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The Plutonomy Reports

from Edward Fullbrook

On this blog, posts dealing with plutonomy have consistently been the most heavily viewed. Given this interest, here is one of several sections on plutonomy from my paper “The Political Economy of Bubbles” in the new issue of Real-World Economics Review. It is centered on the three Citigroup Plutonomy Reports.

3.     The Plutonomy Reports 

Unlike the 99 per cent, the 1 per cent in the US and the UK are very much aware of both the income redistributions and the new political system that make them possible.  They even have a name for it: plutonomy. It is the term used by some of the key backers of this political ideology, political movement and concept of government, whose primary players belong to the financial sector.  

The history of plutonomy’s conceptual development remains clouded in secrecy.  But the fact that plutonomy as a real-world political phenomenon is conceptually driven, rather than merely an historical accident, emerged to public view in 2005 when the first of three Citigroup documents prepared for its wealthiest clients were leaked.  

  • “Plutonomy: Buying Luxury, Explaining Global Imbalances” Oct. 16, 2005 (35 pages)
  • “Revisiting Plutonomy: The Rich Getting Richer” March 5, 2006 (18 pages)
  • “The Plutonomy Symposium — Rising Tides Lifting Yachts” Sept. 29, 2006  (64 pages)

 Citigroup has gone and continues to go to great links to supress these important historical documents.  Websites which post them receive threats of legal action if they are not immediately taken down, and likewise, apparently, the servers of those websites.  Roughly a year and a half ago Citigroup lawyers had succeeded in removing them all.  But now, using Google, it is easy to find all three documents on the Web, mostly on sites associated with The 99 Percent Movement. 

Here are a few passages from the “Citigroup Plutonomy Memos” that outline, in the plutonomist’s vernacular, this political ideology’s key points and their view of the world.  You will notice the strategic nature of these reports.  It is this that makes it, from the plutonomist’s viewpoint, imperative to keep the content of these historical documents from entering into mainstream discourse.    

Report no. 1

 Little of this note should tally with conventional thinking. Indeed, traditional thinking is likely to have issues with most of it. 

The world is dividing into two blocs – the plutonomies, where economic growth is powered by and largely consumed by the wealthy few, and the rest. Plutonomies have occurred before in sixteenth century Spain, in seventeenth century Holland, the Gilded Age and the Roaring Twenties in the U.S.  

We project that the plutonomies (the U.S., UK, and Canada) will likely see even more income inequality, disproportionately feeding off a further rise in the profit share in their economies, capitalist-friendly governments, more technology-driven productivity, and globalization. 

In a plutonomy there is no such animal as “the U.S. consumer” or “the UK consumer”, or indeed the “Russian consumer”. There are rich consumers, few in number, but disproportionate in the gigantic slice of income and consumption they take. There are the rest, the “non-rich”, the multitudinous many, but only accounting for surprisingly small bites of the national pie. 

 . . . we think the plutonomy is here, is going to get stronger, its membership swelling from globalized enclaves in the emerging world, . . .


The U.S., UK, and Canada are world leaders in plutonomy.  . . . .  Countries and regions that are not plutonomies: Scandinavia, France, Germany, other continental Europe (except Italy), and Japan.


As Figure 1 shows the top 1% of households in the U.S., (about 1 million households) accounted for about 20% of overall U.S. income in 2000, slightly smaller than the share of income of the bottom 60% of households put together. That’s about 1 million households compared with 60 million households, both with similar slices of the income pie!

The rich in the U.S. went from coupon-clipping, dividend-receiving rentiers to a Managerial Aristocracy indulged by their shareholders.


We posit that the drivers of plutonomy in the U.S. (the UK and Canada) are likely to strengthen, entrenching and buttressing plutonomy where it exists. The six drivers of the current plutonomy: 1) an ongoing technology/biotechnology revolution, 2) capitalist friendly governments and tax regimes, 3) globalization that re-arranges global supply chains with mobile well-capitalized elites and immigrants, 4) greater financial complexity and innovation, 5) the rule of law, and 6) patent protection

At the heart of plutonomy, is income inequality. Societies that are willing to tolerate/endorse income inequality are willing to tolerate/endorse plutonomy.

So an examination of what might disrupt Plutonomy – or worse, reverse it – falls to societal analysis: will electorates continue to endorse it, or will they end it, and why.

Report no. 2

The second report begins by identifying three things that have enabled the creation of plutonomies in the US, UK, Canada and Australia: “Asset booms, a rising profit share and favourable treatment by market-friendly governments”. (emphasis added)   Further on it considers:

 What Could Go Wrong

. . . the rising wealth gap between the rich and poor will probably at some point lead to a political backlash. Whilst the rich are getting a greater share of the wealth, and the poor a lesser share, political enfrachisement remains as was – one person, one vote (in the plutonomies). At some point it is likely that labor will fight back against the rising profit share of the rich and there will be a political backlash against the rising wealth of the rich. . . . .  We don’t see this happening yet, though there are signs of rising political tensions. However we are keeping a close eye on developments.

Report no. 3

This is the longest of the three reports.  Significantly it notes that:

The rise of this inequality is not universal. In a number of other countries – the non-plutonomies – income inequality has remained around the levels of the mid 1970s. Egalitarianism rules.    (p.9)

It singles out Japan, France, Switzerland and the Netherlands as examples and dubs them “The Egalitarian Bunch”.  Their deviance is then illustrated with a graph titled “The Income Share of the Top 1% Is Relatively Small Compared to Plutonomies”.

Further on, after reminding the readership that “plutonomy countries” are those with “economies powered by a relatively small number of rich people” and geared to “financial wealth creation”, and noting that the previous week a “Plutonomy Symposium” was held in London, “the risks to plutonomy” are, as in previous reports, considered.

Perhaps the most immediate challenge to Plutonomy comes from the political process. Ultimately, the rise in income and wealth inequality to some extent is an economic disenfranchisement of the masses to the benefit of the few. However in democracies this is rarely tolerated forever. One of the key forces helping plutonomists over the last 20 years has been the rise in the profit share – the flip side of the fall in the wage share in GDP. As plutonomists or capitalists tend to be long {on} the profit share, they have benefited from trends like globalization and the productivity revolution, disproportionately. However, labor has, relatively speaking, lost out. We see the biggest threat to plutonomy as coming from a rise in political demands to reduce income inequality, spread the wealth more evenly, and challenge forces such as globalization which have benefited profit and wealth growth.  [emphasis added]


Our own view is that the rich are likely to keep getting even richer, and enjoy an even greater share of the wealth pie over the coming years.

These three plutonomy tracts, being windows both into the plutonomist’s mind and to their strategies, contain many interesting points, but for democrats the most significant one is that plutonomists see the subversion of democratic process as the ultimate key to their success.  If the “political enfranchisement remains” and is allowed to remain, then the “economic disenfranchisement of the masses” is only possible if they can be bamboozled into voting against their interests.  It seems inevitable therefore, that plutonomists and their agents have gone to great lengths to suppress these documents. 

4.     Plutonomy’s means to power

How does the financial industry come to control the political parties and individual politicians?   ……………………   continued in  The Political Economy of Bubbles

  1. March 14, 2012 at 2:45 pm

    Any citations of where to find the 3rd report of the Plutonomy memos?

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