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THIS IS A MACHINE-TRANSLATED VERSION OF THE ORIGINAL ARTICLE, LINKED BELOW.
Original Author: Ángel Bermúdez
Role: BBC News World (Spanish section)
Publish date: 17 July 2024
Original Article (Spanish, HTTP)
This professor of Political Science at Northwestern University (Illinois, USA) has spent a quarter of a century studying a complex topic: the power of wealth and how it is transformed into political influence.
From that effort came his book "Oligarchy", in which he not only traces the history of power and privilege of oligarchies from ancient times to the present day, but also develops an original theory on this subject.
In this conversation with BBC World about the publication of that text in Spanish, Winters talks about some of his most controversial approaches, such as, for example, his statement that all liberal democracies today are, at the same time, oligarchies.
It also addresses the reasons why it considers that democratic participation has become ineffective in confronting the power of oligarchies, as well as the paradox that democratic societies – which enshrine political equality – are currently "incredibly unequal from an economic point of view".
Oligarchy refers to the political power of wealth. Since ancient times, in Athens and Rome, when the word oligarchy first appeared, it always referred to the power of those few people who have enormous wealth.
Political power can take many forms, such as holding political office or controlling coercive capacities, such as a warlord, but one of the most important sources of political power throughout history has been possessing massive wealth, and today we have oligarchs in the same way we had them in the ancient world.
It should worry us because all the democratic countries of the world are also simultaneously oligarchies. They are a mixture of both.
Countries that allow political competition between parties and enjoy the right to vote also have a small number of people who use the enormous power of their wealth to fund candidates even before all citizens turn out to vote. Generally, the power of money first determines who is a viable candidate.
A second reason is because, especially in today's democracies, we have greater inequality than ever before in history. This is ironic because we normally think of inequality as a problem of non-democratic societies but, in fact, liberal democracies are incredibly unequal from an economic point of view.
One reason for this is that for the past 250 years the oligarchs have used their power to make sure that democracy does not make society more economically equal.
So, the explosion of inequality that we see in the world and the explosion of anger that we see in citizens is related to the fact that the oligarchy is stronger today in democracies than it has been in decades.
Democracy has a limited capacity to solve this issue because the laws have already been written by the democracies themselves to favor the ability of oligarchs to use the power of their wealth.
I will give you an example. In the United States we had in 2010 a very famous case called Citizens United, in which the Supreme Court equated the use of money in politics with the exercise of freedom of expression. This opened the floodgates to the use of money to influence the political system.
And today in the United States, because of the existence of special political action committees, not only is the amount of money that oligarchs can use virtually unlimited, but it is also for the most part secret, because we don't know exactly who is influencing policy until long after the money has been used.
The elite also refers to a minority of people who have an enormous amount of power, but who are based on things other than wealth. For example, someone like Barack Obama held political office when he was president, so he was a member of the elite but not wealthy. Someone like Gandhi was a member of the elite because he was tremendously powerful, but he had no wealth. Someone like Oprah Winfrey can have an enormous amount of power for being a celebrity.
Oprah Winfrey derives her influence from being a media personality. (15 Kb, PNG)
Let's go back to the example of the United States: long before anyone can vote either in a primary election or in the election to public office, we have something called the wealth primary.
Wealth primaries are those in which the candidate who wants to run first addresses all the rich and says, "What do you want? Let me make sure that the policies are going to work in your favor." Then the rich decide who they will back.
Typically, primaries of the wealthy begin a year or two before any kind of campaign for public office. And if you want to run, but can't attract money from the rich, most of the time you can't compete.
So the role of the power of wealth is to limit candidates to a very small number of people who are already acceptable to the oligarchs. After the oligarchs have eliminated the other candidates, they then open up the possibility for the people to decide between candidates A, B and C, all of which are completely acceptable to the oligarchs.
Let me be clear: do citizens have the possibility to choose, are they free, can they vote freely? Yes, but we have to understand that the combination of oligarchy and democracy severely limits the options and policies that are possible because they seek to ensure that inequality, extreme inequality and the concentration of wealth are maintained.
Sometimes this process fails and democracy produces candidates or parties that are not acceptable to the oligarchs. When that happens, it is usually democracy itself that collapses, because the oligarchs find it unacceptable.
A very clear example was the case of Allende in Chile. Democracy produced a party and a candidate that were completely unacceptable to corporations and the wealthy, and the result was murder and the end of democracy. And this has happened in many places around the world.
So one of the things we need to understand about the relationship between oligarchy and democracy is that democracy is possible as long as the oligarchy is not threatened.
When democracy was emerging, the oligarchs were extremely concerned that it would cause a redistribution of wealth. They were very afraid and, in fact, they did not want democracy to happen. And it turns out that, in fact, democracy has been structured in a way that makes it extremely difficult to redistribute wealth.
They have also tried to use the power of wealth to shape ideas in society. Many oligarchs around the world fund research centers, institutes, and economics departments at major universities to spread the idea that without oligarchs and concentrated wealth, jobs will not be created and economies will collapse.
They also raise the idea that oligarchs are actually beneficial to society because they are philanthropists and donate money to medicine and other causes they support.
What is never said is that the main thing the oligarchs do with their money is defend their own wealth. Starting in the 1950s and 1960s, there emerged what I call in the book 'the wealth defense industry', which is a multi-billion dollar industry made up of lawyers, accountants, lobbyists, and wealth management professionals whose only job is to make sure that oligarchs don't have to pay taxes.
There are two ways in which inequality increases. One occurs at the point of production, that is, in the relationship between the people who work and the owners of the workplaces.
