Who are the capitalists?

Posted: 24 February 2016 in Uncategorized
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We have, by all accounts, a capitalist economic system.* But who are the capitalists?

It’s one of the questions I ask my students. And they always get the answer wrong. So, in my experience, do most other people.

But it’s a key issue. If we’re going to figure out how capitalism works—and, perhaps even more important, how to change it—we need to know who the capitalists are.


Well, for starters, they’re not the “top 1 percent” or the “billionaire class”—although many capitalists are in fact members. Those groups, which have become part of our lexicon after Occupy Wall Street and the Bernie Sanders campaign, are defined by how large their incomes are. They’re clearly at the top of the pile in terms of the size of their incomes (and, even more, wealth) but they’re able to capture (and, via low tax rates, to keep) that money not by virtue of being capitalists, but by other means. They own stocks, bonds, and property (and receive dividends, capital gains, interest, and rent) and they are often chief executives of large corporations (and receive more equity shares in addition to very high salaries). They benefit from capitalism but they’re not necessarily capitalists.

To put it differently, those who belong to the “top 1 percent” or the “billionaire class” receive large shares of the surplus created within capitalism but they don’t necessarily appropriate the surplus. They don’t “share in the booty” as capitalists; instead, a portion of the surplus is distributed to them by the group of people who are the real capitalists.

So, stockholders are not capitalists. They buy (or receive as compensation) shares in capitalist enterprises, and receive a part of the surplus in the form of dividends and capital gains. Nor are CEOs (and, for that matter, CIOs, CFOs, and other top executives). They’re hired to run the corporations on a daily basis, and often receive a cut of the surplus in the form of exorbitant salaries, benefits, stocks, and golden parachutes.

My students think that shareholders or chief executives are the capitalists but they’re wrong.

So, who are the capitalists?

As we often do with students, I answer that question with another question: who today occupies the position that is constituted—economically, politically, legally, and culturally—as the representative of “capital”?

And the answer is: the corporate boards of directors. The members of the boards of directors of corporations (say, of Standard & Poor’s 500 companies) are the ones who sit at the top and are ultimately responsible for the enterprises. They are the people who, during occasional meetings of the boards (for which they receive a small fee), make decisions concerning the general direction of the corporation, hire and oversee top executives, and are legally required to fun the firm on behalf of shareholders. In other words, they occupy the position of capital and appropriate the surplus created by the workers within those enterprises.

To be clear, that doesn’t mean the capitalists get to keep the surplus they appropriate. Some of it is retained within the enterprise to hire more workers and to invest in new software and equipment (or, increasingly these days, to be kept as cash). Another portion of it is distributed to the management, to make sure the surplus continues to be produced by the workers, and as dividends to shareholders. And still another portion is distributed outside the firm—in the form of interest payments to banks, taxes to the government, and so on.

Within contemporary capitalism, then, capitalists are members of corporate boards of directors. And it’s a tiny group. Given that boards are made up of 10-15 members, we’re talking about (for the leading, S&P 500 companies) only 6250 individuals. Even less (closer to 4500), if we subtract interlocking directorates, that is, individuals who sit on more than one board.

For all kinds of reasons, capitalists are also members of the top 1 percent, the billionaire class, stock owners, and chief executives. But, as capitalists—as appropriators of the surplus and the personification of capital—they’re a much smaller group.

The answer therefore is: in the United States today, the capitalists are members of the tiny group of people who form the boards of directors of the nation’s largest corporations.


*Well, to be accurate, the economic system in the United States is not entirely or exclusively capitalist. There are all kinds of forms of noncapitalism that form the economic iceberg hidden from view below the water line. I’m thinking of things like cooperatives and worker-owned enterprises, gift exchanges and volunteering, modern forms of slavery, feudal indentured servitude, and so on. None of those can very well be described as capitalist

  1. Pedro says:

    With all due respect, I am afraid I am not sure I agree with your characterization here:

    In the United States today, the capitalists are members of the tiny group of people who form the boards of directors of the nation’s largest corporations.

    As members of the board, directors receive fees for a function they perform for the corporation. The amount may be much smaller, their daily involvement much more limited, but in that they are no different from CEOs, CIOs, CFOs.

    Some members of the board of directors are paid to represent groups of shareholders. Some shareholders are members of the board and represent themselves. Some shareholders are members of the board and CEOs: managing directors. In all cases, the key term is shareholder, not member of the board of directors.

    In fact, CEOs often control the board and through that control determine or at least influence their own compensation. You don’t need to take my word for that, shareholder rights activists make that case.

    True, there are mom and dad shareholders: they barely count when it comes to deciding the future of the business. That’s where wealth inequality plays a role.

    For me, unless I’m badly mistaken, capitalist means shareholder.


    • David F. Ruccio says:

      Pedro, a couple of things: First, we need to distinguish between control and ultimate responsibility. Executives may control the day-to-day operations of enterprises but, unless they sit on the board (which, of course, many do), they don’t appropriate the surplus-value. They receive a distributed portion of the surplus for managing things. And, of course, members of the board are elected by shareholders but, once again, the shareholders don’t appropriate the surplus-value. They, too, received a distributed share of the surplus for putting up equity capital. To my mind, that leaves the board of directors as the personification of capital, the appropriators of the surplus-value.

      • Pedro says:

        I think we’ll have to agree to disagree, then.

        All you write is true. That’s not what I object.

        However, who appropriates the surplus value is the shareholder and the shareholder has the utimate responsibility, neither the directors representing him/her, nor the managers: both directors and managers are employees and, as such, can be fired.

        The corporation belongs to its shareholders: that’s what net equity is. The ultimate legal responsibility falls on the shareholders, and its limited to that amount.

        Sole-partnerships have no board of directors, no CEOs, but they still have a single capitalist: the proprietor (who may announce to his/her customers: this business is business-managed”). The ultimate responsibility falls on this shareholder, too: for the amount of his/her personal net worth.

  2. […] February—Who are the capitalists? […]

  3. Ed George says:

    This is an interesting argument. I’d been thinking about this as well . I mean, everyone says, the bourgeoisie this, the bourgeoisie that, but who are they exactly? By definition, there’s not going to be many of them. What are their names? Where do they live? And so on.

    Anyway, other than this post I’ve never really seen the question addressed anywhere. Has it been, do you know? Is there any empirical/theoretical work where this issue is addressed at this level of specificity? I’d be really interested to know.

  4. Prasun Rakshit says:

    A bad one

  5. […] produced by workers in the United States and around the world. They’re not necessarily capitalists (in the sense of directly appropriating the surplus through a process of exploitation)—although […]

  6. […] surplus produced by workers in the United States and around the world. They’re not necessarily capitalists (in the sense of directly appropriating the surplus through a process of exploitation)—although […]

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