A plutocracy () or plutarchy is a society that is ruled or controlled by people of great
wealth
Wealth is the abundance of Value (economics), valuable financial assets or property, physical possessions which can be converted into a form that can be used for financial transaction, transactions. This includes the core meaning as held in the ...
or
income
Income is the consumption and saving opportunity gained by an entity within a specified timeframe, which is generally expressed in monetary terms. Income is difficult to define conceptually and the definition may be different across fields. For ...
. The first known use of the term in English dates from 1631. Unlike most political systems, plutocracy is not rooted in any established
political philosophy
Political philosophy or political theory is the philosophical study of government, addressing questions about the nature, scope, and legitimacy of public agents and institutions and the relationships between them. Its topics include politics, ...
.
Usage
The term ''plutocracy'' is generally used as a pejorative to describe or warn against an undesirable condition. 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
Greed (or avarice) is an uncontrolled longing for increase in the acquisition or use of material gain (be it food, money, land, or animate/inanimate possessions); or social value, such as status, or power. Greed has been identified as und ...
and
hedonism
Hedonism refers to a family of theories, all of which have in common that pleasure plays a central role in them. ''Psychological'' or ''motivational hedonism'' claims that human behavior is determined by desires to increase pleasure and to decr ...
.
Examples
Historic examples of plutocracies include the
Roman Empire
The Roman Empire ( la, Imperium Romanum ; grc-gre, Βασιλεία τῶν Ῥωμαίων, Basileía tôn Rhōmaíōn) was the post-Republican period of ancient Rome. As a polity, it included large territorial holdings around the Mediterr ...
, some
city-state
A city-state is an independent sovereign city which serves as the center of political, economic, and cultural life over its contiguous territory. They have existed in many parts of the world since the dawn of history, including cities such as ...
s in
Ancient Greece
Ancient Greece ( el, Ἑλλάς, Hellás) was a northeastern Mediterranean civilization, existing from the Greek Dark Ages of the 12th–9th centuries BC to the end of classical antiquity ( AD 600), that comprised a loose collection of cult ...
, the civilization of
Carthage
Carthage was the capital city of Ancient Carthage, on the eastern side of the Lake of Tunis in what is now Tunisia. Carthage was one of the most important trading hubs of the Ancient Mediterranean and one of the most affluent cities of the classi ...
, the
Italian
Italian(s) may refer to:
* Anything of, from, or related to the people of Italy over the centuries
** Italians, an ethnic group or simply a citizen of the Italian Republic or Italian Kingdom
** Italian language, a Romance language
*** Regional Ita ...
merchant
A merchant is a person who trades in commodities produced by other people, especially one who trades with foreign countries. Historically, a merchant is anyone who is involved in business or trade. Merchants have operated for as long as indust ...
city states of
Venice
Venice ( ; it, Venezia ; vec, Venesia or ) is a city in northeastern Italy and the capital of the Veneto Regions of Italy, region. It is built on a group of 118 small islands that are separated by canals and linked by over 400 ...
,
Florence
Florence ( ; it, Firenze ) is a city in Central Italy and the capital city of the Tuscany region. It is the most populated city in Tuscany, with 383,083 inhabitants in 2016, and over 1,520,000 in its metropolitan area.Bilancio demografico an ...
,
Genoa
Genoa ( ; it, Genova ; lij, Zêna ). is the capital of the Italian region of Liguria and the List of cities in Italy, sixth-largest city in Italy. In 2015, 594,733 people lived within the city's administrative limits. As of the 2011 Italian ce ...
, the
Dutch Republic
The United Provinces of the Netherlands, also known as the (Seven) United Provinces, officially as the Republic of the Seven United Netherlands (Dutch: ''Republiek der Zeven Verenigde Nederlanden''), and commonly referred to in historiography ...
and the pre-World War II
Empire of Japan
The also known as the Japanese Empire or Imperial Japan, was a historical nation-state and great power that existed from the Meiji Restoration in 1868 until the enactment of the post-World War II 1947 constitution and subsequent fo ...
