The 1% and the Rest of Us by Tim Di Muzio

Author:Tim Di Muzio
Language: eng
Format: epub, pdf
Publisher: Zed Books
Published: 2015-06-19T16:00:00+00:00

4 | DIFFERENTIAL CONSUMPTION: THE RISE OF PLUTONOMY

The central trend dominating ... has been the relentless growth of ‘plutonomy’ economics, a phenomenon that sees the wealth of the richest 1% growing far quicker than that of the general population. (Knight Frank 2012: 4)

Richistanis like to flaunt their wealth. And never before have so many flaunted so much. (Robert Frank 2007: 120)

History has rarely seen an era in which so much money has been made by so few people in such a short amount of time. (Jim Taylor et al. 2009: 4)

In my last year on Wall Street my bonus was $3.6 million – and I was angry because it wasn’t big enough. I was 30 years old, had no children to raise, no debts to pay, no philanthropic goal in mind. I wanted more money for exactly the same reason an alcoholic needs another drink: I was addicted. (Sam Polk 2014)

In the previous chapter we considered wealth, money and power and argued that the historical concern of the 1% has been the differential accumulation of money eventually expressed in the rising capitalisation of income streams. Today, differential capitalisation is symbolic of their power over other humans and over the natural world. Moreover, the magnitude of their power/wealth in the modern period was made possible by private ownership, the surplus energy of fossil fuels, and organised corporate power – for example, over the creation of money as debt. Also symbolic is the differential consumption of dominant owners, which is evidence to others of their wealth, status and power. This chapter takes a closer look at how high-net-worth individuals (HNWIs) spend their money through the lens of what Veblen (2007) called conspicuous consumption.1

The global plutonomy

The concept of a ‘plutonomy’ was penned by a team of global equity strategists in a 2005 report for Citigroup entitled ‘Plutonomy: buying luxury, explaining global imbalances’. A subsequent report, ‘Revisiting plutonomy: the rich getting richer’, followed a year later and largely reiterated the first report. Taken together, the main aim of the reports is to provide an analysis of current economic trends capable of informing high-net-worth investment strategies. The thesis advanced in the report is twofold. The first argument is that ‘the world is dividing into two blocs – the plutonomies, where economic growth is powered by and largely consumed by the wealthy few, and the rest’. The second argument is far simpler: ‘the rich will keep getting richer’ (Citigroup 2006: 10). The authors then read the concept of plutonomy back into history and argue that plutonomies have existed in ‘sixteenth century Spain, in seventeenth century Holland, the Gilded Age and the Roaring Twenties in the U.S.’. Today, they argue that the United States, Canada, the UK and Australia (added in the second report) are all plutonomies powered by the differential gains made by the wealthiest 1% of income earners, or, in their words: ‘the rich now dominate income, wealth and spending in these countries’ (ibid.: 1). Their evidence for this claim is based on empirical research

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