A LONGITUDINAL STUDY OF AMERICAN ECONOMIC ELITES Adam...
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A LONGITUDINAL STUDY OF AMERICAN ECONOMIC ELITES Adam Sauls A Thesis Submitted to the University of North Carolina Wilmington in Partial Fulfillment of the Requirements for the Degree of Master of Arts Department of Sociology and Criminology University of North Carolina Wilmington 2012 Approved By Advisory Committee Yunus Kaya Cecil Willis Steve McNamee Chair Accepted by Dean, Graduate School
Transcript of A LONGITUDINAL STUDY OF AMERICAN ECONOMIC ELITES Adam...
A LONGITUDINAL STUDY OF AMERICAN ECONOMIC ELITES
Adam Sauls
A Thesis Submitted to the University of North Carolina Wilmington in Partial Fulfillment
of the Requirements for the Degree of Master of Arts
Department of Sociology and Criminology
University of North Carolina Wilmington
2012
Approved By
Advisory Committee
Yunus Kaya Cecil Willis
Steve McNamee Chair
Accepted by
Dean, Graduate School
TABLE OF CONTENTS ABSTRACT ............................................................................................................................................................... iv LIST OF TABLES ..................................................................................................................................................... v LIST OF FIGURES .................................................................................................................................................. vi INTRODUCTION ..................................................................................................................................................... 1 LITERATURE REVIEW ......................................................................................................................................... 2 Classic Elite Theory .................................................................................................................................. 2 The Power Elite ......................................................................................................................................... 3 Wealth and The American Dream ...................................................................................................... 7 “Diversity” in the Economic Elite ........................................................................................................ 8 Self-Perpetuation of Elites.................................................................................................................. 11 Control by the Economic Elite ........................................................................................................... 13 The Forbes 400 ....................................................................................................................................... 17 DATA AND METHODS ....................................................................................................................................... 19 RESULTS ................................................................................................................................................................ 22 Demography ........................................................................................................................................... 22 Source of Wealth ................................................................................................................................... 33 Concentration ......................................................................................................................................... 37 Stability .................................................................................................................................................... 39 CONCLUSION ........................................................................................................................................................ 41 REFERENCES ........................................................................................................................................................ 47
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ABSTRACT
Control of economic resources has long been a key focus of social research.
Studying the individuals who comprise the Forbes 400 a greater understanding of the
economic elite in the United States is afforded. In this study, demographic trends, sources
of wealth, concentrations of wealth, and stability of wealth are observed over the period of
1995 to 2010 to determine whether the upper echelon of economic elite in the United
States are becoming more diverse, or whether there remains a self-perpetuating, relatively
closed group.
Using descriptive statistics and Pearson’s correlation for the 16 lists generated from
1995 to 2010 it was found that the Forbes 400 has not become noticeably more diverse
and mobility into the list has been very minimal. There remain high levels of concentration
even on the list, and it is still dominated by older, White men. With the ability of economic
power to be readily converted into social and political power, such high concentrations of
wealth demand attention by social researchers. This study adds to the existing body of
literature by examining the pinnacle of economic elite in the United States through the
perspective of contemporary elite theory.
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LIST OF TABLES
Table Page
1. Race Composition of the Forbes 400 ............................................................................................ 24
2. Race by Source of Wealth .................................................................................................................. 27
3. Sex Composition of the Forbes 400 .............................................................................................. 28
4. Inheritance by Gender ........................................................................................................................ 30
5. Age ............................................................................................................................................................. 32
6. Forbes 400 Compared to 2010 US Population ......................................................................... 33
7. Source of Wealth................................................................................................................................... 35
8. Distribution of Wealth ........................................................................................................................ 37
9. Nominal Stability .................................................................................................................................. 40
10. Stability of Rank .................................................................................................................................... 41
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LIST OF FIGURES
Figure Page
1. Racial Composition of the Forbes 400 ......................................................................................... 23
2. Gender Composition of the Forbes 400 ....................................................................................... 29
3. Age Composition of the Forbes 400 .............................................................................................. 31
4. Concentration of Wealth by Top 10 and Quintile .................................................................... 38
INTRODUCTION
It is the purpose of this study to identify and analyze characteristics of the richest
400 Americans who comprise the Forbes 400 Richest Americans list over a span of 16
years. In 1956, sociologist C. Wright Mills coined the term “power elite,” to refer to
individuals (or as he referred to them quite intentionally, men) in whose hands rested the
power of three sectors of modern society: the economy, the military, and the political
structure of the United States (Mills, 1956). Since the 1950’s, the military and political elite
have become more and more integrated into the umbrella of the economic elite. Through
avenues such as the funding of politics, politicians, and policy; and private contracts for
defensive military services, the power elite in the United States has become increasingly
subsumed within the economic elite (Domhoff, 1987; Dye, 1987; Domhoff, 1990; Lasch,
1995).
This study examines the core of the American economic elite, the richest 400
Americans. Specifically, this study examines the demographic characteristics of the Forbes
400 richest Americans, their sources of wealth, and their degree of concentration and the
stability of wealth. In a society that places great emphasis on individual merit, the Forbes
400 should represent the pinnacle of personal achievement. Following the logic of the
“American Dream,” the Forbes 400 should be relatively socially heterogeneous and access
to the Forbes 400 should be relatively permeable, with shifts in economy greatly shaping
who is included in the Forbes 400. If, however, there is little change in the composition of
the list over time, and high levels in the concentration of wealth over time, this would
instead suggest the existence of a small, cohesive, and self-perpetuating elite.
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LITERATURE REVIEW
Classic Elite Theory
There has been a long tradition of scholarship on the sociology of elites. Gaetano
Mosca (1939) observed that in every society since the dawn of civilization there existed
two classes of people, those who rule, and those who are ruled. Elites are often viewed as a
necessary and functional characteristic of societies in which there is a specialized division
of labor, often holding key positions politically that afford control over material and human
resources (Marger, 1987).
Vilfredo Pareto (1971) defined elites as the highest achievers in any area of human
activity, believing such achievement to be based in personal characteristics. Mosca and
Pareto shared the view that society was a basic dichotomy: the elites, and the masses. For
both theorists the masses were unorganized, unable and unwilling to govern themselves,
leaving elites to serve as the necessary functional leaders of society. The major difference
between Pareto’s view of elites and that of Mosca was the ability to change. Both saw the
elite class as a permeable group, with chances of mobility into and out of the elite by the
masses, but disagreed as to the consequences of such mobility. Pareto saw change as
superficial, with the only difference being the individuals filling the roles of the ruling class,
entering positions of authority only to perpetuate the existence of such a class and use any
available resources to maintain authority. Mosca saw potential for change, however, with
new leaders bringing the potential for drastic changes in the power structure of society,
namely in the political climate.
Robert Michels (1958) expanded upon the premise of elites and masses by
formulating what is known as the “Iron Law of Oligarchy” that power resting in the hands
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of a few elite leaders is the natural social evolution of intricate divisions of labor in
societies. To Michels the masses refused responsibility for certain societal issues, choosing
to rely on the decisions handed down from those in positions of authority. Michels’ take on
the stability of the elite structure more readily aligns with Pareto, however, in that once
individuals come to power, their directive shifts from that of benefitting the masses to the
perpetuation of their own authority.
