So, I’m in Westchester County, NY and it’s a drizzly autumn evening on the Tappan Zee. A perfect night to brave the elements to see Michael Moore’s Capitalism: A Love Story out at the Jacob Burns Film Center over in Pleasantville, which is a great screening facility.
I find Moore to be a colourful character and I “get” his shtick. That said, no matter how you feel about his politics or this documentary, he brings up some interesting food for thought. In the documentary, there is a reference to an internal Citibank {a “zombie” bank these days} report on the “plutonomy.” While the idea of a power elite is nothing new in sociology -or- to anyone familiar with institutions and the macro-structural, I don’t think everyone is on the same page with respect to this being a bad thing or not. Well, let’s not get too far ahead. What is this plutonomy business anyway? According to the Citibank report::
“Our thesis is that the rich are the dominant drivers of demand in many economies around the world (the US, UK, Canada and Australia). These economies have seen the rich take an increasing share of income and wealth over the last 20 years, to the extent that the rich now dominate income, wealth and spending in these countries. Asset booms, a rising profit share and favorable treatment by market-friendly governments have allowed the rich to prosper and become a greater share of the economy in the plutonomy countries. Also, new media dissemination technologies like internet downloading, cable and satellite TV, have disproportionately increased the audiences, and hence gains to “superstars” – think golf, soccer, and baseball players, music/TV and movie icons, fashion models, designers, celebrity chefs etc. These “content” providers, the tech whizzes who own the pipes and distribution, the lawyers and bankers who intermediate globalization and productivity, the CEOs who lead the charge in converting globalization and technology to increase the profit share of the economy at the expense of labor, all contribute to plutonomy. Indeed, David Gordon and Ian Dew-Becker of the NBER demonstrate that the top 10%, particularly the top 1% of the US – the plutonomists in our parlance – have benefited disproportionately from the recent productivity surge in the US.
So, this is good if you’re in the top 1%, right? Let’s move on to the “risks”::
“Furthermore, 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. This could be felt through higher taxation (on the rich or indirectly though higher corporate taxes/regulation) or through trying to protect indigenous laborers, in a push-back on globalization – either anti-immigration, or protectionism.We don’t see this happening yet, though there are signs of rising political tensions. However we are keeping a close eye on developments.”
One of the themes in Moore’s film is that there is collusion between government and business. Moreover, this is NOT a Republican vs. Democrat issue, as deregulation and the repeal of Glass-Steagall was signed under Bill Clinton’s watch.
Have we gotten to a point where within the context of “democracy,” we are now seeing an unholy alignment of interests of an unfettered private sector that seeks to influence the “rules” of the market and a public sector willing to bargain? I would argue that we are so far removed from the idealized capitalism of the flavour of Adam Smith’s waxings, as the market has been replaces in many instances by “the visible hand” of managerial puppetry in the private and public spheres.
The checks-and-balances in “idealized” capitalism are that competition and the profit motive driven by shareholders will allow for smoothly functioning and efficient markets. In financial markets, undermining faith in the institution of the market through insider trading carries stiff penalties. The plutonomy sees fit to alter the rules for the political and economic elite. Some may argue that the plutonomy is fine. The alignment of interests is a way to channel wealth and capital towards successful ventures. The sociological “Matthew effect” in action, where the rich get richer and success breeds more success.
I’m not convinced. Historically, Microsoft has a marginal track record at managing and commercializing innovations and the well-heeled US pharmaceutical industry knows that newly patented drugs with incremental benefits are far more profitable than truly innovative drugs with an unknown track record. The entertainment industry strives to find or replicate a “formula,” rather than try to push the envelope with creativity. Success breeds plutonomy…and Spiderman 4.
The thing is that the plutonomy doesn’t care about companies or shareholders, let alone workers or pension plans. It’s all about the power elites, who control, enable, and reap the rewards of wealth creation. I’m not sure Moore has the answers here, but Scorsese might. The plutonomy is all about feeding the top of the pyramid. The motto…”f*ck you, pay me.”
