The role of the super rich with Guido Alfani

In this special episode of Geoeconomic Competition, Francesca Ghiretti talks with Guido Alfani, Professor Economic History at Bocconi University in Milan and author of "As Gods among Men. A History of the Rich in the West". As 2025 brings new challenges, this unusual episode delves in some of the key questions of our time explored in the book such as how the rich historically helped their societies in times of crisis, why they no longer do, and what that may mean for social stability. 

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SPEAKER_00 0:00

One crucial reason why Western societies came to accept the presence of super rich individuals was the silent understanding that in time of dire need, they would help the community with their private resources. That was done, for example, by Cosimo de Medici in 15th century Florence, but there are much more recent examples. The last one probably being JP Morgan's rescue of the United States from the crisis of 1907. This is going to be an unusual episode for a podcast on geoeconomic competition. But 2025 is bringing new challenges, economic, social, geopolitical, geoeconomic, and political challenges. And some of these challenges, like tariffs and a faster revolution of economic statecraft and changes in the way we think about economic security, come from the newly instated Trump administration. No, this is not an episode about tariffs, nor about new means of economic statecraft, although I have a feeling that that episode will be coming sooner rather than later. It is an episode about the super rich, the role in society, and how they affect the relationship between countries. What are opportunities and risks of the actions of these powerful figures? Welcome to Geoeconomic Competition. I'm Francesca Giretti, your host, and in every episode I dive into the intricacies of geoeconomics with other experts. And today with me I have Guido Alfani, professor of economic history at Bocone University in Milan, and author of As Gods Among Men: A History of the Rich into the West. At the very beginning of this podcast, you heard an extract from Guido's book. So let's get started. Welcome, Guido.

SPEAKER_01 1:49

Thank you, Francesca. It's a pleasure to be here.

SPEAKER_00 1:52

So let me come to the question: What are the historical relationships between the rich and politics? Starting from what is a rich?

SPEAKER_01 2:04

Right. Well, uh, we have to begin by saying that uh every human society has its rich people and its poor people, unless we imagine uh uh an entirely uh hypothetical perfect egalitarian society, right, which never really existed in practice. So the point is here that uh a rich is defined in relation to the other. So it's really a relative concept. It's very difficult and not even uh very interesting to try and uh and establish uh an absolute level of wealth across history or even you know between countries above which you can be defined to be to be wealthy. You have to consider who are the other people you are you are living with. So I define the rich as as uh either as those who are at the top of the wealth pyramid, like for example the one percent. So I think we can push into the top 5%, a little bit you know, larger definition, uh, or those who have uh wealth at least 10 times the median wealth, so 10 times the central point in the overall distribution. And these definitions uh integrate each other because um if you look only at the one percent as you are kind of fixing uh the rich as exactly the same percentage across time, across space. If you want to have that very, you have to look at the other definitions, so those who are above a certain relative threshold level. And so, you know, in this way I define the object of my research for the purpose of the book, and then I set on to try and study all the different aspects. And of course, one of the key and even you know the most interesting uh things to say about the rich is that they've always been kind of close to the political power. Already the there is an ancient Babylonian poem, the Theodice, which was already stating that the king is the one at what side wealth walks. And you know what that means? It means that the wealthy, the rich are close to the king because they need you know his support. So they they talk in the in the ear of the king, and also the king needs the rich because if he needs resources, for example, to fund a war, then he will have to get them from somebody, and that's the rich that that he's going to need. So this this is uh this is uh you know a connection which has always been there. But the interesting thing is that already this 3,000-year-old uh poem was say was actually claiming that this is a source of injustice, right? So the question in the poem is why do the gods allow this? And and the point is, this kind of injustice, so the special position that the richest have with respect to political power has always been kind of considered problematic, surely by those who were thinking about uh different kinds of government. One thing is uh is a monarchy, an absolute monarchy if you want, and one thing is a democracy. So, in a democracy, the fact that the rich, and in particular super rich, might have uh a greater access to political resources is has always been considered to be kind of troubling from uh the ancient Athenian democracy, uh I would say, until today. Although, as you were mentioning at the very beginning, we are now observing in the United States what is quite an exceptional situation in the context of a modern democracy, right? Because modern democracies have always tried to keep the rich, the super rich in particular, um kind of to the side of uh of politics. Because the point is, if they start uh meddling with politics, then politics will tend to get to become captured by wealth, and then you will have that those who have in their hands the economic power are also those who have in their hands the political power, and that may be too much, and that may be also a big problem for the democracy itself, for the survival of the democratic system.