Echoing the classic elite theorists, contemporary scholars have noted that with the
shift of society from villages to cities, there is an increased capital interest for a select few
when a large geographic area falls under common governance such as that of the United
States (Bodley, 1999). This provides higher levels of polarization and, according to Bodley,
increasingly unequal living conditions and higher levels of stratification. In the case of the
modern exercise of power, control of finite resources translates into economic power.
The Power Elite
The issue of powerful elites was rather dormant in sociology until C. Wright Mills
returned it to center stage in 1956 with the publication of The Power Elite. This gave birth
to the modern scholarship on the power elite, a term that was coined by Mills to refer to the
men (a term that was deliberately used by Mills) who controlled the three major
institutions in modern society: the military, the economy, and the political structure of
government by being positioned in key authoritative positions within the bureaucratic
structure of each (Mills, 1956). With the political climate and structure of the modern
United States, Mills observed that power did not rest in any one individual, but key
organizations and with centralized bureaucratic forms of governance.
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For Mills, power did not rest in individuals, and wealth did not guarantee that an
individual was considered to be in the power elite. Mills saw the exercise of power, the
existence of celebrity and the accumulation of wealth as “valued experiences” (Mills,
1956:10) as a result of accessing the three institutions and holding positions that allowed
them to influence their own lives as well as the lives of others. It was through these
avenues of control, the ability to make decisions that are of great fiscal consequence, that
the power elite serve not only their own interests but also the interests of the upper class.
Mills’ blend of Max Weber’s emphasis on organization and bureaucracy and Karl
Marx’s focus on class structure and exploitation suggest a class of elites with high degrees
of fluidity between the three sectors of society, a fluidity proposed to exist among the
individuals who occupy the positions of authority in the economic, government, and
military structures in the United States.
Mills also provided the first modern profile of the power elite. Members of the
power elite typically knew one another and generally traveled in the same social circles.
The power elite were disproportionately drawn from the upper and upper middle classes,
had attended highly prestigious schools, were frequently listed on the social register of the
upper class, and had high rates of marriage within the upper class, all of which further
served to insulate them from the rest of society and helped to ensure the perpetuation of
their elite status, working to effectively form what could be considered as a “loose coalition”
(Marger, 1987:143).
Power elite theory was met with praise and criticism. Shortly after The Power Elite,
Floyd Hunter (1959) published a study addressing the existence of a relatively stable
power structure in the United States. Hunter found that when surveying individuals
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wielding great amounts of power in the government and corporate arenas, the assessments
of who made up the top policymakers reported were returning the same names of
individuals in positions of power. He concluded that there was not a conspiracy among the
power elite, but rather a basic unity, and noted the high levels of interlock found in the
individuals comprising the three basic spheres of dominance.
G. William Domhoff, in a series of works that began in 1967, furthered Mills’ and
Hunter’s works by suggesting the existence of a ruling class, that disproportionately
controls the nation’s wealth, income, and number of individuals who are involved in key
decision-making positions. Domhoff proposed that there was an increase in power among
the economic elite, with a subsequent decrease in the power controlled by military and
political elite. While coming to the same basic conclusions of Mills and Hunter that elites
are self-serving, exploitative, and unresponsive to the needs of the masses (Marger, 1987),
Domhoff comes to the conclusion that economic leaders are, in fact, the same individuals
who wield significant power in politics, or that they have political leaders directly acting on
their behalf (Domhoff, 2006).
Finally, E. Digby Baltzell (1958) shares many of the same positions as Mills, Hunter
and Domhoff on the existence of a relatively cohesive power elite. Contrary to the
aforementioned three however, Baltzell sees the perpetuation of an elite class with room
for the introduction of innovative thinking brought about by the existence of new members
to the ruling class to be necessary for stable systems of authority. Baltzell’s work also
contradicts Domhoff in that he sees no evidence of much overlap or intersection between
the economic elite and political leaders (Marger, 1987).
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While a great deal of scholarship exists in support of Mills’ theory of the power elite,
it is not without its opponents. An alternative school of thought exists that refutes the
existence of a unified power elite, and suggests that there are, indeed, multiple spheres of
elites that control various realms of society, neither acting in concert nor having the same
origins. Arnold Rose (1967) presented the idea of multiple elites as very specialized
decisionmakers who exert influence over their own fields of specialty, and have very little
overlap if any with other elites. Rose’s work echoed that of Suzanne Keller’s (1963)
depiction of those in authority as autonomously working in their own spheres and in the
interests of society. Marger suggests that this is the main discord between the power elite
theorists and those who advocate a multiple spheres approach is that power elite theorists
generally view elites as self-serving and exploitative of the masses, while the “multiple
spheres” approach posits an elite, or rather several elites, who are more responsive to the
needs of those over whom they govern, acting for the good of society rather than for
individual gain (Marger, 1987). A final view in opposition to the power elite theory, which
is rather unique, comes from David Reisman’s 1950 work The Lonely Crowd. Reisman
suggests that there is indeed no power elite, and that elites themselves are indeterminate.
To Reisman no one group has the ability or authority to control the actions of masses, but
rather comprise “veto groups” (Reisman, 1950) which can only attempt to block
unfavorable action advanced by another group, which the veto group feels is not in the
interest of society.
The assessments by Mills and the other power elitists of the existence of a self-
perpetuating climate found among the power elite highlights the main consideration of the
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proposed study regarding the modern economic elite: Is there evidence of a relatively
stable economic elite? If so, does this imply that the American Dream is a myth?
Wealth and The American Dream
It is important to explain the use of wealth rather than income as an indicator of
who is part of the economic elite. Income refers to revenue individuals receive from wages,
dividends, etc. and wealth refers to assets owned by an individual. The control of assets
available for liquidation not only provides a buffer against economic hardship, but allows
for investment opportunities to be realized, so that wealth may beget wealth, or at least
security (Shapiro, 2004; McNamee and Miller, 2009). It has also been shown that while
holding income constant, there exists great inequality in wealth holdings (Shapiro, 2004).
It is accumulated wealth that is transferred intergenerationally, not an individual’s income,
that serves to perpetuate not only privilege, but also inequality (McNamee and Miller,
1989).
The general consensus among the authorities on the issue of wealth inequality is
that inheritance, both at death, and as transformative assets passed from parents to
children at pivotal points throughout the life course, known as inter vivos gifts (or gifts
between the living) allows for the intergenerational transmission of privilege (McNamee
and Miller, 1989; Shapiro, 2004; Elmelech, 2008; McNamee and Miller, 2009). Whether it is
the ability to leverage real assets in times of investment opportunity, or the ownership of
assets that can be used to weather temporary economic hardship, big money does not
come from salaries or wages, but from owning resource-producing assets (McNamee and
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Miller, 2009). In sum, wealth is of much greater consequence than income in the reckoning
of economic inequality.
