Life Among the Plutocrats -- What Unimaginable Wealth Does to a Person
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Reviewed: Plutocrats: The Rise of the New Super-Rich and the Fall of Everyone Else, by Chrystia Freeland (Doubleday, Canada 2012)
Last year the Occupy movement brought the subject of inequality into public debate, and especially the inequality between those of us in the 99 per cent and the happy few in the one per cent. But Chrystia Freeland has been studying the happy few for years, and has spent many hours talking with some of their most famous and powerful members.
The result is a book full of surprises and insights. Today's plutocrats are the latest variation on an old theme, and at the same time they're strikingly new in many ways.
Societies have supported plutocratic classes at least since ancient Rome, and the Gilded Age of the US after the Civil War presaged our own: A rising class of self-made men, imaginative exploiters of new technology and wider trade. Then it was the telegraph and the railroad; now it's the internet and the container ship.
Freeland's plutocrats are mostly self-made also, and overwhelmingly male; one very rich man suggested to her that women lack the "killer instinct" needed for real success. But they are not the idle heirs of rich parents. The "working rich" are a distinct class: smart, ambitious and often outsiders.
What's more, they represent a dramatic change from the 19th and early 20th century, Freeland argues. Then, the conflict was between capital and workers, with workers doomed to lose because they couldn't own the means of production.
The communist revolutions were supposed to transfer those means to the workers, but instead transferred them to a new class of upstart intellectuals and technical experts. She cites Milovan Djilas, Tito's second in command in communist Yugoslavia. In the 1960s Djilas wrote "The New Class" to describe this phenomenon as a corruption of communist orthodoxy; Tito threw him in jail.
They didn't come entirely out of the blue. Freeland documents the gradual but decisive shift in fields like finance, which since the age of the superstar had been regulated to the point of boredom. This came along with a new struggle: Now it wasn't capital versus labour, but capital versus talent.Even more ironically, the same new intellectual class now runs capitalism -- with the exception of the princelings of the Chinese Communist Party, the billionaire sons and grandsons of Mao's old proletarian comrades. But elsewhere, smart young men got possession of ex-Soviet resources, or an operating system for newfangled personal computers, and within months were rich beyond imagining.
The age of the superstar
Companies were no longer stuck with local workers and their high wages. Globalization meant they could outsource the work to anywhere in the world, whether Chinese special economic zones or Mexican maquiladoras.
And by the 1970s we were in the age of the superstar: the baseball player, singer, or CEO whose talent could make the difference between corporate success and failure. Talent couldn't be bolted to the shop floor, and superstars in any field could name their price.
Hence, says Freeland, CEOs' salaries began to rise while their workers' pay stagnated or fell. Financial superstars set up their own hedge funds, and drew investors by the sheer power of their reputations. The superstar entrepreneurs thrive in a globalized economy, equally at home in Beijing, Moscow, New York or London.
In fact, they are now so rich that they form their own economy, a "plutonomy" producing goods and services just for them: private jets, monster yachts, and armies of professionals dedicated to making them comfortable.