Home > economics profession, Plutonomy > A Plutonomy and a Précarité

A Plutonomy and a Précarité

from Edward Fullbrook

At 83, Noam Chomsky was in top form on Saturday when speaking to thousands of the 99% demonstrating at Dewey Square in Boston. His topics included economics and plutonomy.  Here are some highlights.

On economics:
What’s being played out for the past 30 years is actually kind of a nightmare that was anticipated by the classical economists.

If you take, say Adam Smith, if you bother to read Wealth of Nations. He considered the possibility that merchants and manufacturers inEngland might decide to do their business abroad—invest abroad and import from abroad. He said they would profit, butEngland would be harmed.

However, he went on to say that they would prefer to operate in their own country—what’s sometimes called a “home bias.” So as if by an invisible hand, Englandwould be saved the ravages of what is now called neo-liberal-globalization. That’s a pretty hard passage to miss in Wealth of Nations. That’s the only occurrence of the phrase “invisible hand.” MaybeEngland would be saved from neo-liberal-globalization by an invisible hand.

On Plutonomy:
For the general population, the 99%, it’s been pretty harsh. And it could get worse. This could be a period of irreversible decline. For the 1%, even more, the 1/10 of the 1%, it’s just fine.

The rich are now more powerful than ever. Controlling the political system, disregarding the public.

And if it can continue, sure, why not? Just what Smith and Ricardo warned about.

Take, for example, CitiGroup … for decades, one of the most corrupt of the major investment banking corporations, repeatedly bailed out by the taxpayer over and over again starting in the early Reagan years and now once again. I won’t run through the corruption over again, you already know about it. But it’s pretty astonishing.

A couple years ago they came out with a brochure for investors. They urged investors to put money into Plutonomy index. They said the world is dividing into a Plutonomy: the rich, those who buy luxury goods and so on—and that’s where the action is. They said their Plutonomy index is way out-performing the stock market so put your money into it. As for the rest, we sent ‘em adrift. We don’t really care about them.  “We don’t’ really need ‘em.” They have to be around to provide a powerful state which will protect us and bail us out when we get into trouble, but other than that they essentially have no function.

They’re sometimes called these days the “Précarité”: people who live a precarious existence at the periphery of society. It’s not the periphery anymore; it’s becoming a very substantial part of the society in theUnited States. And this is considered a good thing.

So, for example, Alan Greenspan—at the time when Alan Greenspan was still Saint Alan—hailed by the economics profession as one of the greatest economists of all time—this was before the crash for which he was substantially responsible. He was testifying to Congress in theClintonyears, explaining the wonders of the great economy which he was supervising.

And he said a lot of the success of this economy was based substantially on what he called “growing worker insecurity.”

Greenspan testified that the very successful economy he was supervising (which has the properties that I described) was based substantially on growing worker insecurity. If working people are insecure, if they’re part of what we now call the “Précarité,” living precarious existences, they’re not ‘gonna make demands, they’re not ‘gonna try to get wages, they won’t get benefits. We can kick ‘em out if we don’t need ‘em. And that’s what’s called a “healthy” economy, technically. And he was very highly praised for this, greatly admired.

Well now the world is indeed splitting into a Plutonomy and a Précarité.

Again, in the imagery of the Occupy Movement, the 1% and the 99% (not literal numbers, but the right picture) Now the Plutonomy is where the action is. Well, it could continue like this.

If it does continue like this, the historic reversal that began in the 1970s could become irreversible—that’s where we’re heading. And the Occupy movements are the first real major popular reaction which could avert this. But as I said, it’s ‘gonna be necessary to face the fact that it’s a long, hard struggle. You don’t win victories tomorrow. You have to go on, have to form the structures that will be sustained, that will go on through hard times, and can win major victories. And there are a lot of things that can be done.

You can read more highlights of Chomsky’s speech at http://digboston.com/think/2011/10/occupy-excerpts-noam-chomsky/#more-104362


  1. Bruce E. Woych
    October 31, 2011 at 1:26 pm

    Thank You Edward, I hope this compliments your efforts: Bruce

    Home > Political Economy > from November 2010: Citigroup attempts to disappear its Plutonomy Report #2
    from November 2010: Citigroup attempts to disappear its Plutonomy Report #2
    (quoted material):
    “The full report is available here http://www.scribd.com/doc/23321255/Citigroup-Mar-5-2006-Plutonomy-Report-Leaked-Citigroup-Memo-Part1
    Citigroup’s second Plutonomy report, titled “Revisiting Plutonomy: The Rich Getting Richer”, was issued on March 5, 2006 and began:

    The latest Survey of Consumer Finance data was released Friday 24th of February. It shows that the rich in the US continue to be in great shape. We thought this was good time to bang the drum on plutonomy.
    Back in October, we coined the term ‘Plutonomy’ (The Global Investigator, Plutonomy: Buying Luxury, Explaining Global Imbalances, October 14 2005). Our thesis is that the rich are the dominant drivers of demand in many economies around the world (the US, UK, Canada and Australia). These economies have seen the rich take an increasing share of income and wealth over the last 20 years, to the extent that the rich now dominate income, wealth and spending in these countries. Asset booms, a rising profit share and favourable treatment by market-friendly governments have allowed the rich to prosper and become a greater share of the economy in the plutonomy countries. Also, new media dissemination technologies like internet downloading, cable and satellite TV, have disproportionately increased the audiences, and hence gains to “superstars” – think golf, soccer, and baseball players, music/TV and movie icons, fashion models, designers, celebrity chefs etc. These “content” providers, the tech whizzes who own the pipes and distribution, the lawyers and bankers who intermediate globalization and productivity, the CEOs who lead the charge in converting globalization and technology to increase the profit share of the economy at the expense of labor, all contribute to plutonomy. Indeed, David Gordon and Ian Dew-Becker of the NBER demonstrate that the top 10%, particularly the top 1% of the US – the plutonomists in our parlance – have benefited disproportionately from the recent productivity surge in the US.

    Both reports were leaked and made available on the WEB. Michael Moore referred to them in Capitalism: a love story, and the now retired US newscaster Bill Moyers has called attention to them. But they seem to have been largely ignored by scholars.” (end of quoted materials) see link for more…

    Also: While early work by Jeffrey Sachs in Eastern Europe and Russia is unacceptable, his later work is admirable and he lambasted globalization premises with a no non-sense address of one of its core foundation problems here:

    The Global Economy’s Corporate Crime Wave
    Jeffrey D. Sachs

  2. Bruce E. Woych
    October 31, 2011 at 1:36 pm

    Some may also find these references useful:

    http://baselinescenario.com/2010/05/13/senator-kaufman-was-right/#comment-55620 The Baseline ScenarioSenator Kaufman Was Right – Our Financial System Has Become Dangerous with 141 comments By Simon Johnson

    http://www.tnr.com/book/review/the-worst-and-the-brightest (by Simon Johnson)

    James K. Galbraith: Why the ‘Experts’ Failed to See How Financial Fraud Collapsed the Economy

    By James K. Galbraith, AlterNet
    Posted on May 15, 2010,

    Editor’s Note: The following is the text of a James K. Galbraith’s written statement to members of the Senate Judiciary Committee delivered this May.

  3. Bruce E. Woych
    November 4, 2011 at 3:18 am
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