Complex and historically rooted ideas can be difficult to understand today, especially at a time when the politics often uses them as labels, many times without any real meaning. However, in recent years, many of these historical ideas have resurfaced, not only in the media and politics but also in the academic sphere. In this piece, my goal is to provide a brief understanding of an idea that we encounter more and more in everyday news: the one known as plutocracy.

Plutocracy may not have been a very mainstream concept before, but today it is no longer confined to the realm of philosophy. As we read the news, one could increasingly conclude that it has moved into the reality, especially with the inauguration of President Donald Trump’s second term, since dozens of articles have been published with ‘plutocracy’ in the title. Given that 13 multibillionaires and many more whose net worth is at least 100 million USD have been appointed or anointed into decision-making and/or governmental positions, these extremely wealthy and economically powerful actors around the new administration raised many questions in the general public worldwide. These and many other examples have created a situation where the public at one point needs to engage with the understanding of such philosophical terms. However, I would like to highlight that the economic background and its influence on the theory are, of course, not novelties of the present era. Here, I have only mentioned the most recent critiques that have used the term ‘plutocracy’ on a level accessible to the wider public.

Plato says in “The Republic”: “What would happen if someone were to choose the captains of ships by their wealth, refusing to entrust the ship to a poor person even if he was a better captain? They would make a poor voyage of it. And isn’t the same true of the rule of anything else whatsoever? I suppose so. Except a city? Or does it also apply to a city? To a city most of all, since it’s the most difficult and most important kind of rule.”

I think this passage effectively demonstrates the problem and the philosophical background of plutocracy. It highlights a world where one’s qualities are not what define them, but rather their background, family, and wealth they inherit by birth, not by merit or action. (By the way, another upcoming term is kakistocracy – government by the worst and least scrupulous – also relevant to ‘defining qualities’ coming up in the discourse about plutocracy, as mentioned.) Kakistocracy also informs this debate and has frequently appeared in legal literature concerning Latin America. Kakistocracy – as mentioned above – is government that is ruled by the least suitable, able, or experienced people in a state or country. There is a widely known saying, which in my opinion strongly connected to this issue, it is about those who want to lead should never become leaders, those who seek power should never come to power, which well-known saying suggests that those who would truly be suited for leadership often do not strive for power, as they do not live for personal gain or the desire for control. In contrast, those who seek to acquire power often lack the necessary skills or moral integrity to become true leaders. It serves as a warning that power often ends up in the hands of the least suitable individuals when those who should lead do not seek power.

Defining Plutocracy

As always there are different definitions of the theory of plutocracy, but I will use the definition provided by the Cambridge Dictionary, which defines it as “a system of government in which the richest people in a country rule or have power”.

This refers to a type of governance in which the power is concentrated not only in the hands of the wealthiest individuals, but also even in the hands of wealthy and powerful families within a country or a society. In a plutocracy (or plutarchy), the ‘ruling class’ is defined by their financial resources, which ensure their authority and power. This wealth allows them to advance their own interests, often at the expense of the broader population. This form of rule naturally, automatically allows a small, elite group to hold disproportionate influence over the political and economic landscape.

What makes plutocracy particularly concerning is that it is a self-reinforcing system. Once a group of wealthy individuals ascends to power, they can use their financial resources to influence political decisions and even reshape laws and policies to further protect and expand their wealth. This creates a feedback loop where the rich continue to accumulate power and wealth, while the majority of people find it increasingly difficult to challenge or alter the status quo.

However, it is important to highlight that plutocracy isn’t formally recognized as a political ideology or philosophy, simply because it is not that: it is a form of governance. It is, albeit, widely criticized as unjust and it is rather used with a pejorative meaning. It is meant to highlight the inherent inequalities and lack of democratic accountability in such a system. People generally view plutocracy as an undesirable state, where the interests of the few are prioritized over the well-being of the many, undermining the principles of fairness and equality, which are the pillars of the current ideas of states, the rule of law. In such a system, the wealthy are able to consolidate their position, ensuring that their privileges are protected and even expanded, while the majority of the population remains sidelined.

