In 2016, the Financial Times reported in an article[i] that it is Goldman Sachs that runs the world, and quotes its American but also international connections, which include all the major leaders of the world. Goldman Sachs is an American multinational investment bank and financial services company headquartered in New York City. Some have spoken of the Goldman Sachs Oligarchy, and a “dark role” that it plays in the world. Robert Reich, professor of public policy wrote on the Berkley Blog[ii] in 2019 that 2020 was about oligarchy versus democracy and listed a number of “democratic oligarchs” including Goldman Sachs, Morgan Stanley, JPMorgan and hedge fund giants like Bridgewater, Renaissance Technologies and Elliott Management, who were investing in the democratic process.
A number of critics, including John Light on billmoyers.com have spoken out about the political influence that rich Americans wield[iii], using the word “plutocracy” (from Ancient Greek πλοῦτος (ploûtos) ‘wealth’, and κράτος (krátos) ‘power’) or plutarchy, which is a society that is ruled or controlled by people of great wealth or income. The first known use of the term in English dates from 1631. Unlike most political systems, plutocracy is not rooted in any established political philosophy.[iv]
The term plutocracy is generally used as a pejorative to describe or warn against an undesirable condition. Throughout history, political thinkers and philosophers have condemned plutocrats for ignoring their social responsibilities, using their power to serve their own purposes and thereby increasing poverty and nurturing class conflict and corrupting societies with greed and hedonism.[v]
Historic examples of plutocracies include the Roman Empire, some city-states in Ancient Greece, the civilization of Carthage, the Italian merchant city states of Venice, Florence, Genoa, the Dutch Republic and the pre-World War II Empire of Japan (the zaibatsu). According to Noam Chomsky[vi] and Jimmy Carter[vii], the modern United States resembles a plutocracy though with democratic forms. A former chairman of the Federal Reserve, Paul Volcker, also believed the US to be developing into a plutocracy.[viii]
One modern, formal example of a plutocracy, according to some critics,[ix] is the City of London.[x] The City (also called the Square Mile of ancient London, corresponding to the modern financial district, an area of about 2.5 km2) has a unique electoral system for its local administration, separate from the rest of London. More than two-thirds of voters are not residents, but rather representatives of businesses and other bodies that occupy premises in the City, with votes distributed according to their numbers of employees. The principal justification for this arrangement is that most of the services provided by the City of London Corporation are used by the businesses in the City. In fact about 450,000 non-residents constitute the city’s day-time population, far outnumbering the City’s 7,000 residents.[xi]
In the New Statesman bonus edition, the question was asked whether the world will end its addiction to growth, citing the findings of the Club of Rome in the 1970s. “In 1972 the Club of Rome published the Limits to Growth report: a pioneering document on the extent to which the Earth’s natural resources can support rates of industrialisation and population growth.”[xii]
50 years later, the impact of this report and what is happening to create a new social and economic paradigm to help the world’s population live in harmony with the environment has been examined. According to the New Statesman, there is little evidence that the world has taken note. There was a long article in the Harvard Business Review in 2017 suggesting strategies that could “cure” the addiction to growth[xiii], but there is no indication that Wall Street and a capitalist culture that’s obsessed with growth has changed.
There is a widespread ideology that to be the bedrock of wellbeing, inclusive growth has to be pursued, which means the improvement of conditions of the poor not through a redistributive policy, but through a broad involvement of the work force in the economic activities, which ideally makes it sustainable. However, it is becoming increasingly clear that inequality and economic exclusion are becoming widespread which could thereby threaten economic growth.
In a paper[xiv] which examined the incentives for an “educated oligarchy” to subsidise the education of the poor and initiate a democratic transition and concluded that initial per capita income has a positive or negative effect on the likelihood of a country becoming a democracy, on its average growth rate at a given point in time and on the speed of democratisation of countries in transition. Therefore, if democracy is a desired outcome, an “educated oligarchy” should invest in education to increase its average growth rate. However, the also note that this isn’t always the desire of a “ruling class” because first of all the investment can be costly, and secondly there is a danger that the educated population of a country could want to change the status quo and the oligarchy would therefore avoid such a conflict.
So, the question who runs the world seems clear to many people, but we must ask ourselves whether this is because we believe in the structures that we live in and thereby actively support them. A number of developments have meant that the economy no longer serves human society but rather humans live to serve the economy and those that drive it. Indications of this are found in many issues that trouble us today.
One area that has completely confounded people working in areas where the impacts will be greatest is the largely successful efforts of multinationals to prevent meaningful action on climate change. Although this has been an issue for many decades, the combined efforts of business, political parties and tabloids have managed to turn the discussion into a debate about who is responsible rather than what needs to be done. It doesn’t matter who is responsible unless it is to identify the climate impacts that we can change. In Europe, because of the energy crisis caused by the Ukraine war, there is a move towards renewable energy as a means of achieving independence that might never have happened without the conflict.
