Review: Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else, by Chrystia Freeland

If there’s one thing that pundits love to talk about in this age of ongoing yet sluggish recovery from the 2008 economic collapse, it’s income inequality. The topic has been, for example, on the tongues of commentators as Wall Street billionaire Michael Bloomberg wraps up his 12-year stint as mayor of New York, a city that has seen both tremendous growth and tremendous growth in wage disparity under his watch. It has been a topic of much debate in relation to China, a country that has seen nearly 1 billion people elevated out of poverty in the last two decades and yet now boasts one of the largest gaps between the haves and the have-nots. And talk of income inequality remains the background chatter of any discussion about how the Eurozone is going to reconcile its chasm between the winner countries and loser countries as it tries to recover from the recession.

So Chrystia Freeland’s timing is quite good with this 2012 tome, Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else, a book that provides us with a window into the much-maligned 1% of society. Freeland wisely does not limit herself to examining the plutocrats of the United States and other pillar countries of the West. Instead, she sets as her thesis the notion that a one-percenter from the Upper East Side of Manhattan has more in common with a Russian oligarch or Chinese billionaire than he does with a middle-class office drone in Cleveland. Her book looks to examine both the history, the rationales, and the outcome of the modern-day plutocracy that we now take for granted.

In this attempt, Plutocrats succeeds on many fronts—especially in the first quarter of the book. Freeland establishes the proper historical context for how such breathtaking wage disparity was able to emerge, i.e. the industrial revolution that commenced in the mid-to-late 1700s and found its culmination in such late-19th century figures as Andrew Carnegie, whom Freeland cites extensively. She walks us through the Long Depression (1873-1896), the Great Depression (1929-1939) and how income inequality in these periods helped to spawn such eventual phenomena as global communism and the New Deal. She also discusses the great golden age of mixed economies (1945-1980) and how wage disparity was at its lowest and general prosperity was at its highest during this period. She then leads us through the economic coup d'état that occurred starting around 1980 with the Chicago School of Economics that saw the rise of globalization and neoliberal economic ideology. This led inevitably to the collapse of communism and millions around the world seeing their standard of living skyrocket, but also caused a level of income inequality that Andrew Carnegie could not have even imagined. And thus, here we are, saddled with a sub-society of plutocrats who are so much wealthier than the rest of us.

The next two quarters of the book examine in detail the lives of these stratified billionaires, but there doesn’t seem to be much cohesion to Freeland’s descriptions and the writing starts to grow tedious. Part of the problem is that she doesn’t delve into the broader philosophical underpinnings that allow plutocracy to thrive. After walking us through what we might label Carnegian inevitability—the idea from Andrew Carnegie that income disparity was a bad thing but entirely unavoidable in the wake of the industrial revolution—she leaps forward into neoliberal inevitability, that is the overriding belief that because advances in technology and international politics have allowed for globalization to occur, then globalization must occur. What is missing is the moral argument for unfettered capitalism that emerged in the middle part of the 20th century, between the period of Carnegian inevitability and the period of neoliberal inevitability.

This moral foundation, I would argue, arose from a writer less nuanced than Milton Friedman, the doyen of the Chicago School, and one whose ideas found little traction at the time because she was writing during the height of America’s mixed-economy successes. That writer—one Freeland mentions only in passing—is Ayn Rand. While most intelligent people rightly dismiss Rand’s “philosophy” as little more than the one-dimensional ramblings of an intellectual pipsqueak, her credos are enjoying a resurgence among right-wingers and apologists for the plutocrats. This is because income inequality is, ultimately, not inevitable. It is a deliberate choice that society has made based on the moral assumption—an assumption articulated by Rand in both her fiction and nonfiction, and one reinforced by Friedman and the Chicago School and then made practical through Reaganomics and Thatcherism—that “greed is good,” that leaving capitalism unfettered will eventually lift all boats. The idea is: if I, as a lower or even middle-class person, experience an unprecedented and demonstrable rise in my standard of living as a result of unfettered capitalism, then why do I care how much more the top 1% makes than me?

Freeland barely skims the surface of these issues in the middle part of her book; and even as she builds to her engaging summations at the end, she never really delves deeply into this. There can be little doubt that globalization and economic neoliberalism have improved the economic status of millions around the world; anyone looking to argue against that on sheer data would surely look the fool. But if this is the case, then why is income inequality a bad thing? If the overall pie is getting much bigger than we could have ever imagined, then why should we be concerned if our percentage of the pie is going down? Freeland does not really answer this question effectively by the end of Plutocrats.

The reason, for what it’s worth, is that just because your economic status has risen doesn’t mean that you necessarily have more agency over your life. In fact, quite the opposite can be true. Surely the litmus test for any economic policy is that its core tenets allow for the next generation to live happier and more stable lives than the previous one. But neoliberalism has cataclysmically failed on that count. If an American graduating from university in 1970 could glimpse through a time portal at the America of 2013, she would be mortified by the far-fetched dystopian nightmare that she'd see. The age of cheap education, plentiful well-paying jobs for life and affordable housing is gone. Today, two-income families struggle to make ends meet. University or college education is growing increasingly out of reach for even upper middle-class households. Student loan debts now cripple two generations of graduates. Outsourcing, contract work, and layoffs become a regular and stressful occurrence. Jobs pay more than what our parents made (even when adjusted for inflation), but we’re inexplicably worse off. And these grievances are not limited to the West. In 1980, a full 80% of China’s population lived in abject poverty; today, the country is an economic powerhouse. Yet a recent survey showed that even middle-class Chinese label themselves less happy than they were 35 years ago. Something is definitely wrong. The reason income inequality is to blame is because it robs the majority of the population of agency over the long haul. The benefits may be short-term, but the drawbacks rewire how you are forced to live the rest of your life.

Thankfully, Freeland posits an antidote (albeit inadvertently) to this malaise early in Plutocrats. She has some great descriptions of the mixed-economy period, and readers should rightly see the re-emergence of mixed-economy ideology as our only way out. It’s intellectually lazy to pull one’s economic policies hard to the right (as we’ve been doing since 1980) or hard to the left (as many countries did in the first half of the 20th century) on sheer principle alone. The wiser thing to do, the harder thing to do, is to create a strategic and well-thought out mix of socialist and capitalist polices that are balanced and fair. Higher taxes, more strategic regulations, and the re-financing of public institutions would provide longer-term benefit to everyone, including those at the top. But it’s a strategy that governments are not interested in, and the majority of middle-class people don’t care about. We’re all too busy just figuring out a way to make a fast buck.