Is the Mandelson-Epstein Affair a Symptom of Plutocracy?

In this Saturday Long Read, Will Snell, CEO of the Fairness Foundation, explores how extreme wealth reshapes political power - and what that means for democratic trust.

Editor’s Note: Today’s contribution to Bearly Politics comes from Will Snell, CEO of the Fairness Foundation - a UK based think tank that’s focused on the structural consequences of socio-economic inequality. The Foundation’s work, including its Wealth Gap Risk Register and weekly Fair Comment newsletter, centres on simple, though uncomfortable propositions for some: That extreme wealth concentration does not just distort the economy, but reshapes democracy itself.

Regular readers will know that this is an argument that resonates very strongly with my own beliefs, and I’ve often written about the systems, incentives and all the ways in which power rearranges itself. Will’s piece today takes aim at that concern head-on, using the lens of the Mandelson/Epstein episode as a case study in how economic inequality spills straight into political influence, and exactly why that spillover is so dangerous to public trust.

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Here’s something to be cheerful about. Soon, we’ll no longer be regularly reminded about Peter Mandelson’s infamous line that he was “intensely relaxed about people getting filthy rich”. If we travel back in time from 1998 to 1625, we find a wiser metaphor about wealth and shit in the writings of Francis Bacon: “money is like muck, not good unless spread”.

One aspect of the tawdry Mandelson/Epstein saga that hasn’t received much attention is that it is a symptom, perhaps even an inevitable outcome, of rampant wealth inequality and its corrosive effect on our democracy.

Wealth inequality undermines democracy in two, mutually reinforcing ways – by eroding public trust in the institutions and processes that underpin it, and by corroding those institutions and processes themselves.

The public already knows that wealth inequality has led to a situation where we have one rule for the rich and one for the poor. Hence we see sharp declines in public trust in politicians, in public faith in democratic institutions, in the belief that government can and will deliver for them.

Recent polling from More in Common shared in their weekly newsletter suggests just how deep this perception runs, with more than four in five Britons believing that elites protect other wealthy or powerful people from being held to account, and that they follow a different set of rules to the rest of us. Seven in ten think people in power do not take crimes against ordinary people seriously. Perhaps most concerning, half of Britons now say it is probably or definitely true that a secret group makes major world decisions.

Our own polling last year found that 63% of Britons think that the very rich have too much influence on politics in the UK; in 2023 we discovered that 75% of people are concerned that people with net wealth of £10m or more have too much influence on the political system, and the ONS has shown that 69% of people feel that they do not have any say in what the government does.

And little wonder; the evidence is everywhere, from an absence of fair process (“the system is rigged”) to clearly unfair opportunities (a threadbare social contract) and outcomes (the cost of living scandal, enshittified high streets).

As a result, it’s no surprise that we find ourselves in a doom loop of declining support for paying taxes (alongside increasingly polarised attitudes to the size of the state). The prevailing cynicism is turbocharged by the not inaccurate public perception that the wealthy are not paying their fair share of taxes – not just because of avoidance or evasion, but because they’re not being asked to pay enough in the first place.

Acting in concert with plummeting public confidence are the actual ways in which wealth inequality undermines democratic processes and outcomes.

To be clear, the problem is not purely the super-rich – there’s a broader issue that politicians privilege the interests of the richer half of the country, who own property and vote more, over everyone else. But the means by which the very wealthy - let’s say the top 0.01% - increasingly call the shots is arguably more insidious and directly harmful.

Photo by Benjamin Child on Unsplash

Research from the US shows just how wealth inequality distorts political decision-making in that country: if the wealthy support a policy, it has a 45% chance of becoming law, but if they oppose a policy, the likelihood of it making it onto the statute book is just 18%. In the UK, Spotlight on Corruption found that businesses are 23 times more likely than civil society groups to get meetings with Treasury officials; no wonder that last November’s Budget failed to introduce widely trailed and supported increases in taxes on wealth, such as reforms to the capital gains tax regime. These are some of the more mundane ways in which wealth inequality spills over into political inequality and promotes bad decision-making.