SPEAKER_00 6:17

Sure. But I suppose that in the past, and I don't know, again, you are the historian, so you'll tell me in the past, the rich, perhaps the wealthy, will be the ones um advising the politicians and the political power. Well, and in your book, you you kind of taught well, not kind of, you actually touch upon this. Since we have in modernity, in contemporary times, figures like Silvio Berlusconi in Italy, Trump himself, and well, not quite Elon Musk, because he hasn't been elected anywhere for the time being, who cover positions of political power. So they no longer just advise political power, but they are themselves a political power. Is that something that has uh had already happened in the past, or there's some uh some parallelism there?

SPEAKER_01 7:05

Yeah. Well, more than advising the political power, the the rich uh were there to provide money. That's their function in the context of, say, uh a late medieval uh feudal polity, right? Um if you think about the feudal system in the Middle Ages, and then of course that survives in the early modern period, weakening and so forth and so on, but still being there. The interesting thing there from our perspective today is that in the feudal system, the political power is in the hand of the king and the nobles. And the economic power, not necessarily, right? So the point is, and this is something the sociologist Max Weber was already arguing, when the traditional feudal system weakens, uh, a kind of implicit agreement is reached between the nobility and the bourgeoisie, so meaning actually the new rich people who reside in cities. And the point is, okay, we will allow you to become rich, to grow rich, but we will keep in our hands the political power and some control and some privilege, in particular, privilege regarding taxation. So, you know, uh in this context, um again, you have a kind of separation of powers. Where do you find the problem arising? And this is kind of telling for our situation today. Well, you find it arising in those places which are kind of exceptions, uh, where the nobility was weak, like, for example, the Italian communes or the small republics of the late Middle Ages, or comparable places, for example, in the low countries, right? And that's where you really have that the uh possibility for the wealthiest members of those small republics to exert political influence uh is greater. There is a great example, and that's that of Florence in the 15th century, where you have during the 15th century the rise of the Medici family. The Medici were a new uh wealth family in that period, and they were considered to be uh parmenu but also political enemies by the traditional families that used to hold most of the power. And this is why in 1433 the Republic exiles Cosimo the Elder, Cosimo de Medici, because they argue that that guy wanted to rise above the others and basically upturn the republic. And then what's the problem? The problem is that immediately, for independent reasons, the city of Florence loses a war against Lucca, and it risked going up bankrupt because they can't use the spoils of war to repay themselves. And then what's the problem? Well, where do we get the money? And the easiest way to get the money to help the finances of the city is to call Cosimo de' Medici back. And just one year after the exile, in 1434, he is back, hailed as the savior of the city, right? And they exile his enemies. And he comes back to Florence and orders to his bank to buy the debt of the city. But what's the problem there? That 1434 is also the moment when historians place the beginning of the so-called hidden seigneur of the Medici family in Florence. So Cosimo comes back to Florence, he saves the city, but basically buys it. And these descendants will become the Dukes of Florence and the Dukes of Tuscany. That's the end of the Republic in the end, right? First in practice and then also formally. And that's the problem, right? So that's a relatively open political system for a late medieval context, and that's what happens when you have the local super-rich deciding that in the end it can try and uh and take over the politics of the city entirely. And you have other examples, and these are again