(the ''
zaibatsu
is a Japanese term referring to industrial and financial vertically integrated business conglomerates in the Empire of Japan, whose influence and size allowed control over significant parts of the Japanese economy from the Meiji period unt ...
''). According to
Noam Chomsky
Avram Noam Chomsky (born December 7, 1928) is an American public intellectual: a linguist, philosopher, cognitive scientist, historian, social critic, and political activist. Sometimes called "the father of modern linguistics", Chomsky is ...
and
Jimmy Carter
James Earl Carter Jr. (born October 1, 1924) is an American politician who served as the 39th president of the United States from 1977 to 1981. A member of the Democratic Party (United States), Democratic Party, he previously served as th ...
, the modern
United States
The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territorie ...
resembles a plutocracy though with democratic forms.
A former chairman of the
Federal Reserve
The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States of America. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a ...
,
Paul Volcker
Paul Adolph Volcker Jr. (September 5, 1927 – December 8, 2019) was an American economist who served as the 12th chairman of the Federal Reserve from 1979 to 1987. During his tenure as chairman, Volcker was widely credited with having ended th ...
, also believed the US to be developing into a plutocracy.
One modern, formal example of a plutocracy, according to some critics, is the
City of London
The City of London is a city, ceremonial county and local government district that contains the historic centre and constitutes, alongside Canary Wharf, the primary central business district (CBD) of London. It constituted most of London fr ...
.
The City (also called the Square Mile of ancient
London
London is the capital and largest city of England and the United Kingdom, with a population of just under 9 million. It stands on the River Thames in south-east England at the head of a estuary down to the North Sea, and has been a majo ...
, corresponding to the modern financial district, an area of about 2.5 km
2) 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.
In the
political jargon
Politics (from , ) is the set of activities that are associated with making decisions in groups, or other forms of power relations among individuals, such as the distribution of resources or status. The branch of social science that studies ...
and
propaganda of Fascist Italy
The propaganda used by the National Fascist Party (PNF) in the years leading up to and during Benito Mussolini's leadership of Italy (1922–1943) was a crucial instrument for acquiring and maintaining power, and for the implementation of Fascist ...
,
Nazi Germany
Nazi Germany (lit. "National Socialist State"), ' (lit. "Nazi State") for short; also ' (lit. "National Socialist Germany") (officially known as the German Reich from 1933 until 1943, and the Greater German Reich from 1943 to 1945) was ...
, and the
Communist International
The Communist International (Comintern), also known as the Third International, was a Soviet-controlled international organization founded in 1919 that advocated world communism. The Comintern resolved at its Second Congress to "struggle by ...
, Western
democratic state
Democracy (From grc, δημοκρατία, dēmokratía, ''dēmos'' 'people' and ''kratos'' 'rule') is a form of government in which the people have the authority to deliberate and decide legislation ("direct democracy"), or to choose gover ...
s 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.
Plutocracy replaced
democracy
Democracy (From grc, δημοκρατία, dēmokratía, ''dēmos'' 'people' and ''kratos'' 'rule') is a form of government in which the people have the authority to deliberate and decide legislation (" direct democracy"), or to choose gov ...
and
capitalism
Capitalism is an economic system based on the private ownership of the means of production and their operation for Profit (economics), profit. Central characteristics of capitalism include capital accumulation, competitive markets, pric ...
as the principal fascist term for the United States and Great Britain during the
Second World War
World War II or the Second World War, often abbreviated as WWII or WW2, was a world war that lasted from 1939 to 1945. It involved the vast majority of the world's countries—including all of the great powers—forming two opposin ...
.
For the Nazis, the term was often a code word for "the
Jews
Jews ( he, יְהוּדִים, , ) or Jewish people are an ethnoreligious group and nation originating from the Israelites Israelite origins and kingdom: "The first act in the long drama of Jewish history is the age of the Israelites""The ...
