Plutocracy
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A plutocracy () or plutarchy is a society that is ruled or controlled by people of great
wealth Wealth is the abundance of valuable financial assets or physical possessions which can be converted into a form that can be used for transactions. This includes the core meaning as held in the originating Old English word , which is from an ...
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. F ...
. 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 studies the theoretical and conceptual foundations of politics. It examines the nature, scope, and Political legitimacy, legitimacy of political institutions, such as State (polity), states. This field investigates different ...
.


Usage

The term ''plutocracy'' is generally used as a
pejorative A pejorative word, phrase, slur, or derogatory term is a word or grammatical form expressing a negative or disrespectful connotation, a low opinion, or a lack of respect toward someone or something. It is also used to express criticism, hosti ...
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 and
hedonism Hedonism is a family of Philosophy, philosophical views that prioritize pleasure. Psychological hedonism is the theory that all human behavior is Motivation, motivated by the desire to maximize pleasure and minimize pain. As a form of Psycholo ...
. " Dollarocracy", an anglicised adaptation of the word "plutocracy", may refer to "a specifically American version of plutocracy".


Examples

Historic examples of plutocracies include the
Roman Empire The Roman Empire ruled the Mediterranean and much of Europe, Western Asia and North Africa. The Roman people, Romans conquered most of this during the Roman Republic, Republic, and it was ruled by emperors following Octavian's assumption of ...
; 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 throughout history, including cities such as Rome, ...
s in
Ancient Greece Ancient Greece () was a northeastern Mediterranean civilization, existing from the Greek Dark Ages of the 12th–9th centuries BC to the end of classical antiquity (), that comprised a loose collection of culturally and linguistically r ...
; the civilization of
Carthage Carthage was an ancient city in Northern Africa, 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 classic ...
; the Italian merchant city-states of
Venice Venice ( ; ; , formerly ) is a city in northeastern Italy and the capital of the Veneto Regions of Italy, region. It is built on a group of 118 islands that are separated by expanses of open water and by canals; portions of the city are li ...
,
Florence Florence ( ; ) is the capital city of the Italy, Italian region of Tuscany. It is also the most populated city in Tuscany, with 362,353 inhabitants, and 989,460 in Metropolitan City of Florence, its metropolitan province as of 2025. Florence ...
and Genoa; the
Dutch Republic The United Provinces of the Netherlands, commonly referred to in historiography as the Dutch Republic, was a confederation that existed from 1579 until the Batavian Revolution in 1795. It was a predecessor state of the present-day Netherlands ...
; and the pre-
World War II World War II or the Second World War (1 September 1939 – 2 September 1945) was a World war, global conflict between two coalitions: the Allies of World War II, Allies and the Axis powers. World War II by country, Nearly all of the wo ...
Empire of Japan The Empire of Japan, also known as the Japanese Empire or Imperial Japan, was the Japanese nation state that existed from the Meiji Restoration on January 3, 1868, until the Constitution of Japan took effect on May 3, 1947. From Japan–Kor ...
(the '' zaibatsu''). According to
Noam Chomsky Avram Noam Chomsky (born December 7, 1928) is an American professor and public intellectual known for his work in linguistics, political activism, and social criticism. Sometimes called "the father of modern linguistics", Chomsky is also a ...
and
Jimmy Carter James Earl Carter Jr. (October 1, 1924December 29, 2024) was an American politician and humanitarian who served as the 39th president of the United States from 1977 to 1981. A member of the Democratic Party (United States), Democratic Party ...
, the modern
United States The United States of America (USA), also known as the United States (U.S.) or America, is a country primarily located in North America. It is a federal republic of 50 U.S. state, states and a federal capital district, Washington, D.C. The 48 ...
resembles a plutocracy though with democratic forms. In 2018, Paul Volcker, a former
chair of the Federal Reserve The chair of the Board of Governors of the Federal Reserve System is the head of the Federal Reserve, and is the active executive officer of the Federal Reserve Board of Governors, Board of Governors of the Federal Reserve System. The chairman p ...
, stated he also believed the U.S. 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, also known as ''the City'', is a Ceremonial counties of England, ceremonial county and Districts of England, local government district with City status in the United Kingdom, city status in England. It is the Old town, his ...
. The City (also called the Square Mile of ancient
London London is the Capital city, capital and List of urban areas in the United Kingdom, largest city of both England and the United Kingdom, with a population of in . London metropolitan area, Its wider metropolitan area is the largest in Wester ...
, 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. In the political jargon and propaganda of Fascist Italy,
Nazi Germany Nazi Germany, officially known as the German Reich and later the Greater German Reich, was the German Reich, German state between 1933 and 1945, when Adolf Hitler and the Nazi Party controlled the country, transforming it into a Totalit ...
and the
Communist International The Communist International, abbreviated as Comintern and also known as the Third International, was a political international which existed from 1919 to 1943 and advocated world communism. Emerging from the collapse of the Second Internationa ...
, 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. Plutocracy replaced democracy and
capitalism Capitalism is an economic system based on the private ownership of the means of production and their use for the purpose of obtaining profit. This socioeconomic system has developed historically through several stages and is defined by ...
as the principal fascist term for the U.S. and Great Britain during World War II. In
Nazi Germany Nazi Germany, officially known as the German Reich and later the Greater German Reich, was the German Reich, German state between 1933 and 1945, when Adolf Hitler and the Nazi Party controlled the country, transforming it into a Totalit ...
, it was often used as a dog whistle term for Jewish people in their antisemitic propaganda. 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".