Some people imagine that plutocracy is the oldest form of government in the world, believing that our ancient ancestors, long before the modern age of science, capitalism, and democracy, were ruled by powerful, wealthy leaders who could do whatever they wanted because they controlled all the resources. Although, this is partly a myth. Pre-capitalist and non-capitalist societies had various social structures, some based on wealth, but not all. In many tribal societies, leaders gained power through generosity, not ownership. For example, Anglo-Saxon kings earned loyalty through sharing battle spoils, not hoarding wealth. Before the rise of capitalism, Europe had various economic systems. Capitalism differs by giving everyone the right to own, buy, and sell goods, allowing individuals to amass wealth and influence politics. This opens the door to plutocracy, as seen with the Medici family in Florence, and even in non-capitalist nations like modern China.

To provide a more nuanced understanding of plutocracy, I will explore its distinction from other well-known political concepts, such as democracy and oligarchy.

What is the difference between democracy and plutocracy?

To understand the term one needs to distinguish between two ideas juxtaposed in this question. As Kishore Mahbubani explains: “In a democracy, the masses broadly determine their future. Equally critically, in terms of the economy, society, and political system there is a level playing field where the working classes, middle classes, and affluent elites compete. The term “level playing field” is absolutely critical here”. Additionally, the connection between democracy and plutocracy can be well explained by the famous U.S. Supreme Court decision, Citizens United v. FEC from 2010. This landmark ruling allowed unlimited political spending by corporations, unions and other large donors or political action committees (PACs) that argued such spending is a form protected speech (corporate speech). The ruling effectively gave these (American) entities the ability to pour vast sums of money into (domestic) elections. This has created an environment where political candidates and parties increasingly relied on funding from the wealthy elite, shifting the balance of power in favor of those with significant financial resources.

Governing by the few: a distinction of plutocracy and oligarchy

Oligarchy, according to the Britannica is: “a government by the few, especially despotic power exercised by a small and privileged group for corrupt or selfish purposes. Oligarchies in which members of the ruling group are wealthy or exercise their power through their wealth are known as plutocracies.” This means that plutocracy is one type of oligarchy, more simply put: every plutocracy is oligarchy but not every oligarchy is plutocracy. Among the types of oligarchy, we can mention – along with others –  stratocracy, where the military holds the power, or theocracy, which describe a country that is controlled by a group of religious leaders  or even  technocracy which originally referred to a system of governance ruled by skilled experts, such as people with degrees in fields like finance, engineering, and law. However, in contemporary discourse, the term ‘technocratic’ is more commonly used to describe a system where power is exercised by individuals who control or possess expertise in technology, digital systems, and data management — and many times with a pejorative tone. In this regard, we could mention the newly created Department of Government Efficiency (DOGE), which perfectly exemplifies technocracy.

Conclusion

As we could see the idea of plutocracy has existed in various forms throughout history, its modern resurgence signals a need for deeper reflection on the balance of power in society. From the ancient Athens to our contemporary governments, the concentration of wealth has always influenced politics, many times shaping policies and leadership in ways that favor the elite. The rise of corporate influence, particularly the more and more powerful digital economies suggests that the conversation around plutocracy is far from over, especially as economic disparities continue to widen.

Soma BÁCSFALVI is a final year Msc student of law at the Faculty of Law and Political Sciences of the University of Szeged, Hungary, but has also studied at the Université Catholique de Louvain and is a former student of the European Academy of Public Law. He was a scholarship student of the Aurum Foundation. As a former intern with the presidential cabinet of the Hungarian Constitutional Court and the National Assembly, his researches focuses on the interconnections of national constitutional law and European public law, in particular on the rule of law and its manifestations in the European Union.