It’s a tragedy of modern plutocratic Britain: if you want to rise, follow the Piers Morgan playbook

George Monbiot in The Guardian

It was one of the abiding mysteries of public life. How did Piers Morgan rise so far? I see him as a buffoon, a bully, a windbag. Yet, despite scandals that would have killed most people’s careers, he rose like a methane bubble in a slurry lagoon, occupying some of the most prestigious and lucrative positions in the media. This week, reflecting on the life and abuses of the plutocrat Mohamed Al Fayed, Private Eye magazine produced an explanation. It came from Morgan himself, writing about Fayed in 1999. “I’ve always made it a strict rule in life to ingratiate myself with three categories of people: newspaper owners, potential newspaper owners and billionaires. And since Mohamed Al Fayed is a billionaire and would love to own a newspaper, sucking up to him seems an extremely sensible move.”

The strategy is not unusual. But voicing it is. Morgan expressed the unspoken rule of public life out loud. If you want to get ahead, grovel to billionaires, especially those who own the media. The obvious coda to the rule is: “because they are the people with real power”.

Plenty of rules are broken without consequence. You can appear on the BBC while hiding your financial interests, breaking its editorial guidelines, as long as you are channelling the demands of the very rich. You can breach parliamentary rules without punishment – by lying, or by failing to update your register of interests, or by taking a second job without clearance when your ministerial career ends – as long as you remain a loyal servant of big money. But Morgan’s Rule is the one that must not be broken. If you are a political party and you want a sniff at power, if you are a commentator who wants to appear on the BBC, you must observe it. Otherwise you will be vilified or excluded.

‘Since Mohamed Al Fayed is a billionaire and would love to own a newspaper, sucking up to him seems an extremely sensible move,’ wrote Piers Morgan in 1999. Photograph: Reuters

Morgan and journalists like him are members of the concierge class, which provides a wide range of services to economic power. Some of them, such as editors of the billionaire media and the junktanks of Tufton Street, specialise in translating the outrageous demands of oligarchs and corporations into what looks like political common sense, or in attacking plutocrats’ critics or transferring blame for their impacts on to immigrants, the Labour party and other customary scapegoats.

Some of them, such as lobbyists, specialise in reputation-laundering: brokering deals between grim plutocrats and cultural institutions – universities, museums, opera houses, charities – which, in return for lavish donations, will name faculties, professorships, galleries, funds and prizes after their sponsors, transforming violent kleptocrats into pillars of society.

Others, including lawyers, accountants, bankers and wealth managers, specialise in hiding and washing their money, buying them special visas, or suing and hounding their critics. This is why organised crime loves London. It takes advantage of both England’s ultra-permissive financial laws and its ultra-repressive libel laws.

The government is always ready to help. In 2021, while Rishi Sunak was chancellor of the exchequer, lawyers acting for Yevgeny Prigozhin, the late brutal chief of Russia’s Wagner mercenary group, applied to the Treasury for permission to override the sanctions against him, so that he could sue the investigative journalist Eliot Higgins. Sunak’s Treasury granted the special licences they requested and even approved sanctions-busting flights to St Petersburg so they could plan their legal attack.

In this way a few dozen people, assisted by thousands of concierges, can dominate our lives. The system we call democracy is a mere patina, sticky and dimpled, on the surface of oligarchic power.

There are many ways in which economic power translates into political power, and none of them are good for us. The most obvious is campaign finance: the sponsorship not only of political parties but of entire systems of political thought and action. These transactions muscle the interests of society out of politicians’ minds. Some of them are enormous. Last year, the US website the Lever exposed a $1.3bn (£1bn) transfer of money from a little-known billionaire, Barre Seid, to a new political advocacy group run by an ultraconservative. How can mere citizens compete?

‘Rishi Sunak’s administration, run by an oligarch for oligarchs, produces assurances that it will close economic crime loopholes, then subtly tweaks the legislation to keep them open.’ Photograph: Dan Kitwood/PA

Financial power also ensures that the rules supposed to stop economic crime and the laundering of its proceeds contain loopholes wide enough for a superyacht to sail through. For the past few months, members of the House of Lords have been battling to remove the obvious get-out clauses from the economic crime bill passing through parliament. The government has thwarted it at every turn. In the debate on Monday, the Conservative peer Lord Agnew – the very opposite of a radical firebrand – complained that “the government continue to say one thing and then do something different”. Sunak’s administration, run by an oligarch for oligarchs, produces heart-thumping assurances that it will close the loopholes, then subtly tweaks the legislation to keep them open.

Money’s might ensures that its environmental impacts are unrestrained. Recently, I was told about a multimillionaire who had intended to fly in his private jet to a luxury resort, only to change his mind at the last minute and decide to go to a different place, with a shorter landing strip. The plane was too heavy to land there, so it sat on the tarmac and burnt off $15,000 of fuel before setting out. Sunak treats the UK as a flyover state, travelling by helicopter and private jet to places he could easily reach by train. Kylie Jenner and Floyd Mayweather zip about on private flights of less than 20 minutes. Each of them negates the efforts of thousands of ordinary mortals to live within the limits of a habitable planet.

