Home > Plutonomy, Political Economy, Real-World Economics Review > Forbes’ update on the state of plutonomy or “democracy for the few”

Forbes’ update on the state of plutonomy or “democracy for the few”

from Edward Fullbrook

The current Forbes, the bi-weekly of The One Percent, features an update on the current state of what it, like Citigroup, calls plutonomy.  Also called by its insiders “democracy for the few”, this is the basic economic-political reality of our time, which one-percenters chat about daily and which the rest of us generally pretend doesn’t exist.  Skeptics of the analysis of plutonomy offered in “The Political Economy of Bubbles” in the current issue of RWER are encouraged to read Forbes’ plutonomy update.   Below is a taster. 

The new “us versus them” is not like the racism of colonial times. This is starkly different. It’s the 99% versus the 1%, . . .

Call it “democracy for the few”, the rich are rising in numbers and getting their way. By many accounts, they live in an Earthly greenzone, sometimes above the law, almost always above financial crises. Although thousands of wealthy individuals lost their jobs when Bear Stearns and Lehman Brothers folded in 2008, and hundreds saw their retirement accounts evaporate due to an abundance of good-times Ponzi schemes, on balance, in the eye of the global economic storm when plutonomy seemed under threat as asset values plummeted, the response to the financial crisis did more to revive the value of investments held by the wealthy than improve the position of the wider population, says Liam Bailey, head of residential research at Knight Frank in London.

Economic turbulence failed to curb the rise in the number of ultra-wealthy individuals in 2011, according to exclusive new figures produced for Knight and Citi’s The Wealth Report 2012. There are now 63,000 people worldwide with $100 million or more in assets, according to Ledbury Research, a London-based firm specializing in monitoring global wealth trends. The number of these so called centa-millionaires has gone up by 29% since 2006. Their net worth is around $40 trillion. How much is that? By comparison, world GDP in 2011 was $62.9 trillion, according to the International Monetary Fund. The world’s Cloud Minders, the new one-percenters, or better yet the one-tenth-percenters, are worth more than the U.S. and Chinese economy produced last year. Like the inscription on the James Farley Post Office building in New York: “neither snow, nor rain, nor heat, nor gloom of night” will stop them from getting even richer.

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  1. Ignacio
    March 30, 2012 at 2:05 pm | #1

    “neither snow, or rain, nor heat, nor gloom of night”

    A Tax it was its needed. If I recall correctly a recent work published in VOX EU showed that without taxes, wealth would inexorably tend to accumulate in one pair of hands. The 0,000000001%-nomy.

    Blame tax heavens, tax loopholes, and the stupidity (as a whole) of the 99,9%.

    • April 2, 2012 at 5:15 am | #2

      Monopoly, originally called The Landlords’ Game, was invented to demonstrate the ideas of Henry George.

      I blame the stupidity of the 99% but most culpable are those on the left of politics for swallowing the half-truths peddled by Marx and Keynes and then went on to shape policy.

      This will end in tears before bedtime.

      • Alice
        April 2, 2012 at 9:20 am | #3

        Oh dear – “the stupidity of Marx and Keynes??”

        Hang on – they (keynes and Marx) were ditched, policy wise in the 1970s – hardly the cause of the tears before bedtime now – blame Greenspa who came to power following blindly the thoughts of Ayn Rand and libertarianism and market de-regulation and freedoms.

        30 years of de-regulation and tax cuts and freedoms for America’s wealthy entrepreneurs and what does the US have to show for it now?

        A damn huge budget deficit.

        The US entrepreneurs (who were supposed to trickle all these cost cuts down into the US economy and promote wealth nfor all – a rising tide lifts all boats bla bla ) but really are now trickling down in China and other cheaper relatively labour countries (where is the cheapest labout this year? Thats where you will find all the freed up low tax deregulated US entrepeneurs who are now making a motza of money exporting cheap produce to the US? None of the profits of which will benefit the US or any other country seeing as its likely parked in a tax fee zone.

        When GDP once equalled C+I+G+X-M – all the US got was more M and the government it deserved who listened to the shills of low tax low regulation mouthpieces.

        Self destruction reigns supreme in the US but it was never due to Keynes or Marx.

      • April 2, 2012 at 1:18 pm | #4

        Alice – the problem is that Marx and Keynes get wheeled out as counters to what you are describing and neither is up to the task. The alternative theories of political economy that could effectively counter the neo-libertarian nonsense are almost nowhere to be seen, so the nonsense reigns without effective challenge.