There exists a widespread myth in the United States that being talented, working
hard, having the right attitude, and playing by the rules is the pathway to great wealth.
McNamee and Miller (2009) systematically debunk this myth of “meritocracy,” a term they
define as “a social system as a whole in which individuals get ahead and earn rewards in
direct proportion to their individual efforts and abilities” (pg. 2). If meritocracy were
actualized, there would necessarily be a high level of diversity among the economic elite.
This simply is not the case.
“Diversity” in the Economic Elite
In Mills’ analysis of the power elite, he observed the elite to be almost exclusively
male, urban, white and Protestant. While this may be a rather accurate description of the
demographics of the power elite, to avoid making overgeneralizations about the
homogeneity of the economic elite, there does appear to be a moderate level of
diversification (Zweigenhaft, 2001). Indeed, the power elite is more diverse in its present
state than it has ever been in the United States, mostly in the wake of the Civil Rights and
subsequent social movements (Zweigenhaft and Domhoff, 2006). For the first time in the
history of the United States, Jews, women, Asians, Latinos and African Americans are all
represented (using the term loosely, as they are grossly underrepresented) in the power
elite. The popular media seems to delight in citing cases that “demonstrate” “diversity” at
all levels of government, military and economy. Numerous examples selected to
demonstrate this point actually illustrate the opposite. For instance, Colin Powell, the son
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of Jamaican immigrants, advanced through the military to four star general and chairman
of the Joint Chiefs of Staff and eventually served on the cabinet of George W. Bush as
Secretary of State. Madeline Albright, a woman with Jewish heritage, was selected as
Secretary of State and Robert Goizueta, a Cuban national, served as the CEO of The Coca-
Cola Company (Zweigenhaft, 2001). This was manifest most recently by the appointment
of Sonia Sotomayor, a Latina, to the Supreme Court by President Barack Obama; himself
being the first member of a racial minority to occupy the United States’ highest executive
position. As portrayed in the media, there appears to be a more meritocratic America than
40 years ago.
It is not the intention to downplay increases in the presence of minorities into the
historically white, Anglo-Saxon, Protestant, male-dominated power elite, but there are
several realities that must be understood about those who are represented in the power
elite. Both Albright and Goizueta came from wealthy families, with prestigious educations,
and were ready and willing to assimilate into the dominant culture of the power elite
(Zweigenhaft and Domhoff, 2006). Though the frequency with which minorities are being
included in the power elite is surely increasing, it is by no means as drastic an increase as
presented by the media (which in many cases is coincidentally controlled by those with the
means to produce media—the power elite). A rather pronounced willingness to assimilate
the ideals, attitudes and behaviors of the white male-dominated elite, as well as a close
aesthetic similarity to the existing elite are characteristic of minorities found in the power
elite. Examples include lighter-skinned African Americans, white Jews who are not visibly
different from Protestants, and other individuals willing to “play the part” through class-
cultural assimilation. The latter was exemplified when Cecily Cannan Selby, the first
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woman on the board for Avon, shocked the male-dominated guest list after a dinner party
by lighting up a cigar with the boys. These are the kinds of individuals who are likely to
make it to the power elite (Zweigenhaft, 2001; Zweigenhaft and Domhoff, 2006). In
addition, the numbers of minorities who actually make it to great wealth, the Forbes 400
list, are very few and far between. There seems to exist a willingness to include those who
look and act white, at the lower levels of the power elite, but the true litmus test of mobility
into the economic elite is found in the permeability and composition of the Forbes 400.
Examination of the wealth holdings in the United States shows an extraordinary
level of stratification. In fact, by 1995, wealth disparities were greater than at any time
since the Stock Market Crash of 1929 (Wolff, 1995). Repeatedly throughout the time
period of 1989-2008, whenever the wealth of the top 1% of Americans was measured, they
were found to hold anywhere between 30% and 40% of the total household wealth in the
United States (Wolff, 1995; Domhoff, 2006; Gilbert, 2008; McNamee and Miller, 2009;
Domhoff, 2010). Another study found that since the 1930s, the top 1% of Americans have
steadily held around 30% of total household wealth (Keister and Moller, 2000). Based on
these findings, if those who comprise the pinnacle of the economic elite do not exhibit
considerable change over time, there is support for the premise that much of the nation’s
wealth lies in the hands of a select and relatively stable few who control much economic
power. This has serious implications for the economy, especially in times of economic
hardship, but even in times of prosperity. Under these circumstances there are major
differences between those who benefit and those who actually pay the price for prosperity
(Wolff, 1995).
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Self-Perpetuation of Elites
Closely related to the debunking of the myth of the American Dream of equality of
opportunity, is evidence of a self-perpetuating characteristic of the power elite. With the
increasing concentration of wealth among the top 1% and further concentration within the
Forbes 400, the economic elite has been observed to have become more and more self-
perpetuating, which inherently contradicts the presumption of an open society (Bodley,
1999). Much emphasis has been placed on the existence of interlocking directorates in the
corporate world to explain the self-perpetuation of elites (Jenkins and Eckert, 2000;
Mizruchi, 2004; Burris, 2005; Domhoff, 2006; Foster and Holleman, 2010). Interlocking
directorates, as defined by Domhoff, exist when an individual sits on two or more corporate
boards of directors (Domhoff, 2006) a phenomenon that dates back to as early as 1912
(Foster and Holleman, 2010).
Interlocking directorates serve many purposes for the power elite: they both control
admission into the upper echelons of economic power and work together to better advance
their collective interests. There are two primary ends that are satisfied by the use of
interlocking directorates by the power elite: obvious financial gain (Mizruchi, 2004) and
political cohesion (Burris, 2005). Political cohesion is more veiled than the increases in
financial gains, but is nevertheless vital to maintenance of the power elite.
The existence of interlocking directorates serves to decrease competition among
various corporations either in the same market or in complementary markets (Mizruchi,
2004). Not only do interlocking directorates logistically limit the number of required
board members in the economy at large, they also imply high levels of integration among
corporations that control sectors of the economy, in direct contrast to the ideal of a “free
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market” (Mizruchi, 2004; Domhoff, 2006). For example, in 2006 Domhoff reported that the
interlock between General Motors, Ford Motors, and ExxonMobile was extremely high,
with General Motors and Ford sharing administrative members and working with a
complementary company (ExxonMobile) whose entire business existence is hinged on the
existence of automobiles that require gasoline (Domhoff, 2006). Quite simply, there is not
much benefit to the production of energy efficient vehicles on a more grand scale, save for
the last few years, because without the use of gasoline in combustion engines (which
require regular servicing, ensuring that not only will GM and Ford Motors make money on
the initial sale of a vehicle, but on subsequent maintenance costs) because it would
potentially cripple one of the automobile manufacturers’ greatest business allies,
ExxonMobile.
Jenkins and Eckert (2000) when discussing corporate elite theory and the
interlocking directorates association with policy and important ramifications for the
practice of a democratic government stated, “the key architects of major policy change are
the owners and directors of the largest corporations who hold multiple directorships in top
corporations and are integrated into upper class social networks” (pg. 309). Their analysis
provides an explanation as to why the study of the elite, and more specifically, the elite of
the elite, is crucial to the discussion of mobility, opportunity, and policy. While the current
study does not specifically examine interlocking directorates, they are an important
mechanism that has been shown to facilitate communication and control among the power
elite.