But these specific impacts fail to capture the aggregate effect: the remarkable way in which society comes to reflect the demands of the ultra-rich. Almost everyone in public life accepts the same set of preposterous beliefs. That economic growth can continue indefinitely on a finite planet; that the unhindered acquisition of enormous fortunes by a few is acceptable, even commendable; that they should be allowed to own as much natural wealth as their money permits; that there’s nothing objectionable about a few offshore billionaires owning the media and setting the political agenda; that anyone who disputes such notions has no place in civil society. We are free to speak, up to but not beyond this point: the point on which everything hangs.

Morgan’s maxim is not just the unspoken rule. It is also the unspeakable truth. Everyone knows it, hardly any will mention it. It underpins our august institutions, our legal codes, our manners and mores. It is the great silence we need to break.

The new elite’s phoney crusade to save the world – without changing anything

Today’s titans of tech and finance want to solve the world’s problems, as long as the solutions never, ever threaten their own wealth and power. by Anand Giridharadas in The Guardian 


A successful society is a progress machine. It takes in the raw material of innovations and produces broad human advancement. America’s machine is broken. The same could be said of others around the world. And now many of the people who broke the progress machine are trying to sell us their services as repairmen.

When the fruits of change have fallen on the US in recent decades, the very fortunate have basketed almost all of them. For instance, the average pretax income of the top 10th of Americans has doubled since 1980, that of the top 1% has more than tripled, and that of the top 0.001% has risen more than sevenfold – even as the average pretax income of the bottom half of Americans has stayed almost precisely the same. These familiar figures amount to three-and-a-half decades’ worth of wondrous, head-spinning change with zero impact on the average pay of 117 million Americans. Globally, over the same period, according to the World Inequality Report, the top 1% captured 27% of new income, while the bottom half of humanity – presently, more than 3 billion people – saw 12% of it. 

That vast numbers of Americans and others in the west have scarcely benefited from the age is not because of a lack of innovation, but because of social arrangements that fail to turn new stuff into better lives. For example, American scientists make the most important discoveries in medicine and genetics and publish more biomedical research than those of any other country – but the average American’s health remains worse and slower-improving than that of peers in other rich countries, and in some years life expectancy actually declines. American inventors create astonishing new ways to learn thanks to the power of video and the internet, many of them free of charge – but the average US high-school leaver tests more poorly in reading today than in 1992. The country has had a “culinary renaissance”, as one publication puts it, one farmers’ market and Whole Foods store at a time – but it has failed to improve the nutrition of most people, with the incidence of obesity and related conditions rising over time.

The tools for becoming an entrepreneur appear to be more accessible than ever, for the student who learns coding online or the Uber driver – but the share of young people who own a business has fallen by two-thirds since the 1980s. America has birthed both a wildly successful online book superstore, Amazon, and another company, Google, that has scanned more than 25m books for public use – but illiteracy has remained stubbornly in place, and the fraction of Americans who read at least one work of literature a year has dropped by almost a quarter in recent decades. The government has more data at its disposal and more ways of talking and listening to citizens – but only a quarter as many people find it trustworthy as did in the tempestuous 1960s.

Meanwhile, the opportunity to get ahead has been transformed from a shared reality to a perquisite of already being ahead. Among Americans born in 1940, those raised at the top of the upper middle class and the bottom of the lower middle class shared a roughly 90% chance of realising the so-called American dream of ending up better off than their parents. Among Americans born in 1984 and maturing into adulthood today, the new reality is split-screen. Those raised near the top of the income ladder now have a 70% chance of realising the dream. Meanwhile, those close to the bottom, more in need of elevation, have a 35% chance of climbing above their parents’ station. And it is not only progress and money that the fortunate monopolise: rich American men, who tend to live longer than the average citizens of any other country, now live 15 years longer than poor American men, who endure only as long as men in Sudan and Pakistan.

Thus many millions of Americans, on the left and right, feel one thing in common: that the game is rigged against people like them. Perhaps this is why we hear constant condemnation of “the system”, for it is the system that people expect to turn fortuitous developments into societal progress. Instead, the system – in America and across much of the world – has been organised to siphon the gains from innovation upward, such that the fortunes of the world’s billionaires now grow at more than double the pace of everyone else’s, and the top 10% of humanity have come to hold 85% of the planet’s wealth. New data published this week by Oxfam showed that the world’s 2,200 billionaires grew 12% wealthier in 2018, while the bottom half of humanity got 11% poorer. It is no wonder, given these facts, that the voting public in the US (and elsewhere) seems to have turned more resentful and suspicious in recent years, embracing populist movements on the left and right, bringing socialism and nationalism into the centre of political life in a way that once seemed unthinkable, and succumbing to all manner of conspiracy theory and fake news. There is a spreading recognition, on both sides of the ideological divide, that the system is broken, that the system has to change.

Some elites faced with this kind of gathering anger have hidden behind walls and gates and on landed estates, emerging only to try to seize even greater political power to protect themselves against the mob. (We see you, Koch brothers!) But in recent years a great many fortunate Americans have also tried something else, something both laudable and self-serving: they have tried to help by taking ownership of the problem. All around us, the winners in our highly inequitable status quo declare themselves partisans of change. They know the problem, and they want to be part of the solution. Actually, they want to lead the search for solutions. They believe their solutions deserve to be at the forefront of social change. They may join or support movements initiated by ordinary people looking to fix aspects of their society. More often, though, these elites start initiatives of their own, taking on social change as though it were just another stock in their portfolio or corporation to restructure. Because they are in charge of these attempts at social change, the attempts naturally reflect their biases.