Globalisation has been a driver of high-intensity, high-tech, property-restrictive agriculture that excludes small farmers who have fed the majority of the world’s population for centuries, if not millennia. Farmers in former colonies like India in particular experienced terrible times, causing widespread suicide because their rice was no longer needed. The industrialisation of agriculture meant that traditional producers could no longer compete, and rice (and other commodities) were imported because they were cheaper. Now the generations that have the necessary know-how have largely disappeared and we are dealing with a very unstable distribution chain that could collapse under the pressure of large-scale conflicts, as we are experiencing in Ukraine and possibly in other countries.
There is widespread collusion between governments and companies to take control of land and natural resources away from communities in order to make profits for investors who do not even live in the country. Water and crops are often made available for export in order to obtain foreign currency that governments can use to trade on the world market.
Europe attempted to legislate[xv] to prevent the so-called “race to the bottom” between governments that forgo revenue through blanket “tax exemptions” to attract foreign investment, even when the benefits are unclear or negligible. The loss of tax revenue and the strain on the road and rail network puts governments in the position of providing a service to companies that do not invest in the country by paying taxes while raking in huge profits. Brexit was a reaction to Europe’s intention to secure financial services contracts in the UK, which didn’t quite work out.
Governments around the world continue to fail to enact laws that protect workers from abuses ranging from human trafficking to inadequate wages to unacceptably risky working conditions, with women in the most precarious, low-paid and inhumane jobs. In addition, there is no recognition of the systematic abuse of women’s rights in many areas – but especially the enormous, unpaid support that women provide to all economies with their unpaid and poorly paid care work that keeps families and societies running. Above all, the use of coercion, including violence, by powerful elites in private corporations, fundamentalist movements and repressive regimes to control women’s bodies and sexual and reproductive choices, their work, their mobility and their political voice is a huge problem.
Globalisation put pressure on countries (and more recently the collusion between governments and corporations) to change trade and consumer protection laws so that foreign companies can dominate markets. This has been especially apparent recently in Britain because of the rise in prices, especially when looking at who owns the privatised public services like railway, waterways and postal services. Of course, in other countries it is equally an issue.
In Britain, it has been noted how public schools (which are not for the public but private fee-paying secondary schools, especially ones for boarders) profit from the system and finance privatised schools at the expense of decent public education, even though there is no evidence that the results will benefit anyone but the owners. Public schools actually outperform private schools, and with less money.[xvi]
These are indications how plutocratic forces influence the world we live in. The “client press” also helps spread the indoctrination that suggests the opposite, but it is becoming too obvious recently that this is going on. You only have to go to the sources I’ve mentioned to check. The question of course remains, whether we can do anything about it, especially to correct the injustices listed above, a list which is far from exhaustive. The collusion between multinationals and governments are one thing, but there is growing concern that America and Britain have fallen under the influence of forces that are set upon changing the face of society, which would mean less “democratic oligarchs” and perhaps more of the kind we have in Russia or China, ruled by an authoritarian government. We will have to be wary of developments in this area and 2024 could be a crucial election year.
[v] Viereck, Peter (2006). Conservative thinkers: from John Adams to Winston Churchill. New Brunswick, New Jersey: Transaction Publishers. pp. 19–68. ISBN 978-1412805261.
[vi] Chomsky, Noam (6 October 2015). “America is a plutocracy masquerading as a democracy”. Salon. Retrieved 13 February 2015.
[vii] Carter, Jimmy (15 October 2015). “Jimmy Carter on Whether He Could Be President Today: “Absolutely Not””. supersoul.tv. Retrieved 13 February 2015.
[viii] Sorkin, Andrew (23 October 2018). “Paul Volcker, at 91, Sees ‘a Hell of a Mess in Every Direction'”. New York Times. Retrieved 28 October 2018.
[ix] Atkinson, Rowland; Parker, Simon; Burrows, Roger (September 2017). “Elite Formation, Power and Space in Contemporary London”. Theory, Culture & Society. 34 (5–6): 179–200. doi:10.1177/0263276417717792. ISSN 0263-2764
[x] Monbiot, George (31 October 2011). “The medieval, unaccountable Corporation of London is ripe for protest”. The Guardian. Retrieved 1 November 2011.
[xi] René Lavanchy (12 February 2009). “Labour runs in City of London poll against ‘get-rich’ bankers”. Tribune. Archived from the original on 15 January 2015. Retrieved 17 January 2015.
[xiv] Journal of Development Economics Vol. 62 2000 285–313, Francois Bourguignon & Thierry Verdier, Oligarchy, democracy, inequality and growth, © 2000 Elsevier Science B.V