exceptional, but you can think about the the so-called patrician republics of early modern Europe, like the Republic of Venice or the Dutch Republic, and those were polities in which you have a perfect coincidence between those who have political power and those who have economic power. They are basically republics ruled by merchants. And this has consequences, right, in terms of their openness to new forces. They are not entirely closed because if you if somebody in any way manages to become very rich, that person can buy its entrance into a patrice, they can get into the system, but you know, there are also drawbacks when that happens. And these are not democracies, these are wealth oligarchies. So, from my point of view, when we look again at the inauguration of Trump presidency with all these super rich there, I have kind of many thoughts about that. And one of the darker thoughts I have is okay, you know uh one possible uh one possible future is one in which we continue to live formally in a democracy, but in practice that's going to work more and more like a wealth oligarchy. And that is the future that awaits us if uh super wealth really starts shaping policies. And will it, well, we don't know, it has to do with the future, but that's a threat, right? Um and also, however, I can't stop thinking about this other side. I was telling you before that the reason why the Babylonians said wealth walks by the king is not only that the wealthy want to influence the king, but also that the king needs to have the wealthy there. And if you if we consider all these billionaires in the US uh in the last few weeks, which went to Mar a Lago to talk to Trump, this kind of procession to go and meet the new prince, uh, it was somehow humiliating for them, right? I mean, some among them were been trying to present themselves as progressive people, like Zuckerberg, for example. So, you know, there's also this other side. So one thing is Elon Musk, who was very directly involved in the campaign supporting Trump. And one thing are these other people, so you know. Um and they, of course, also have the problem of trying to prevent uh their company suffering any damage from a president who might be willing to damage those who are not explicitly sided with him. So, you know, there are many things there, and we don't know which uh shape uh the future will take, but uh I mean if if history has anything to tell us about this, is that it's not a good thing, right? All this proximity between uh top politicians and the super wealthy is not a good thing for a democracy. So in the end, the problem is also how much we treasure our democratic systems, right? I mean, in the Republic of Venice, the poor weren't left to starve. You wouldn't have a stable polity in that way. They would have rebelled and they would have killed the rich, quite literally. We have many examples of violence against the rich, at least some components of the rich, anytime there are popular revolts, right? But the Republic of Venice was exceptionally stable. Uh the rich as were actually giving something back, they were doing it through this kind of institutionalized charity. There were institutions called squole, which matched this in Venice. And the point is, you observe in the early monarch period that, you know, wealth inequality in the Republic of Venice grows and grows and grows, but the Republic is very stable politically. And then you have also indications that this charity, you know, from the top to the bottom is increasing. And the point is, in the end, for the poor, nothing much changes. But society is changing. Even that kind of wealth oligarchy is evolving towards a system in which the lower strata, there's the real survival, is ever more dependent upon the goodwill of the rich. So even in that context, which is not the context of a democracy, that's going to have consequences in the long run, right? And uh in the case in the case of Venice, the dissatisfaction with the republic, which was widespread at the end of the republic, the republic was cancelled by Napoleon in the end, right? But already at the end of the 18th century, you know, it had become like exhausted uh internally. So that's also because of this, I think.

