Class: don’t mention the war!

‘Plutonomy’: for rich eyes only Combining plutocracy with economy, ‘plutonomy’ was a term coined in 2005–06 by Ajay Kapur of Citigroup, a major US financial group bailed out by the American people in 2008 after sustaining huge losses in the crash. It was introduced in a series of reports, the last of which was called The Plutonomy Symposium – Rising Tides Lifting Yachts . It was sent only to Citigroup’s wealthiest customers, but leaked to the press. It claims that the US, Canada, UK and Australia are the only plutonomies; much of continental Europe and Japan, which haven’t experienced such major upturns in wealth controlled by the rich, are ‘the Egalitarian Bunch’. According to the report, plutonomies have three key characteristics: 1. They are all created by ‘disruptive technology-driven productivity gains, creative financial innovation, capitalist friendly cooperative governments, immigrants … the rule of law and patenting inventions. Often these wealth waves involve great complexity exploited best by the rich and educated of the time.’ 2. There is no ‘average’ consumer in Plutonomies. There is only the rich ‘and everyone else’. The rich account for a disproportionate chunk of the economy, while the non-rich account for ‘surprisingly small bites of the national pie’. Kapur estimates that in 2005, the richest 20% may have been responsible for 60% of total spending. 3. Plutonomies are likely to grow in the future, fed by capitalist-friendly governments, more technology-driven productivity and globalisation. Democracy is potentially a threat: 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… 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. Nonetheless: 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.

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