The Socioeconomic Context: Rising Inequalities
In 1987, just 140 people made it onto the global Forbes list, together owning US$ 295 billion. Thirty years later, there are 2,043 billionaires with US$ 7.7 trillion net worth. The spectacular rise of billionaires since the 1980s can be linked to structural changes within three realms:
- At the material level, globalization has amplified the benefits of those who succeed in “winner-take-all” markets, and world peace preserves their fortunes.
- At the institutional level, states have facilitated the accumulation of wealth, as they are trying to stay ahead in the increasingly intense global competition.
- At the level of ideas, neoliberal ideology has been promoting the values of individual entrepreneurship and private initiative, which sit well with those billionaires considered to be “self-made”.
The Danger: Plutocracy
Academic research on plutocracy – the rule of the wealthy – is not as advanced as one may think. In a major recent study, Jeffrey Winters (Northwestern University) has defined oligarchy as “the politics of wealth defense by materially endowed actors”. For him, in democracies, the ultra-wealthy mainly try to influence tax policies, in order to avoid redistribution by the state, creating what he calls “civil oligarchies“. While we see evidence of this in many places, the focus on taxation is too narrow – many billionaires also enter politics to pursue other goals besides just limiting their tax bill.
Martin Gilens (Princeton University) has been at the forefront of demonstrating the connection between “Affluence and Influence” in American politics. Here, you can watch a lecture in which he explains his findings:
How it Works: Private Wealth in Public Policy
Following Charles Lindblom’s influential exposition of the privileged position of business, one may argue that the power of billionaires rests mainly on the firms that they own. In this role, however, billionaires are similar to the CEOs that are employees of a corporation owned by a variety of shareholders. The degree of autonomy may vary, but billionaires’ behavior as CEOs will be largely driven by the economic logic of the corporation as an institution that wants to make profits and needs to respond to its share- and stakeholders. Several watchdogs are already focusing on corporations, such as Corporate Accountability International.
What sets billionaires apart is their individual control of vast financial resources, which they can use to pursue their own political objectives. Sometimes, the corporate and the individual logics overlap – most notably when billionaires control media businesses. For the most part, billionaireswatch.org is concentrating on “private wealth in public policy“.
What can be done to limit the political power of billionaires?
For the U.S., represent.us has developed a plan for legal changes to roll back what they call the “legal corruption” of American politics – too much influence of private wealth in public policy, through campaign financing and lobbying:
Learn more about the Regulation of Political Finance here!