Critique of “US is an Oligarchy?” Part 2: The US case

In the second section of the paper “Oligarchy in the United States?” by Winters and Page, the authors attempt to conceptualise how the possession of material wealth translates into possession of political power.

Firstly, the authors examine evidence of vast economic inequalities within the US with reference to prior investigations. How these economic inequalities translate into inequalities of political power that essentially make basic democratic processes ineffective is then explored. Finally the authors turn to semantics, which seem to me apologetics, in order to deny that the US is an oligarchy, despite dedicating an entire section to showing that clearly, the US is not a democracy.

Click here to see part 1 of this commentary, “Theory of Oligarchy”, in which the authors fumble around in their attempts to clearly define oligarchy. To find the full paper use the following DOI: 10.1017/S1368980008002541.

This entire section is worth reading so I would strongly encourage that you try and get access to the full article. I’m led to believe that most public libraries provide access to a plethora of academic journals and any good university library should definitely provide access- if your local university does not, simply ask and they will usually do their best to find you a copy.

This section opens:

Does an identifiable oligarchy exist in the United States? If so, how do oligarchs overcome the democratic features of the political system and circumvent majority rule on certain issues? Over what policy domains, if any, do they exert decisive influence?

A useful starting point is to consider the extent of economic inequality in the United States.

Unless you’ve studied this before, even if you think you know about inequality from the mainstream media, the following evidence could be quite shocking. Especially when we consider that this is the level of inequality in the land of the free (with its for-profit prisons, but perhaps this is something to be discussed another time) and disturbingly so when we think on the starving poor in the Global South.

Since about 1973 the real wages and family incomes of average Americans have lagged behind productivity gains and have mostly stagnated, while those at the very top of the income distribution have prospered spectacularly.

  • The top 1 percent receives more than 20% of national income, the top 300,000 receive almost as much as the bottom 150,000,000.
  • The top group received 440 times as much as an average person from the bottom half of the population, double what it was in 1980.
  • In 1973, average CEOs earned about 27 times as much as average workers. In 2005, CEOs earned 262 times as much.
  • In 2006, the combined income of just 3 individual hedge fund managers was $4.4 billion- that’s billion as in thousand million or 1,000,000,000! James Simons’ income was $1.7bn, Kenneth Griffin’s $1.4bn and Edward Lampert’s $1.3bn.
  • In 2006, the top 25 hedge fund managers combined income was $14bn- more than the entire GDP of Jordan or Uruguay!
  • In 2007, the top 25 hedge fund managers combined income was $22bn. John Paulson “earned” $3.7bn, George Soros- $2.9bn and James Simons- $2.8bn!

It’s hard not to be absolutely disgusted when seeing these numbers. These amounts of money are incomprehensible to mere plebs like us, dwarfing the incomes of even top CEOs, showing the system to be the shambles it is. I can’t imagine the kind of mental gymnastics required to rationalise this gross capital accumulation, especially when we remember what abstract substance money acts as a means of exchange for- it’s not just goods and services, i.e. commodities, it is human labour.

Consider that every citizen has an individual power profile based on the power resources he or she can deploy. One person’s power profile might be very low because although he has a right to vote (part of the power profile of all registered adult citizens), he is unmobilized [sic] and has almost no spare material resources. Another person’s power profile might be very high by virtue of holding an office like senator or being a Supreme Court justice. Yet another person’s individual power profile might be high because she is capable of mobilizing tens of thousands of other citizens to act in concert. And finally, there is the person whose power profile is dominated more than anything else by ownership of massive material resources in the form of income or wealth.

Suppose, for the sake of argument, that money income can be translated easily and directly into political power and—as a first cut into the problem—that it translates on a one-to-one basis: twice the income produces twice the political power, and so forth. A search for oligarchy in the United States, then, could begin by calculating exactly how much income the richest Americans get as a multiple of the income earned by most other Americans. This ratio could be used as a first, rough estimate of the political power of potential oligarchs.

The article goes on by calculating this political power using an income-based Material Power Index whereby an individual who earns the average income of those in the bottom 90% have 1 unit of political power. The essay admits that this doesn’t take into account inequalities within the bottom 90% earners but this is because these differences would probably be statistically negligible when compared to the difference between the bottom 90% and top 10%.

Using this measure, the authors found that each individual member of the upper strata, had about 8.5 times as much political power as those from the 90%; the top 1%, averaged over 38 times as much; the top 0.1%, over 190 times as much; and the top 0.01%, over 882 times as much!

Would this degree of concentrated power be sufficient to establish the existence of oligarchy in the United States? Striking as these figures are, they still leave room for doubt. The groups that include the highest-income, most powerful individuals are quite small, so that the total power wielded by those groups may not be overwhelming.