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Control by the Economic Elite
Increasingly, economic power is being more easily converted into political power
(Domhoff, 1990). This power manifests itself multiple forms. Economic power can be used
to fund political campaigns and in some instances provide a smooth transition from the
private sector to positions in government. As Marger states:
“As economic forms of wealth become more important in modern societies,
for example, the significance of military might declines and the power of the
military class also declines. Those who are best able to gather and
coordinate economic wealth, now the most important social force,
consolidate political power and dominate the ruling, or political, class.”
(Marger, 1987:55)
This collapse of power also entails the control of the flow of economic resources to various
regions by using decision-making positions to place factories and plants in areas that offer
favorable accommodations for generating maximum returns. Such areas provide lower tax
rates for corporations, effectively discourage organization among workers in the form of
unions, and often will pass legislation to accommodate the new factories or plants in order
to boost their local economy.
It is important to distinguish the upper class and economic elites from Mills’
definition of the power elite. For Mills, the power elite were often members of the upper
class, or the upper middle class, and consisted of those individuals who were able to
significantly impact policy, the economy, and military by virtue of their positions within
each structure. The wealthiest individuals and families may not necessarily be a part of
this power elite, as extraordinary wealth does not necessitate hands on decision-making.
The power elite, however, generally works in the best interest of the upper class, and the
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individuals controlling such wealth, and serves to perpetuate and attempt to legitimate
authority. The ruling class view, as previously discussed, proposed by Domhoff takes the
power elite and integrates those holding great amounts of wealth. Whether or not a person
who controls great economic means takes an active role in policy planning or the day-to-
day activities of a large corporation, they indirectly exert control over the decisions made
by Mills’ power elite by their ability to choose how to utilize their wealth. In sum, the mere
existence of such vast wealth affords the current upper class, and more specifically, the
elite of the elite in terms of wealth holdings, a certain degree of power, whether exploited
or not, by virtue of the potential degree of control offered by such individual wealth.
Economic elites exert control over government through two primary means:
controlling the means of policy making and controlling the means of funding for various
forms of government activity. With the existence of a two party system in the United States,
the American population has been divided into camps, neither of which satisfy the majority
of concerns of the people (Domhoff, 1990). This system is exploited by the power elite,
according to Lasch (1995), who claims that nearly all political issues have their origins in
issues between economic elites with opposing perspectives and the power elite who
represent their interests (Lasch, 1995).
The economic structure of the United States has led to a growing gap between
politics and policy, with the majority of policy planning, organizing, and initiatives
originating outside of the government in the form of think tanks, and other non-profit, non-
government organizations (Dye, 1987; Domhoff, 1990). The non-profit self-definition of
most of these policy generating organizations misleads the public into believing that there
is no monetary motivation behind policies from these “experts”, who presumably are
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offered freedom of thought as analysts and scientists for defending and deciding which
policies to endorse, as well as the scope and ramifications of such policy (Dye, 1987). The
reality is that most prominent think tanks and other organizations aimed at initiating or
endorsing policy are funded by the same corporations and economic elite that stand to
benefit from the potential legislation created by the policy. Although there does exist a
degree of freedom in these organizations, the “experts” are ultimately funded by, and
responsible to the boards of directors of the organizations for which they work, the same
boards of directors whose interlocks examined above provide for decreased competition
among corporations, and skyrocketing profit (Dye, 1987; Domhoff, 1987; Domhoff, 1990).
A prime example of such control over policy and government exists in the current
“Great Financial Crisis” in which there exists a private bank system that is “too big to fail”
(Foster and Holleman, 2010). It could be argued that if banks which practice overly
aggressive business models in order to obtain huge returns on investments, are allowed to
go bankrupt when these reckless practices lead to loss rather than gain, and must be
“bailed out” by the federal government to avoid an even worse situation for the economy of
the United States, then the federal government essentially is handcuffed to supporting
these corporations, which are controlled by the power elite. Such actions have increased
the visibility of the power elite, engaging in what Foster and Holleman (2010) have
referred to as “state sponsored private profiteering.”
The best example of a private corporation influencing government and exercising
control which served to perpetuate the status quo and protect the position of dominance by
the power elite is found in the case of Robert Rubin, former Secretary of the Treasury
under the Clinton administration. After the implementation of the Glass-Steagall Act of
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1933, investment banking and commercial banking were federally required to be separate,
in an effort to avoid another situation of bank failures which led to the Great Depression
(Foster and Holleman, 2010). In 1999, while working in the Clinton administration, Rubin
began to broker a new piece of legislation, the Financial Services Modernization Act, which
would repeal the Glass-Steagall Act of 1933, and open the door to more aggressive banking
practices. One week after the repeal was set in motion, Rubin announced his resignation
from the Clinton administration to take a job at Citigroup, perhaps the largest beneficiary at
the time for the repeal. His salary was to be $1 million for 2000 and 2001, and then $14
million a year thereafter (Foster and Holleman, 2010).
With the conversion of economic power into political power, affording the economic
elite with a measure of control over policy planning and the federal government in general,
serious questions are raised for democracy at the national level. Mizruchi (2004) provides
a simple analogy that suggests a façade of democracy both in the private and public sectors.
In publicly traded corporations, the board of directors, and especially the CEO, serve as the
analog to national democracy in that they are the “elected” leaders of the corporation.
However, much like national politics, the “elected” officials are seldom responsible to the
“voters” or stockholders in Mizruchi’s example, a reality that is also manifested in the
façade of national democracy (Mizruchi, 2004). It is for these reasons that the study of the
upper echelons of the economic elite is essential to the field of sociology. When society is
believed to be based on meritocracy and governance by publics, there should exist high
levels of mobility. But as the literature suggests, the opposite is true. There are not high
rates of mobility, or a true political democracy, but rather a system based on self-
perpetuating super wealth, reflected in the stability and concentration of the Forbes 400.
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The Forbes 400
Since the Forbes 400 was first published in 1982, studies have been conducted on
the composition of the members of the list, their demographics, sources of wealth, and
backgrounds. E. Ray Canterbery and E. Joe Nosari conducted the earliest study in 1985,
observing that inheritance accounted for a great deal of the wealth of the Forbes 400, and
that there was no evidence that wealth grew exponentially over the lifetimes of the
respondents from the Forbes 400. The study suggested that inheritance prevailed over
individual achievement or the result of personal ambition, and that the actual wealth
comprising the Forbes 400 was more constant than the specific individuals who held that
wealth in any given year (Canterbury and Nosari, 1985).
Canterbury and Nosari’s focus on inheritance was echoed in subsequent studies. An
examination of the 1995 and 1996 Forbes 400 lists found that at least 56% of the
respondents on the list inherited at least $50 million, and 14% came from families in the
top 10% income bracket (Collins, 1997). Expanding on Collins’ 1997 findings, Domhoff
(2006) noted that the 30% of the Forbes 400 in 1995 and 1996 that were on the list as a
result of upward mobility still retained significant advantages over others in their original
socioeconomic class, specifically in the area of education at highly prestigious schools.