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 A civil war is a war between organized groups within the same Sovereign state, 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.J ...
until the beginning of the
Great Depression The Great Depression was a severe global economic downturn from 1929 to 1939. The period was characterized by high rates of unemployment and poverty, drastic reductions in industrial production and international trade, and widespread bank and ...
. President
Theodore Roosevelt Theodore Roosevelt Jr. (October 27, 1858 – January 6, 1919), also known as Teddy or T.R., was the 26th president of the United States, serving from 1901 to 1909. Roosevelt previously was involved in New York (state), New York politics, incl ...
became known as the "trust-buster" for his aggressive use of
antitrust law Competition law is the field of law that promotes or seeks to maintain market competition by regulating anti-competitive conduct by companies. Competition law is implemented through public and private enforcement. It is also known as antitrust ...
, through which he managed to break up such major combinations as the largest railroad and
Standard Oil Standard Oil Company was a Trust (business), corporate trust in the petroleum industry that existed from 1882 to 1911. The origins of the trust lay in the operations of the Standard Oil of Ohio, Standard Oil Company (Ohio), which had been founde ...
, 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: The Sherman Antitrust Act had been enacted in 1890, when large industries reaching monopolistic or near-monopolistic levels of market concentration and
financial capital Financial capital (also simply known as capital or equity in finance, accounting and economics) is any Economic resources, economic resource measured in terms of money used by entrepreneurs and businesses to buy what they need to make their prod ...
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." 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 Electoral fraud, sometimes referred to as election manipulation, voter fraud, or vote rigging, involves illegal interference with the process of an election, either by increasing the vote share of a favored candidate, depressing the vote share o ...
such as ballot-box stuffing and intimidation of the other party's voters. The U.S. instituted progressive taxation in 1913, but according to
Shamus Khan Shamus Rahman Khan (born October 8, 1978) is an American sociologist. He has been a professor of Sociology and American studies at Princeton University since 2021. Formerly he served as chair of the sociology department at Columbia University. He ...
, 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. In 1998, Bob Herbert of ''
The New York Times ''The New York Times'' (''NYT'') is an American daily newspaper based in New York City. ''The New York Times'' covers domestic, national, and international news, and publishes opinion pieces, investigative reports, and reviews. As one of ...
'' referred to modern American plutocrats as "The Donor Class" (list of top (political party) 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 until Resignation of Richard Nixon, his resignation in 1974. A member of the Republican Party (United States), Republican ...
, 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 and journalist who has served as the Member of Parliament (Canada), member of Parliament (MP) for University—Rosedale (federal electoral district), University—Rose ...
, author of '' Plutocrats'', 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 U.S. is increasingly ruled by the wealthiest 1%. 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. In the U.S. Congress itself, more than half of all members are millionaires. A study conducted by political scientists Martin Gilens of
Princeton University Princeton University is a private university, private Ivy League research university in Princeton, New Jersey, United States. Founded in 1746 in Elizabeth, New Jersey, Elizabeth as the College of New Jersey, Princeton is the List of Colonial ...
and Benjamin Page of
Northwestern University Northwestern University (NU) is a Private university, private research university in Evanston, Illinois, United States. Established in 1851 to serve the historic Northwest Territory, it is the oldest University charter, chartered university in ...
, 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 U.S. as an "oligarchy" or "plutocracy" per se; however, they do apply the concept of "civil oligarchy" as used by Jeffrey A. Winters with respect to the U.S. The investor, billionaire, and
philanthropist Philanthropy is a form of altruism that consists of "private initiatives for the public good, focusing on quality of life". Philanthropy contrasts with business initiatives, which are private initiatives for private good, focusing on material ...
Warren Buffett, one of the wealthiest people in the world, voiced in 2005 and once more in 2006 his view that his class, the "rich class", is waging class warfare on the rest of society. In 2005 Buffet said to CNN: "It's class warfare, my class is winning, but they shouldn't be." In a November 2006 interview in ''
The New York Times ''The New York Times'' (''NYT'') is an American daily newspaper based in New York City. ''The New York Times'' covers domestic, national, and international news, and publishes opinion pieces, investigative reports, and reviews. As one of ...
'', Buffett stated that " ere's class warfare all right, but it's my class, the rich class, that's making war, and we're winning."