Then there are the more jaw-dropping examples of influence that have come out of the Epstein files. In 2009, then-Chancellor Alistair Darling seemingly came under pressure from JP Morgan’s CEO Jamie Dimon to scrap plans to tax bankers’ bonuses. Despite Mandelson (then a government minister) apparently advising Dimon to “mildly threaten” Darling - his own colleague! - at his friend Epstein’s behest, the scheme failed, and Darling stood firm. But too often the tactics work. As Tax Justice UK put it, this is a story not about “the personal failings of a few individuals, but the structural rot of a political system that no longer serves the public, but the private interests of a powerful and privileged few… It is a story about a political culture in which the wealthy and well‑connected can whisper into the machinery of the state and expect it to move.”

This dynamic rapidly becomes self-reinforcing, not only because it undermines public trust in politics and faith in democratic institutions but also because it ensures that decisions are made on behalf of the wealthy rather than the rest of the population. Wealth inequality ossifies into plutocracy – rule by the wealthy. And the very plutocrats are increasingly willing to use their power in ever more brazen ways not just to ignore the laws and rules that govern the rest of us, but to reshape the state, the economy and society in their favour.

In doing this, they are too often directly enabled by politicians who are unwilling to stand up to them (if those politicians are not actively part of the project, as is the case in the US and many other countries). Andy Burnham wasn’t afraid to call this out earlier this week at a Resolution Foundation conference: “Recent events have drawn a heavy line under a political culture that was too close to wealth and power and too distant from the lives of people that we’re talking about today.”

We are already seeing the real-world consequences (we listed 49 of them in our Wealth Gap Risk Register). However, the future impacts could be much worse. The complexity scientist Peter Turchin has argued that in his book End Times (watch our event with him here) that when history repeats itself, one tune is at the top of the playlist: “When the scales of power heavily favour the ruling elite, it leads to a surge in income inequality, enriching the wealthy and impoverishing the less privileged. As more individuals aspire to join the elite, dissatisfaction with the established order intensifies, often resulting in calamity.” If we don’t interrupt the cycle we’re headed for democratic atrophy, eventually perhaps even societal collapse - and yet this government and its predecessors have shown almost no interest in tackling it.

It’s important to find quick and effective policy mechanisms to start to interrupt the cycle, by reducing the spillover impacts of wealth inequality on political inequality and decision-making, such as caps on political donations and better regulation of lobbying. The government has just published its Representation of the People Bill, but by refusing to include a cap on political donations, they’ve missed an opportunity to rebalance our political system by breaking one of the key links between wealth and disproportionate influence on decision-making.

There’s clear scope for government to be bolder on keeping big (as well as foreign) money out of politics, and to better regulate our opaque lobbying system while they’re at it. But we also need to think about more radical interventions to reduce the incentives for politicians to prioritise the interests of the wealthier half of the population over those of the less wealthy half, perhaps including electoral reform.

More fundamentally still, we can’t rely on simply reducing the spillover impacts of wealth inequality on our politics, our society and our economy. The wealthy will always find ways around whatever measures are taken, and some politicians will always be tempted by the power and status of the wealthy to get far too close to them. Extreme wealth is inherently harmful. The only surefire way to solve the problem is to take measures to reduce the underlying level of wealth inequality itself, both by redistributing wealth through the tax system and, through various means, by sharing it more broadly across society in the first place.

I’ll leave the last word to Lisa Nandy:

“What was laid bare in the Epstein files is that there are a group of people in this country and across the world – powerful, wealthy people, mostly men – who control the system, look after their own interests, look after each other and screw everyone else. And that has been happening in plain sight for a really long time. Look across this country at so many things, whether it’s the taxation system, or housing or water or energy, the opportunities people have, the voice that people have, and people say the system is rigged for a reason. Because it is. It works against the interests of most people in most parts of the country.”

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