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What is a Plutocracy?

Mary McMahon
Updated May 23, 2024
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A plutocracy is a government that is ruled by the wealthy or controlled by wealthy individuals. The term usually is used pejoratively, because it implies a lack of democratic freedom and social mobility. Many historical governments were plutocracies, controlled by an elite class of wealthy people, and some modern governments have been accused of being plutocracies, including the government of the United States.

The term "plutocracy" comes from the Greek words ploutos, or “wealth,” and kratia, or “ruler.” Many nations have experienced a state of plutocracy at some point, because wealth often comes with immense power, especially during the formative stages of a new country. Some countries that have valuable natural resources, such as oil and precious metals, have also experienced this type of government because the entities that control these resources generally want to maintain conditions that are favorable to them.

Wealth Leads to Political Power

An outright plutocracy governed by a handful of wealthy individuals is relatively rare in the modern era. The governments of many nations, however, are heavily influenced by wealth. Wealth can buy political power through lobbying, campaign contributions, bribing and other forms of legal or illegal financial pressure. Many nations have tried to limit the influence of the wealthy through laws controlling things such as campaign finances and lobbying, but these laws can be difficult to define and enforce.

Economic Disparity

One of the hallmarks of a plutocracy is economic disparity. In nations where the wealthy control the government, wealthy people have a vested interest in retaining their wealth and in promoting government policies that will enhance their situations. As a result, people who don't have as much money might be unable to effect change in their governments. Economic inequality can lead to social unrest, because members of the lower classes rebel against the ruling upper classes. It often, therefore, is in the best interest of the wealthy to appease the masses rather than exploit or dominate them.

Social Immobility

Another common feature of a plutocracy is a general lack of social mobility. Plutocrats tend to socialize and marry amongst themselves, thus concentrating their wealth and making it difficult for people in the lower classes to improve their standing in society. Rule by the wealthy is often associated also with ethnic disparities, in which members of the plutocracy have similar religious beliefs, ethnic backgrounds and skin colors, while people who are of different religions and ethnicities remain trapped in the lower or middle class.

Other Criticisms

Some people believe that a plutocracy is not a just system of government. They argue that it does not promote the welfare of the population as a whole. Critics claim that it tends to promote class disparity and systemic inequalities.

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Mary McMahon
By Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a Historical Index researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

Discussion Comments
By anon946124 — On Apr 17, 2014

The challenge is also in a mixed system where the levers of political power control economic power, it lends itself to a plutocracy. Wealthy people know that one anonymous bureaucrat often wields infinitely more power than a tycoon in a system where that bureaucrat can coerce human behavior. So the wealthy elites seize control of the legislature in this system and use the bureaucrats as their minions to advance their own economic position. What we need is a separation of state and the economy, which allows the power to be diluted and forces the plutocrats to compete to keep their advantage - something that benefits the more nimble and creative minds.

On direct democracy: this is not a functional system because it lends itself to an oligarchy who promises to deliver redistribution. And too often it is used as an excuse to violate people's natural rights. Direct democracy does not allow a hard nucleus of civil and political liberties to exist for long.

By anon289175 — On Sep 03, 2012

Plutocracy exists everywhere in the world, no matter the system of governance. But with a strong middle class, it can work properly. A weak middle class usually does not have the intellectual capabilities to question and critically analyze the action of the plutocrats.

In a democratic state, revolution might not be the alternative to remove plutocrats from power because there will not be enough reason for it because leaders can be changed through elections. But if various plutocrats continue to rule in the same manner, it can lead to demonstrations which can lead to coup d'etats, as happened in many African states during the post colonial period.

By sweetPeas — On Aug 21, 2011

It's amazing to me how quicky a large middle class emerged in this country, giving political and economic power to so many people and really influencing our society.

The causes are many - industrialization, higher pay. strong unions were formed to get benefits for workers, education opportunities, World War II gave a burst of new homes and babies.

So the middle class continued to grow and their power provided "checks and balances" to the dominance of the rich. But now in some countries, this balance is shaky, the middle class are having to give up rights and powers that they used to have. Governments tend to not stay stable indefinitely.

By BoniJ — On Aug 20, 2011

In my opinion, many of the modern day democracies have plutocratic elements to them. Some of the most wealthy are not necessarily in government positions, but are the wealthy business owners, who greatly influence government decisions with lobbying and "little deals."

Even in the beginnings of America's democracy, the leaders were wealthy and exerted their power over the "others", who were mostly lower class and uneducated. Thankfully, things did change over the years, with the emergence of a strong middle class.

By cardsfan27 — On Aug 20, 2011

I agree that many countries are plutocratic in a sense. During WWII Hitler would continually criticize the United States and England for being plutocracies and oppressing their people. Although Hitler was an evil dictator he was able to use the perception of plutocracies as being a bad form of government to help push a point to his people that he could lead. In reality plutocracies can work as a form of government, as long as there are checks that occur on the government.

Anytime a government starts to abuse their power and oppress the people that is when revolution can occur. That is why checks and balances are so important and are the hallmark of any good form of government.

By Emilski — On Aug 19, 2011

@jmc88 - You are correct in your assumption of many countries being plutocratic in a sense. The rich and powerful will usually be the ones that country a government and they are always at risk of an overthrow, which is why a dictatorship usually ends in an overthrow at some point.

Even though a plutocracy may seem like a bad thing, what it really comes down to is whether the government has an appropriate measure of checks and balances. In a plutocracy the people hold a check over the government because they can always overthrow it of they are unhappy enough. This is always known among any plutocrat and is kept in mind when there is a possibility of oppression of the people.

By jmc88 — On Aug 18, 2011

@TreeMan - Although your point may be true, that point is true in nearly all forms of government besides a direct democracy. Whenever a nation state has a representative government that is not directly decided on by the people it is usually going to consist of people of wealth and power. As good of intentions as a form of government may have it is impossible to correct human error and the rich and powerful will usually be the ones who end up running the country. Many nations are a plutocracy in a sense because of this reason.

With any form of government, not just a plutocracy, the people in charge have to be able to appeal to the average citizens of the country. The people, as a whole, always have the power to rebel and can overthrow any government as long as they are dissatisfied and united enough. This is what keeps plutocrats in check as well as anyone in power in any form of government, not just those that are wealthy and have invested interest in their government.

By TreeMan — On Aug 18, 2011

Although a plutocracy does promote a division among the classes one of the advantages is that the wealthy people who run the country have a reason to be concerned with the government and are inclined to rule in an effective manner.

Since there is a division amongst the classes, that means that the lower classes will always be critical of the wealthy individuals in power. Once the lower classes have enough of bad rule that means a revolution can occur. In order for the plutocrats to keep their power and their vested interest in the government they must be able to not be seen as inhibiting the lower classes, but rather willing to work with them in the system or else an overthrow can occur.

Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a...

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