For the most part, these initiatives are not democratic, nor do they reflect collective problem-solving or universal solutions. Rather, they favour the use of the private sector and its charitable spoils, the market way of looking at things, and the bypassing of government. They reflect a highly influential view that the winners of an unjust status quo – and the tools and mentalities and values that helped them win – are the secret to redressing the injustices. Those at greatest risk of being resented in an age of inequality are thereby recast as our saviours from an age of inequality. Socially minded financiers at Goldman Sachs seek to change the world through “win-win” initiatives such as “green bonds” and “impact investing”. Tech companies such as Uber and Airbnb cast themselves as empowering the poor by allowing them to chauffeur people around or rent out spare rooms. Management consultants and Wall Street brains seek to convince the social sector that they should guide its pursuit of greater equality by assuming board seats and leadership positions.

Conferences and ideas festivals sponsored by plutocrats and big business – such as the World Economic Forum, which is under way in Davos, Switzerland, this week – host panels on injustice and promote “thought leaders” who are willing to confine their thinking to improving lives within the faulty system rather than tackling the faults. Profitable companies built in questionable ways and employing reckless means engage in corporate social responsibility, and some rich people make a splash by “giving back” – regardless of the fact that they may have caused serious societal problems as they built their fortunes. Elite networking forums such as the Aspen Institute and the Clinton Global Initiative groom the rich to be self-appointed leaders of social change, taking on the problems people like them have been instrumental in creating or sustaining. A new breed of community-minded so-called B Corporations has been born, reflecting a faith that more enlightened corporate self-interest – rather than, say, public regulation – is the surest guarantor of the public welfare. A pair of Silicon Valley billionaires fund an initiative to rethink the Democratic party, and one of them can claim, without a hint of irony, that their goals are to amplify the voices of the powerless and reduce the political influence of rich people like them.

 

Bill Clinton and Richard Branson at a Clinton Global Initiative event in New York in 2006. Photograph: Tina Fineberg/AP

This genre of elites believes and promotes the idea that social change should be pursued principally through the free market and voluntary action, not public life and the law and the reform of the systems that people share in common; that it should be supervised by the winners of capitalism and their allies, and not be antagonistic to their needs; and that the biggest beneficiaries of the status quo should play a leading role in the status quo’s reform.
This is what I call MarketWorld – an ascendant power elite defined by the concurrent drives to do well and do good, to change the world while also profiting from the status quo. It consists of enlightened businesspeople and their collaborators in the worlds of charity, academia, media, government and thinktanks. It has its own thinkers, whom it calls “thought leaders”, its own language, and even its own territory – including a constantly shifting archipelago of conferences at which its values are reinforced and disseminated and translated into action. MarketWorld is a network and community, but it is also a culture and state of mind.

The elites of MarketWorld often speak in a language of “changing the world” and “making the world a better place” – language more typically associated with protest barricades than ski resorts. Yet we are left with the inescapable fact that even as these elites have done much to help, they have continued to hoard the overwhelming share of progress, the average American’s life has scarcely improved, and virtually all of the US’s institutions, with the exception of the military, have lost the public’s trust.

One of the towering figures in this new approach to changing the world is the former US president Bill Clinton. After leaving office in 2001, he came to champion, through his foundation and his annual Clinton Global Initiative gatherings in New York, a mode of public-private world improvement that brought together actors like Goldman Sachs, the Rockefeller Foundation and McDonald’s, sometimes with a governmental partner, to solve big problems in ways plutocrats could get on board with.

After the populist eruption that resulted in Hillary Clinton’s defeat in the 2016 US election, I asked the former president what he thought lay behind the surge of public anger. “The pain and road rage we see reflected in the election has been building a long time,” he said. He thought the anger “is being fed in part by the feeling that the most powerful people in the government, economy and society no longer care about them or look down on them. They want to become part of our progress toward shared opportunities, shared stability and shared prosperity.” But when it came to his proposed solution, it sounded a lot like the model to which he was already committed: “The only answer is to build an aggressive, creative partnership involving all levels of government, the private sector and nongovernment organisations to make it better.”

In other words, the only answer is to pursue social change outside of traditional public forums, with the political representatives of mankind as one input among several, and corporations having the big say in whether they would sponsor a given initiative or not. The public’s anger, of course, has been directed in part at the very elites he had sought to convene, on whom he had gambled his theory of post-political problem-solving, who had lost the trust of so many millions of people, making them feel betrayed, uncared for and scorned.

What people have been rejecting in the US – as well as in Britain, Hungary and elsewhere – was, in their view, rule by global elites who put the pursuit of profit above the needs of their neighbours and fellow citizens. These were elites who seemed more loyal to one another than to their own communities; elites who often showed greater interest in distant humanitarian causes than in the pain of people 10 miles to the east or west. Frustrated citizens felt they possessed no power over the spreadsheet- and PowerPoint-wielding elites commensurate with the power these elites had gained over them – whether in switching around their hours or automating their plant or quietly slipping into law a new billionaire-made curriculum for their children’s school. What they did not appreciate was the world being changed without them.

