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The New Economics: The Ironies of Plutocracy

Reprint: Country Wisdom News October 2011

It’s wonderful to think about many of the new and positive economic ideas that are available to us these days—and maybe even to take action on some of them. But I’m afraid we risk impotence and even irrelevance if we don’t see and understand a tiny little elephant in our collective living room. It’s called plutocracy. Plutocracy is a political term, not an economic one. But because it means quite simply “rule by the wealthy” it has tremendous bearing on the economics of our times. How can there be any kind of realistic discussion on economics without at least noticing this issue? And it’s not enough to point out the outrageous power and influence of corporations and wealthy individuals. We need to understand how we allow ourselves to be ruled by them—the ways in which we give them our power. Without this recognition, the prospects of really doing anything about the economy are really very bleak. 

Let’s be blunt about it: the power of plutocracy is that they own us because we want what they have. We envy and respect them for their success. We live in the trance of materialism just as they do. We buy their self-serving arguments because they stroke our own “inner plutocrat.” Rich or poor, we are magnetized, not just by things themselves, but by the habitual patterns of acquisition, possession, and—perhaps most perversely—by the perceptions of others regarding our wealth. And it’s a short jump indeed from the power urge of wealth to the power urge of politics. Our modern system of pay-as-you-go media completes the circuit. In the end though, it is the seduction of our own appetites for deception, of our own psychological materialism, that feeds the pattern of plutocracy. The plutocratic conspiracy, as it were, is actually a massive pattern of cultural codependence. 

That is the first irony of plutocracy: at least in our modern materialist era, it is created by society generally, not the rich. Once we take at least a modicum of responsibility for the part we all play in creating it, we can, without hypocrisy, take a look at plutocracy and how it fits into the economic debate generally.

After World War II, the United States enjoyed a tremendous period of prosperity. There are many reasons for that, but one of them is that after the bitter lessons of the Great Depression, regulatory safeguards were put into place to contain the worst abuses of the financial services industry. By the time Ronald Reagan was elected, the cultural memory of the Depression had faded somewhat, and the time was ripe for an under-the-radar plutocratic money-and-power grab that continues to this day. The dismantling of financial regulation (which continued under the Clinton administration, by the way) was a direct contributing factor to the great crash of 2008. The award-winning film Inside Job does an excellent job of documenting the revolving-door relationship between leaders at the highest levels of the financial services industry and government in the years before (and after) the crash of 2008. This leads us to the second irony of plutocracy these days: even with decades of shameless manipulation of public policy in favor of the rich, we are left with a system that is not stable even for the rich—let alone ordinary people.   

Obviously when we talk about plutocracy here, we don’t just mean government power, even government power that is wielded by and for selfish interests. A lot of actual power over people’s thinking comes from media, and most mainstream media reporting on business and economics is actually the mouthpiece of corporate plutocracy. They manipulate and distort the narrative, the priorities, and the attention of the public. The latest emphasis is on unemployment and the message is: “if you have a job, you’re fine. Forget about any aspirations beyond that. Your job is to be an employee. Forget about ownership or a share of power in the business realm.” It’s a mind-numbing mantra of class warfare. And along with that goes the line: “don’t increase taxes on the wealthy and corporations, because they ‘give’ us jobs with all that money they don’t pay in taxes.”

It’s easy to get cynical and discouraged in the face of such hypocrisy, but that is not the purpose of this article. It’s more about thinking realistically, and to do so we have to face up to some unpleasant matters. This is why “plutocracy” needs to be part of our vocabulary.

David McCarthy has been studying classic and alternative economic theories for many years.