The authors then show how the collective power of these groups looks as a percentage of the combined political power points of all groups. They found that the bottom 90% had just 51.5% of the power; the top 10% had 48.5%; the top 1% had 21.8%; the top 0.1%, 10.9%; top 0.01%, 5.1%.

[…] One may consider it to be rather sobering that by this measure the top 10 percent of the population has about as much material-based political power as the entire bottom 90 percent. This may or may not be a definitive sign of oligarchy, but it certainly does not look like pure, one-person one-vote democracy. Furthermore, higher-income people are probably able to deploy more of their incomes for politics, more effectively, than are those on the bottom. The bottom 90 percent face formidable collective action and communications problems, and they must spend a much higher proportion of their incomes on necessities.

In any case, the picture changes when we recall the Aristotelian definition of oligarchy, which focuses on wealth rather than income. Most of the resources of the working and middle classes are not available for political action. Their income has to go for day-to-day necessities. Great wealth, on the other hand, can command political influence even when the wealth-owner’s annual income is low or negative. Many of the wealthiest individuals maintain large savings that can be readily tapped. And illiquid wealth can serve as collateral for loans that can be spent on politics. Furthermore, without anyone spending a dime, wealth can pose a threat to—can hover as a dark cloud of potential retaliation above—any politician who might threaten the interests of wealth holders. Thus wealth is more relevant to political power than income. And it is more highly concentrated in fewer hands. A focus on wealth provides stronger evidence for the existence of oligarchy.

The authors go on to examine political power inequalities using a wealth based Material Power Index rather than the previously used income-based index. They found the following (using data from multiple sources which can be found in the full article):

Fraction of Adult Population Average Wealth Individual Power Index Total Group Power Index
Using Forbes Top 400
Top 5/100,000 of top 1% (101 people) $8.1 billion 59,619 2.5%
Top 2/10,000 of top 1% (404 people) $3 billion 21,836 3.7%
Using Estate Tax data
Top 0.01% $63.56 million 462.7 3.9%
Top 0.1% $14.79 million 107.6 9.1%
Top 1% $3.39 million 24.7 20.8%
Using Consumer Finance Survey data
Top 1% $14.79 million

($13.5m non-home)

107.6

(199.4 based on non-home)

34.3%

(42.2%)

Top 10% $3.07 million 22.3 71.2%
Bottom 90% $137,389

($67,611 non-home)

1.0 28.7%

(19.1%)

I think the rest of this section speaks for itself.

Any fixed quantitative criterion used to identify oligarchs is bound to be arbitrary. In particular, we would argue strongly against any mechanical rule of looking (say) for groups that have “a majority” of the political power in society according to some quantitative measure.

The size of oligarchies (if and when they exist) is an empirical matter that undoubtedly varies by time and place and will require considerable effort and ingenuity to pin down. Moreover, membership in an oligarchy is not likely to be dichotomous (yes or no) but rather a matter of degree. And finally, not every individual possessing immense material power necessarily uses it (although our theory of oligarchy does not require that all oligarchs exercise their power, only that some do and that the others tend not to use their power against core oligarchic interests).

Keeping these caveats in mind, we suspect that the power share of the top tenth of 1 percent of US households may well be sufficient to dominate politics on key issues of most intense interest to that group, when we take into account the collective action problems of their potential opponents among less wealthy citizens and the likely sympathy or (at worst) indifference of most of the rest of the top 10 percent. That is, for the United States at the present time, a definitional boundary that identifies the top tenth of 1 percent of the wealthiest households as potential oligarchs seems fairly plausible.

The roughly 300,000 individuals in the top tenth of 1 percent far exceed in size any tiny conspiracy or cabal. Though some of them undoubtedly network with each other, most are not even mutually acquainted. They are bound together—if at all—by material self-interest and political clout, not by social ties. At the same time, a group that constitutes just one-tenth of 1 percent of the population is much smaller than a Marxian class or a mass-based pluralistic interest group. And it has a much more distinct character than a broadly defined “elite.” Perhaps, then, we have identified a set of potential oligarchs in the United States.

As I noted in the end of the first section of this critical commentary, Marxist analyses of classes do not have any size bounds. In orthodox Marxist analyses, membership of a class is purely defined by relation to means of production however, in some neo-Marxist approaches, sub-classes going beyond the simple distinction between bourgeoisie and proletariat exist- the “highest” being the monopoly capitalists. Even with these analyses however, size of the class is not a factor for consideration, only the amount of wealth, which as this article shows is, power that they have, that they have because others do not.

In the next part of my admittedly shallow (this series is fairly low down on my list of priorities) analysis/commentary of this paper, I’ll be looking at the section titled “Oligarchy and Public Policy” which begins by looking at actual differences in how US policy is affected by these different competing interests. We see that throughout American history, policy has always been generous to the wealthy, while ignoring the needs and demands of not just the poorest of American citizens, but also its middle classes.


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