Plutocracy Overview & Government | What is a Plutocracy?

Who are Plutocrats?

Plutocrats are political decision-makers who create public policies that directly provide an advantage to those with vast incomes. Their political interests extend only to maintaining and increasing the riches of those who already hold a disproportionate amount of a country's wealth. However, the term plutocrat does not simply refer to anyone with political power. It is reserved for those who themselves are wealthy. Whether an individual or a class of people, plutocrats work to populate government with other such people or groups. They work to ensure that the affluent remain in power and help accumulate wealth for the prosperous few.

Plutocracy vs. Oligarchy

Oligarchy refers to a form of government in which the political leaders are a small population elite, making it a minority rule. However, a plutocracy is a specific type of oligarchy in which the ruling few are wealthy. Not only is political power held exclusively by the wealthy, but the purpose of their rule is to consolidate and increase their wealth using their political power. Plutocrats can come to hold power in various ways, but most commonly, it is through peaceful means. However, while plutocracies have historically been formed without violence, they are often associated with political corruption.

In comparison, oligarchy does not focus on a particular source of rule. Instead, any elite sector, like the military, religious leaders, or an intelligentsia, can hold power. Frequently, oligarchs come to power through revolution or political violence. For example, military juntas (a group of the military elite) typically rise to power through a military overthrow of the government, such as the Chilean junta led by Augusto Pinochet.

General Augusto Pinochet was the leader of the ruling military junta in Chile. The junta took power in a military overthrow of the government.

Features of a Plutocracy Government

There are several key characteristics of a plutocratic form of government that focus on the economic interests of the wealthy elite in society.

• Plutocratic leaders: In a plutocracy, there is a ruling elite who are very wealthy. Only this affluent minority holds power and determines public policies.
• Beneficiaries of plutocratic rule: Plutocratic political systems are constructed in such a way that a few can ensure that political decisions and public policies are geared toward maintaining and enhancing the wealth of the ruling elite.
• The general public: The welfare of the general public is largely disregarded by plutocrats. This results in a significant wealth gap between the rich and the poor. Eventually, this can lead to political unrest in society.
• Rights and liberties: Plutocracies do not necessarily restrict the core rights or liberties of the general citizens. Nevertheless, the general public does not play a role prominent in governance and has no control over governmental structures and processes.

Plutocracy Causes

Plutocracies are not generally considered formal governmental structures. They are not grounded in political theory as other forms of government are, like democracy. Nevertheless, several factors are associated with the development of plutocracies.

• Economic conditions: Plutocracies are often seen in countries with significant income inequality between the rich and the poor.
• History of oligarchic rule: States that have a history of rule by the few and limited public engagement in politics are more likely to develop plutocratic characteristics.
• Culture of social inequality: Societies with cultures of inequality and histories of disproportionately promoting one group over others through public policies can create a political environment ripe for plutocracy.
• Corruption: Political systems with a history of corruption can have a greater tendency to develop plutocracies. Kleptocracies, governments in which corrupt political officials gain personal wealth by misappropriating public resources, can lead to the establishment of plutocratic political systems

Regardless of the causes of plutocracies, the outcomes are generally the same. When a country's financial assets and resources are diverted from the general public and programs benefit society, there can be significant consequences.

• Political outcomes: Democracy can be weakened when decisions are no longer made by and for the people.
• Economic significance: Key resources, especially scarce ones, are often not well managed and can be depleted, and this can weaken the economy of the nation.
• Societal ramifications: When a wealth gap continues for a long time, it can lead to social unrest and even political violence.
• Psychological implications: Plutocrats often develop a sense of entitlement can lead to a lack of empathy for others. This can, in turn, result in public policies that are increasingly aimed at directing a society's wealth and resources toward the already wealthy and away from those in need.

Plutocracy Examples

The practice of acquiring political power for economic gain has occurred since ancient times. Elites seeking to consolidate and expand their wealth are found in autocratic and democratic political systems across the globe. Two famous examples of plutocracy are the Roman Republic and the Gilded Age in the United States.

Roman Republic (509 B.C. - 27 B.C)

Ancient Rome is often referred to as a republic or representative form of government throughout much of its history. However, it was ruled by less than one percent of the population. This ruling elite enjoyed vast wealth, privilege, and political power. Much of the affluence of the ruling class, known as patricians, was achieved through trade, manufacturing, and war. In order to ensure continued wealth, the patricians would often pay those in political power.

• One of the wealthiest Romans was Marcus Licinius Crassus. He acquired his riches from the spoils of war and corrupt business dealings.
• Plebeians comprised the lower class in the Roman Republic. While not enslaved, they had no political power in the Republic's early years and only limited political power in the latter years. The lower class lived in poverty and hardship while the patricians enjoyed all forms of luxury often acquired through the exploitation of the plebeians.

American Gilded Age (1876 - 1900)

The Gilded Age in the United States was a period of significant political corruption during the 1870s that was fraught with a few industrialists and entrepreneurs who amassed great wealth and exercised significant influence over economic policy.

• Entrepreneurs such as Andrew Carnegie, John D. Rockefeller, and J.P. Morgan Cornelius Vanderbilt built enormously profitable businesses based in the steel, petroleum, and transportation (chiefly railroads) industries.
• Known as robber barons, they engaged in unethical business practices and corruption, exploited workers, restrictions on international trade, and formed monopolies by manipulating industries and the free market to stifle competition.
• The robber barons' wealth enabled them to influence politicians to create laws that protected them and increased their wealth.

John D Rockefeller began his career as a bookkeeper for Standard Oil Company. He later became the first billionaire in the U.S.

Lesson Summary

The plutocracy definition is an oligarchic type of government where the few who are wealthy hold power. These elite plutocrats make public policies that directly advantage themselves. A plutocracy is a type of oligarchy, ruled by the few, who are defined in terms of wealth rather than some other characteristic. Two prominent examples are the Roman Republic and the Gilded Age in the U.S. The Roman Republic (509 B.C. - 27 B.C) where patricians lived lavish lives and engaged in corrupt political practices. Meanwhile, plebeians, a lower class in the Roman Republic, had limited or no political. A second example is the American Gilded Age (1876 - 1900) where robber barons amassed great wealth that helped purchase the power to influence public policies in their favor.

Plutocracies often develop under specific political, economic, and social conditions. These include existing income gaps between the rich and poor, a history of oligarchic rule or social inequality, and political corruption. The outcomes of plutocracy often include loss of economic resources, psychological indifference to those who suffer, a weakening of democratic ideals, and social unrest.