".
United States
Some modern historians, politicians, and economists argue that the United States was effectively plutocratic for at least part of the
Gilded Age
In United States history, the Gilded Age was an era extending roughly from 1877 to 1900, which was sandwiched between the Reconstruction era and the Progressive Era. It was a time of rapid economic growth, especially in the Northern and Weste ...
and
Progressive Era
The Progressive Era (late 1890s – late 1910s) was a period of widespread social activism and political reform across the United States focused on defeating corruption, monopoly, waste and inefficiency. The main themes ended during Am ...
periods between the end of the
Civil War
A civil war or intrastate war is a war between organized groups within the same state (or country).
The aim of one side may be to take control of the country or a region, to achieve independence for a region, or to change government policies ...
until the beginning of the
Great Depression
The Great Depression (19291939) was an economic shock that impacted most countries across the world. It was a period of economic depression that became evident after a major fall in stock prices in the United States. The economic contagio ...
. President
Theodore Roosevelt
Theodore Roosevelt Jr. ( ; October 27, 1858 – January 6, 1919), often referred to as Teddy or by his initials, T. R., was an American politician, statesman, soldier, conservationist, naturalist, historian, and writer who served as the 26t ...
became known as the "trust-buster" for his aggressive use of
United States antitrust law
In the United States, antitrust law is a collection of mostly federal laws that regulate the conduct and organization of businesses to promote competition and prevent unjustified monopolies. The three main U.S. antitrust statutes are the Sherm ...
, through which he managed to break up such major combinations as
the largest railroad and
Standard Oil
Standard Oil Company, Inc., was an American oil production, transportation, refining, and marketing company that operated from 1870 to 1911. At its height, Standard Oil was the largest petroleum company in the world, and its success made its co-f ...
, the largest oil company. According to historian David Burton, "When it came to domestic political concerns, TR's
bête noire was the plutocracy." 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.
The
Sherman Antitrust Act
The Sherman Antitrust Act of 1890 (, ) is a United States antitrust law which prescribes the rule of free competition among those engaged in commerce. It was passed by Congress and is named for Senator John Sherman, its principal author.
...
had been enacted in 1890, when large industries reaching
monopolistic
A monopoly (from Greek el, μόνος, mónos, single, alone, label=none and el, πωλεῖν, pōleîn, to sell, label=none), as described by Irving Fisher, is a market with the "absence of competition", creating a situation where a spec ...
or near-monopolistic levels of
market concentration
In economics, market concentration is a function of the number of firms and their respective shares of the total production (alternatively, total capacity or total reserves) in a market. In any industry, a handful of firms that hold a signific ...
and
financial capital
Financial capital (also simply known as capital or equity in finance, accounting and economics) is any economic resource measured in terms of money used by entrepreneurs and businesses to buy what they need to make their products or to provide ...
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
Walter Edward Weyl (March 11, 1873 in Philadelphia, Pennsylvania – November 9, 1919 in Woodstock, New York) was a writer and speaker, an intellectual leader of the Progressive movement in the United States. As a strong nationalist, his goal was ...
, 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."
In his book ''
The Conscience of a Liberal'', in a section entitled The Politics of Plutocracy,
economist
An economist is a professional and practitioner in the social sciences, social science discipline of economics.
The individual may also study, develop, and apply theories and concepts from economics and write about economic policy. Within this ...
Paul Krugman
Paul Robin Krugman ( ; born February 28, 1953) is an American economist, who is Distinguished Professor of Economics at the Graduate Center of the City University of New York, and a columnist for ''The New York Times''. In 2008, Krugman was th ...
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 Vote buying (also referred to as electoral clientelism and patronage politics) occurs when a political party or candidate distributes money or resources to a voter in an upcoming election with the expectation that the voter votes for the actor handi ...
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.