There were four inheritance level categories listed for the 1997 Forbes 400 list:
inherited status, inherited significant wealth, inherited lesser wealth or advantage, and no
inheritance (Gilbert, 2008). It was found that 42% from the 1997 list inherited an amount
of wealth that would secure them a position on the list outright. These individuals were
considered to have inherited status. Those who had inherited significant wealth comprised
13% of the list and included those who had inherited over $1 million, comparable start-up
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capital, or an existing enterprise. Another 14% came from socially upper-class
backgrounds, with inheritances of lesser wealth or advantage. Finally, 31% in 1997 had no
apparent advantageous inheritance, but as was observed by Domhoff (2006), still likely
retained advantages in education.
Changing patterns in the composition of the sources of wealth for the super-rich
during the 1980s were observed by James Petras and Christian Davenport (1990). By
using the reported sources of wealth from the respondents who made up the Forbes 400,
there was an observed shift toward finance and real estate, and away from more traditional
forms of wealth such as manufacturing and mass media (Petras and Davenport, 1990).
An in-depth look at the Forbes 400 with a blend of data from the Forbes lists,
biographical and anecdotal content was provided by journalists Peter W. Bernstein and
Annalyn Swan in 2007. Importantly, Domhoff (2010) has warned of the potential to
downplay important contributing factors to making it on the list when considering
anecdotal information at face value. For example, Bill Gates, often highlighted as being a
college dropout, actually left Harvard as the opportunity for cornering the market on new
software was made manifest. Before becoming a “college dropout” he was the son of a
prominent corporate lawyer in Seattle and a socialite mother, who attended the top private
school in Seattle before attending Harvard. As Domhoff and others suggest, there is
actually much more limited mobility within the economic elite than is often suggested or
implied by anecdotal examples.
19
DATA AND METHODS
Analysis of existing data sets has long been used as a method for social research.
Dating back to Emile Durkheim’s Suicide, Max Weber’s The Protestant Ethic, and several
of Karl Marx’s works such as Capital, archival data have been the central data source for
sociological research that has shaped the discipline (Gidley, 2004).
Data were collected from the Forbes 400 List of Richest Americans from 1995
through 2010. According to Foster and Holleman (2010) “the best empirical data available
for ascertaining the changing wealth distribution within the capitalist class [is found in the
Forbes 400]” (pg. 9). Other scholars such as Val Burris (2000) and journalists Bernstein
and Swan (2007) have endorsed the integrity of the Forbes 400 as a data set.
The individuals on the Forbes 400 shape financial trends, shift leadership and policy
initiatives, and are on the cutting edge of economic and technological innovation (Kroll,
2010). When formulating the list, Forbes considers several factors. Throughout the year,
associates of Forbes interview list members, their business rivals, partners, and a number
of other relevant individuals. The list also requires examining court and tax documents,
assigning wealth values to assets, and including in the analysis, the debt held by each
individual (Kroll, 2010). Calculating wealth for this elite 400 is no different than for any
calculation of wealth discussed previously (when comparing wealth to income).
By examining those who are the epitome of economic elite over time, a number of
methodological benefits arise. First, there is no need for estimates, as the list represents
the universe of those studied. Next, by studying the 16 lists of the Forbes 400 from 1995 to
2010, trends can be documented. Potential changes in concentration of wealth among
those included on the list, demographic shifts, and stability have been observed.
20
For each year, eight variables were coded for each individual who is included on the
list: name, wealth rank, wealth amount, primary source of wealth, sex, age, and race. Sex
was coded as a binary variable, age as continuous, and race was split into five categories:
White, Black, Hispanic, Asian, and other. Those included on the Forbes 400 are individuals.
This is important to note because it separates dynastic families such as the Waltons, heirs
of the Wal-Mart fortune, into individual units. This allows for a dispersion of family
members throughout the list, with a ranking on their own personal wealth holdings, and
not necessarily that of their families.
Starting in 2000, wealth amounts were changed from “millions of dollars” to
“billions of dollars.” The maximum number of decimal places used by Forbes is three,
which may suggest a possibility of an individual with more wealth being ranked in a tie on
the list with an individual with less wealth. This would only be possible in cases in which
the difference was less than $500,000. Considering the minimum wealth amount on the
2010 list was one billion dollars, this is an acceptable margin. This is not only a
phenomenon that concerns the lowest wealth holdings on the list, but throughout the list,
there are individuals who share a rank with “equal” wealth holdings. Any such “ties” can be
treated as equal amounts of wealth for the purposes of studying individuals who hold vast
amounts of wealth.
After a preliminary analysis was concluded of the major sources of wealth, thirteen
categories were established to code the primary sources of wealth. The thirteen categories
are as follows: Inheritance; Computers/Technology; Healthcare/Medical Services; Energy;
Finance/Insurance; Food; Manufacturing; Arts/Media/Entertainment; Wholesale/Retail
Trade; Real Estate/Rentals; Transportation/Storage; Services; and Miscellaneous. By
21
analyzing these sources of wealth from year to year, it will be possible to observe any
existing shifts in sources of wealth that may suggest shifting patterns in the economy of the
United States. According to Foster and Holleman (2010) the Forbes 400 represent the
overall direction of the economic elite (pg. 9).
By using the variables of race, sex, and source of wealth it was possible to determine
whether or not the economic elite is more permeable than has been the case historically
(Zweigenhaft, 2001). By using the demographic variables race and sex, it was possible to
determine if the White male dominated economic elite has become more diverse
(Zweigenhaft, 2001; Zweigenhaft and Domhoff, 2006), or if the changes have been
negligible and possibly explained by assimilation of women and minorities into the
economic elite, who differ only slightly from their White male counterparts (Zweigenhaft,
2001; Zweigenhaft and Domhoff, 2006).
Next, wealth concentration of the Forbes 400 was observed to determine whether
there is an even, relatively flat, distribution of wealth among the economic elite, or whether
it exhibits extremely skewed and stratified distribution as found within society at large,
where the top one percent own up to forty percent of existing wealth (Wolff, 1995;
McNamee and Miller, 2009). In order to analyze the distribution of wealth within the
Forbes 400, six groups were distinguished, and the percentage of total wealth of the Forbes
400 will be determined for each group. The top ten individuals (top 2.5%) from each year
comprise one group, and the list was divided into quintiles.
Closely related to the concept of the concentration of wealth is that of the stability of
the Forbes 400. It is important to note the difference, however, as they are separate
phenomena. Lists were generated of those individuals on the list who die from the year
22
before, or fall off due to changes in the economic makeup of the list. The changes from year
to year in terms of the percentage of those who drop off due to financial conditions will
suggest the level of mobility among the economic elite. In a society that places such a high
emphasis on meritocracy, such as the United States, high levels of stability among the
Forbes 400, and a low level of movement into the ranks of the economic elite would serve
as further evidence to challenge the ideal of the American Dream (McNamee and Miller,
2009). By analyzing the change in composition not only of sex and race each year, but also
by the amount of movement into and out of the Forbes 400, conclusions were drawn
regarding the amount of stability among the economic elite. To observe the stability of the
Forbes 400 over the observed period, each unique member of the list will be assigned an
identification number along with his or her wealth ranking for each individual year.
