Plutocracy

A plutocracy is a society ruled or controlled by people with great wealth or high income. It is a specific type of oligarchy. An oligarchy is a system where a small group of people holds power. In a plutocracy, that small group is defined by its money. The term first appeared in English in 1631. It is not part of any established political philosophy. Most people use the word as a pejorative. This means they use it as a criticism to warn against an undesirable condition. Some people even use the term "dollarocracy" to describe a version of this in America.

History provides many examples of plutocratic systems. The Roman Empire and several city-states in Ancient Greece functioned this way. The civilization of Carthage and the Dutch Republic are other historical examples. In Italy, merchant city-states like Venice, Florence, and Genoa were led by wealthy traders. Before World War II, the Empire of Japan had a version of this system. It involved large business groups known as zaibatsu. These groups allowed massive wealth to shape the direction of the nation.

During the Gilded Age and Progressive Era, many argued the United States was effectively a plutocracy. This period lasted from the end of the Civil War until the start of the Great Depression. President Theodore Roosevelt fought against this influence. He earned the nickname "trust-buster" for his work. He used the Sherman Antitrust Act of 1890 to break up massive monopolies. These included the largest railroad and the Standard Oil company. Roosevelt believed these wealthy heads of corporations exerted too much influence over politics and public opinion.

Economist Paul Krugman identified three factors that helped plutocracy take hold in the U.S. during that era. First, the poorest quarter of residents, including African-Americans and non-naturalized immigrants, could not vote. Second, wealthy individuals funded the political campaigns of their preferred candidates. Third, vote buying and electoral fraud were easy and widespread. This included methods like ballot-box stuffing and intimidating voters. These factors allowed money to act as the "mortar" of a political system that functioned like a large business.

Some modern critics point to the City of London as a formal example of plutocracy. This area is a financial district covering about 2.5 square kilometers. It has a unique electoral system that is separate from the rest of London. More than two-thirds of the voters are not residents. Instead, they are representatives of businesses that occupy the area. Votes are distributed based on the number of employees a business has. While only 7,000 people live there, about 450,000 people work there during the day. The system is justified because businesses use the services provided by the City of London Corporation.

In the modern United States, many leaders and economists have raised concerns about a drift toward plutocracy. Former Federal Reserve chair Paul Volcker stated he believed the U.S. was developing into one. Some describe a "donor class" that makes up only one-quarter of 1 percent of the population. Economist Joseph Stiglitz argued that the U.S. is increasingly ruled by the wealthiest 1 percent. Research by Martin Gilens and Benjamin Page in 2014 supports this concern. Their study suggested that the majority of the American public has very little influence over government policy. They used the term "civil oligarchy" to describe this dynamic.

Wealth concentration is often linked to economic trends. Economist Thomas Piketty suggests that rapid economic growth can increase income inequality. This happens as the rate of return on innovation increases. In the U.S. Congress, more than half of all members are millionaires. Billionaire Warren Buffett once noted that the "rich class" is winning a form of class warfare. This discussion connects to broader ideas about state-corporate capitalism. It also examines how societies prioritize the accumulation of wealth over other social interests.