Jeffrey Winters speaks like an academic, but many might consider his ideas subversive or revolutionary.
This professor of Political Science at Northwestern University (Illinois, USA) has spent a quarter of a century dedicated to the study of a complex subject: the power of wealth and how it is transformed into political influence.
From this effort arose his book “Oligarchy,” in which he not only traces the history of power and privilege of oligarchies from ancient times to the present, but also develops an original theory on this subject.
In this conversation with BBC Mundo on the occasion of the publication of this text in Spanish, Winters talks about some of his most controversial ideas, such as his assertion that all liberal democracies today are, at the same time, oligarchies.
He also addresses the reasons why he believes that democratic participation has become ineffective in confronting the power of oligarchies, as well as the paradox that democratic societies – which enshrine political equality – are currently “incredibly unequal from an economic point of view.”
What do we talk about when we talk about oligarchy?
Oligarchy refers to the political power of wealth. Since ancient times, in Athens and Rome, when the word oligarchy first appeared, it always referred to the power of those few people who have enormous wealth.
Political power can take many forms, such as holding political office or controlling coercive capabilities, such as a warlord, but one of the most important sources of political power throughout history has been the possession of massive wealth, and we have oligarchs today just as we had oligarchs in the ancient world.
Why should we care about the oligarchy right now?
We should be concerned because all democratic countries in the world are simultaneously oligarchies. They are a mixture of both.
Countries that allow political competition between parties and enjoy voting rights also have a small number of people who use the enormous power of their wealth to finance candidates even before all citizens turn out to vote. Generally, the power of money first determines who is a viable candidate.
A second reason is because, especially in today’s democracies, we have greater inequality than ever before in history. This is ironic because we usually think of inequality as a problem of non-democratic societies, but in fact liberal democracies are incredibly economically unequal.
One reason for this is that over the past 250 years oligarchs have used their power to ensure that democracy does not make society more economically equal.
So the explosion of inequality that we see in the world and the explosion of anger that we see among citizens is related to the fact that the oligarchy is stronger in democracies today than it has been in decades.
How is it possible that democracy cannot solve this problem of inequality due to the oligarchy?
Democracy has limited ability to address this issue because laws have already been written by democracies themselves to favor the ability of oligarchs to use the power of their wealth.
Let me give you an example. In the United States, in 2010, we had a very famous case called Citizens United, in which the Supreme Court equated the use of money in politics with the exercise of freedom of expression. This opened the floodgates to the use of money to influence the political system.
And today in the United States, because of the existence of special political action committees, not only is the amount of money that the oligarchs can use virtually unlimited, but it is also largely secret, because we don’t know exactly who is influencing policy until long after the money has been used.
When talking about a small group of very rich people who use their power and wealth, most people would think of elites. How do you differentiate between elites and oligarchs?
The elite also refers to a minority of people who have an enormous amount of power, but it is based on things other than wealth. For example, someone like Barack Obama held political office when he was president, so he was a member of the elite but he was not rich. Someone like Gandhi was a member of the elite because he was tremendously powerful, but he did not have wealth. Someone like Oprah Winfrey can have an enormous amount of power because she is a celebrity.
How can it be that in liberal democracies, where elections are free and all citizens have the right to vote, oligarchs can have such influence?
Let’s go back to the example of the United States: long before anyone can vote either in a primary election or in an election for public office, we have something called the wealth primary.
Wealth primaries are where the candidate who wants to run goes to all the rich people first and says, “What do you want? Let me make sure the policies are going to work for you.” Then the rich people decide who they will support.
Typically, the primaries of the wealthy begin a year or two before any kind of campaign for public office. And if you want to run, but can’t attract the money of the wealthy, you often can’t compete.
So the role of the power of wealth is to limit the candidates to a very small number of people who are already acceptable to the oligarchs. After the oligarchs have eliminated the other candidates, they then open up the possibility for the people to decide between candidates A, B and C, all of whom are completely acceptable to the oligarchs.
Let me be clear: do citizens have a choice? Are they free? Can they vote freely? Yes, but we have to understand that the combination of oligarchy and democracy severely limits the options and policies that are possible because they seek to ensure that inequality, extreme inequality and concentration of wealth are maintained.
