is real and gives little reason for optimism about where the United States is
- 42Majority of lawmakers in 116th Congress are millionairesKarl Evers-Hillstrom — 2020-04-23
- 43JournalTesting Theories of American Politics: Elites, Interest Groups, and Average CitizensMartin Gilens et al. — 2014
- 47NewsIn Class Warfare, Guess Which Class is WinningWarren Buffett — 26 November 2006
- 48BookCapital in the Twenty-First CenturyThomas Piketty — Harvard University Press — 2013
- 49BookThe American plutocracyMilford Wriarson Howard — Holland Publishing — 1895
- 50BookPlutocracy: or, American white slavery; a politico-social novelThomas Manson Norwood — American News Company — 1888
- 51BookTriumphant Plutocracy: The Story of American Public Life from 1870 to 1920Richard Franklin Pettigrew — Academy Press — 1921
- 52BookThe New PlutocracyJohn Calvin Reed — Abbey Press — 1903
- 54BookPlutocracy. Chronicles of a global monopolyAbraham Martínez — NBM — 2021