Plutocrats: The Rise of the New Global Super Rich and the Fall of Everyone Else by Chrystia Freeland – book review

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by Amelia Gordon

Plutocrats is a rather alarming book. Many of the middle class in America think they are ruled by a bureaucracy or even by their elected politicians, but, it may come as a shock to understand that a new plutocracy has emerged with a significant influence on their lives. Plutocracy derives from Ancient Greek πλοῦτος, ploutos, meaning “wealth”, and κράτος, kratos, meaning “power, dominion, rule”, that is, in common parlance, the rule of the wealthy. Wealthy does not quite describe it though. Many are wealthy – but these are the super wealthy with fortunes in the billions. As the author puts it, people making a mere 5-10 million dollars per year are stretched, maxed out in debt as they try to keep up with the super rich who fly their own planes.

Chrystia Freeland has chronicled the rich and super rich for over 20 years and she makes the startling observation that the real disparity is not the inequality between the 1% and 99% so central to the “occupy” movement but between the 1% and the .01% of the top 1%. There wealth rises exponentially and she comments that many movements including the Orange Revolution and perhaps the Egyptian one, are really battles between millionaires and billionaires, with the rest of us simply pawns or sidelined.

The middle class as we know it in America is being hollowed out by travelling capital which can pursue the greatest profit and the lowest wages in many jurisdictions around the world, but those at the very top are becoming stupendously wealthy and they have their own private society – Davos, Bilderberg Group and other exclusive venues to discuss their philosophies.

In a departure from previous eras, a significant number of plutocrats have earned their wealth through their own labour, not by inheritance or the simple clipping of coupons. Ms. Freeland points out that those who have amassed stupendous wealth in the last 20 years have had the nimbleness to take advantage of revolutionary moments and the wit to act quickly: the collapse of Communism and the auction of state enterprises, the privatization of assets in China, the technology revolution in the North America. These men (and they are most frequently men) comment that large institutions cannot act quickly enough to take advantage of such quick changes.

Financiers have definitely outpaced others in this world. Elite managers also have done especially well. In 2010, the compensation of chief executives reached 110 times that of the average worker.

An insight the book offers is that knowledge workers are, in fact, the owners of the tools of production: their knowledge and expertise. This is a major shift in the power balance. Marx said that the capitalists always owned the tools of production and the worker was merely a labour force brought in to operate them. In the knowledge economy, the labourer carries the tools and in order to exploit them, the capitalist must enlist the labourer and keep him or her employed.

This is a very good book, with insights that are reminiscent of the book The Black Swan, citing facts that surround us, many of which we experience but have never collated into a coherent pattern. If you have not completed your Christmas shopping, this is a book for your intellectual, your curious and your business relative. It is a great book for young people starting out too. It gives them an insight into where they should focus their career efforts.