Nominal stability was calculated by excluding mortality and calculating percentages of
those who were repeat members of the list from the previous year. Further, rank stability
was measured employing a Pearson correlation using pairwise deletion to determine the
year-to-year stability of the Forbes 400.
RESULTS
Demography
During the examined period of 1995-2010 Whites have dominated the list each year,
with a low of 94.75% in 2000, and a high of 97.5% in 1998 (See Figure 1). Rather than a
steady increase in non-white members of the Forbes 400 from 1995 to 2010, the numbers
fluctuate within a range of 94.75% to 97.5% for all years (See Table 1).
2
3
Figu
re 1
. Rac
ial C
ompo
siti
on o
f For
bes
400
0.00
%
10.0
0%
20.0
0%
30.0
0%
40.0
0%
50.0
0%
60.0
0%
70.0
0%
80.0
0%
90.0
0%
100.
00%
Whi
te
Non
-Whi
te
24
White Black Hispanic Asian Other Missing
2010 96.75% .25% .25% 2.75% --- ---
2009 96.25% .25% .25% 3% .25% ---
2008 95% .25% .25% 3.75% .25% .5%
2007 95.75% .25% .25% 2.75% .5% .5%
2006 95.75% .25% .25% 2.5% .5% .75%
2005 96.25% .25% .25% 2% .5% .75%
2004 96.75% .25% --- 1.5% .5% .75%
2003 96.5% .25% --- 1.75% .75% .75%
2002 97% .25% --- 1.25% .75% .75%
2001 96% .25% --- 2% 1% .75%
2000 94.75% .25% .25% 4% .25% .5%
1999 95.75% .25% .5% 2.75% .5% .25%
1998 97.5% .25% --- 1.75% .25% .25%
1997 97.25% .25% .5% 1.5% .25% .25%
1996 96.5% .25% .5% 2% .25% .5%
1995 96.5% .25% .5% 1.5% .5% .75%
Average 96.27% .25% .23% 2.3% .44% .52%
Table 1. Race Composition of Forbes 400
Throughout the 16 years examined, only one African American was included in the
Forbes 400, Oprah Winfrey, making the list every year from 1995 to 2010, but leaving the
African American representation in the list at one-quarter of one percent (See Table 1),
quite disproportionate to the national percentage of 12.6% in 2010 (U.S. Bureau of the
Census, 2010). The Hispanic makeup of the Forbes 400 is very similar. The maximum
number of Hispanics on the list was 2, and only for the years 1995, 1996, 1997 and 1999.
25
In 1998, 2001, 2002, 2003 and 2004, there were no Hispanics to make the list. The
remaining years included one Hispanic on the list, making the percentage range from zero
to one-half of one percent for the examined period (See Table 1). In 2010, there was only
one Hispanic member of the list, making the composition one-quarter of one percent
Hispanic, as opposed to the national composition of 16.3% (U.S. Bureau of the Census,
2010).
The last defined racial minority on the list, Asian, was represented every year on the
Forbes 400. With a low of 1.25% and a high of 4% (See Table 1) the Asian category, while
fluctuating from 1995 to 2001, has seen a steady increase from 1.25% to 2.75% from 2002
to 2010 making Asian the largest defined racial minority group represented on the list as
well as the only group which has shown increasing representation. The Asian composition
of the Forbes 400 is the category that most closely resembles the national composition in
2010, with 2.75% of the list being Asian in 2010 and 4.8% of the national population (U.S.
Bureau of the Census, 2010). It is worth noting that Asians are disproportionately
represented as a minority with relation to African Americans and Hispanics. When
examining the source of wealth trend from year to year it is evident that the technological
industry has grown from 7% of the list in 1995 to 11.5% in 2010. Further, when examining
the racial breakdown with regards to source of wealth, the percentage of Asians on the list
with a technology-based primary source of wealth averaged 67% (See Table 2), perhaps
suggesting more permeability for Asian minorities in that particular industry.
The final racial category “Other” consists primarily of individuals of Middle Eastern descent,
as well as other racial minority groups which were not represented with enough regularity
26
to observe any particular patterns of representation. The “Missing” percentage for each
year in which race was unclear or indeterminate was relatively small, ranging from zero
to .75%.
Much like the racial composition of the Forbes 400, the sex composition is quite one-
sided. From 1995 to 2010 the Forbes 400 has been dominated by men (ranging from
84.25% at the lowest and 90.5% at the highest), with the percentages actually increasing
from averaging 85% male from 1995 to 1998, then increasing to around 89% male for the
following years (See Table 3), with a composition 89.75% male in 2010, nearly twice the
national average of 49.16% (U.S. Bureau of the Census, 2010). While there has been
fluctuation throughout the period from 1995 to 2010, men have consistently dominated
the sex composition of the list (See Figure 2). At the peak of women’s inclusion on the list,
women only comprised 15.75%, and held at around 15% from 1995 to 1998, when there
was a decline to around 11% for the following years. While there has been minimal
fluctuation throughout the examined period, the Forbes 400 has steadily remained a male-
dominated group, and has actually become more masculine over the period from 1995 to
2010, suggesting a less permeable economic elite with regards to sex.
27
In
heri
tanc
e Co
mpu
ters
/Tec
hnol
ogy
Hea
lth
Care
/Med
ical
En
ergy
Fi
nanc
e/In
sura
nce
Food
M
anuf
actu
ring
Whi
te
10.3
%
9.7%
2.
6%
6%
18.8
%
7%
5.7%
Bla
ck
---
---
---
---
---
---
---
His
pani
c --
- 6.
7%
---
---
---
20%
--
-
Asi
an
---
67%
8.
5%
---
---
---
---
Oth
er
---
28.4
%
---
---
12.3
%
---
1.2%
A
rts/
Med
ia/E
nter
tain
men
t W
hole
sale
/Ret
ail
Trad
e R
eal E
stat
e/R
enta
ls
Tran
spor
tati
on/S
tora
ge
Serv
ices
M
isce
llane
ous
Whi
te
13.6
%
6.5%
10
.4%
2.
2%
3.8%
3.
5%
Bla
ck
100%
--
- --
- --
- --
- --
-
His
pani
c 6.
7%
6.7%
46
.7%
--
- 13
.3%
--
-
Asi
an
5.3%
4.
3%
2.1%
--
- 3.
2%
9.6%
Oth
er
27.2
%
---
4.9%
3.
7%
6.2%
16
%
Tabl
e 2.
