http://en.wikipedia.org/wiki/Plutocracy
Plutocracy (from Greek πλοῦτος, ploutos, meaning "wealth", and κράτος, kratos, meaning "power, dominion, rule"), also known as plutonomy or plutarchy, is rule by the wealthy. Its first known use was in 1652. Unlike systems such as democracy or anarchism, plutocracy is not rooted in an established political philosophy and has no formal advocates. The concept of plutocracy may be advocated by the wealthy classes of a society in an indirect or surreptitious fashion, though the term itself is almost always used in a pejorative sense.
The word plutocracy is almost always used as a pejorative to describe or warn against an undesirable condition, and throughout history political thinkers such as Winston Churchill, 19th-century French sociologist and historian Alexis de Tocqueville and 19th-century Spanish monarchist Juan Donoso Cortés have condemned those they characterize as plutocrats for ignoring their social responsibilities to the poor, using their power to serve their own purposes and thereby increasing poverty and nurturing class conflict, and corrupting their societies with greed and hedonism.
Examples of plutocracies include the Roman Republic, some city-states in Ancient Greece, the civilization of Carthage, the Italian city-states/merchant republics of Venice, Florence, Genoa, and pre-World War II Empire of Japan, zaibatsu.
One modern, perhaps unique, formal example of a plutocracy is the City of London. The City (not the whole of modern London but the area of the ancient city, which now mainly comprises the financial district) has a unique electoral system. More than two-thirds of its voters are not residents, but rather representatives of businesses and other bodies that occupy premises in the City, with votes distributed according to their number of employees. The principal justification for the non-resident vote is that about 450,000 non-residents constitute the city's day-time population and use most of its services, far outnumbering the City's 9,000 residents.
Another contemporary example involves the municipalities of Lake Buena Vista and Bay Lake, Florida. Both are owned and governed by The Walt Disney Company, per state statutes. The only landowners are fully owned subsidiaries of Disney, and right-of-way for state and county roads, and the only residents are Disney employees.
Historically and by the nature of their existence, wealthy individuals and organizations can exert influence over the political arena. In the modern era, democratic republics around the world permit fundraising for politicians, who frequently rely on such income for advertising their candidacy to the voting public.
Whether through individuals, corporations or advocacy groups, such donations are often believed to engender a cronyist or patronage system via which major contributors are rewarded on a more or less quid pro quo basis. In fact, while campaign donations need not directly affect the legislative decisions of elected representatives, the natural expectation of donors is that their needs will be served by the person they donated to. If not, it is in their self-interest to fund a different candidate or political organization.
While quid pro quo agreements are generally illegal in most democracies, they are notoriously difficult to prove short of a well-documented paper trail. A core basis of democracy, being a politician's ability to freely advocate policies which benefit his or her constituents, also makes it difficult to prove that doing so might be a crime. Even the granting of appointed positions to a well-documented contributor may not cross the line of the law, particularly if it happens that the contributor can actually boast a qualified resume.
Some systems even specifically provide for such patronage. The UK, for example, uses a variety of means to reward individuals that hold the same values or interests. These include honours such as medals and honorary titles dating back to the nation's feudal era.
Quite often, wealthy individuals either finance their own political campaigns or leverage their affiliations with other wealthy persons and organizations to do so on their behalf. In the United States, currently, 250 members of Congress both Democratic and Republican are millionaires, with 57 belonging to the top 1% of American wealthy
Some contemporary and modern historians, politicians and economists believe the United States 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. After the Civil War, with large industries reaching monopolistic or near-monopolistic levels of market concentration and financial capital increasingly integrating corporations, a handful of very wealthy heads of large corporations began to exert increasing influence over industry, public opinion and politics. 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."
In his book The Conscience of a Liberal, in a section entitled The Politics of Plutocracy, 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.