      • Alice
        April 2, 2012 at 9:31 pm | #5

        I agree with your point at 4 Henry – but the counter really has to start with the modus operndi of the US political system which is so donation saturated and infuenced and lobby pressured that it (US governance) is basically rendered completely ineffective to govern for the majority.

      • April 2, 2012 at 10:07 pm | #6

        The history of Rome is instructive. It is at one level the story of a descent from democracy to tyranny but the weaknesses were present from the outside. On the other hand, the Roman empire developed into the Byzantine empire which seems to have been a time where the rule of justice would prevail once more.

        My impression is that the US is on the way to degenerating into the kind of society depicted in Judge Dredd. I would like to think that this is a state of affairs that can be averted, if only for the safety of the rest of the world.

  2. robert r locke
    March 30, 2012 at 2:11 pm | #7

    Yes, but in the 19th century senario first came the delights of the 1% in the slogan enrichissez-vous, then, came the uprisings and the 1% quaking with fright before the red spectre.

  3. davetaylor1
    March 30, 2012 at 9:49 pm | #8

    And before that, in the 0th century, God said to the rich man: “Fool! This very night the demand will be made for your soul, and this hoard of yours, whose will it be then?” [Lk 12:20].

  4. March 31, 2012 at 1:40 am | #9

    Ignacio, I suggest reviewing the post on the Herd Instinct or the Fortean classics on the madness of crowds. Plutocracy is Mobocracy which may as well be called Demonocracy, eh?
    The plutocratic elite like their global game and, until the last elitist sociopath is left with most of the bogus debt-units (micro-CDOs AKA Fed bucks or whatever) or until that individual is eaten by those who manage to get through his security gates (remember Fight Club?), there are still enough of them to make “The Market” look like there are still lots of other players in the game (Neo-Monopoly AKA Plutonomy, the World Game). On the other hand, we could start a new game, maybe call it the Global Community Credit System.

  5. Stuart Birks
    March 31, 2012 at 8:49 am | #10

    Thanks for the pointer to the Forbes article. It draws on a broader report which is also worth a read. It is at:

    http://www.thewealthreport.net/The-Wealth-Report-2012.pdf

    • Alice
      March 31, 2012 at 9:50 am | #11

      Thanks Stuart as far as I can see thisn report is telling the ultra rich where to their homes to so their children can make it to school OK?
      “Returning to Miami, we can see a classic example of a
      growing fault line, where emerging-world wealth, which
      has driven luxury house prices sharply higher in recent
      years, is rubbing up against a very different world of
      distressed sales and foreclosures.”

      How helpful of these financial advisers. I hope the security gates are secure enough.

      • Stuart Birks
        March 31, 2012 at 6:07 pm | #12

        There is a French film which explores some of the social issues with the ultra-rich and the rest. I would recommend it. Its English title is “My piece of the pie”. See: http://www.imdb.com/title/tt1641624/

    • Alice
      March 31, 2012 at 10:02 am | #13

      Well – Ill give them one thing Stuart – the HNWIs in this report (High net worth individuals) picked one thing right. They estimated future negative imopacts to their wealth creation would come from a) global political instability 90% vs b) terrorism 25%
      Pardon me but would any of those idiot HNWIS actually suggest a tax increaseo n themselves to pay for a few public services to the poor to keep them from getting so “globally politically unstable”.
      Where is the call from these HNWIs to “please put up my tax? I can afford it if it means my wealth is under threat”
      Doh
      We are now living with with themultiple greedy children of HNWIs of the 1960s who may have had a superior sense of social responsibility and didnt object to paying their taxes.
      The question was asked on another thread “do the .01% change over time?”. Yes, they have children.

  6. April 3, 2012 at 12:48 pm | #14

    Economic growth that is powered and consumed by the wealthiest upper class of society is an issue to taxation. Plutonomy refers to a society where the majority of wealth is controlled by an ever-shrinking minority; as such, the economic growth of that society becomes dependent on the fortunes of that same wealthy minority. At a low percentage, they are still being powerful in dictate what an economy of a certain area will be. This ‘democracy for a few’ seems to serve as a bad connotation that everyone must look into, and certain regulations should be formulated as well

  7. Stuart Birks
    April 20, 2012 at 5:51 am | #15

    On the plutonomy theme, Dan Hind discusses “Why nations fail” at: http://www.aljazeera.com/indepth/opinion/2012/04/201241571432959431.html

    The general argument is that political factors enable most of the wealth to be controlled by a few.

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