Rac
e by
Sou
rce
of W
ealth
28
Men Women
2010 89.75% 10.25%
2009 90% 10%
2008 89.5% 10.5%
2007 90.5% 9.5%
2006 89.25% 10.75%
2005 87.5% 12.5%
2004 87% 13%
2003 87.5% 12.5%
2002 88% 12%
2001 90% 10%
2000 88% 12%
1999 88.5% 11.5%
1998 85.25% 14.75%
1997 85% 15%
1996 84.75% 15.25%
1995 84.25% 15.75%
Average 87.8% 12.2%
Table 3. Sex Composition of Forbes 400
29
Figure 2. Gender Composition of the Forbes 400
The rates of inheriting wealth to gain admission into the Forbes 400 between men
and women are also very telling (See Table 4). From 1995 to 2004 the rates of inheritance
as the primary source of wealth for women on the list were from a low of 42.3% of women
on the list to a high of 54.1%. By comparison, from 1995 to 2004 the highest rate of men
on the list for whom inheritance was the primary source of wealth was 10.6%. These
staggering discrepancies in the percentages of inherited wealth between men and women
could suggest further limitations to women in the economic elite. These findings suggest
that avenues to amass great personal wealth are more readily available to men than to
women, who are already disproportionately represented in the Forbes 400. After 2004,
however, the rates of inheritance as a primary source of wealth have steadily dropped
0
10
20
30
40
50
60
70
80
90
100
Percentage Men
Percentage Women
30
among women, paired with an overall decreased rate among men. In 2010 the rate of
inheritance as the primary source of wealth for women was still seven times greater than
that of men (9.8% for women; 1.4% for men), leaving a persistent gap in the percentage of
individuals on the list from inheritance based on sex.
Source of Wealth Inheritance
Year Men Women
2010 1.4% 9.8%
2009 3.1% 17.5%
2008 4.8% 26.2%
2007 3% 21.1%
2006 4.2% 23.3%
2005 3.7% 26%
2004 4.3% 42.3%
2003 8.3% 54%
2002 6.8% 50%
2001 6.7% 45%
2000 6.3% 43.8%
1999 7.9% 50%
1998 7.9% 42.4%
1997 10% 48.3%
1996 10.6% 54.1%
1995 8.9% 42.9%
Table 4. Inheritance by Gender
The age demographic for the Forbes 400 has also shown very little change from
1995 to 2010 (See Figure 3). The mean age, modal age, and median age for the examined
period have all been in the 60s, with the exception of the 1995, 1996 and 2007 modal age
31
in the early 70s, and the 1999 modal age of 57 (See Table 5). In 2010, the median age for
the Forbes 400 was 67, compared with a national median age of 37.2 (U.S. Bureau of the
Census, 2010). There has been an increase from 63 for the median age in 1996 to 66 in
2010, which though subtle coincides with an increased life expectancy in the population of
the United States. A further explanation for the ages of list members being consistently in
the 60s could be that adult children are not as likely to inherit substantial estates and
family wealth from their parents until later in life. Support for this hypothesis, however,
would require more in-depth bibliographical data, beyond the reach of the current study.
Figure 3. Age Composition of Forbes 400
0
10
20
30
40
50
60
70
80
Mean Age
Modal Age
Median Age
32
Mean Age Mode Age Median Age
2010 65.64 67 66
2009 65.73 65 66
2008 64.74 65 65
2007 64.59 70 65
2006 65.11 69 65
2005 65.1 68 66
2004 64.8 67 66
2003 64.94 66 66
2002 64.71 65 65
2001 63.4 64 64
2000 60.5 63 61
1999 60.83 57 61
1998 63.14 60 63
1997 63.06 60 63
1996 62.94 73 63
1995 63.61 70 64
Average 63.93 65.5 64.38
Table 5. Age
While there have been few notable exceptions (such as Mark Zuckerberg, founder of
Facebook being the youngest entry into the Forbes 400 at age 24 in 2008) the data for age
of those who make up the Forbes 400, coupled with race and sex, suggest a regular
composition of older, white men, with very little change over the 16 year period.
33
Forbes 400 1995-2010
2010 Forbes 400 2010 US Population
Percentage White 96.27% 96.75% 63.7%*
Percentage Men 87.8% 89.75% 49.16%**
Median Age 64.38 67 37.2
*2010 US Census White Not Hispanic or Latino (all ages) **2010 US Census (all ages)
Table 6. Forbes 400 Compared to 2010 US Population
As shown above, the Forbes 400 is consistently comprised of White men with a
significantly higher median age than the United States population (See Table 6). In 2010
men were represented at nearly twice the rate of the United States population, with an
overwhelmingly high representation of Whites and a median age 30 years greater than that
of the United States as a whole (See Table 6).
Source of Wealth
Using the reported primary source of wealth for each member of the Forbes 400 by
Forbes Magazine, thirteen categories were created to observe tendencies in sources of
wealth for the Forbes 400 from 1995 to 2010 (See Table 7). Of the thirteen categories,
seven showed marked change over time. Inheritance as the primary source of wealth
showed the most change from 1995 to 2010 from 14.25% of the list in 1995 to only 2.25%
in 2010. It is important to note that inheritance is conservatively measured by Forbes,
being reserved for individuals who entirely inherit assets and wealth holdings that are the
sole factors of their list membership. Being that it is the most ambiguous category on the
list, most susceptible to the discretion of the creators of the Forbes 400 List, and that it
does not take into account inheritance of social class or other significant factors leading to
the accumulation of mass wealth, the inheritance category has shown the most change, but
34
also holds the greatest potential for this to be a matter of interpretation on the part of those
who compile the list.
The category of Finance/Insurance showed the greatest raw growth throughout the
observed period with a rise of 10% of the list from 1995 to 2010. Both Energy and
Computers/Technology showed an increase by 2010 of more than 50% from their starting
rates in 1995. The final category showing an increase from 1995 to 2010 was the Real
Estate/Rentals group, which rose from 8.75% of the list in 1995 to 12% of the list in 2010.
Both the Food and the Manufacturing categories showed significant decline from
1995 to 2010, with declines of nearly 50% from their starting rates in 1995. The remaining
six categories: Healthcare/Medical; Arts/Media/Entertainment; Wholesale/Retail Trade;
Transportation/Storage; Services; and Miscellaneous showed no significant trends or
changes from 1995 to 2010.
3
5
In
heri
tanc
e Co
mpu
ters
/Tec
hnol
ogy
Hea
lthc
are/
Med
ical
En
ergy
Fi
nanc
e/In
sura
nce
Food
M
anuf
actu
ring
2010
2.
25%
11
.5%
3%
9.
25%
23
.75%
6.
5%
5.5%
2009
4.
5%
10.7
5%
3%
8%
22.5
%
6.75
%
4%
2008
4.
75%
10
.75%
3%
7.
25%
24
%
5.5%
5%
2007
4.
75%
10
.5%
3.
25%
7.
5%
25.7
5%
5%
4.5%
2006
6.
25%
10
.75%
3.
25%
6.
75%
22
.5%
5%
5.
25%
2005
6.
5%
10%
3.
25%
5.
75%
20
.75%
5.
5%
5.25
%
2004
9.
25%
10
%
2.5%
5.
75%
20
.75%
6%
5.