Twitterversion:: #MichaelMoore’s Capitalism: A♥Story brings up food 4 thought re:plutonomy. In the end, is it just Scorsese’s #Goodfellas. http://url.ie/2qaw @Prof_K
Song:: The Birth of the True – Aztec Camera
Comments 6
rkatclu — October 29, 2009
Microsoft, pharmaceuticals and Hollywood were highly innovative at one point. Don't venture capital investments and startups do something to offset dearth of high risk/high reward innovation on the part of the larger players? I have also heard arguments to the effect that the cost of regulatory compliance disproportionately affects smaller businesses and that regulatory barriers discourages innovation.
The"unholy alignment" of a "private sector that seeks to influence the “rules” of the market and a public sector willing to bargain" can deviate from "idealized capitalism" in another way. Firms are not above attempting to obtain regulatory advantages over their competitors.
The core problems aren't new. Plato's description of a plutocracy scooped the gist of the Citigroup report by 2400 years.
Regarding Moore:
While his topics are usually important, his methods and "take" tend to lack the credence needed to make meaningful contributions to serious debates about the problem.
Brett Hetherington — October 29, 2009
The bare facts are:
Two-thirds of the USA’s total income gains from 2002 to 2007 flowed to the top 1 percent of U.S. households, and that top 1 percent held a larger share of income in 2007 than at any time since 1928.
As this study also found the (inflation-adjusted) income of the top 1 percent of households grew more than ten times faster than the income of the bottom 90 percent of households.
For a graph of this, and other info go to:
http://www.bretthetherington.net/Modules/Blog/Pages/BlogEntry.aspx?BlogEntryId=397
Fourcultures — November 5, 2009
The plutomatic economy
As I walk to work I pass the shop window of an aviation company which tells me "There's never been a better time to buy a personal jet". I resist the temptation, but I'm interested in the authors' neologism 'plutonomy'. It would be a neologism if it hadn't been coined in 1866, [Frederic Harrison, "Industrial Co-operation", in The Fortnightly Review, vol. III, page 499].
"On this side it [Socialism] is a crude compromise between the claims of labour and of capital — the hybrid child of Plutonomy and Communism." I think what the Citibank people are describing already has a well-established name: 'plutocracy'- rule by the wealthy. When they write of 'plutonomists' they seem to be referring to what the rest of us would know as plutocrats. Having said that, there may be two more limited uses for the term. First plutonomy could be seen as a modification of the word economy to emphasise the economy's subordination to the interests of the plutocracy, it could refer to the specifically economic sphere of a plutocratic society. Hence, armed with the right statistics (such as Brett's, above), it could be argued that nations such as the US are moving from an economic state of democratic capitalism towards one of plutonomy. A second alternative use for the term would be to see it as a contraction of 'pluto-autonomy', the autonomy of the wealthy from social or any other regulatory constraints, in which the purpose of the economy becomes overwhelmingly to satisfy the interests of money itself. This latter might conceal more than it reveals, since it does not take into account the human benificiaries of such a system. Having considered these options, I think it may be best just to keep the established terms, to stick with the plutocracies and plutocrats we all know and love...
...But if we have to coin new terms, I don't intend to get left behind. How about 'plutomatic'? This refers to systems put in place to ensure the continuous reproduction of plutocratic forms of governance. Some examples would be political party funding mechanisms, or political lobbying regulations, or large areas of corporate law.
Kumamotop — November 10, 2009
I am sure Citibank revived 'plutonomy" simply because "plutocracy"
carries such negative baggage.
internet vote acct — April 15, 2011
People are over-represented politically is the cause of all evil! To break this mold, a adoptation of citizen online voting account can be used. For appropriate issue, a weighting mechanism can be applied to each vote based on the score of issue-knowledge-test.The voting outcome referring by line-number known only by vote-account holder should be print out for lookup and eletronic PDF file copy can be email upon request. Once voters gain back some representative power to themselve everything would change.
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