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.
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.
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.
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.