SPEAKER_00 15:43

And regarding the king needing to have the rich or needing the money that the rich provide, um, I can't help but thinking about the Stargate initiative, this 500 billion initiative on AI infrastructure in the United States that Trump has launched, and that so many, again, rich entrepreneurs in general have uh bought into. So there are, again, I'm not an historian nor am I an applied historian, but uh I do see quite a lot of parallelism. But I want to challenge a little bit the idea that you know rich in power are a bad thing, if anything, to um, you know, to propose one of the hypotheses that you test in your book, which is perhaps because these people are already rich, so they do not need themselves to be necessarily supported by the rich. So they are both kings or princes, however you want to frame it, and the rich at the same time, perhaps then they're less corruptible than the average person that rises to power and then needs the support of rich people and therefore is more subjected to those to their inferences. What is the conclusion that you reach in the book about on these hypotheses?

SPEAKER_01 16:57

Well, uh, first, uh, and this is a fact, the argument that uh the rich uh are less corruptible than others is made very frequently by the rich when they decide to enter into politics. This is something that, for example, Silvio Berlusconi said uh in the 1990s when he started uh you know running uh for election in Italy. He was elected for the first time in 1994, right? Uh so you know that's really a typical argument uh uh which is made. Only thing is we don't have any any evidence that it is correct. And the point also is if it is true that a rich, a super rich individual, Berlusconi was extremely rich, by the way. At some point he was the 25th, I think, richest person, richest person on the planet. So it was in relative terms much wealthier than Trump ever was, right? So uh but but the point is if it is true, I mean, were it true that uh uh a super rich individual isn't interested in getting more money? So why are all these people continuously becoming wealthier and wealthier and wealthier? So what's their motivation in the end? And the only possible motivation for that is that in the end they like to get more money, even if it is only to keep scores, to be the first in the ranking by forbes, right? So, you know, there are many reasons to doubt that this argument is valid, right? And the very fact, again, that all the, I mean, not all of them, but many among the super rich of today continue to try and expand their wealth, suggests otherwise. Then there is another argument, which uh has also often been made in the uh European, sorry, in the not European, the Western uh political tradition, which is that if you want to be a politician, you need some wealth. And this is something that uh Aristotle was already claiming in classical antiquity. And for him, the point is if you want to be a politician, you need to have some spare time, and to have spare time, you need some resources. And the same kind of kind of argument was made repeatedly after this. Um, in the United States, Hamilton, one of the founding fathers of the US, was saying the same thing. You need some wealth to be free in your action as a politician. But some wealth doesn't mean great wealth, it doesn't surely mean super wealth. So in the campaign, uh which uh in the in the US electoral campaign, I was pretty surprised when at some point a debate started about whether Tim Waltz, the would-be vice president for Kamala Harris, was rich enough to become vice president? What does that mean? I mean, Tim Waltz is really a middle-class person. So a middle class person isn't rich enough to become vice president. And also, do we want to take this away from the middle class, which has been suffering a lot in the in the last decades? Do we also want to take away from them the idea that at least they could rule their country as politicians? Because they're not wealthy enough. Uh, and that was a frankly bizarre, I mean, from my historical perspective, and also I would say from a European perspective, that was a pretty bizarre uh debate, right? Because of course he was rich enough, according to Aristotle, according to Hamilton, according to all those who were making this argument. And by the way, uh, what is also interesting, if you if we think historically at the United States specifically, is that uh one century ago, a little bit more than one century ago, in the United States there was a very strong bipartisan opposition uh to the idea that the super rich uh might have uh uh meddled with politics. And this is what led to all the big fight against the so-called monetrust, right? Which was this small group of uh great financiers, the likes of J.P. Morgan, John-Pierre Morgan, who might were already made thought uh they were already controlling the uh finances and the economics of the kind and the economy of the country, and it was feared they might have decided to take control of politics as well. And this was so you know, this was a perceived threat, which together with the view that monopolies are bad for competition, for consumers, for innovation, led to many efforts to actually break the power economic, financial, and potentially political of the money trust. And this then translates into this phase of uh inequality reduction in the United States, which we can observe from uh the from let's say 1914, especially up until the 1960s, right? And that's built on uh A very strong enforcement of antitrust legislation, but it's also built on deeper and much more progressive taxation of inheritances, wealth, income, whatever. Actually, everything was taxed more and more progressively in that period. And the idea was that by the accumulating wealth at the top, you were also protecting democracy somehow. And we have steered quite clearly away from that ideal. That's a process which has been going on for decades. It's pretty difficult to trace exactly the beginning of this. But when in Italy Silvio Berlusconi won the elections in 1994, that was already the sign that something had changed. Two years before, in the United States, Ross Perot didn't win the election, but his results were much better than anybody would have expected. So, you know, across the West, something had changed already by the 1990s. And we today are still moving in that direction. We have collectively grown, again, in the context of Western democracies, more accepting of the rich, but again, particularly of the super rich, playing a very active role in politics. And that's new. And that's exactly what is captured by all this picture we show Trump with Zuckerberg, Bezos, Mask, and all the others close to him.

SPEAKER_00 23:31

Okay, but let me play devil's advocate a little bit. These figures, the super rich, have very um a very large wealth. And don't you think that we need that wealth in order to invest in enterprises, invest in innovation? Do we need that means?

