Capitalists Speaking Frankly

Capitalist interest in preserving and profiting from the economic power of the rich was verbalized in a 2005 Citigroup equity strategy report called “Plutonomy: Buying Luxury, Explaining Global Imbalances.”[1] It was never meant to be public.

Its language reveals the wealth and position of its writers, who head their sections with phrases like “Welcome to the Plutonomy Machine,” “Riding the Gravy Train,” “How to Play Plutonomy,” and “the New Managerial Aristocracy.” It is enlightening because it is honest: the authors point to capitalism as what births plutonomies—economies powered by the super-rich—in their analysis of how investors can profit from the great consumption of the wealthy. They believe the “wealth waves” created by new technology, productivity gains, patents, and “capitalist-friendly” governments are “exploited best by the rich and educated of the time,” creating a massive wealth gap. They write, “At the heart of plutonomy is income inequality.” They insist “society and governments need to be amenable to disproportionately allow/encourage the few to retain the fatter profit share. The Managerial Aristocracy…needs to commandeer a vast chunk of that rising profit share, either through capital income, or simply paying itself a lot.” The workers who made those profits possible be damned.

It is clear the Citigroup executives are wary of changing attitudes among the citizenry:

Perhaps one reason that societies allow plutonomy is because enough of the electorate believe they have a chance of becoming a Pluto-participant. Why kill it off, if you can join it? In a sense this is the embodiment of the ‘American Dream’. But if voters feel they cannot participate, they are more likely to divide up the wealth pie, rather than aspire to being truly rich.

This neatly summarizes the way the conservative dogma of rugged individualism protects the interests of the upper class. How right Marx was when he noted, “The ruling ideas of each age have ever been the ideas of its ruling class.”[2]

In a 2006 follow-up report entitled “Revisiting Plutonomy: The Rich Getting Richer,” the corporation noted how the rich get richer “at the relative expense of labor,” how wages for workers are kept low (you have to “keep wage inflation in check”) while the capitalist owners reap more profits than they used to:

We believe that the rich are going to keep getting richer in coming years, as capitalists (the rich) get an even bigger share of GDP as a result, principally, of globalization. We expect the global pool of labor in developing economies to keep wage inflation in check, and profit margins rising – good for the wealth of capitalists, relatively bad for developed market unskilled/outsource-able labor.[3]

Capitalism, the capitalists understand, transforms the hard work of the many into the wealth of the few. Good for capitalists, bad for labor. The document also revealed Citigroup’s fear of the citizenry demanding greater income equality:

Our whole plutonomy thesis is based on the idea that the rich will keep getting richer. This thesis is not without its risks…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… We don’t see this happening yet, though there are signs of rising political tensions. However we are keeping a close eye on developments.[4]     

The minority is always fearful of the majority. They know, as Marx wrote, that

…the proletarian movement is the self-conscious, independent movement of the immense majority in the interest of the immense majority. The proletariat, the lowest stratum of our present society, cannot stir, cannot raise itself up, without the whole superincumbent strata of official society being sprung into the air.[5]

Citigroup would soon see their fears realized with the rise of the Occupy Wall Street movement and a louder dialogue about the income inequality and wage theft of capitalism.

 

Notes

[1] http://delong.typepad.com/plutonomy-1.pdf

[2] Marx, Communist Manifesto, 26

[3] http://www.correntewire.com/sites/default/files/Citibank_Plutonomy_1.pdf

[4] http://www.correntewire.com/sites/default/files/Citibank_Plutonomy_1.pdf

[5] Marx, Communist Manifesto, 18

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