Which raises a question for all of us: are we ready to hand over our future to the plutocratic elites, one supposedly world-changing initiative at a time? Are we ready to call participatory democracy a failure, and to declare these other, private forms of change-making the new way forward? Is the decrepit state of American self-government an excuse to work around it and let it further atrophy? Or is meaningful democracy, in which we all potentially have a voice, worth fighting for?

There is no denying that today’s American elite may be among the more socially concerned elites in history. But it is also, by the cold logic of numbers, among the more predatory. By refusing to risk its way of life, by rejecting the idea that the powerful might have to sacrifice for the common good, it clings to a set of social arrangements that allow it to monopolise progress and then give symbolic scraps to the forsaken – many of whom wouldn’t need the scraps if society were working right. It is vital that we try to understand the connection between these elites’ social concern and predation, between the extraordinary helping and the extraordinary hoarding, between the milking – and perhaps abetting – of an unjust status quo and the attempts by the milkers to repair a small part of it. It is also important to understand how the elites see the world, so that we might better assess the merits and limitations of their world-changing campaigns.

There are many ways to make sense of all this elite concern and predation. One is that the elites are doing the best they can. The world is what it is, the system is what it is, the forces of the age are bigger than anyone can resist, and the most fortunate are helping. This view may allow that elite helpfulness is just a drop in the bucket, but reassures itself that at least it is something. The slightly more critical view is that this sort of change is well-meaning but inadequate. It treats symptoms, not root causes – it does not change the fundamentals of what ails us. According to this view, elites are shirking the duty of more meaningful reform.

But there is still another, darker way of judging what goes on when elites put themselves in the vanguard of social change: that doing so not only fails to make things better, but also serves to keep things as they are. After all, it takes the edge off of some of the public’s anger at being excluded from progress. It improves the image of the winners. By using private and voluntary half-measures, it crowds out public solutions that would solve problems for everyone, and do so with or without the elite’s blessing. There is no question that the outpouring of elite-led social change in our era does great good and soothes pain and saves lives. But we should also recall Oscar Wilde’s words about such elite helpfulness being “not a solution” but “an aggravation of the difficulty”. More than a century ago, in an age of churn like our own, he wrote: “Just as the worst slave-owners were those who were kind to their slaves, and so prevented the horror of the system being realised by those who suffered from it, and understood by those who contemplated it, so, in the present state of things in England, the people who do most harm are the people who try to do most good.”

 

Skid Row in downtown Los Angeles. Photograph: Frederic J Brown/AFP/Getty Images

Wilde’s formulation may sound extreme to modern ears. How can there be anything wrong with trying to do good? The answer may be: when the good is an accomplice to even greater, if more invisible, harm. In our era that harm is the concentration of money and power among a small few, who reap from that concentration a near monopoly on the benefits of change. And do-gooding pursued by elites tends not only to leave this concentration untouched, but actually to shore it up. For when elites assume leadership of social change, they are able to reshape what social change is – above all, to present it as something that should never threaten winners. In an age defined by a chasm between those who have power and those who don’t, elites have spread the idea that people must be helped, but only in market-friendly ways that do not upset fundamental power equations. Society should be changed in ways that do not change the underlying economic system that has allowed the winners to win and fostered many of the problems they seek to solve.

The broad fidelity to this law helps make sense of what we observe all around: powerful people fighting to “change the world” in ways that essentially keep it the same, and “giving back” in ways that sustain an indefensible distribution of influence, resources and tools. Is there a better way?

The secretary-general of the Organisation for Economic Co-operation and Development (OECD), a research and policy organisation that works on behalf of the world’s richest countries, has compared the prevailing elite posture to that of the fictional 19th-century Italian aristocrat Tancredi Falconeri, from Giuseppe Tomasi di Lampedusa’s novel The Leopard, who declares: “If we want things to stay as they are, things will have to change.” If this view is correct, then much of today’s charity and social innovation and buy-one-give-one marketing may not be measures of reform so much as forms of conservative self-defence – measures that protect elites from more menacing change. Among the kinds of issues being sidelined, the OECD leader wrote, are “rising inequalities of income, wealth and opportunities; the growing disconnect between finance and the real economy; mounting divergence in productivity levels between workers, firms and regions; winner-take-most dynamics in many markets; limited progressivity of our tax systems; corruption and capture of politics and institutions by vested interests; lack of transparency and participation by ordinary citizens in decision-making; the soundness of the education and of the values we transmit to future generations.” Elites, he wrote, have found myriad ways to “change things on the surface so that in practice nothing changes at all”. The people with the most to lose from genuine social change have placed themselves in charge of social change – often with the passive assent of those most in need of it.

It is fitting that an era marked by these tendencies should culminate in the election of Donald Trump. He is at once an exposer, an exploiter and an embodiment of the cult of elite-led social change. He tapped, as few before him successfully had, into a widespread intuition that elites were phonily claiming to be doing what was best for most Americans. He exploited that intuition by whipping it into frenzied anger and then directing most of that anger not at elites, but at the most marginalised and vulnerable Americans. And he came to incarnate the very fraud that had fuelled his rise, and that he had exploited. He became, like the elites he assailed, the establishment figure who falsely casts himself as a renegade. He became the rich, educated man who styles himself as the ablest protector of the poor and uneducated – and who insists, against all evidence, that his interests have nothing to do with the change he seeks. He became the chief salesman for the theory, rife among plutocratic change agents, that what is best for powerful him is best for the powerless too. Trump is the reductio ad absurdum of a culture that tasks elites with reforming the very systems that have made them and left others in the dust.

