Is plutocracy really a threat?

July 28, 2011|By ALLAN POWELL

Within a short period of time one can notice the word “plutocracy” being used by pundits to describe the direction in which our society is going. We are surely aware of the power of the wealthy because they can afford to hire lawyers, lobbyists and possibly “buy” legislators with campaign contributions. But can it be said that the wealthy “rule” as the term requires? In order to get an informed opinion on this question, I took another look at what economic historian Kevin Phillips has written in “Wealth and Democracy: A Political History of the American Rich,” published in 2002.

Phillips is cautious about the easy use of “plutocracy” but uses many charts and graphs to call attention to the huge, periodic accumulations of wealth in our history. He also calls attention to the patterns of economic shifts in Great Britain, Holland and Hapsburg Spain in which “a small elite in finance, investments and international commerce” accumulated huge fortunes that qualified them to be called plutocrats. This suggests that, since we have had a similar pattern, we might also qualify for such a name.

Surprisingly, one of the early presidents (after Andrew Jackson) to become alarmed at the future prospect of a plutocracy was Abraham Lincoln. In a letter, written on Nov. 21, 1864, Lincoln expressed his fears. “I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. As a result of the war, corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong the reign by working upon the prejudices of the people until all wealth is aggregated in a few hands and the Republic is destroyed …” Lincoln was a truly prescient leader.

Historian Phillips credits three presidents (Theodore Roosevelt, Woodrow Wilson, and Franklin Roosevelt) with the knowledge and power to turn the country away from an uncontrollable concentration of wealth. In a speech in 1936, Roosevelt said, “I should like to have it said of my first administration that in it, the forces of selfishness and lust for power have met their match. I should like to have it said of my second administration that in it these forces have met their master.”

The post New Deal era had to then consider if plutocracy was in the making. An interesting report provided by Phillips gives a good clue to the affirmative.

A list of the top 30 family and individual fortunes in America for 1999 — only eight years before the “Great Recession” — reveals a remarkable concentration of wealth. Leading is Bill Gates of Microsoft ($ 85 billion) with the Hearst family ($7 billion) being the last in rank.

Phillips had the Koch family with a holding of “only” $8 billion — and a ranking of “only” 22nd.

A recent report advances the Koch brothers to the rank of fourth-wealthiest ($44 billion) in the world. The special interest centers on why should a certified plutocrat, living in Kansas, be giving advice and financial support to a governor in Wisconsin to inhibit a firefighter or a policeman from earning $50,000 a year or having a good retirement plan? The answer is clear — there is a common interest to reduce the power of labor.

Phillips shows some of the consequences of this concentration of wealth by pointing out that, “The large transnational corporations, for their part, achieved record earnings while hiring fewer Americans than ever before — and the two often seemed related. As the 500 largest U.S. corporations eliminated almost 5 million U.S. jobs between 1980 and 1999, they tripled their assets and their profits and enlarged their market value eightfold as measured by stock prices.”

It has often been stated that an unresolved tension exists between a democracy and a plutocracy. There has also been agreement that it is not possible to have a healthy democracy with extremes of great wealth at the top of the social system while having an extreme portion of poverty at the bottom.

A third opinion is a very old idea. In the fourth century B.C.E., Aristotle made this very wise observation. “Thus it is manifest that the best political community is formed by citizens of the middle class, and that those states are likely to be well administered in which the middle class is larger and stronger, if possible, than both other classes.” This wisdom goes against the views of many other thinkers throughout the years — but has not been shown to be flawed.

We may conclude that plutocracy has always been a threat. It has been more or less checked by two realities. First it has been checked by its own excesses in periodic collapses of its own balloons. Then, it has been checked by progressive regulation after each collapse. In the end, Lincoln’s fear should be our fear — huge, unlimited accumulations of wealth will always be a threat to a democracy.

Allan Powell is professor emeritus of philosophy at Hagerstown Community College.

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