A plutocracy () 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. Unlike most political systems, plutocracy is not rooted in any established political philosophy.

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 Class conflict, also referred to as class struggle and class warfare, is the political tension and economic antagonism that exists in society because of socio-economic competition among the social classes or between rich and poor. The forms ...

and corrupting societies with greed 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, some city-states in Ancient Greece, the civilization of Carthage, the Italian

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 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 ...

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, 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. A former chairman of the Federal Reserve, Paul Volcker, 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 (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. 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. 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".

United States

Some modern historians, politicians, and economists argue that 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 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 became known as the "trust-buster" for his aggressive use of United States antitrust law, 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 ''Bête noire'' ("black beast" in French, meaning something that is an object of aversion or the bane of one’s existence) may refer to: * ''Bête Noire'' (album), an album by British singer Bryan Ferry, released on Virgin Records in November 1 ...

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 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 Progressive may refer to: Politics * Progressivism, a political philosophy in support of social reform ** Progressivism in the United States, the political philosophy in the American context * Progressive realism, an American foreign policy par ...

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 ''The Conscience of a Liberal'' is a 2007 book written by economist and Nobel laureate Paul Krugman. It was 24th on the '' New York Times Best Seller list'' in November 2007. The title was used originally in Senator Paul Wellstone's book of the s ...

'', 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 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 of ...

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 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 Jeffrey Winters calls "the income defense industry" to greatly reduce their taxes. In 1998, Bob Herbert of '' The New York Times'' 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, the United States is a plutocracy in which there is a "fusion of money and government." 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 occurs because the rich feel that their interests are shared by society. When the Nobel Prize–winning economist

Joseph Stiglitz Joseph Eugene Stiglitz (; born February 9, 1943) is an American New Keynesian economist, a public policy analyst, and a full professor at Columbia University. He is a recipient of the Nobel Memorial Prize in Economic Sciences (2001) and the Joh ...

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 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 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.

References

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