One thing that unites those who voted for Trump and those who despaired at his being elected – and the same might be said of those for and against Brexit – is a sense that the country requires transformational reform. The question we confront is whether moneyed elites, who already rule the roost in the economy and exert enormous influence in the corridors of political power, should be allowed to continue their conquest of social change and of the pursuit of greater equality. The only thing better than controlling money and power is to control the efforts to question the distribution of money and power. The only thing better than being a fox is being a fox asked to watch over hens.

What is at stake is whether the reform of our common life is led by governments elected by and accountable to the people, or rather by wealthy elites claiming to know our best interests. We must decide whether, in the name of ascendant values such as efficiency and scale, we are willing to allow democratic purpose to be usurped by private actors who often genuinely aspire to improve things but, first things first, seek to protect themselves. Yes, the American government is dysfunctional at present. But that is all the more reason to treat its repair as our foremost national priority. Pursuing workarounds of our troubled democracy makes democracy even more troubled. We must ask ourselves why we have so easily lost faith in the engines of progress that got us where we are today – in the democratic efforts to outlaw slavery, end child labour, limit the workday, keep drugs safe, protect collective bargaining, create public schools, battle the Great Depression, electrify rural America, weave a nation together by road, pursue a Great Society free of poverty, extend civil and political rights to women and African Americans and other minorities, and give our fellow citizens health, security and dignity in old age.

Much of what appears to be reform in our time is in fact the defense of stasis. When we see through the myths that foster this misperception, the path to genuine change will come into view. It will once again be possible to improve the world without permission slips from the powerful.

The staggering rise of India’s super-rich

India’s new billionaires have accumulated more money, more quickly, than plutocrats in almost any country in history. By James Crabtree in The Guardian

On 3 May, at around 4.45pm, a short, trim Indian man walked quickly down London’s Old Compton Street, his head bowed as if trying not to be seen. From his seat by the window of a nearby noodle bar, Anuvab Pal recognised him instantly. “He is tiny, and his face had been all over every newspaper in India,” Pal recalled. “I knew it was him.”

Few in Britain would have given the passing figure a second look. And that, in a way, was the point. The man pacing through Soho on that Wednesday night was Nirav Modi: Indian jeweller, billionaire and international fugitive.

In February, Modi had fled his home country after an alleged $1.8bn fraud case in which the tycoon was accused of abusing a system that allowed his business to obtain cash advances illegally from one of India’s largest banks. Since then, his whereabouts had been a mystery. Indian newspapers speculated that he might be holed up in Hong Kong or New York. Indian courts issued warrants for his arrest, and the police tried, ineffectually, to track him down.

It was only by chance that Pal spotted him. A standup comic normally based in Mumbai, he happened to be in London for a run of gigs. “My ritual was to go to the same noodle bar, have a meal, and then head to the theatre,” Pal said. “I always sat by the window. And then suddenly Modi walks past. He was unshaven, and had those Apple earphones, the wireless ones. He looked like he was in a hurry.”

It was another month before the press finally caught up with Modi, as reports of his whereabouts emerged in June, along with the suggestion that he was planning to claim political asylum in the UK. (Modi denies wrongdoing, and did not respond to requests for comment.) In the process, Modi also gained entry into one of London’s more notorious fraternities: the small club of Indian billionaires who seem to end up in the British capital following scandals back at home.

The most prominent among these émigré moguls is India’s “King of Good Times”, Vijay Mallya, the one-time aviation magnate and brewer, who transformed Kingfisher beer into a global brand. A few years ago, Mallya was one of India’s most celebrated industrialists, famous for his mullet haircut and flamboyant lifestyle. But in early 2016, Indian authorities filed charges relating to the collapse of his Kingfisher airline, which went bust in spectacular fashion in 2012, leaving behind mountainous debts and irate, unpaid staff. And so, facing allegations of financial irregularities and of refusing to repay outstanding loans, Mallya quietly boarded a plane for Britain, too.

Like Modi, Mallya denies wrongdoing. Last month he released a long statement accusing India’s government of conducting a witch-hunt against him. And to the extent that this claim has some merit, it is because Indian prime minister Narendra Modi (no relation to Nirav Modi) has of late been under great pressure to bring supposedly errant tycoons such as Mallya to book.

Men like Mallya and Modi were members of India’s expanding billionaire class, of whom there are now 119 members, according to Forbes magazine.Last year their collective worth amounted to $440bn – more than in any other country, bar the US and China. By contrast, the average person in India earns barely $1,700 a year. Given its early stage of economic development, India’s new hyper-wealthy elite have accumulated more money, more quickly, than their plutocratic peers in almost any country in history.

