Global ruling class

Global Ruling Class: Billionaires and How They `Made It'



by Prof. James Petras

Global Research, March 23, 2007
James Petras Website

Even as the world's billionaires grew in number from 793 in 2006 to
946 this year, major mass uprisings became commonplace in China and
India. In India, which has the highest number of billionaires (36) in
Asia with total wealth of $191 billion, Prime Minister Singh declared
that the greatest single threat to 'India's security' were the Maoist-
led guerrilla armies and mass movements in the poorest parts of the
country. In China, with 20 billionaires with $29.4 billion net worth,
the new rulers, confronting nearly a hundred thousand reported riots
and protests, have increased the number of armed special anti-riot
militia a hundred fold, and increased spending for the rural poor by
$10 billion in the hopes of lessening the monstrous class
inequalities and heading off a mass upheaval.

The total wealth of this global ruling class grew 35 per cent year to
year topping $3.5 trillion, while income levels for the lower 55 per
cent of the world's 6-billion-strong population declined or
stagnated. Put another way, one hundred millionth of the world's
population (1/100,000,000) owns more than over 3 billion people. Over
half of the current billionaires (523) came from just 3 countries:
the US (415), Germany (55) and Russia (53). The 35 per cent increase
in wealth mostly came from speculation on equity markets, real estate
and commodity trading, rather than from technical innovations,
investments in job-creating industries or social services.

Among the newest, youngest and fastest-growing group of billionaires,
the Russian oligarchy stands out for its most rapacious beginnings.
Over two-thirds (67 per cent) of the current Russian billionaire
oligarchs began their concentration of wealth in their mid to early
twenties. During the infamous decade of the 1990's under the quasi-
dictatorial rule of Boris Yeltsin and his US-directed economic
advisers, Anatoly Chubais and Yegor Gaidar the entire Russian economy
was put up for sale for a 'political price', which was far below its
real value. Without exception, the transfers of property were
achieved through gangster tactics assassinations, massive theft, and
seizure of state resources, illicit stock manipulation and buyouts.
The future billionaires stripped the Russian state of over a trillion
dollars worth of factories, transport, oil, gas, iron, coal and other
formerly state-owned resources.

Contrary to European and US publicists on the right and left, very
few of the top former Communist leaders are found among the current
Russian billionaire oligarchy. Secondly, contrary to the spin-
masters' claims of 'communist inefficiencies' , the former Soviet
Union developed mines, factories, energy enterprises were profitable
and competitive, before they were taken over by the new oligarchs.
This is evident in the massive private wealth that was accumulated in
less than a decade by these gangster-businessme n.

Virtually all the billionaires' initial sources of wealth had nothing
to do with building, innovating or developing new efficient
enterprises. Wealth was not transferred to high Communist Party
Commissars (lateral transfers) but was seized by armed private mafias
run by recent university graduates who quickly capitalized on
corrupting, intimidating or assassinating senior officials in the
state and benefiting from Boris Yeltsin's mindless contracting of
'free market' Western consultants.

Forbes magazine puts out a yearly list of the richest individuals and
families in the world. What is most amusing about the famous Forbes
magazine's background biographical notes on the Russian oligarchs is
the constant reference to their source of wealth as 'self-made' as if
stealing state property created by and defended for over 70 years by
the sweat and blood of the Russian people was the result of the
entrepreneurial skills of thugs in their twenties. Of the top eight
Russian billionaire oligarchs, all got their start from strong-arming
their rivals, setting up 'paper banks' and taking over aluminum, oil,
gas, nickel and steel production and the export of bauxite, iron and
other minerals. Every sector of the former Communist economy was
pillaged by the new billionaires: Construction, telecommunications,
chemicals, real estate, agriculture, vodka, foods, land, media,
automobiles, airlines etc..

With rare exceptions, following the Yeltsin privatizations all of the
oligarchs quickly rose to the top or near the top, literally
murdering or intimidating any opponents within the former Soviet
apparatus and competitors from rival predator gangs.

The key 'policy' measures, which facilitated the initial pillage and
takeovers by the future billionaires, were the vast and immediate
privatizations of almost all public enterprises by the Gaidar/Chubais
team. This 'Shock Treatment' was encouraged by a Harvard team of
economic advisers and especially by US President Clinton in order to
make the capitalist transformation irreversible. Privatization led to
the capitalist gang wars and the disarticulation of the Russian
economy. As a result there was an 80 per cent decline in living
standards, a devaluation of the Ruble and the sell-off of invaluable
oil, gas and other strategic resources at bargain prices to the
rising class of predator billionaires and US-European oil and gas
multinational corporations. Over a hundred billion dollars a year was
laundered by the mafia oligarchs in the principle banks of New York,
London, Switzerland, Israel and elsewhere funds which would later be
recycled in the purchase of expensive real estate in the US, England,
Spain, France as well as investments in British football teams,
Israeli banks and joint ventures in minerals.

The winners of the gang wars during the Yeltsin reign followed up by
expanding operations to a variety of new economic sectors,
investments in the expansion of existing facilities (especially in
real estate, extractive and consumer industries) and overseas. Under
President Putin, the gangster-oligarchs consolidated and expanded
from multi-millionaires to billionaires, to multi-billionaires and
growing. From young swaggering thugs and local swindlers, they became
the 'respectable' partners of American and European multinational
corporations, according to their Western PR agents. The new Russian
oligarchs had 'arrived' on the world financial scene, according to
the financial press.

Yet as President Putin recently pointed out, the new billionaires
have failed to invest, innovate and create competitive enterprises,
despite optimal conditions. Outside of raw material exports,
benefiting from high international prices, few of the oligarch-owned
manufacturers are earning foreign exchange, because few can compete
in international markets. The reason is that the oligarchs have
'diversified' into stock speculation (Suleiman Kerimov $14.4 billion
), (Mikhail Prokhorov $13.5 billion ), banking (Fridman $12.6
billion ) and buyouts of mines and mineral processing plants.

The Western media have focused on the falling out between a handful
of Yeltsin-era oligarchs and President Vladimir Putin and the
increase in wealth of a number of Putin-era billionaires. However,
the biographical evidence demonstrates that there is no rupture
between the rise of the billionaires under Yeltsin and their
consolidation and expansion under Putin. The decline in mutual murder
and the shift to state-regulated competition is as much a product of
the consolidation of the great fortunes as it is the 'new rules of
the game' imposed by President Putin. In the mid 19th century, Honoré
Balzac, surveying the rise of the respectable bourgeois in France,
pointed out their dubious origins: "Behind every great fortune is a
great crime." The swindles begetting the decades-long ascent of the
19th century French bourgeoisie pale in comparison to the massive
pillage and bloodletting that created Russia's 21st century
billionaires.