The U.S. instituted
progressive taxation
A progressive tax is a tax in which the tax rate increases as the taxable amount increases.Sommerfeld, Ray M., Silvia A. Madeo, Kenneth E. Anderson, Betty R. Jackson (1992), ''Concepts of Taxation'', Dryden Press: Fort Worth, TX The term ''progr ...
in 1913, but according to
Shamus Khan
Shamus Rahman Khan (born October 8, 1978) is an American sociologist. He is a professor of sociology and American Studies at Princeton University. Formerly he served as chair of the sociology department at Columbia University. He writes on elites ...
, in the 1970s, elites used their increasing political power to lower their taxes, and today successfully employ what
political scientist
Political science is the science, scientific study of politics. It is a social science dealing with systems of governance and power, and the analysis of politics, political activities, political thought, political behavior, and associated c ...
Jeffrey Winters calls "the income defense industry" to greatly reduce their taxes.
In 1998,
Bob Herbert
Robert Herbert (born March 7, 1945) is an American journalist and former op-ed columnist for '' The New York Times''. His column was syndicated to other newspapers around the country. Herbert frequently writes on poverty, the Iraq War, racis ...
of ''
The New York Times
''The New York Times'' (''the Times'', ''NYT'', or the Gray Lady) is a daily newspaper based in New York City with a worldwide readership reported in 2020 to comprise a declining 840,000 paid print subscribers, and a growing 6 million paid ...
'' referred to modern American plutocrats as "The Donor Class"
(list of top donors)
and defined the class, for the first time,
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."
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. According to
Kevin Phillips, author and political strategist to
Richard Nixon
Richard Milhous Nixon (January 9, 1913April 22, 1994) was the 37th president of the United States, serving from 1969 to 1974. A member of the Republican Party, he previously served as a representative and senator from California and was ...
, the United States is a plutocracy in which there is a "fusion of money and government."
Chrystia Freeland
Christina Alexandra Freeland (born August 2, 1968) is a Canadian politician serving as the tenth and current deputy prime minister of Canada since 2019 and the minister of finance since 2020. A member of the Liberal Party, Freeland represent ...
, author of ''
Plutocrats: The Rise of the New Global Super Rich and the Fall of Everyone Else'', says that the present trend towards plutocracy occurs because the rich feel that their interests are shared by society.
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 United States is increasingly ruled by the wealthiest 1%. Some researchers have said
the US may be drifting towards a form of oligarchy, as individual citizens have less impact than economic elites and organized interest groups upon public policy. A study conducted by political scientists Martin Gilens (Princeton University) and Benjamin Page (Northwestern University), which was released in April 2014, 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 US as an "oligarchy" or "plutocracy" per se; however, they do apply the concept of "civil oligarchy" as used by
Jeffrey A. Winters
Jeffrey A. Winters is an American political scientist at Northwestern University, specialising in the study of oligarchy. He has written extensively on Indonesia and on oligarchy in the United States. His 2011 book ''Oligarchy'' was the 2012 winn ...
with respect to the US.
Russia
Causation
Reasons why a plutocracy develops are complex. In a nation that is experiencing rapid economic growth,
income inequality
There are wide varieties of economic inequality, most notably income inequality measured using the distribution of income (the amount of money people are paid) and wealth inequality measured using the distribution of wealth (the amount of we ...
will tend to increase as the rate of return on innovation increases.
In other scenarios, plutocracy may develop when a country is
collapsing due to
resource depletion
Resource depletion is the consumption of a resource faster than it can be replenished. Natural resources are commonly divided between renewable resources and non-renewable resources (see also mineral resource classification). Use of either ...
as the elites attempt to hoard the diminishing wealth or expand debts to maintain stability, which will tend to enrich
creditors
A creditor or lender is a party (e.g., person, organization, company, or government) that has a claim on the services of a second party. It is a person or institution to whom money is owed. The first party, in general, has provided some property ...
and
financiers
An investor is a person who allocates financial capital with the expectation of a future return (profit) or to gain an advantage (interest). Through this allocated capital most of the time the investor purchases some species of property. Type ...
