The Theory and Practice of Oligarchical Capitalism

The Theory and Practice of Oligarchical Capitalism April 17, 2014

Talking about George Orwell's 1984, and the book within the book, is always interesting. But this semester the discussion took some turns that seem to me worth sharing.

The book by Emmanuel Goldstein, The Theory and Practice of Oligarchical Collectivism, is an intentional parody of Marx and Engels' Communist Manifesto. It represents a plan to bring about something less like what Marx and Engels idealistically envisaged, and more like what Communism ended up looking like in Eastern Europe.

Orwell's analysis, albeit fictional, is thus nonetheless very serious. The notion that revolutions have consistently been led by the middle class rather than the lower, making appeals and promises to the masses that are never fulfilled, seems strikingly accurate. And it doesn't just apply to Communism.

When we started asking whether our own socio-economic system aims to elevate the poor, or merely to keep the poor unrealistically hopeful of the possibility of elevation, it was hard not to be cynical.

For instance, studying at university is crucial to achieving wealth in our society in most cases. The wealthy can afford education. The poor have a shot at a few scholarships, or can put themselves heavily in debt, undermining the extent to which the education they thus purchase will lead to wealth. And so is American the land of opportunity, or the land where opportunity is held out as an unrealistic promise to maintain the status quo, much as the lottery (both in the real world and in 1984) takes wealth from the masses while offering them the hope of wealth that most of them will never attain.

Isn't our society in fact an oligarchy, with the American Dream held out unrealistically as a way to keep the poor engaged in a system that rarely actually benefits them, while the wealthy really control things? Doesn't being a leader not only in the business world but even in politics require that one already have access to wealth?

Believe it or not, I wrote the above before I saw the Princeton study suggesting that the U.S. is an oligarchy.

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  • Gary

    Video: forgot #8. Keep interest rates low, so poor grandma and grandpa get 0.01% interest on their savings account and CD, while propping up the stock market so grandma and grandpa Romney can buy their extra homes in La Jolla, and hide his fortune in off shore tax free accounts. They never did find out how he got so much money into his retirement stash. Life is good. Of course, low interest rates create jobs, that is, unless the CEO’s are sinking their profits into golden parachute retirements, increasing management salaries, busting unions, and holding back expansion in full time jobs to avoid providing benefits like health care for their working class brothers. Life is good.

  • Tim

    One of my professors once remarked that “The lottery is a tax for people who are bad at math.”

  • Michael Wilson

    James, thanks for linking to “The Theory and Practice…”I loved 1984, and it is a favoite of conservatives. Regarding economic mobility, I think you will be happyto know things aren’t as dire as you think. In fact most people born into poverty will not remain there. A little over half of the bottom 5th move up. See

    By the same token, most of the the top 5th’s children will move a step down. About 60%. Most of the movement is to the bext 5th. Frankly, I think if it were more volatile, that woukd be sign of a society in turmoil. Consider a society where kids in the middle class had just as much chance to grow up poorer than their parents as richer. Growing up would be scary. Fortunately the case is that more middle class kids stay the same or move up than go back. Much if the shrinking if the middle class is due to defection to the upper class.

    Of course if one’s vision of upward mobility us rising from a poor family to the upper reaches of power, your our of luck, but it is a jaded interpretation of the American dream to assumes that the goal is for every poor kid to become a tycoon or rock star.

  • Michael Wilson

    On the 6th paragraph of the third chapter of “The Theory..”, Orwell writes that a dociety where every one has a car, indoor toilet, refrigerator, short hours, and plentiful food, their would be a sort of equality of life and the masses would become literate and aware of their position in the world. Do you think, and remembering he wrote this in the 50’s, that this ideal has made great head way in Europe and the US? Do you think that in some terms you have equality with the rich? How many dozens of times better is Donald Trump’s meals and and leisure life? How many decades will he live past the average person?

    • As a university professor, I have a degree (pun intended) of job security that few have in a capitalist society, and which everyone has in a communist society. If there is something that I am sure Donald Trump can do and I cannot is simply decide to travel and not have cost become an issue. I allow my work to overflow into what could potentially be my “leisure” time, partly because my job allows me an incredible amount of flexibility to my schedule, and also because I enjoy studying and reading about the things I teach and research for a living, and so the distinction between the two is blurry. That too is a major difference – I doubt that most people who check out customers in a supermarket could do that as a hobby even if they were so inclined. But they might need to do that in a second job simply to make ends meet.

      Life expectancy is one area in which there has been significant overall progress, and in which it is unlikely unless new technology is developed that the rich will have an enormous advantage over the poor – although science fiction has explored some scenarios in which that could change:

      • Michael Wilson

        On science fiction, I’ve given thought to a scenerio where a medical advance might so expensive that only a few could afford it with ability to make its purchaser nearly immortal. I think you’ve already discused Elysium. Even the crappy health care we have now causes all sorts of social problems. Unlike top tier fame platforms, people aren’t that content to just wait for new cancer drugs to become affordable. I imagine in Elysium world, the people who control access to the health pods must be under a lot of preasure by bribe or threat to move certain people ahead of the the waiting line for life.

        I’ve done alright in my research waiting tables. I think the difference between me and many others of equivalent income is not my amount of liesure time, but what I spend it on. Lots of people think news, science, history, and politics are boring. This explains raiting for the NFL, NBA, Duck Dynasty, and Keeping up with the Kardashians. If have time for Candy Crush, you have time to read a book.

      • Michael Wilson

        OH Yes! In Time was great. Timberlake is great in everything.

  • Michael Wilson

    Regarding our oligarchs, it is certainly true that money talks, and their are far fewer people below middle class in elected office than in general society. But in any group are their not likely to be individuals a lot more influential than the average joe? And who are the rich few? At what income bracket do you lose your voice? In INSOC, only 6 million people were part of the inner ruling class, admitsnce was restricted by exams. Their was no gradual reduction in membership the oligharchy. In our system a person making 600K has more influence than one making 100k and less than one making 1000K. So who’s part of the oligharchy and who has power. And if they have all the power, why do they pay such high taxes? If the top 20% ruled, I would expect their tax rates would be the lowest. It is infact the opposite. Some power. How much do you supose an INSOC party member contributed to the income of the state vs the proles? Finally, would our government work better if it members demographics reflected America at large? This would be a congress where less than half the members would have a college degree, and around 6% would be high school drop outs. I admit that at times it means that our representstives are out if touch with the lower class and how law effects them, but I dont think that just because our president grew up in a wealthy family and has achieved even greater wealth on his own, that he can’t properly advocate for the poor.

  • Reich’s video does not address the central questions on each specific point: who is this “they” and why (specifically) they oppose these economic interventions. He also offers no empirical evidence of “their” actions in opposition to the interventions he supports. Obviously, it is in the interests of employers to lower employees’ bargaining power, but this lowered bargaining power is likely to decrease unemployment. Also, Reich does not show that the interventions he supports are somehow “good for America”. Expanded unemployment benefits and the minimum wage, for example, are likely to keep unemployment above what it would be in the absence of these interventions.

    Also, rich people work. I despise the phrase “working class”, though I am, by any standard, a part of it.

    • Michael Wilson

      Emperor Hardass, your right. Reich sets up straw men about the rich wanting to eliminate the programs they think are over funded for no other reason than shortsighted greed. Reading “Theory and Practice…” I couldn’t help but see that according to Orwell, the leftist are the last middle group seeking to topple the high and establish a permanent hierarchy based on destruction of surplus. The leftist in America are consciously or not, setting up a system where the poor stay poor and new innovation is slowed to protect the non class based hierarchy, the civil servants.