Economic wealth accumulation creates elite-contenders that undermine the stability of western institutions
Looking back at 2016 can be agonising. Political anxiety and economic uncertainty have fuelled this year’s political turmoil in many western countries. Much has been said about the underlying reasons feeding this evolution and I do not intend to bore you with a reiteration of well-known arguments. I will not tell you about social norms that are being broken nor will I make normative points about the moral inferiority of Trump’s America. Instead, I will set forth a channel through which recent political extremities could be explained.
While common people, who feel as politically marginalised as ever, try to punish established political figures using democratic means – economic elites are still running the political show. Trump’s cabinet is reportedly one of the wealthiest in US history; the British PM’s roots in financial services hardly make her a leader for the people. How is it then, that populations have revolted and replaced one part of the intellectual elite with another?
During the better part of the 20th century, political stability and social institutions have held western societies together. The political system could work well because political institutions and policy-makers collaborated: the part of the powerful elite that wished to participate in politics could do so. Presently though, collaboration among elites has eroded as the number of elites grew.
Economic elites in need of political power
This elite oversupply – channel is rooted in economic power. Over the last 50 years or so, the number of top wealth holders has steadily increased. For example, the number of US households worth $10mn or over grew from 66,000 in 1983 by more than five times to 464,000 in 2007 . This story continues in other countries: in the UK the average income of the top 10% increased from 27,900£ in 1977 to 80,400£ in 2014 (ONS, 2015). Broadly speaking, even though I have to rely on different statistics, the numbers point to an increase in the size of the population that has economic influence. While this story goes hand-in-hand with a widening income gap, which deserves criticism on its own, it allows us to spin a different narrative.
Now, how can an increased set of economic elites explain political chaos? First, note that the political elite tends to stem from richer parts of the population and this part of society frequently strives to press the policy debate into their hands and their influence. This implies that there are many more people that have the means and desire to invest in political capital today. Yet, the supply of political offices has stayed flat in most western countries. The last time the size of the US congress was increased occurred in 1912 – in the meantime, US population more than tripled. In praxis, this means that there are too many politically ambitious elites for the available offices.
Such an oversupply generally leads to more intra-elite competition – as opposed to collaboration. Whereas previously, economic elites would support their friends’ political aspirations, now they must contend for power. This is then followed by ideological polarisation and fragmentation of the political class. The more potential rivals there are, the more end up on the losing side – and a situation arises, where a large class of disgruntled elite-wannabees, who are often well-educated and capable, are denied access to elite positions.
Ghastly sedition ahead
We have seen this process of political fragmentation arise – and elites left out of the loop are taking unprecedented means to gain political power. Sometimes no less than by abusing the fears and anxieties of the common population.
Peter Turchin, mathematician and historian at heart, has studied elite overproduction in historical societies – and he finds that an oversupply always ended in political violence or revolution (2013). For example, the American civil war or the Russian revolution were marked by competition amongst elites. The outlook looms dim at our gates for the prediction is that political violence will escalate until 2020.
The meagre hope on the horizon might be a side-lined political mainstream that surrenders peacefully and gives up political aspirations. Politicians realising the need to include more economic elites by extending the number of political offices available could also stop the bleeding. Sometimes political cronyism might have its benefits after all.
 Counting the number of households exceeding a certain wealth level is tedious. For the US, Wolff uses Fed CSF data. For other countries, no such data is readily available.