SPEAKER_01 23:52

Right. So let me begin by saying that the argument that we need the super rich in particular because we need their capital for investment is not exactly correct, in the sense that capital today is abundant. In fact, in I mean, in most of history, it has been abundant. The phases during which capital was scarce were pretty specific and pretty limited historically. So if today somebody has a brilliant idea and you know proposes a startup, you know, capital will be there. He will be able to raise the money that person needs to start the enterprise. You don't need to have, again, Musk having himself 400 and plus billion dollars to achieve that objective. Capital is abundance. So we don't have it, we don't need to have it so concentrated in so few hands. And we don't need the super rich to produce even more capital. And this abundance of capital actually is also the source of some instability, financial instability across the world. So it's really a different situation. So what was the role of the rich in the past? Well, the point is the following. In the Middle Ages, uh those who were thinking about society, uh, and they were mostly theologians, were all arguing that the commoner who became very wealthy, not the nobility, which was a different thing, and they you know they had a greater access to resources because of what God ordained, and also because in turn they needed to give protection to their subjects, right? But what about the commoners, the bourgeois, the rich people who were arising in the cities and becoming wealthier and wealthier because of the reopening of long-range trade, basically, from some point, from the commercial revolution uh beginning in the 11th century. So they were the problem. And the theologists said, well, these are all sinners because what's their wealth for? They could use their wealth to help the poor. If they don't, they are too attached to material things, not enough to the spiritual things. So, you know, they don't have a place in a well-organized Christian society. But the theologians fail in stopping the process of you know emergence of uh these very rich people, again, commoners in at least some parts of Europe. Like again, Italy was really uh a big player in that uh in that kind of early game. Uh, and so by the end of the 15th century, um another role has to be found for the rich to play because they are too rich, too numerous to be simply dismissed as uh sinners. And the role which is given to them from the late Middle Ages is to be there to help their communities in times of crisis. What does it mean? It means that if you have a crisis like a war, a plague, a famine, then you will need you will need financial resources, right? And who's going to help you? As Poggio Bracciolini, an Italian humanist who wrote, who wrote a treaty on avarice, said, you know, if you have that kind of crisis, are you going to ask the poor to help you? No, because they will not have anything to give you. You will need the rich because they will have the money you need. And by the way, this doesn't mean that you know the rich will kindly help because of their good uh quality, good cutter, whatever. The point is, if they are there, you can ask them kindly. If they aren't willing, you can force them to provide a loan, you can tax them, you can expropriate them. The argument is only they need to be there. And that is actually an argument about you know having some concentration of resources, but in a very different context and in a moment of crisis. And actually, as I try and demonstrate in the book, throughout the rest, uh throughout the centuries, the the rich across the West have regularly played this role. During crisis, they have been asked to contribute to find the resources to face the crisis itself. Uh, you know, throughout the early modern period, there are all these forced loans which all politicies in Europe use. So there is a war, ask the merchants for money, for already money, and then maybe we will repay them later. Uh, think about the world wars, the loans which were required by governments during the wars, which were, of course, formally um for formally uh you know uh freely acquired by the rich, but in fact there was a lot of pressure and a big potential social sanction if they didn't comply with this kind of general expectation. So, from this point of view, the 21st century really marks a novelty because if you take all the crises of the 21st century from the great recession uh beginning in 2008, triggered by a financial crisis the year before, to you know, then in some parts of Europe you also had the sovereign debt crisis after that, then we had COVID-19, then we have the war uh between Russia and Ukraine. And in none of these crises, if you look at the service of fiscal reform across European countries or across OECD countries, there are many such services. If you look at them, in none of these crises have the rich been made to contribute more. So they are no longer fulfilling this role because they aren't made to, but at least some among them are actually resisting actively the idea that they should be made to tax more. So that's kind of really an ideological shift away, not only from you know high taxation and progressive taxation, but also from specifically asking the rich to contribute more, with a little bit of a paradox here, because in all these crises across the West, you had from the bottom the request of making the wealthiest contribute more. So, you know, the rich are no longer playing the traditional role, which leads to the question so which role are they playing? Um and the point is if they don't play a recognized role, then their position in society becomes unclear. Of course, there is another role that they might potentially play, like you know, rule us all, govern the rest. But the problem with that is not that they wouldn't be able to do it, the problem is that that's that wouldn't be a democracy anymore. So we are back to my first point, to my previous point. That the issue here is also how much we value living in a democracy which actually works as a democracy. So, you know, Elon Musk can argue that he would be better than any politician in administering that you know in trying to uh make administration more efficient. I don't know whether that's true. I actually think that the virtues you need for for managing administration, a public administration are necessarily the same you need to manage the uh to manage a big uh multi uh multinational company. But you know, even if that were true, the problem is a different one, which is can you do that in a democracy? It's a different kind of question. So from my point of view, the the the argument about the actual potential contribution of super rich in politics, which can be debated, but that argument doesn't solve the other problem, which is the political problem that already Aristotle was highlighting. If you have a democracy in which the super rich take a very active role, then as Aristotle said, they will be as God is among men. And I take the title of my book from here, it's actually a paraphrasis of that. You can't expect that they will be in the democracy as all others are, right? So if you have super voters in a democracy, that's no longer a democracy from a proper point of view, right? Which is basically the definition of democracy goes back to Aristotle himself. So he he is uh entirely legitimated to offer a relevant perspective when we talk about democracies in general.