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. In other scenarios, plutocracy may develop when a country is collapsing due to
resource depletion Resource depletion occurs when a natural resource is consumed faster than it can be replenished. The value of a resource depends on its availability in nature and the cost of extracting it. By the law of supply and demand, the Scarcity, scarcer ...
as the elites attempt to hoard the diminishing wealth or expand debts to maintain stability, which will tend to enrich creditors 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 the investor usually purchases some species of property. Types of i ...
. 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 Productivity, output produced per unit of cost (production cost). A decrease in ...
). Other nations may become plutocratic through
kleptocracy Kleptocracy (from Greek , "thief", or , "I steal", and from , "power, rule"), also referred to as thievocracy, is a government whose corrupt leaders (kleptocrats) use political power to expropriate the wealth of the people and land the ...
or rent-seeking.


See also

*
Aristocracy Aristocracy (; ) is a form of government that places power in the hands of a small, privileged ruling class, the aristocracy (class), aristocrats. Across Europe, the aristocracy exercised immense Economy, economic, Politics, political, and soc ...
* Banana republic * Broligarchy * Corporatocracy * Elitism *
Kleptocracy Kleptocracy (from Greek , "thief", or , "I steal", and from , "power, rule"), also referred to as thievocracy, is a government whose corrupt leaders (kleptocrats) use political power to expropriate the wealth of the people and land the ...
* Neo-feudalism *
Oligarchy Oligarchy (; ) is a form of government in which power rests with a small number of people. Members of this group, called oligarchs, generally hold usually hard, but sometimes soft power through nobility, fame, wealth, or education; or t ...
* Overclass * Plutonomy * Timocracy * Upper class * Wealth concentration * Property qualification


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

{{Authority control 17th-century neologisms Oligarchy Pejorative terms for forms of government Political philosophy Social philosophy Wealth concentration