Democracy and Plutocracy Don’t Go Together
Last week’s mid-term elections were not only a clash of political ideas and competing politicians. It was also a clash of plutocrats using their money to influence the election outcome. This time it was donors to the Republican party that lost big after spending the colossal amount of $1.344 billion. Donors to the Democrats may have come on top this time after spending almost half billion dollars, but that does not erase their own losses in previous election cycles.
However, the thing is this. Political money, and especially big money, should not be viewed favorably regardless which side it supports. Political money, especially of the size we have seen in recent elections, is all around bad. Democracy is seriously compromised and eventually cannot survive when wealth is used in such an unfettered way with the intention to influence election outcomes.
I use the word intention deliberately because I want to preempt the argument that political money is innocuous if it fails to produce its desired result. Nor is political money a non-issue when it is relatively evenly spent on all sides. And the same applies when wealth is about evenly available across all political camps and, hence, one can argue that each side has the same capacity to spend political money.
I find none of these conditions to be an excuse good enough to dismiss the corrosive effect of political money on the quality of democratic governance. Political money enables a class of citizens whom we call plutocrats to abuse the power of wealth to create their own rule. After all this is the meaning of plutocracy: ruling by wealth.
Plutocracy is not the same as concentration of wealth. Concentration of wealth is primarily an economic problem. Plutocracy, on the other hand, is the deliberate use of wealth to acquire political influence. Therefore, plutocracy is a political problem. Of course, plutocracy presupposes the accumulation of wealth. But it is the intention to use it as means to political ends that makes it subject to moral and political judgment.
Furthermore, accumulation of wealth is not intrinsically blame-worthy. It may come as a result of prudent and lucky investments in financial assets or through successful entrepreneurial activities. Wealth becomes, however, an economic problem when it achieves a concentration level that is primarily explained by distortions in the distribution of incomes. What we have seen in recent decades is the accumulation and concentration of wealth because of the rise of monopolies and the extraction of rents, distortions in the tax code in favor of income from capital, the inter-generational accumulation of wealth due to a super-generous inheritance tax code, and the decline of the bargaining power of labor.
It is often the preservation of these unfair economic conditions that turn wealthy people into plutocrats once they start using their wealth to that end. To the point, Peter Thiel of Palantir has stated that “competition and capital are opposites,” which is an argument in defense of the accumulation of capital at the expense of market and social fairness. Bypassing the rules of fair competition is often achieved by creating a symbiotic relationship with the state and capturing government contracts. As I have written in a previous post, in their book Muskism, Slobodian and Tarnoff describe how Elon Musk developed business relationships with successive administrations to the point his businesses (Space X in particular) became indispensable by elbowing out the government’s own operations delivered by NASA and other potential private competitors.
Seeking accumulation of wealth by attacking the foundations of market integrity is not the only aim of plutocracy. By using wealth plutocrats can also place themselves beyond the checks of legal, moral and social norms. Noah Hawley (“Everything Is Free and Nothing Matters,” Atlantic, May 2026) writes “their (i.e., plutocrats) actions are only judged by themselves.” So, “they feel free to act on their whims and interests.” And “For them the word failure has ceased to mean anything.” Thus, plutocrats comprise a distinct social class and live in “disassociation from the reality of cause and effect, from meaning and history.” The result is that plutocracy endows a sense of freedom (economic, moral, political) not enjoyed by the common citizen. Again Peter Thiel: “I no longer believe freedom and democracy are compatible.”
Present day plutocrats also seem more eager to protect their fortunes than to contribute to the fiscal strength of the state or to the funding of social policies. In his article “The Rich Have Forgotten Their Place” (NYT 11/25/23), Guido Alfani writes that unlike the rich of past eras who were summoned to help states and societies and often stepped up on their own, today’s plutocrats have managed to be left unscathed. Despite the widespread loss of wealth and jobs by ordinary citizens because of the 2008 Great Recession and the Covid19 pandemic, wealthy people fought higher taxes or other limits to their power. In fact, the wealthy were handsomely rewarded in two tax acts passed in 2017 and 2025. Just this fall, the super-rich spent $425 million to defeat the one-time wealth tax of billionaires in California.
When plutocracy becomes endemic it affects more than the power structure in a democratic country. It makes wealth the primary tool to attain social status and political power and, thus, wealth becomes the supreme good, or what philosophers call summum bonum. Eventually what matters is not moral or civic virtue nor is it achievements in culture or knowledge.
When wealth is used to buy political power as well as influence over tax and regulatory policy, higher education, and culture in general, democracies find themselves captive to monied minorities. In the end, a representative democracy becomes a representative plutocracy.
To avoid this fate, we know what we need to do. We need to correct the distortions that result in economic inequality and, hence, in excessive wealth concentration and we need to constrain the reach and power of political money.
