Written by Derryl Hermanutz
Chrystia Freeland’s 2012 book, “Plutocrats“, is the most recent in a long line of must-read books describing the plutocratic nature, and structural evolution, of wealth and government engendered by industrialization and globalization of production and markets.
In 1922 Richard Franklin Pettigrew, an American capitalist and Senator, published, “Triumphant Plutocracy: The Story of American Public Life from 1870 to 1920“, the 50 year period during which Pettigrew was intimately involved with the plays and the players of the “Gilded Age” and WWI eras. Balzac may not have said exactly*, “Behind every great fortune there is a crime“, but Pettigrew lays out the details of the soon-to-be robber barons’ legalistic appropration of the wealth of the American continent and people into their private ownership, aided and abetted always by the “government branch” of big money and big business.
Already by the 1870s Pettigrew described America not as a capitalist free market republic but as a plutocratic empire, describing the military-commercial annexation of Hawaii and the Philippines among other proofs of his imperialistic point. War is good for business, and profiteering in WWI multiplied the robber barons’ wealth and cemented their dominance in finance and industry.
In 1956 C. Wright Mills published, “The Power Elite“, describing the early-mid 20th century process of institutionalization of plutocratic wealth into the modern corporate form, where private fortunes are secured behind legions of brokers and accountants and lawyers and bankers and lobbyists and legislation and layers of corporate management. The post-WWII permanent war-footing policy added another branch to the power elite, the military-industrial complex.
Nationalization of Plutocracy
This period also saw the social glory of local fortunes and local politics subsumed by national fortunes and national political and social hierarchies. The scale of wealth and power had shifted from the local and personal to the national and corporate. After WWII the “expense account” corporate executive was elevated into a lifestyle unaffordble to virtually anybody else, and he thus rose immediately to the top of the local social stratus as soon as a corporation moved into a town or small city. Old money, of course, money that was a generation or two removed from Balzac’s dictum, remained at the top of the big city social hierarchy.
Mills describes the politicians in Congress and the Senate as occupying a “second tier” in the power structure, carrying out the bidding of the actual rulers of the nations: the lords of finance, industry and military. Corporatized bankers (the issuers of virtually all modern money, as credit at interest), corporatized economic power, and military power, not elected governments representing the will of the people, are the elites whom Mills sees deciding the agendas and dividing the spoils of nations.
Globalization of Plutocracy
Where Mills saw the elite social sphere expand from the local to the national level, Freeland describes the expansion of this sphere to a global scale. To participate in the social realm of Freeland’s plutocrats it is no longer sufficient to be a nationally renowned multimillionaire. Plutocrat wealth is now measured in the multiple hundreds of million and in billions. As formerly Third World nations have boarded the globalist train and arrived on the international stage as “emerging economies”, robber baron cum corporatist cum plutocrat classes have arisen rapidly in formerly poor nations. The centuries-long “great power” monopoly on wealth and innovation is evaporating into a more even global distribution.
Because the mass markets that enable the acquisition of great personal wealth are now global, Freeland’s generation of plutocrats see themselves more as paragons of the global economy rather than as loyal citizens of particular nation states. Their social hierarchy is the global elite whose commercial empires transcend nations. Shakespeare exaggerated the breadth of Julius Caesar’s realm, “He bestrode the narrow world like a colossus“, in that post-republican Rome was not a truly global empire. But the same word’s truly describe today’s global corporatists and plutocrats.
Freeland’s 2012 book treats the new technocratic billionaires, and their plutocratic peers in more traditional industries, with a far lighter hand than Pettigrew described the baldfaced machinations of the robber barons or than Mills presents the slick manouverings of the corporatocracy. Twain and Warner lampooned Gilded Age greed and compliant governance in their eponymous 1873 book that lent that era its enduring title. Pettigrew presents himself as a republican bulwark against private predations on public wealth and against an imperialist tide in American public life.
Accomodation by the U.S. Constitution
However, because he sees that the US Constitution, written behind closed doors while Jefferson was in France, explicitly protects property rights and excludes human rights, Pettigrew sees America’s devolution from democratic republican ideals to plutocratic imperialist reality as, if not exactly planned, certainly accommodated. Mills likewise writes with a tone of lament for the vast gulf that separates America’s ideals of “rule by the people” and “free markets” from the realities of entrenched oligarchy and oligopoly. Mills saw America’s wealth and power as extremely concentrated and becoming more so.
Freeland briefly touches on some of these democratic downsides of the fact that a few people own almost everything and everybody else owns almost nothing, but her book focuses more on the marvels of the new technologies that these “meritocrats” are creating, and their glamorous if overworked global lifestyle, than on the dire socioeconomic consequences of extreme and rising inequality of wealth and opportunity. Freeland’s Plutocrats reads more like a 1960s celebration of the James Bond jetset whose oyster is the whole world, than a critical socioeconomic analysis and commentary.
Freeland presents the “consolation” in the zero sum terms that are so rejected by neoliberal globalist ideology that preaches eternal growth for all and trickle down and rising tides: formerly Third World peasants are making spectacular economic gains as formerly First World middle classes suffer permanent economic obsolescence. As David Ricardo wrote ( in his 1817 “Principles of Political Economy and Taxation“) of the Luddites whose livelihood had been usurped by machines while the capitalist owners maintained their profit margins by selling into export markets, “the population is rendered redundant“.
