This blog draws on Branko Milanovic’s new book entitled ‘The Great Global Transformation’, an impressive volume that offers an evidence-based assessment of the present state of geopolitics. My immediate focus in on his concept of ‘homoploutia’. This is his way of articulating the emergence of a new ruling class in ‘the new capitalism’.
He notes Burnham’s prediction that a new managerial class would come to render capital owners more or less redundant. There would be a ‘withering away’ of private capital – and de-emphasising of the profit motive – in the face of the growing power of the state. The reality, Milanovic contends, it has been quite different. A credentialled or meritocratic managerial class has indeed been created and has expanded, but it is quite different from the one envisaged by Burnham. It has not arisen in opposition to the ‘capitalist class’, but on the contrary, it has become part of the capitalist class. This is the context in which Milanovic writes of ‘homoploutia’:
‘homoploutia means that the top of the income distribution is not composed, as in classical capitalist societies, of people whose entire, or almost entire, income is derived from ownership of capital, but increasingly of people who receive high incomes from both labour and capital, and thus not only belong to the top income class, but are among the highest wage-earners and among the richest capitalists. This is an entirely new phenomenon. It is nit equivalent to the fact, noted before (see e.g. Piketty in ‘Capital in the Twenty-First century’), that the richest groups today have a greater share of labour income than in the past. This is, of course, true. But what was not noticed, and what the concept of homoplautia highlights, is the triple coincidence: (i) the richest people are also (ii) the highest paid wage-earners and (iii) the richest capitalists. For the sake of convenience, we shall define as members of the ‘homoploutic’ new class those who are in the top decile by labour income, capital income and total income’ (pp. 111-112).
Milanovic’s focus here is on the US, but he invites similar considerations of other OECD countries. He argues that a fusion has occurred between the original or simple professional-managerial class with ‘capitalists proper’. Or rather, the former have ‘become capitalists’. He suggests this defines ‘the new ruling class in advanced capitalism’.
Developing this point, he cites Markovits’ ‘The Meritocracy Trap’:
‘Marcovits argues that ‘what is conventionally called merit is actually an ideological conceit, constructed to launder fundamentally unjust allocation of advantage’. The system is relatively easy to explain by writing it as a modification of Marx’s famous M-C-M scheme (invested money ‘leads to’ production of commodities ‘leads to’ more money). Here it is M-E-M where ‘E’ stands for production of children’s education. The moneyed elite, itself well educated and hard-working, dedicates large amounts of effort and money to place its children through the most expensive, elitist and competitive education system in the world that begins with pre-kindergarten and ends with graduate school – in order to make sure that children earn ever higher incomes and stay on top. ‘Meritocracy’ is thus just another way to create and maintain a de facto ruling class, where birth advantage (fundamental to its power) is concealed by educational credentials’ (p.117).
Milanovic’s conclusion to his discussion of homoploutia is again worth quoting in full:
‘ … (1) the new ruling class in advanced capitalism (and even more strongly in the United States) is a class that was successful in uniting the old-fashioned managerial class with top capitalists. (2) That fusion does not take place only or mainly through a similarity of material interests, or similarity of positions in the process of production of the two classes (managerial and capitalist), which, in principle, might not rule out the possibility that the two classes may move apart, or that their interests may diverge. (3) On the contrary, the new ruling class is created by fusion, as it were ‘within’, which implies a concordance of material interests. Highly credentialled individuals acquire capital, or rich heirs acquire the best education and then high-paying jobs. Interests of the professional-managerial class this become intertwined with the interests of capital. The old-fashioned capitalist class might still maintain its position at the fringes, but it is clearly destined for extinction, even in the cases where their members may have inherited wealth but neglect to obtain educational credentials’ (p.119).
These are his interpretations of the evidence he lays out in detail about the newly emerging composition of the ( fusion of the wealth + income) elites, especially but not exclusively in the US). There is much more to his book than this, but that will have to wait for another occasion.
It is an interesting thesis about a putatively new ruling class combining credentialism and homoploutia. What does it mean for my longstanding conviction and argument that the formula ‘capital buys power to make policy’ is best articulated in terms of a new class/command dynamic emerging in post-1970s rentier capitalism? I shall think on, but it will have to await another blog.
Reference
Milanovic,B (2026) The Great Global Transformation. London; Allen Lane