A few weeks ago, Ed Fullbrook posted about a Citibank report about the rise of a plutonomic society. The report reads, in part:
The World is dividing into two blocs – the Plutonomy and the rest. The U.S., UK, and Canada are the key Plutonomies – economies powered by the wealthy. Continental Europe (ex-Italy) and Japan are in the egalitarian bloc.
Equity risk premium embedded in “global imbalances” are unwarranted. In plutonomies the rich absorb a disproportionate chunk of the economy and have a massive impact on reported aggregate numbers like savings rates, current account deficits, consumption levels, etc. This imbalance in inequality expresses itself in the standard scary “global imbalances”. We worry less.
There is no “average consumer” in a Plutonomy. Consensus analyses focusing on the “average” consumer are flawed from the start…
We project that the plutonomies (the U.S., UK, and Canada) will likely see even more income inequality, disproportionately feeding off a further rise in the profit share in their economies, capitalist-friendly governments, more technology-driven productivity, and globalization.
Banks realize what’s going on, and they must- plutonomy has vast implications for the demand for their debt products. Of course, it has even more important political and economic implications as well. Fullbrook rightly points out that scholars largely didn’t notice the report when it came out (2005), and it has since been removed from public space. Let’s hope more people think about the structures driving inequality. I’ll have another post on Thursday that ties back to this one and shows that scholars are noticing in some unexpected placement, although this discussion still falls outside mainstream discourse.