SPEAKER_00 32:30

Okay, let me inject, not because I have to, but because I want to a little bit of trying to inject a little bit of positivity in into this relatively gloomy outlook that you've uh you've given us. Um so far we've been debating that the rich no longer cover that social role, that social socially responsible role that they wanted to cover before, they were made to cover before. And that now these super rich, because we should clarify, we're talking about people between one and five percent top, right? So these super rich are actually gaining political power, and this can destabilize a um a democracy. But sort of I cannot avoid by asking the question, and I'm not sure how much you've explored that in your research, of is there a positive role in a democracy for the super rich in which you know in which they can positively contribute to to society? And and then sort of the follow-up question is if if it exists, how do we has politics failed to provide a framework for that role for them?

SPEAKER_01 33:48

Yeah. Well, let me begin by saying that, of course, you know, the the super rich are are people, so you know, as the rest of us, each each one of them is different and has her or his own personal views and uh personal motivation. So it's uh you you can't generalize, right? Uh you can still make a general uh point about the fact that if they become too directly involved in politics, in particular, that that's that's really a general, that's really a general problem. So uh can they play uh uh a positive role in society? Of course they can. Um I mean uh uh those who have an exceptional access to economic resources are truly in the position of making a lot of good if they apply themselves to it and they if they decide to invest some of the resources for that purpose. From my point of view, uh, however, uh this is what you do with what is left of your resources after fair taxation. So to get into another current debate, uh the fact that the super rich might be willing to do a lot of charity, a lot of investment for the public good, is not something which can be meaningfully used to argue that they should be taxed less, because in this way they will be able to do even more good. Really, that's really a faulty, that's really a faulty argument. So after fair taxation, progressive taxation, maybe also some sort of exceptional taxation in times of crisis uh to help the rest of us, right? Which actually, I mean, my country, which is Italy, financially could have used the help of the most affluent in practically all the recent crises we went through, and they could have afforded that much more than all the rest. Uh anyway, after this, if they if they want uh if they still want to be uh very involved in uh uh in uh in uh in the attempt of uh achieving the public good, well, you know, uh I would be there, uh I'm totally there to applaud them. Uh and they surely could do it. Uh so that's definitely a positive role they can they can play they can play in society. Um and uh the point, and this is kind of a problem I have uh throughout the book, is that the point when you think uh about the rich in general, and especially about the super rich, because in their case you also have all these political issues, right? Um meaning political problems that arise when they become too involved. But the point is that it's very difficult to say, okay, this is the right thing for them to do, and this is the bad thing for them to do, because whatever they do, there are always going to be problems. If they uh consume too much in too a visible way, they become the object of uh uh public resentment. But if they save all their income, they only become wealthier and wealthier, and that's in the long run what might lead to the biggest problems, right? If they get involved in politics, then we have concerns about democracy. But if they don't at all, they risk being considered like uh aloof and disinterested in what the rest of us does. So you know it's very difficult to say this is good and this is bad. I think that there are some things which are clear, like again, super rich in politics for me is a no, right, in a democracy. In a democracy, uh, and other things which are in instead uh really a grey area, and then uh it's uh it's kind of uh very difficult to say to make some general statement. One really has to look at what uh each individual does.

SPEAKER_00 37:45

And this is the perfect conclusion to me because, like many other things that we've discussed on this podcast, the sort of you know, these things cannot be left to the inclination of each individual, right? There need to be check and balances that make sure that certain rules apply to everyone and that this sort of extreme don't materialize. And this is, you know, a something that can be applied throughout. Um, what can I say? I I want to say thank you. We haven't even talked about how technology has shaped all of this. We should have maybe another time. Um, I want to say thank you. I want to recommend listeners to read um your book as uh it's great. And again, Guido, so much thank you for spending some time with us today.

SPEAKER_01 38:36

Thank you. It has really been a great pleasure talking to you, and thank you for all those to all those who listened.