. 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
In microeconomics, economies of scale are the cost advantages that enterprises obtain due to their scale of operation, and are typically measured by the amount of output produced per unit of time. A decrease in cost per unit of output enables ...
).
Other nations may become plutocratic through
kleptocracy
Kleptocracy (from Greek κλέπτης ''kléptēs'', "thief", κλέπτω ''kléptō'', "I steal", and -κρατία -''kratía'' from κράτος ''krátos'', "power, rule") is a government whose corrupt leaders (kleptocrats) use political ...
or
rent-seeking
Rent-seeking is the act of growing one's existing wealth without creating new wealth by manipulating the social or political environment.
Rent-seeking activities have negative effects on the rest of society. They result in reduced economic effi ...
.
See also
*
Aristocracy
Aristocracy (, ) is a form of government that places strength in the hands of a small, privileged ruling class, the aristocracy (class), aristocrats. The term derives from the el, αριστοκρατία (), meaning 'rule of the best'.
At t ...
*
Anarcho-capitalism
*
Banana republic
In political science, the term banana republic describes a politically unstable country with an economy dependent upon the export of natural resources. In 1904, the American author O. Henry coined the term to describe Honduras and neighboring ...
*
Corporatocracy
Corporatocracy (, from corporate and el, -κρατία, translit=-kratía, lit=domination by; short form corpocracy) is an economic, political and judicial system controlled by corporations or corporate interests.
The concept has been used ...
*
Elitism
*
Kleptocracy
Kleptocracy (from Greek κλέπτης ''kléptēs'', "thief", κλέπτω ''kléptō'', "I steal", and -κρατία -''kratía'' from κράτος ''krátos'', "power, rule") is a government whose corrupt leaders (kleptocrats) use political ...
*
Neo-feudalism
Neo-feudalism or new feudalism is the contemporary rebirth of policies of governance, economy, and public life, reminiscent of those which were present in many feudal societies. Such aspects include, but are not limited to: Unequal rights and lega ...
*
Oligarchy
Oligarchy (; ) is a conceptual form of power structure in which power rests with a small number of people. These people may or may not be distinguished by one or several characteristics, such as nobility, fame, wealth, education, or corporate, r ...
*
Overclass
*
Plutonomy
*
Timocracy
A timocracy (from Greek τιμή ''timē'', "honor, worth" and -κρατία ''-kratia'', "rule") in Aristotle's ''Politics'' is a state where only property owners may participate in government. More advanced forms of timocracy, where power deri ...
*
Upper class
Upper class in modern societies is the social class composed of people who hold the highest social status, usually are the wealthiest members of class society, and wield the greatest political power. According to this view, the upper class is gen ...
*
Wealth concentration
The distribution of wealth is a comparison of the wealth of various members or groups in a society. It shows one aspect of economic inequality or economic heterogeneity.
The distribution of wealth differs from the income distribution in that ...
References
Further reading
* Howard, Milford Wriarson (1895)
''The American plutocracy'' New York: Holland Publishing.
* Norwood, Thomas Manson (1888)
''Plutocracy: or, American white slavery; a politico-social novel'' New York: The
American News Company.
*
Pettigrew, Richard Franklin (1921).
Triumphant Plutocracy: The Story of American Public Life from 1870 to 1920'' New York: The Academy Press.
* Reed, John Calvin (1903)
''The New Plutocracy'' New York: Abbey Press.
* Winters, Jeffrey A. (2011).
Oligarchy'' Cambridge University Press
External links
* Documentary
''Plutocracy''Political repression in the U.S.A. part 1, by Metanoia Films
* Documentary
''Plutocracy II: Solidarity Forever''Political repression in the U.S.A. part 2, by Metanoia Films
{{Authority control
17th-century neologisms
Oligarchy
Pejorative terms for forms of government
Political philosophy
Social philosophy
Wealth concentration