 

A cardboard cut-out of billionaire jeweller Nirav Modi at a protest against him in New Delhi in February. Photograph: Chandan Khanna/AFP/Getty Images

Narendra Modi won an overwhelming election victory in 2014, having promised to put a stop to the spate of corruption scandals that had dogged India for much of the previous decade. Many involved prominent industrialists – some directly accused of corruption, while others had simply mismanaged their finances and miraculously managed to escape the consequences. Voters turned to Narendra Modi, the self-described son of a poor tea-seller, hoping he would deliver a new era of clean governance and rapid growth, ridding India of a growing reputation for crony capitalism.

Narendra Modi pledged to end a situation in which the country’s ultra-wealthy – sometimes called “Bollygarchs” – appeared to live by one set of rules, while India’s 1.3 billion people operated by another. Yet as they continue to hide out in cities like London, men like Mallya and Nirav Modi have come to be seen as representing the failure of that pledge; the Indian authorities “have a long road ahead”, as one headline put it in the Hindustan Times last year, referring to a “long and arduous” future extradition process in Mallya’s case.

And as Narendra Modi gears up for a tough re-election battle next year, he is fighting the perception that India is unable to bring such men to heel, and that it has been powerless to respond to the rise of this new moneyed elite and the scandals that have come with them. “This ongoing battle to get India’s big tycoons to play by the rules is one of the biggest challenges we face,” says Reuben Abraham, chief executive of the IDFC Institute, a Mumbai-based thinktank. “Getting it right is central to India’s economic and political future.”

India has long been a stratified society, marked by divisions of caste, race and religion. Prior to the country winning independence in 1947, its people were subjugated by imperial British administrators and myriad maharajas, and the feudal regional monarchies over which they presided. Even afterwards, India remained a grimly poor country, as its socialist leadership fashioned a notably inefficient state-planned economic model, closed off almost entirely from global trade. Over time, India grew more equal, if only in the limited sense that its elite remained poor by the standards of the industrialised west.

But no longer: the last three decades have seen an extraordinary explosion of wealth at the top of Indian society. In the mid-1990s, just two Indians featured in the annual Forbes billionaire list, racking up around $3bn between them. But against a backdrop of the gradual economic re-opening that began in 1991, this has quickly changed. By 2016, India had 84 entries on the Forbes billionaire list. Its economy was then worth around $2.3tn, according to the World Bank. China reached that level of GDP in 2006, but with just 10 billionaires to show for it. At the same stage of development, India had created eight times as many.

In part, this wealth is to be welcomed. This year India will be the world’s fastest-growing major economy. During the last two decades, it has grown more quickly than at any point its history, a record of economic expansion that helped to lift hundreds of millions out of poverty.

Nonetheless, India remains a poor country: in 2016, to be counted among its richest 1% required assets of just $32,892, according to research from Credit Suisse. Meanwhile, the top 10% of earners now take around 55% of all national income – the highest rate for any large country in the world.

Put another way, India has created a model of development in which the proceeds of growth flow unusually quickly to the very top. Yet perhaps because Indian society has long been deeply stratified, this dramatic increase in inequality has not received as much global attention as it deserves. For nearly a century prior to independence, India was governed by the British Raj – a term taken from the Sanskrit rājya, meaning “rule”. For half a century after 1947, a system dominated by pernickety industrial rules emerged, often known as the Licence-Permit-Quota Raj, or Licence Raj for short. Now a system has grown in their place once again: the billionaire Raj.

The rise of India’s super-rich – the first and most obvious manifestation of the billionaire Raj – was propelled by domestic economic reforms. Starting slowly in the 1980s, and then more dramatically against the backdrop of a wrenching financial crisis in 1991, India dismantled the dusty stockade of rules and tariffs that made up the Licence Raj. Companies that had been cosseted under the old regime were cleared out via a mix of deregulation, foreign investment and heightened competition. In sector after sector, from airlines and banks to steel and telecoms, the ranks of India’s tycoons began to swell.

Nothing symbolises the power of this billionaire class more starkly than Antilia, the residential skyscraper built in Mumbai by Mukesh Ambani, India’s richest man. Rising 173 metres above India’s financial capital, the steel-and-glass tower is rumoured to have cost more than $1bn to build, looming over a city in which half the population still live in slums.

 

The Antilia building, at right of photograph, in Mumbai. Photograph: Alamy
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Ambani owns Reliance Industries, an empire with interests stretching from petrochemicals to telecoms. (His father, Dhirubhai, from whom he inherited his company, was one of the main beneficiaries of the economic reforms of the 1980s.) At Antilia, Ambani entertains guests in a grand, chandeliered ballroom that takes up most of building’s ground floor. There are six storeys of parking for the family’s car collection, while the tower’s higher levels feature opulent apartments and hanging gardens. Further down, in sub-basement 2, the Ambanis keep a recreational floor, which includes an indoor football pitch. Antilia became an instant landmark upon its completion in 2010. The city had long been a place of stark divisions, yet the Ambani’s home almost seemed to magnify this segregation. (A spokesman for Reliance did not respond to a request for comment.)

The emergence of the Indian super-rich was bound up in larger global story. The early 2000s were the heyday of the so-called “great moderation”, when world interest rates stayed low and industrialised nations grew handsomely. This was also when the fortunes of India’s new tycoons began to change. Pumped up by foreign money, domestic bank loans and a surging sense of self-belief, industrialists went on a spending spree. Ambani dumped billions into oil refineries and petrochemical plants. Vijay Mallya spent heavily on new fleets of Airbus jets. Nirav Modi began building a global chain of jewellery stores. Stock markets boomed. From 2004 to 2014, India enjoyed the fastest expansion in its history, averaging growth of more than 8% a year.

