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A plutocracy () or plutarchy 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.
One modern, formal example of a plutocracy, according to some critics, is the City of London. 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. Around 450,000 non-residents constitute the City's day-time population, far outnumbering the City's 7,000 residents.
In the political jargon and propaganda of Fascist Italy, Nazi Germany and the Communist International, Western were referred to as plutocracies, with the implication being that a small number of extremely wealthy individuals were controlling the countries and holding them to ransom. (2025). 9781576079409, ABC-CLIO. ISBN 9781576079409 Plutocracy replaced democracy and capitalism as the principal fascist term for the U.S. and Great Britain during World War II. (2025). 9780674021754, Harvard University Press. ISBN 9780674021754 In Nazi Germany, it was often used as a dog whistle term for Jews in their antisemitic propaganda. Joseph Goebbels, the Reich Minister of Propaganda, found the term to be particularly favorable, describing it as "the main concept at which the ideological struggle will be aimed".As quoted in Boelcke, Willi A. The Secret Conferences of Dr. Goebbels: October 1939-March 1943, edited by Willi A. Boelcke; trans. Ewald Osers. London: Weidenfeld and Nicolson, 1970.
The Sherman Antitrust Act had been enacted in 1890, when large industries reaching monopolistic or near-monopolistic levels of market concentration and financial capital increasingly integrating corporations and a handful of very wealthy heads of large corporations began to exert increasing influence over industry, public opinion and politics after the Civil War. Money, according to contemporary progressive and journalist Walter Weyl, was "the mortar of this edifice", with ideological differences among politicians fading and the political realm becoming " a mere branch in a still larger, integrated business. The state, which through the party formally sold favors to the large corporations, became one of their departments."
In "The Politics of Plutocracy" section of his book, The Conscience of a Liberal, economist Paul Krugman says plutocracy took hold because of three factors: at that time, the poorest quarter of American residents (African-Americans and non-naturalized immigrants) were ineligible to vote, the wealthy funded the campaigns of politicians they preferred, and vote buying was "feasible, easy and widespread", as were other forms of electoral fraud such as ballot-box stuffing and intimidation of the other party's voters.
The U.S. instituted progressive taxation in 1913, but according to Shamus Khan, in the 1970s, elites used their increasing political power to lower their taxes, and today successfully employ what political scientist Jeffrey Winters calls "the income defense industry" to greatly reduce their taxes.Kahn, Shamus (18 September 2012) "The Rich Haven't Always Hated Taxes" Time Magazine
In 1998, Bob Herbert of The New York Times referred to modern American plutocrats as "The Donor Class" (list of top (political party) donors) and defined the class, for the first time, as "a tiny group – just one-quarter of 1 percent of the population – and it is not representative of the rest of the nation. But its money buys plenty of access."
Chrystia Freeland, author of Plutocrats, says that the present trend towards plutocracy occurs because the rich feel that their interests are shared by society:See also the Chrystia Freeland interview for the Moyers Book Club (12 October 2012) Moyers & Company Full Show: Plutocracy Rising
When the Nobel Prize–winning economist Joseph Stiglitz wrote the 2011 Vanity Fair magazine article entitled "Of the 1%, by the 1%, for the 1%", the title and content supported Stiglitz's claim that the U.S. is increasingly ruled by the wealthiest 1%.Stiglitz Joseph E. "Of the 1%, by the 1%, for the 1%". Vanity Fair, May 2011; see also the Democracy Now! interview with Joseph Stiglitz: "Assault on Social Spending, Pro-Rich Tax Cuts Turning U.S. into Nation 'Of the 1 Percent, by the 1 Percent, for the 1 Percent, Democracy Now! Archive, Thursday, 7 April 2011 Some researchers have said the U.S. may be drifting towards a form of oligarchy, as individual citizens have less impact than economic elites and organized interest groups upon public policy.Thomas Piketty (2014). Capital in the Twenty-First Century. Belknap Press. p. 514: "the risk of a drift towards oligarchy is real and gives little reason for optimism about where the United States is headed." In the U.S. Congress itself, more than half of all members are millionaires.
A study conducted by political scientists Martin Gilens of Princeton University and Benjamin Page of Northwestern University, which was released in April 2014, stated that their "analyses suggest that majorities of the American public actually have little influence over the policies our government adopts". Gilens and Page do not characterize the U.S. as an "oligarchy" or "plutocracy" per se; however, they do apply the concept of "civil oligarchy" as used by Jeffrey A. WintersWinters, Jeffrey A. " Oligarchy" Cambridge University Press, 2011, pp. 208–254 with respect to the U.S.
The investor, billionaire, and philanthropist Warren Buffett, one of the wealthiest people in the world, voiced in 2005 and once more in 2006 his view that his class, the "rich class", is waging class warfare on the rest of society. In 2005 Buffet said to CNN: "It's class warfare, my class is winning, but they shouldn't be." Buffett: 'There are lots of loose nukes around the world' CNN.com In a November 2006 interview in The New York Times, Buffett stated that "there's class warfare all right, but it's my class, the rich class, that's making war, and we're winning."
Other nations may become plutocratic through kleptocracy or rent-seeking.
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