Exporting Redundant Populations…
The past 40 years of empirical evidence demonstrates that a policy of global free trade and free global capital movements is decidedly NOT in the interest of developed world working classes whose incomes have stagnated or disappeared and whose debts have exploded, but as always policy is made by the elites for the elites so in the ‘democratic’ developed nations the workers’ concerns are irrelevant to government policy. The 19th century could transport its redundant populations to North and South America and Australia, and because they weren’t “seeing” agitated hordes of unemployed, political economists of the “myopia school” of neoliberalism could convince themselves that mechanization does ‘not’ permanently eliminate the economic need for workers and for full employment. So John Stuart Mill’s 1848 advocacy for a steady state economy and a more political, less market distribution of income could be blithely ignored.
…Works No More
But there are no undeveloped continents left to which to ship the structurally unemployed, and they are not politely dying off en masse like good social Darwinists would do. So unless we overtly embrace a tyranny of the winners of economic evolution to repress the losers, “somebody” is going to have to pay taxes to distribute purchasing power to keep the losers alive and maintain them in a non-revolutionary mood. Do you “win” the game of life if you have to give a large part of your prize to the losers? Or, alternatively, “if you have to repress or murder them to keep the gains for yourself?
Decline of Nationalism
Globalism has morphed into an effort by corporatized wealth to transcend the bounds of national borders and governments, freeing corporate business from the constraints of regulation and taxation. But whereas global capital has proved uniquely adept at evading national constraints on its bottom line, the advent of global markets and global technology and media to reach those markets has produced the phenomenon of superstars, perhaps altering the terms of trade between capital and labor. Where an 1890s stage performer could thrill thousands, a 1940s radio performer could reach millions and a 21st century Lady Gaga can enthrall billions. Their personal incomes rise commensurately with the multiples of fans who pay to be thrilled by them.
The same holds true for inventions like the personal computer and the iPhone. Hundreds of millions of people in the world learn about these marvels, want them, and can afford (by hook or by crook) to buy them, so mass market sales enrich whoever is able to enforce his claim of patent. Invention is rarely accomplished by committee but is rather the fruit of a flash of individual genius followed by a sustained effort to develop the idea into a workable form. With the help of teams of associates and employees, and hordes of lawyers and investment bankers and marketers and Chinese production facilities, a modern engineer can parlay a good idea into a multibillion dollar globally marketed product, and a personal megafortune if he cashes in his shares after the IPO.
Capital is in Control
Freeland neglects to mention that it is not the “idea” that generates billions in sales and profits, but the collective efforts of all those other people without whose contributions the ideas of the genius engineer could never be polished to commercial perfection, mass produced and mass marketed around the planet. It remains true that no individual can personally produce such an deceptively ‘simple’ item as a lead pencil. How much moreso the global electrical and communications grids and the miracles of electronic wizardry that bring these words to you? It takes the diverse efforts of millions of people, strangers to each other on different continents, to accomplish the ‘simplest’ feats of modern industrial production.
Nevertheless, the globalist system rewards the superstars as if they alone are responsible for the success of the collective efforts that mass produced and globally sold a product based on their idea. Freeland sees this as “labor” gaining the upper hand over capital, because the superstar is able to extract such a large share of the corporate profit to him/herself. But from the perspective of the thousands or millions of other vastly lower paid workers who contributed to making and selling that product, capital is still very much in control of income distributions.
On the other hand the highest echelon of corporate managers, who are employees running businesses that are owned by others and not robber baron capitalists risking their own fortunes, have also been able to extract megamillion annual pay packages from their shareholder-bosses, elevating corporate managers into the ranks of the global plutocracy. The shareholders own the capital, and the managers are labor, so this CEO superstar pay range supports Freeland’s contention that the terms of trade at the plutocrat level have shifted in favor of labor, specifically in favor of “talent”. Whatever other talents they might possess and exercise in benefit of the shareholders’ corporate interest, the “working rich” are observably talented at extracting an outsize share of the corporate earnings as their personal incomes.
Regardless of any moral spin we might choose to apply to the realities of the past century and a half of economic developments, in point of historical fact it has been driven individuals who organized the large scale structures of modern industry and global trading economies. The luxuries that we take for granted today: a world of food and consumer choices, electricity, private cars, air travel, comfortable homes, humanity’s collective knowledge available in seconds at the cost of a few internet keystrokes; NONE of this would exist without the fossil fueled industrial economy that is built by and which elevates a group of uniquely skilled people into a state of plutocracy.
The socially positive skills of this group are not so much of bare invention but of practical organization of the workers and machinery of production and marketing. Nobody benefits from the conception of an idea or the production of a prototype until it is mass produced and sold to people who need and want it. The socially negative skills of this group are those legalistic means by which the benefits of this collective process of mass production are appropriated by the few at the expense of the many.
You don’t become ‘rich’ by walking naked into the wilderness and cutting down trees with stone tools to build yourself a ruggedly individual log mansion. You get rich by participating in the global cooperative economy. The superstar culture perhaps helps plutocrats forget that they didn’t get rich by their own efforts, and that maybe the millions of other people who contributed some small or large part to the commercial success of their product might, from an objective perspective, be “earning” a little bigger cut of the action than they are presently receiving.
* According to Wikipedia Balzac wrote in Le Père Goriot (1835): “The secret of great fortunes without apparent cause is a crime forgotten, for it was properly done.” The paraphrase is attributed to The Oil Barons: Men of Greed and Grandeur (1971) by Richard O’Connor, p. 47.