The boom years brought benefits, most obviously by reintegrating India into the world economy. Yet this whirlwind growth also proved economically disruptive, socially bruising and environmentally destructive, leaving behind what the writer Rana Dasgupta describes as a sense of national trauma. India’s new wealth has been shared remarkably unevenly, too. Its richest 1% earned about 7% of national income in 1980; that figure rocketed to 22% by 2014, according to the World Inequality Report. Over the same period, the share held by the bottom 50% plunged from 23% to just 15%.

Unsurprisingly, some feel resentful. “You walk around the streets of this city, and the rage at Antilia has to be heard to be believed,” Meera Sanyal, a former international banker turned local anti-corruption campaigner, told me in 2014. Six years before that, in 2008, as the scale of India’s billionaire fortunes were becoming clear, Raghuram Rajan – an economist who would later become the head of India’s central bank – asked an even more pointed question about his country’s tycoon class: “If Russia is an oligarchy, how long can we resist calling India one?”

Back in London, Vijay Mallya feels unjustly targeted by India’s recent attempts to shed its reputation for crony capitalism, the second defining characteristic of the billionaire Raj. “I have been accused by politicians and the media alike of having stolen and run away with Rs 9,000 crores [90bn rupees, or $1.3bn] that was loaned to Kingfisher Airlines,” he wrote in his open letter last month. His case had become, he suggested, a “lightning rod for public anger” over the alleged misbehaviour of his fellow tycoons.

In spring 2017, I met Mallya at his London home, a Grade I-listed town house a short walk from Baker Street tube station. A variety of Rolls-Royces and Bentleys were parked along the mews at the rear, alongside a fat silver Maybach with the number plate VJM 1, which idled outside Mallya’s back door. Inside, he sheltered behind a grand wooden table, a gold lighter and two mobile phones lined up in front of him. At one point I asked to be excused to visit the toilet. A flunky ushered me into a golden bathroom, with a shiny gold seat to match its golden taps and loo-roll holder. The fluffy hand towels were white, but each one came embossed with the letters “VJM” in gold thread.

On the surface, Mallya still seemed every bit the ebullient tycoon of old: a bulky man in a red polo shirt, with gold bracelets on each wrist and a chunky diamond ear stud. But by then he had been stuck in Britain for more than a year, and grew downbeat as the afternoon wound on and our conversation turned to his business troubles and the state of his homeland. “India has corruption running in its veins,” he said with a sigh. “And that’s not something one is going to change overnight.”

With his shoulder-length hair and taste for bling, Mallya had long honed an image as the most piratical of India’s generation of entrepreneurs. A specially kitted-out Boeing 727, its bar well-stocked with his own Kingfisher beer, whisked him between parties and business meetings – a distinction that was, in any case, often hazy. “It was all a bit ridiculous,” one ex-board member at a Mallya company told me.

 

Vijay Mallya, who fled India for London in 2016. Photograph: Mark Thompson/Getty Images

Now marooned in London, Mallya had plenty of time to ponder his missteps. Once a member of the Rajya Sabha, the Indian upper house of parliament, his diplomatic passport has been cancelled. As a long-time UK resident, he was permitted to stay in the country, but without travel documents he was unable to travel, curtailing his notorious jetsetting lifestyle almost entirely. Earlier this month, a UK court issued an order allowing authorities trying to recover debts to enter his various British properties.

In his pomp, Mallya seemed to represent a new India. In a country whose old commercial elite had been dominated by cautious, discreet industrialists, Mallya was different: rich, powerful and not inclined to hide it. Not all of India’s pioneers behaved in this way – its software and IT billionaires, for instance, were typically less flamboyant figures. But while Mallya continues to deny that he did anything wrong, he admits that he has become what he calls the “poster boy” for a moment of public anger against India’s rich, as many newly wealthy business figures found themselves mired in allegations of wrongdoing.

India’s old system created fertile ground for corruption, forcing citizens and businesses alike to pay myriad bribes for basic state services. But these humdrum problems were trivial compared with the grand scandals that emerged during the 2000s. Assets worth billions were gifted under the table to big tycoons by senior politicians and bureaucrats in what became known as the “season of scams”. Giant kickbacks helped businesses acquire land, bypass environmental rules and win infrastructure contracts. Headlines filled up with fresh outrages, from fraudulent public housing schemes to dodgy road-building projects.

Many of those who backed India’s economic reforms hoped that a more free-market economy would lead to more honest government. Instead, crony capitalism infiltrated almost every area of national life. Hundreds of billions of dollars were siphoned away, according to some estimates, by a shadowy alliance of colluding politicians and business tycoons. India’s old system of retail corruption went wholesale.

Many politicians also became astoundingly rich, and would have made the Forbes list had their holdings not been hidden carefully in shell companies and foreign banks. Rapid economic growth increased the value of political power, and what could be extracted from it. Political parties had to raise more money, to fight elections and fund the patronage that kept them in office. One estimate suggested that India’s 2014 election cost close to $5bn, a huge increase over the cheap and cheerful polls of the pre-liberalisation era. Election experts believe most of this money is brought in illegally from favoured tycoons, in exchange for unknown future favours.