Sometimes this process fails and democracy produces candidates or parties that are not acceptable to the oligarchs. When this happens, it is usually democracy itself that collapses, because the oligarchs find it unacceptable.
A very clear example was the case of Allende in Chile. Democracy produced a party and a candidate that were completely unacceptable to corporations and the rich, and the result was murder and the end of democracy. And this has happened in many places around the world.
So one of the things we need to understand about the relationship between oligarchy and democracy is that democracy is possible as long as the oligarchy is not threatened.
In your book you argue that oligarchs have been successful for centuries in making people believe that it is a mistake to attempt a significant redistribution of wealth…
When democracy was emerging, the oligarchs were extremely worried that it would cause a redistribution of wealth. They were very afraid and, in fact, did not want democracy to happen. And it turns out that, in fact, democracy has been structured in a way that makes it extremely difficult to redistribute wealth.
They have also tried to use the power of wealth to shape ideas in society. Many oligarchs around the world fund research centers, institutes and economics departments at major universities to spread the idea that without oligarchs and concentrated wealth, jobs will not be created and economies will collapse.
They also put forward the idea that oligarchs are actually beneficial to society because they are philanthropists and donate money to medicine and other causes they support.
What is never said is that the main thing that oligarchs do with their money is to defend their own wealth. Beginning in the 1950s and 1960s, there emerged what I call in the book ‘the wealth defense industry’, which is a multi-billion dollar industry made up of lawyers, accountants, lobbyists and wealth management professionals whose only job is to make sure that oligarchs don’t have to pay taxes.
There are two ways in which inequality increases. One occurs at the point of production, that is, in the relationship between people who work and the owners of the workplaces.
The other way inequality is affected is by government redistribution policy. That is why most societies try to deal with inequality through progressive taxation. The poor pay a smaller percentage of taxes, while the rich should pay more.
The wealth defense industry’s job is to make sure that progressive taxation doesn’t work. For example, people like Warren Buffet, Elon Musk or Jeff Bezos pay a significantly lower tax rate than the average US citizen.
Why? First, because the wealth defense industry shapes legislation, helping to write laws in Congress to leave loopholes for the wealthy.
Secondly, the same wealth defense industry moves money around the world into secret jurisdictions, trusts or tax havens to make it impossible for agencies like the IRS to [el servicio de impuestos de EE.UU.] can know where the wealth is.
Finally, the same wealth defense industry is lobbying Congress to cut funding for the IRS, limiting its investigative capabilities so that it cannot find the money, pursue or investigate the oligarchs.
In your book, you mention that the oligarchy represents 1% of the 1% and that when they mobilize their power to protect their fortunes, those who end up paying more taxes are those who are a little less wealthy and the middle class. Can you explain that?
In the book I define an oligarch as a person who reaches a level of wealth that allows him to pay for the wealth protection industry. That is, he uses his wealth to protect wealth.
In the United States, for example, there is the group that I call oligarchs and the group below them are wealthy people (mass affluent). This term is applied by the wealth defense industry itself to refer to people who, in reality, are not rich enough to be able to buy their services. [se estima que estas personas disponen para invertir de activos líquidos de entre $100.000 y $1 millón de dólares] And how do they know? Because they have already tried to convert them into clients, but they did not have enough money to pay for their services.
Let me give you an example of these services. In the United States there is something called a tax opinion letter. It is a document prepared by a law firm that has tax specialists who, based on their analysis of the law, indicate that you do not have to pay certain taxes.
Such a letter usually costs between $1 million and $3 million, but it can save you between $30 million and $300 million in taxes in one year. Most people cannot afford to get the tax opinion letter because it costs more than they earn.
By the way, if you receive a tax opinion letter, it means that lawyers have made an interpretation of the US tax code that is over 80,000 pages long. Not even the IRS understands it!
How did it become so complex? The answer is that the wealth defense industry deliberately made it that way so that their clients could interpret the law, rather than having to comply with it.
And this also happens in Western Europe?
