How the rich rule politics again

Oligarchy is back. In Italy, a media magnate looks set to become PM; elsewhere, the wealthy wield mo

When Francis Fukuyama wrote, some 12 years ago, that communism and socialism were collapsing to leave a world cleared for democracy and capitalism, he did not notice a concomitant trend. It is the move towards oligarchy - the rule of the rich. The strengthening of oligarchy is a direct consequence of the poverty of democratic politics. "Poverty" is used here in a literal way. Politics is cash poor compared to the rest of the society.

British parliamentarians will get a pay rise on 1 April: from £48,371 to £49, 822. Comparable jobs even in the public sector pay in the mid-£50, 000s; in the private sector it could be twice or three times or twenty times as much. In the Cabinet, salaries of around £100, 000 are, for the hours and responsibilities, even more out of kilter; and this has been increased by the Prime Minister's decision to freeze, in effect, cabinet salaries for the duration of this parliament.

Senior criminal barristers, for example, have earnings between £150,000 and £550,000, according to a recent legal publisher's survey. Tax barristers range from £300,000 to £2m. Since many MPs and cabinet ministers are lawyers and have lawyer friends and contacts, the disparity will be striking. As for the financiers and business people who have their pay set globally, salaries are always deep in double figures and, at the top end, make the recipients multimillionaires every year.

These are the people cabinet ministers and MPs were or could have been: Tony Blair, Jack Straw, Alistair Darling, Lord Irvine and Lord Falconer were all lawyers.

It is not possible for these politicians to work the hours and bear the strain they do without comparing themselves to those who work less, stand to lose less and earn much more. In the so far apparently minor scandals that have attended Peter Mandelson and the more serious allegations that pursue Keith Vaz, the ministers concerned had about them men and women who were far richer than them, and whose lifestyle they - unsurprisingly - wished to emulate. In Lord Irvine's minor scandal - the request that Labour-friendly lawyers donate to the party - he would see nothing wrong in his actions in part because a few hundred pounds is a trivial sum to those who were asked to give it.

Labour politicians have almost never been rich. Many of those who have been, such as Tony Benn, have gone to some pains to disguise or renounce their wealth. The ethos, which produced much hypocrisy, has been a spartan one: derived either from the severe decency of the upper working class, or the bohemian manners and lifestyle of the intellectual, or the guilty restraint of the progressive middle-class professional. These lifestyles are ancient echoes now; one reason is a change that progressives promoted - women's equality. Both Tony Blair and Gordon Brown have successful wives who earn more than they - Cherie Blair, as a QC, and Sarah Macaulay, as co-owner of the public relations consultancy Hobsbawm Macaulay.

When politicians work and live in relative poverty and are surrounded by relative wealth, temptation is constant. Since the pay trends of the "top people" continue, at least in the UK, to escalate in comparison to those of politicians, we can expect this to get worse. As it does so, the rich will have more purchase on politicians.

This trend is exacerbated by a more serious one. Political parties are everywhere on the decline. The recent revelation that Conservative Party membership is, at 300,000, a tenth of its postwar peak, is only the most dramatic sign of a malaise that afflicts parties everywhere - including, after a strong upward surge with new Labour, the Labour Party.

The decline has coincided with a huge rise in the costs of mounting campaigns. The last general election saw spending by the three main parties reach £44m, compared to £32m in 1992. Both Labour and Tory election spending has tripled in real terms over the past 25 years; so, too, has their non-election spending.

The United States dwarfs all other countries: since it has few caps on election expenditure and media advertising, it increasingly approaches the status of a full-blown democratic oligarchy - that is, a state in which rich parties and individuals compete for power. The last presidential election cost the parties more than $3bn. They spent $600m-plus on network television advertising alone.

The Bush cabinet is composed of the wealthy and the very wealthy - a group in which Colin Powell, with only a million or so gained from the speech circuit and books since leaving the low-paid military, is a poor man. President George Bush has tabled a tax-reduction plan totalling $1.6trn over the next decade, couched in the rhetoric of giving back to the people the surplus they contributed to the budget in the latter Clinton years. Because these cuts will be across the board rather than targeted on low- to middle-income earners, they will benefit the rich much more than the poor. A calculation quoted by the political writer Nicholas Lehman in the New Yorker last month showed that a middle-income family would pay $453 less a year in federal taxes, while a family in the top 1 per cent of earners would pay $46,072 less.