The other way in which inequality is affected is in the government's policy of redistribution. That is why most societies try to deal with inequality through progressive taxation. The poor pay a lower percentage of taxes, while the rich should pay more.
The wealth defense industry's job is to make sure progressive taxation doesn't work. For example, people like Warren Buffet, Elon Musk, or Jeff Bezos pay a significantly lower tax rate than the average citizen in the U.S.
Why? First, because the wealth-defense industry shapes legislation, helping to draft laws in Congress to leave loopholes for the wealthy.
Second, the same wealth defense industry moves money around the world into secret jurisdictions, trusts, or tax havens to make it impossible for agencies like the IRS to know where the wealth is.
Finally, the same wealth-defense industry pressures Congress to cut funding to the IRS, limiting its investigative capacity so that it cannot find the money, prosecute, or investigate oligarchs.
In the book I define an oligarch as a person who reaches an economic level that allows him to pay the industry for the defense of wealth. That is, he uses his wealth to defend wealth.
In the United States, for example, there is the group I call oligarchs and the group below them are mass affluent. This term is applied by the wealth defense industry itself to refer to people who, in reality, are not rich enough to be able to buy its services [it is estimated that these people have liquid assets of between US$100,000 and US$1 million to invest]. And how do they know? Because they already tried to convert them into customers, but they didn't have enough money to pay for their services.
I will give you an example of these services. In the United States there is something called a tax opinion letter. It is a document prepared by a law firm that has tax specialists that, based on their analysis of the law, indicates that you do not have to pay certain taxes.
Such a letter typically costs between $1 million and $3 million, but it can save you $30 million to $300 million in taxes in a year. Most people can't afford to get the tax opinion letter because it costs more than they earn.
By the way, if you receive a tax opinion letter, it means that the lawyers have made an interpretation of the United States tax code that is more than 80,000 pages long. Not even the IRS gets it!
How did it become so complex? The answer is that the wealth-defense industry deliberately did so so that its customers could interpret the law, rather than have to comply with it.
Totally. One of the interesting things about Europe is that we often think that the Scandinavian countries have more socialism and more well-being. But the oligarchs of Sweden, Finland or Denmark pay almost nothing in taxes either.
So how do they fund the welfare of the poor in their countries, access to health care, education, etc.? The answer is that they use regressive taxes. Basically, these are taxes paid by the middle class and the people who are just above it, the wealthy. They pay all the taxes, but the oligarchs don't pay.
Democracy and oligarchy are not zero-sum. The reason we have an oligarchy is not because we don't have enough democracy. The reason we have oligarchy is because of the power of concentrated wealth. So, regardless of whether the country is authoritarian or democratic, the presence of oligarchs is determined by two things: the concentration of the power of wealth and the ability to convert that power of wealth into political influence.
The form of the power of wealth matters a great deal. If you go back in history 1,000 years ago, maybe I was very rich because I had 10,000 head of cattle, but it wasn't easy for me to turn my cattle into political power.
But if we fast forward to the 20th and 21st centuries, we have an explosion of financial wealth that becomes much more easily political influence than if I own land or mines. So in history, the shape of the power of wealth has changed. And today we are at the maximum power of wealth in the world. That is the first point.
The second point is that if we compare the power of the oligarchs in the United States and in China, we will find that it is very different.
Under the Communist Party, controlled by Xi Jinping in China, there are hundreds, if not thousands, of billionaires. But for those oligarchs, using the power of their wealth to control the government is far riskier and more dangerous, compared to the United States.
Xi Jinping proved it with Jack Ma [co-founder of Alibaba]. He spoke up and annoyed Xi Jinping and suddenly disappeared from public view and lost control of his company. China is one of the few places in the world where, if you're an oligarch, you can go to jail or be executed.
The existence of the oligarchy means that the power to make society ever more unequal is unlimited. The main interest of the oligarchs is to concentrate more and more wealth in their own hands. When I started studying oligarchs about 25 years ago, it took hundreds and hundreds of oligarchs to match the wealth of the poorest 50% of the world. Today, some 50 oligarchs have as much wealth as the world's poorest 4 billion people.
In the United States, 25 years ago, it took about 30 oligarchs to match the total wealth of the poorest half of the country. Today, there are only three people. What impact does this have? First of all, the life expectancy of wealthy people compared to people who have no wealth is very different. Due to growing inequality in the world, millions of people die between 5 and 10 years earlier than they would if inequality were lower.
Another difference? The children leave home much later. They are delaying the time to get married, to buy their first home, to have their first child and they have fewer and fewer. All this happens because their economic situation is much more precarious. Their lives are more at risk due to growing inequality.
And, as inequality increases, their willingness to consider more extreme political actors increases because their hope for the future decreases. And around the world we are seeing that even young people, in particular, are more open to very extreme political figures. All of this is a result of the success of the oligarchs in increasing inequality around the world.
Totally.
We have seen in the past that countries around the world have the ability to limit and reduce oligarchic power, even if they do not necessarily eliminate it entirely.
A simple example? The controls that can be imposed on the use of money in politics. These are measures that have been used before in democracies around the world and we have seen that they are possible. But in order to do that, we need to have a stronger mobilization in society around these issues.
Another thing that can be done is something that is now being seriously discussed between the United States, the European Union, Brazil, and the United Nations: the possibility of a global wealth tax. And why is it important? Because if countries coordinate on this issue of taxing wealth, it means that oligarchs cannot use global geography against every country.
We've also seen that when ordinary citizens organize and mobilize, especially through things like labor unions, their political power to challenge the oligarchs increases significantly.
So, there are things that can be done, but they need to be done in a way that is aware of the problem and responds directly to it. We should not see the power of wealth and oligarchic power as inevitable. There are very concrete things that can be done.
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