Absolutely. One of the interesting things about Europe is that we often think that Scandinavian countries have more socialism and more welfare. But the oligarchs in Sweden, Finland or Denmark also pay almost nothing in taxes.
So how do they fund the welfare of the poor in their countries, access to healthcare, education, etc? The answer is that they use regressive taxes. Basically, these are taxes paid by the middle class and the people just above them, the wealthy. They pay all the taxes, but the oligarchs don’t pay.
You have said that although it is often thought that representative democracy implies overcoming oligarchy, this idea is not true. And that oligarchy is not only present in modern democracies, but also that regular democratic participation is not an effective antidote to it. Why?
Democracy and oligarchy are not [un juego] zero-sum. The reason we have oligarchy is not because we don’t have enough democracy. The reason we have oligarchy is because of the power of concentrated wealth. So, regardless of whether the country is authoritarian or democratic, the presence of oligarchs is determined by two things: the concentration of the power of wealth and the ability to convert that power of wealth into political influence.
The form of wealth power matters a lot. If we go back in history 1,000 years ago, maybe I was very rich because I had 10,000 heads of cattle, but it was not easy for me to convert my cattle into political power.
But if we fast forward to the 20th and 21st centuries, we have an explosion of financial wealth that is much more easily converted into political influence than whether I own land or mines. So in history, the shape of the power of wealth has changed. And today we are at the peak of the power of wealth in the world. That’s the first point.
The second point is that if we compare the power of the oligarchs in the United States and in China we will find that they are very different.
Under the Communist Party, controlled by Xi Jinping in China, there are hundreds, if not thousands, of billionaires. But for these oligarchs to use the power of their wealth to control the government is much riskier and more dangerous, compared to the United States.
Xi Jinping demonstrated this with Jack Ma [confundador de Alibaba]He spoke out and annoyed Xi Jinping and suddenly he disappeared from public view and lost control of his company. China is one of the few places in the world where, if you are an oligarch, you can go to jail or be executed.
In practical terms, how does the existence of the oligarchy affect the lives of the remaining 99.9%?
The existence of the oligarchy means that the power to make society ever more unequal is unlimited. The oligarchs’ main interest is to concentrate ever more wealth in their own hands. When I started studying oligarchs about 25 years ago, it took hundreds and hundreds of oligarchs to equal the wealth of the poorest 50% of the world. Today, about 50 oligarchs have as much wealth as the poorest 4 billion people in the world.
In the United States, 25 years ago it took about 30 oligarchs to equal the total wealth of the poorest half of the country. Today, it’s just three people. What impact does this have? First, the life expectancy of rich people compared to people without wealth is very different. Because of rising inequality in the world, millions of people are dying 5 to 10 years earlier than they would if inequality were lower.
Another difference? Children are leaving home much later. They are delaying getting married, buying their first home, having their first child, and they are having fewer and fewer. All this is happening because their economic situation is much more precarious. Their lives are at greater risk due to growing inequality.
And as inequality increases, their willingness to consider more extreme political actors increases because their hope for the future decreases. And all over the world we are seeing that even young people, in particular, are more open to very extreme political figures. All of this is a result of the success of oligarchs in increasing inequality around the world.
Would you say, then, that oligarchs and the rent protection system create inequality, and extreme inequality is a threat to democracy?
Completely.
What can be done about it?
We have seen in the past that countries around the world have the ability to limit and reduce oligarchic power, although not necessarily eliminate it altogether.
A simple example? The controls that can be imposed on the use of money in politics. These are measures that have been used before in democracies around the world and we have seen that they are possible. But to do so, we need to have a stronger mobilization in society around these issues.
Another thing that can be done is something that is now being seriously discussed between the United States, the European Union, Brazil and the United Nations: the possibility of a global wealth tax. And why is this important? Because if countries coordinate on this issue of taxing wealth, it means that oligarchs cannot use global geography against each country.
We have also seen that when ordinary citizens organize and mobilize, especially through things like unions, their political power to challenge oligarchs increases significantly.
So there are things that can be done, but they must be done in a way that is aware of the problem and responds directly to it. We must not see the power of wealth and oligarchic power as inevitable. There are very concrete things that can be done.
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