The New Plutocracy

In a 2005 report to investors three analysts at Citigroup advised that “the World is dividing into two blocs—the Plutonomy and the rest...In a plutonomy there is no such animal as “the U.S. consumer” or “the UK consumer”, or indeed the “Russian consumer”. There are rich consumers, few in number, but disproportionate in the gigantic slice of income and consumption they take. There are the rest, the “non-rich”, the multitudinous many, but only accounting for surprisingly small bites of the national pie."

The rise of the new plutocracy is inextricably connected to two phenomena: the revolution in information technology and the liberalization of global trade. Meanwhile, the vast majority of workers, however devoted and skilled at their jobs, have missed out on the windfalls of this winner-take-most economy—or worse, found their savings, employers, or professions ravaged by the same forces that have enriched the plutocratic elite. The result of these divergent trends is a jaw-dropping surge in income inequality. Individual nations have offered their own contributions to income inequality—financial deregulation and upper-bracket tax cuts in the United States; insider privatization in Russia; rent-seeking in regulated industries in India and Mexico...

[The new plutocracy] members are hardworking, highly educated, jet-setting meritocrats who feel they are the deserving winners of a tough, worldwide economic competition—and many of them, as a result, have an ambivalent attitude toward those of us who didn’t succeed so spectacularly...For the super-elite, a sense of meritocratic achievement can inspire high self-regard, and that self-regard—especially when compounded by their isolation among like-minded peers—can lead to obliviousness and indifference to the suffering of others. Russian oligarchs have been among the most fearless in expressing this attitude. Mikhail Khodorkovsky, at that moment the richest man in Russia, said “If a man is not an oligarch, something is not right with him. Everyone had the same starting conditions, everyone could have done it.” (Khodorkovsky’s is currently in prison which has tempered this outlook: he admitted that he had “did not care much about social responsibility.”) When one of Wall Street’s most successful investment-bank CEOs was asked if he felt guilty for his firm’s role in creating the financial crisis, he answered with evident sincerity that he did not. The real culprit, he explained, was his feckless cousin, who owned three cars and a home he could not afford. One of America’s top hedge-fund managers made a near-identical case—though this time the offenders were his in-laws and their subprime mortgage. And a private-equity baron who divides his time between New York and Palm Beach pinned blame for the collapse on a favorite golf caddy in Arizona, who had bought three condos as investment properties at the height of the bubble. ....As with the aristocracies of bygone days, such vast wealth has created a gulf between the plutocrats and other people, one reinforced by their withdrawal into gated estates, exclusive academies, and private planes...

Perhaps most noteworthy, the new plutocracy are becoming a transglobal community of peers who have more in common with one another than with their countrymen back home. Whether they maintain primary residences in New York or Hong Kong, Moscow or Mumbai, today’s super-rich are increasingly a nation unto themselves...The real community life of the 21st-century plutocracy occurs on the international conference circuit...[it] illustrates another defining characteristic of today’s plutocrats: they are forming a global community, and their ties to one another are increasingly closer than their ties to hoi polloi back home...
...Glenn Hutchins, co-founder of the private-equity firm Silver Lake, puts it, “A person in Africa who runs a big African bank and went to Harvard might have more in common with me than he does with his neighbors, and I could well share more overlapping concerns and experiences with him than with my neighbors.” The circles we move in, Hutchins explains, are defined by “interests” and “activities” rather than “geography”: “Beijing has a lot in common with New York, London, or Mumbai. You see the same people, you eat in the same restaurants, you stay in the same hotels. But most important, we are engaged as global citizens in crosscutting commercial, political, and social matters of common concern. We are much less place-based than we used to be.”
Mohamed ElErian, the CEO of Pimco, the world’s largest bond manager, is typical of the internationalists gradually rising to the top echelons of U.S. business. The son of an Egyptian father and a French mother, ElErian had a peripatetic childhood, shuttling between Egypt, France, the United States, the United Kingdom, and Switzerland. He was educated at Cambridge and Oxford and now leads a U.S.-based company that is owned by the German financial conglomerate Allianz SE. Though ElErian lives in Laguna Beach, California, near where Pimco is headquartered, he says that he can’t name a single country as his own. “I have had the privilege of living in many countries,”

But the flows of goods and capital upon which the super-elite surf are bypassing America more often than they used to. Take, for example, Stephen Jennings, the 50-year-old New Zealander who co-founded the investment bank Renaissance Capital. Renaissance’s roots are in Moscow, where Jennings maintains his primary residence, and his business strategy involves positioning the firm to capture the investment flows between the emerging markets, particularly Russia, Africa, and Asia. For his purposes, New York is increasingly irrelevant. In a 2009 speech in Wellington, New Zealand, he offered his vision of this post-unipolar business reality: “The largest metals group in the world is Indian. The largest aluminum group in the world is Russian … The fastest-growing and largest banks in China, Russia, and Nigeria are all domestic.”
Digital Sky Technologies, Russia’s largest technology investment firm, entered into a partnership with the South African media corporation Naspers and the Chinese technology company Tencent. All three are fast-growing firms with global vision—last fall, a DST spin-off called Mail.ru went public and immediately became Europe’s most highly valued Internet company—yet none is primarily focused on the United States. America's own super-elite is rapidly adjusting to this more global perspective. The U.S.-based CEO of one of the world’s largest hedge funds said in a recent internal debate that one of his senior colleagues had argued that the hollowing-out of the American middle class didn’t really matter. “His point was that if the transformation of the world economy lifts four people in China and India out of poverty and into the middle class, and meanwhile means one American drops out of the middle class, that’s not such a bad trade,” .
Michael Splinter, CEO of the Silicon Valley green-tech firm Applied Materials, said that “This year, almost 90 percent of our sales will be outside the U.S.,” he explained. “The pull to be close to the customers—most of them in Asia—is enormous.”
Speaking at the same conference, Thomas Wilson, CEO of Allstate, also lamented this global reality: “I can get [workers] anywhere in the world. It is a problem for America, but it is not necessarily a problem for American business … American businesses will adapt.” Wilson’s distinction helps explain why many of America’s other business elites appear so removed from the continuing travails of the U.S. workforce and economy: the global “nation” in which they increasingly live and work is doing fine—indeed, it’s thriving...

(Taken and adapted from The Rise of the New Global Elite by Chrystia Freeland, a business journalist.)

For all practical purposes the basic division of society is the all important one—the capitalist owner and propertyless wage workers - "the Plutonomy and the rest". Socialist have always been aware that over the years capitalism has become more and more international, more and more globalised and that the capitalist class was becoming more and more international in character. The entire geography of the world is now established. The world is now a shrinking world, a world of shrinking markets for goods, a shrinking world for new capital investment, and a shrinking world—in the face of rapidly developing technology—for the working class. Knowledge and understanding are needed, and urgently, before this shrinking world chokes humanity.

Yet unity in the capitalist class exists only in its efforts to maintain the working class in subjugation and that it may remain, eternally, a working class.