The US is the wealthiest nation among the Group of Seven wealthiest countries; the least, Italy, is probably about to demonstrate a different form of oligarchy. Polls give a very large lead to the right-wing coalition led by Silvio Berlusconi, owner of the Fininvest corporation which owns three of Italy's television channels, its biggest publishing house, Mondadori, a daily paper and extensive banking and telecommunications interests. He is one of the richest men in Europe. The two main parties that will form the majority with Berlusconi's Forza Italia - and which depend on his financial backing - are the Alleanza Nazionale, the heir to Mussolini's Fascists; and the Lega Nord, led by Umberto Bossi, an uninhibited campaigner against Italy's numerous immigrants.

Berlusconi will be, if he becomes prime minister, the first media lord to take the summit of state power. He will be capital in government, voted there legitimately by the citizens. Even if, as he claims, the many allegations against him are false, he will be a wholly different kind of politician from those who currently govern the advanced countries.

Oligarchy helps to bridge the gulf between developed and developing countries - though the oligarchy of the poorer states is of a different order from that of the rich. For where wealth and business presses upon the governments of the rich states, taking bridgeheads in and around them, the ruling elites of the poorer countries are embarked on pell-mell efforts to enrich themselves. Their western equivalents may find themselves "poor" by the side of other western professionals, but the politicians in developing countries find themselves an impoverished underclass beside western politicians - many of whom run countries much smaller, much calmer and less powerful than theirs, with far less dramatic penalties for failure.

The official salary of a Russian cabinet minister is around one-twentieth of that of his British equivalent; more to the point, it can be one-hundredth of that of the Russian banker whose wealth he has helped to create.

Flesh and blood cannot stand this. When they were liberated from terror, as Russia (then the Soviet Union) and China both were after the deaths of their dictator-gods Stalin and Mao, or from idealism, as India was after the murder of Gandhi, the new elites began to seek out private wealth.

Minxin Pei, of the Carnegie Endowment in New York, says that corruption now accounts for a vast 4 to 8 per cent of China's GNP. While punishment for those caught is severe - 30 regional officials were executed earlier this month for a smuggling racket - the measures are, says Pei, ineffective because "proposals to tackle the root causes of corruption - the unchecked power of the Communist Party, lack of press freedom, weak judiciary and the absence of accountability - are ignored or deemed politically unacceptable". Yet in India, where the press is freer, the government more checked and the judiciary stronger, corruption is also endemic among the elite (see Ziauddin Sardar, page 11). In Russia recently the interior minister, Vladimir Rushaylo, protested that it was not true (as the media alleged) that 70 per cent of officials were corrupt. "Only those who are linked with the organised criminal gangs can be regarded as corrupted," he said. "Do not mistake bribe-taking for corruption."

At the very lowest end of the governing hierarchy, some regimes are in power largely to be, in Mancur Olson's famous phrase, "stationary bandits". This is true in Zimbabwe, where Robert Mugabe's government has become a robber band that rewards its protectors from the dwindling stock of the country's wealth. It was true in Yugoslavia under Slobodan Milosevic: when he was president he used the treasury as his own. A report in the International Herald Tribune claimed: "Investigators say evidence so far suggests that Milosevic's family and perhaps 200 loyal businessmen-politicians who controlled most of the country's state-run companies skimmed anywhere from hundreds of millions to several billion dollars of public money for personal use."

This is the global context against which our own scandals play out. It makes them seem insignificant - and, in relative terms, they are. But it is too comforting to leave it at that. The pressures on the political and state functions from capital and from criminality are leaping up: the temptations, from the subtle to the gross, are much larger.

At the same time, the prestige of both politics and state service weakens. One shield against oligarchy - a strong democratic left which disdained wealth - has largely gone, since its economic programmes failed. The new left can resist the temptations of oligarchy only by relying on traditions of public service in politics and in the bureaucracy, yet these traditions are in decline. Even France - of all advanced countries the one with the strongest and most prestigious state service, staffed by graduates from the prestigious Ecole Nationale d'Administration - is suffering a haemorrhage of talent. Richard Descoings, head of the Parisian Sciences-Po, told the FT recently: "The best graduates of every generation used to think that ENA was the place to be in order to get the best jobs in society. This has definitely changed. Our graduates today know that the real source of innovation and change lies in the private sector."

Those countries where oligarchy remains on the fringes - Britain, France, Germany, Canada and other countries - have a duty to themselves and others to protect and enhance public life, which includes a public service entered into as a profession, not a good deed. But it will be tough. The rich really do want to inherit the earth, and there is little at present to stop them.

This article first appeared in the 26 March 2001 issue of the New Statesman, How the rich rule politics again