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 U.S. President Richard Nixon, the United States is a plutocracy in which there is a "fusion of money and government." A similar position was taken by the Fourth International in January 1941, which stated "Roosevelt’s administration, which claims to be democratic, is really the representative of these piratic plutocrats" and that "the twin capitalist parties control all the main avenues for reaching the masses (the press, radio, halls, etcetera... they collect millions from their wealthy masters and spend them to bamboozle the public and buy elections".
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.
Chrystia Freeland, author of Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else says that the present trend towards plutocracy may not be a deliberate power grab:
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.
— Chrystia Freeland , NPR
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 as well as the content pointed to evidence that the United States is increasingly ruled by the wealthiest 1%. In it he states,
Of all the costs imposed on our society by the top 1 percent, perhaps the greatest is this: the erosion of our sense of identity, in which fair play, equality of opportunity, and a sense of community are so important. America has long prided itself on being a fair society, where everyone has an equal chance of getting ahead, but the statistics suggest otherwise: the chances of a poor citizen, or even a middle-class citizen, making it to the top in America are smaller than in many countries of Europe. The cards are stacked against them. It is this sense of an unjust system without opportunity that has given rise to the conflagrations in the Middle East: rising food prices and growing and persistent youth unemployment simply served as kindling. With youth unemployment in America at around 20 percent (and in some locations, and among some socio-demographic groups, at twice that); with one out of six Americans desiring a full-time job not able to get one; with one out of seven Americans on food stamps (and about the same number suffering from “food insecurity”)—given all this, there is ample evidence that something has blocked the vaunted “trickling down” from the top 1 percent to everyone else. All of this is having the predictable effect of creating alienation—voter turnout among those in their 20s in the last election stood at 21 percent, comparable to the unemployment rate."
Bill Moyers interviewed author Chrystia Freeland and Rolling Stone Contributing Editor Matt Taibbi on Moyers & Company on October 19, 2012. Her book, Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else is the inaugural book in the Moyers Book Club.
BILL MOYERS: Income inequality has soared to the highest level since the Great Depression...Left unanswered, where does this vast inequality take America?
CHRYSTIA FREELAND: Well, I think to a very bad place. And I see two real and present dangers. One is that you see an increase of the political capture.
BILL MOYERS: Of what?
CHRYSTIA FREELAND: Of the political capture. So of the people at the very, very top, capturing the political system. And most crucially, I think something that an economist, a guy called Willem Buiter, who's the chief economist at Citigroup, he calls it cognitive capture. Where he says, look, it's not like this vast conspiracy. It's not as if, you know, everyone is on the payroll of the plutocrats.
And this guy, okay, he is now the chief economist of Citigroup. He wrote this when he was an academic economist. But so it's, he's hardly, you know, some kind of Marxist on the barricades. His argument was that part of the reason the financial crisis happened is the entire intellectual establishment, not just people inside investment banks, but regulators, academic economists, financial journalists, had all been captured by the financial sector's vision of how the economy should work. And in particular, light touch regulation.
And I think there is a broader cognitive capture of, you know, you might call it the intellectual class, the public intellectuals, around maybe the inevitability of plutocracy. You know, as Matt [Taibbi] was saying, this notion that if you're poor, it's your own fault. You're part of this dependent 47 percent. Unions are very bad. All of that sort of stuff.
So I think that that cognitive capture increases. And I think what you see increasingly is, you know, elites like to think of themselves as acting in the collective interest, even as they act in their personal vested interest. And so what I think you'll end up seeing is social mobility, which is already decreasing in the United States, being increasingly squeezed. You see particularly powerful sectors, finance, oil. I would say the technology sector is going to be next in line, getting lots of government subsidies.
And meanwhile, I think you see much less money spent on the things that the middle class and the poor need. That's why have this, you know, full bore attack on entitlements, right? Why is the plutocracy so enthusiastic about cutting entitlement spending? Because they don't need it. But they're very worried about their tax dollars funding it.
— Moyers & Company
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 in ransom. Plutocracy replaced democracy and capitalism as the principal fascist term for the United States and Great Britain during the Second World War. For the Nazis, the term was often a code word for "the Jews".