Politicians spend the money to fund campaigns, but also on handing out favours, jobs and cash to constituents. “It’s sort of an unholy nexus,” as Raghuram Rajan put it to me during his tenure as head of India’s central bank. “Poor public services? Politician fills the gap; politician gets the resources from the businessman; politician gets re-elected by the electorate for whom he’s filling the gap.”

This nexus between business and politics lies at the heart of the third problem of India’s billionaire Raj, namely the boom-and-bust cycle of its industrial economy. In recent decades, China went on the largest infrastructure building spree in history, but almost all of it was delivered by state-backed companies. By contrast, India’s mid-2000s boom was dominated almost exclusively by its private-sector tycoons, giving the industrialists and the conglomerates they run a position of outsized importance in India’s economic development.
Bollygarchs borrowed huge sums from state-backed banks and invested with gleeful abandon, in one of the largest deployments of private capital since America built its railroad network 150 years earlier. But when India’s good times came to an end after the global financial crisis, the tycoons’ hubris was exposed, leaving their businesses over-stretched and struggling to repay their debts. In 2017, 10 years on from the crisis, India’s banks were still left holding at least $150bn of bad assets.

Since taking office, Narendra Modi has tried, often ineffectually, to fix this corporate- and bank-debt crisis, alongside the related problems of cronyism and the super-rich that contributed to it. Watching developments such as these, some argue that the power of India’s tycoon class is fading. Yet India’s ultra-wealthy are still thriving, while its ranks of billionaires keep swelling, and will continue to do so.

There is every reason to believe that on its current course, the country’s the gap between rich and poor will widen, too. Perversely, the closer India comes to its achieving its ambitions of Chinese-style double-digit levels of economic growth, the faster this will happen. On most measures, it should already be ranked alongside South Africa and Brazil as one of the world’s least-equal countries. Even more importantly, poor countries that start off with high levels of inequality often struggle to reverse that trend as they grow richer.
Many experts believe India needs to act. “The main danger with extreme inequality is that if you don’t solve this through peaceful and democratic institutions then it will be solved in other ways … and that’s extremely frightening,” as French economist Thomas Piketty has said of India’s future, pointing to likely rising future tensions between the wealthy and the rest.

 

Protesters burning an effigy of Nirav Modi in New Delhi in February. Photograph: Chandan Khanna/AFP/Getty Images

India is now entering a new phase of development, as it tries to follow Asian economies such as South Korea and Malaysia out of poverty and towards full “middle-income” status. There is no reason this cannot happen. But as we’ve seen in Latin America, the economies with the widest social divides have tended to be the ones that are most likely to get stuck in the “middle-income trap”, achieving moderate prosperity but failing to become rich. The more successful countries of east Asia, by contrast, grew prosperous while managing to stay egalitarian, partly by building basic social safety nets and ensuring that their wealthiest citizens paid their taxes. Of the two models, it seems clear which India should want to follow.

Much the same is true of corruption. India’s old system of cronyism, with its political favours and risk-free bank loans, has came under intense scrutiny, but the battle against corruption is at best half-won. Kickbacks still dominate swathes of public life, from land purchase to municipal contracts. State and city governments are just as venal as ever. Surveys report that India remains Asia’s most bribe-ridden nation. “For any society to lift itself out of absolute poverty, it needs to build three critical state institutions: taxation, law and security,” according to the economist Paul Collier. All three in India – the revenue service, the lower levels of the judiciary and the police – still suffer endemic corruption. Perhaps most importantly, the country’s under-the-table political funding system remains largely untouched.
Progress in fixing India’s problems of corporate and bank debt has also been frustratingly slow. Modi has introduced some important measures, including a new bankruptcy law and a series of bank recapitalisations. But more radical options have been ignored, notably the privatisation of struggling public-sector lenders.

If these struggles sound familiar, that is because they are. India is far from the first country to enjoy a period of rampant cronyism and wild growth, and then grapple with how to respond. In Britain, the onset of the industrial revolution in the mid-19th century kicked off such a moment, as captured in the novels of Charles Dickens and Anthony Trollope. But the more obvious parallel is with America, and the era between the end of the civil war in 1865 and the turn of the 20th century: the Gilded Age, or the era of “the great corporation, the crass plutocrat [and] the calculating political boss”, as one historian put it.

India’s own Gilded Age is different in many ways, but it shares at least one characteristic – namely, that such a period of early industrialisation is also a time of rapid political and economic change, in which it should be possible to invoke what the philosopher Richard Rorty once called the “romance of a national future”, the sense of hope that infuses powers on the rise.

India is set to grow in economic might throughout this century, as America did during the 19th. By some accounts, it has already overtaken China as the world’s most populous nation; in others, the baton will pass during the next decade or two. Whatever the case, the fate of a large slice of humanity depends on India getting its economic model right. Meanwhile, as democracy falters in the west, so its future in India has never been more critical. To make this transition, India’s billionaire Raj must become a passing phase, not a permanent condition. India’s ambition to lead the second half of the “Asian century” – and the world’s hopes for a fairer and more democratic future – depend on getting this transition right.