Plutocracy is a term you’ve probably heard before. It means “rule by the rich”. But what is a “plutonomy”?

In truth, plutocracy is the political system we’ve had in Australia and across the Global North basically forever.

Under plutocracy, the ruling elites are the ultra-wealthy, the millionaire presidents and senators, the corporate executives and billionaires, the sheikhs and aristocrats. This group forms a club representing their own class interests but often appearing divided across two political parties (e.g. the Republicans and Democrats).

These elites still need the consent of the populace. This means democratic-appearing structures and institutions carry weight, and the plutocrats often must make concessions to citizens — for example, higher minimum wages, worker safety laws, consumer protections, social safety nets and Medicare.

These concessions historically have almost entirely been won through organised union efforts — in Australia only one economy-wide concession has ever been won without being led by unions: the NDIS.

So that’s a plutocracy — rule by the rich, but not absolute rule.

But what is a plutonomy?

Coined by Wall Street analysts at Citibank in 2005, a plutonomy is an economy where economic growth is entirely powered by, and consumed by, a tiny fraction of the super-rich.

In a normal economy, most growth and consumption comes from the large mass of workers and middle class. The largest markets are with the general population of millions or tens of millions of people, not with the tiny fraction of 100 or 1000 billionaires.

In a plutonomy, the average consumer is almost complete irrelevant, economically speaking. The daily spending of millions on food, utilities or consumer goods is overwhelmed by the excessive, exorbitant expenditure of a billionaire on super-yachts, mega-mansions and luxury apartments, artwork and Cartier.

We now live in a world where the small elite of ultra-rich holds such a massive share of the nation’s income and wealth that their personal spending and investment habits completely overwhelm the economic decisions of everyone else combined.

Australia is increasingly taking on the structural features of a plutonomy.

Wealth concentration is stark. The top 20 percent of households hoard nearly two-thirds of all national wealth. Meanwhile, the bottom 60 percent of the country is forced to fight over less than a fifth of the total wealth. The richest 200 households have seen their wealth explode from 8 percent to 25 percent of GDP in just twenty years.

These numbers are hard to understand — they are abstract. It means that 200 households, around 400 people, control wealth valued at four hundred fifty billion US dollars. In Australian dollars, that is $1,634,224,286 per person.

If you were paid one dollar every second of every day of every year, it would take you 51 years to reach that $1.6 billion figure.

This extreme wealth is created and driven by asset inflation rather than work.

Over the past three decades, changes in Australian net worth were overwhelmingly driven by capital gains rather than savings from everyday wages. Wealth is generated simply by already owning assets (including the mines selling commodities like coal, iron ore and gas at vastly under-taxed rates overseas), locking out those who must rely solely on a pay cheque.

This unequal system was created and is maintained by deliberate political choices that heavily subsidise the wealthy. Australia provides massive tax breaks for property speculators, such as the capital gains tax discount. This policy alone costs the Commonwealth budget $19 billion a year, with 80 cents of every dollar flowing directly to the top 10 percent of earners.

In 2026, the most devastating consequence of the plutonomy is the generational housing crisis. Homes have been transformed from basic shelter into tax-subsidised financial assets for the rich to speculate on. Young Australians don’t own their lives, they rent them. Millennials and Gen Z people are forced to take on massive debts just to survive — which further enables wealth extraction upwards to the ultra-rich who own the debt.

Extreme economic wealth inevitably translates into severe political inequality. In a plutonomy, the wealthy use their immense financial power and influence to capture the political system, ensuring governments prioritise their asset growth and low taxes over the needs of the broader public.

This is most obvious of course in the USA, but it is also the case the the bastions of democracy and propriety like the UK are also plutonomies where the government serves wealth before people.

The democratic deficit creates a deeply fragile and angry society. As the working class and middle class are choked by the cost of living and stagnant wages, political alienation grows rapidly. This profound economic despair is currently fuelling a surge in support for far-right political parties and groups.

It will be impossible to fix the cost of living or the housing crisis without confronting the fact that our economy is designed to serve a wealthy elite at the expense of everyone else.

To reclaim our democracy and control over our economy, we must urgently reform how we tax wealth and capital. This is a radical, essential, urgent demand.

But what about production I hear you ask?

Under capitalism, there is distribution (which is what extreme wealth and plutonomy describes), but more importantly there is production. Most importantly, it is production — by workers — that creates all of the wealth that the ultra-rich capture and extract.

Under plutonomy, distribution by the elites has gained substantial, dominant power over the power of production. While value is still created by labour, wealth is created through ownership of assets (land, intellectual property, digital platforms). Economists call this rentierism.

Why is this happening? Because capitalism has reached a near terminal stage of over-production and profit crisis. It is so dysfunctional that it is cannibalising the means of social-reproduction (housing, health, food) to maintain growth rates through assetisation. This is aligned to Piketty’s thesis in Capital in the Twenty-First Century.

Fundamentally, if you think, as I do that this stage of capitalism is so precarious, so terminal, that new economic forms could and are becoming dominant, then the core logic of the system can also change. Yanis Varoufakis persuasively argues that the emerging dominant world-economic system is technofeudalism. I am persuaded by this.

The relationship between labour and capital has been utterly hollowed out, although still contradictory and at odds. In a plutonomy, capital doesn’t just exploit your labour at work; it exploits your entire existence (data, debt, and attention, reproduction).

Under capitalism before the Global Financial Crisis, it was essential for the system for workers to consume for the system to function and for workers to reproduce themselves (e.g. buy housing, food, health care, etc). Under technofeudalism and in a plutonomy, capital has found a way to profit even when workers can’t afford to consume.

The gig-working precariat in Amazon picking-warehouses and Ubers aren’t just being exploited for their labour, they are also being managed as a “surplus population” while simultaneously adding to the capital stock of Meta, Amazon and Google through creating unpaid content for cloud services.

The top 3000 plutocrats can sustain economic growth through asset bubbles and luxury consumption, while vast, billions of people remain in emiserating poverty.

Wealth is rapidly no longer becoming about owning productive assets where value is created through labour. Wealth is now being strip-mined, extracted through rent and financial engineering. Labour exploitation has moved from the shop floor to the social totality.

Under plutonomy, the barista serves more value than they are paid. But in the plutonomy, the owner of building that cafe rents often cares less about the profit from the coffee show owner and more about the capital gains on the land the cafe sits on. The rentier cannibalises the capitalist and the labourer. The labouring barisa is further expropriated by the landlord for their rental house, the financier of their car loan, and the barista then performs unpaid value creation by scrolling Instagram as recreation at home, further enriching the cloud-capital stock of Meta.

When I say the consumer is “irrelevant”, this means that the systemic function of the economy is no longer tied to the “mass prosperity” of the working class. That system has not existed, more or less, since the GFC.

For those developing strategy for resisting this, new forms of resistance are needed. Yes, in some instances strikes will still be essential and highly impactful. Logistics and supply chains are still integral to the lifeblood of the capitalist plutonomy. But in many cases we must avoid fighting a 20th century ghost. As the “surplus population” grows, new forms of solidarity across classes will be needed, along with new forms of action.