25%
2003
14
%
10.7
5%
2.25
%
4.25
%
17.7
5%
5.25
%
4.5%
2002
12
%
9.75
%
2.5%
4.
25%
16
.5%
6.
25%
4.
25%
2001
10
.5%
9.
75%
2.
75%
5%
16
.5%
5.
5%
4%
2000
10
.75%
18
.5%
1.
5%
4.5%
13
.25%
5.
25%
4.
75%
1999
12
.75%
15
.75%
1.
25%
4.
5%
14%
6%
5%
1998
13
%
8.75
%
1.75
%
4.25
%
15.5
%
9%
6.75
%
1997
15
.75%
7.
75%
2.
5%
5.75
%
13.7
5%
10.2
5%
8.25
%
1996
17
.25%
9.
25%
3.
25%
5%
12
.5%
10
%
8.25
%
1995
14
.25%
7%
2.
5%
5.75
%
13.7
5%
11.5
%
8.5%
Tabl
e 7.
Sou
rce
of W
ealt
h
3
6
A
rts/
Med
ia/E
nter
tain
men
t W
hole
sale
/Ret
ail
Trad
e R
eal E
stat
e/R
enta
ls
Tran
spor
tati
on/S
tora
ge
Serv
ices
M
isce
llane
ous
2010
11
%
6%
12%
2.
75%
3.
75%
2.
75%
2009
11
%
7.25
%
13%
2.
25%
4%
3%
2008
11
%
6.25
%
13%
2.
25%
3.
25%
4%
2007
11
.5%
5.
5%
12.7
5%
2.25
%
3.25
%
3.5%
2006
12
.25%
6%
12
%
1.75
%
3.5%
4.
75%
2005
12
.75%
6.
75%
12
.75%
2%
4.
5%
4.25
%
2004
12
.5%
7.
25%
9.
75%
2.
25%
4.
5%
4.25
%
2003
12
.5%
8%
9%
1.
5%
5%
5.25
%
2002
16
.25%
7.
25%
10
.5%
1.
5%
5.25
%
3.75
%
2001
16
.75%
7.
25%
9.
5%
2.25
%
5.75
%
4.5%
2000
16
.75%
6.
25%
8.
25%
2.
5%
5.25
%
2.5%
1999
16
.75%
7%
8%
2.
75%
3.
25%
3%
1998
18
.25%
5%
8.
75%
2.
75%
2.
25%
4%
1997
14
%
3.5%
8.
25%
3%
3.
5%
3.75
%
1996
13
.25%
4.
5%
8.5%
2%
3.
25%
3%
1995
14
%
7%
8.75
%
2%
2%
3%
Tabl
e 7.
Sou
rce
of W
ealt
h (c
onti
nued
)
37
Concentration
An indicator of how permeable the economic elite may or may not be is the level of
concentration of wealth within the Forbes 400. If there exists a relatively even distribution
of wealth throughout the list there would be support for the position that there does not
exist a self-perpetuating economic elite. Conversely, if there exists high concentrations of
wealth even in the upper echelons of the economic elite, the existence of a relatively
insulated group of individuals with whom great wealth and the potential for great influence
is much more plausible. Such is the case with the Forbes 400.
Top 10 First Quintile Second Quintile
Third Quintile Fourth Quintile
Fifth Quintile
2010 18.97% 57.9% 16.38% 11% 8.33% 6.39%
2009 19.39% 55.8% 17.22% 11.26% 8.86% 6.86%
2008 18.13% 55.03% 17.27% 11.58% 8.94% 7.18%
2007 17.61% 55.06% 16.3% 11.98% 9.27% 7.4%
2006 18.57% 56.2% 16.2% 11.49% 9.04% 7.07%
2005 20.1% 56.17% 16.1% 11.54% 9.05% 7.14%
2004 22.64% 57.73% 15.68% 11.31% 8.53% 6.76%
2003 24.86% 60.95% 14.88% 10.42% 7.86% 5.88%
2002 25.35% 61.48% 15.09% 9.9% 7.7% 5.84%
2001 25.28% 60.7% 15.25% 10.2% 7.81% 6.03%
2000 24.8% 62.45% 15.24% 9.91% 6.99% 5.41%
1999 27.37% 61.56% 15.99% 9.84% 7.13% 5.48%
1998 25.63% 59.61% 16.02% 10.4% 7.97% 6.01%
1997 21.07% 56.29% 16.94% 11.38% 8.6% 6.79%
1996 16.46% 52.35% 18.07% 12.32% 9.48% 7.78%
1995 16.62% 54.36% 17.01% 11.79% 9.24% 7.61%
Average 21.43% 57.73% 16.23% 11.02% 8.42% 6.6%
Table 8. Distribution of Wealth
38
In order to determine the concentration of wealth in the Forbes 400 the list was
analyzed in six groups: the top ten individuals, and the first through fifth quintiles (See
Table 8). In four of the years examined, the top ten wealth holders alone accounted for
over one-quarter of the wealth held by the entire list. Further, in every year with the
exceptions of 1995 and 1996, the top ten wealth holders on the Forbes 400 held more
wealth collectively than the entire second quintile (See Figure 4).
Figure 4. Concentration of Wealth by Top 10 and Quintile
As is the nature of a list ranked in order of wealth holdings each quintile should hold
a smaller amount of wealth than the preceding quintile. The difference between quintiles,
however, is very telling. For each of the 16 years the first quintile held more than half of
the wealth that comprised the entire list. With fluctuation of only a few percentage points
0
10
20
30
40
50
60
70
Top 10
Top 20%
Second 20%
Third 20%
Fourth 20%
Fifth 20%
39
each year, the top 80 wealth holders on the Forbes 400 have held around 55% of the
wealth of the entire list (See Figure 5).
The concentrations of wealth observed in the Forbes 400 from 1995 to 2010
suggest that there exist great discrepancies in the amount of wealth even in this
microcosmic view of the economic elite. The concentration of wealth among the list is
disproportionately distributed, however this is only one-half of the indication of a self-
perpetuating, insulated economic elite. The other half is the stability of the Forbes 400.
Stability
When examining support for a theory of a self-perpetuating economic elite, high
levels of stability would suggest a high degree of insulation. Conversely, if there exists
lower levels of stability, a permeable, fluctuating economic elite would be more plausible.
In order to determine the stability of the Forbes 400 the members who die between
publications of the list must be excluded, as they do not have an opportunity to return to
the list. By excluding those who die from the measure of stability, it is possible to observe
the percentage of repeat members based solely on wealth. In order to obtain the most
specific stability figures the stability was calculated year-to-year. The nominal stability
was calculated as a percentage of those who were repeat members of the list divided by the
resulting n after mortality was excluded. The nominal stability ranged from 83.97% in the
1998-1999 period to 94.86% in the 2002-2003 period (See Table 9). Throughout the
observed period, the stability held around 90%, showing very little change in the
composition of the list. Such high stability suggests that the list itself is relatively insulated.
40
N Repeat Members % Repeating
2009-2010 391 366 93.61%
2008-2009 394 362 91.88%
2007-2008 394 361 91.62%
2006-2007 393 343 87.28%
2005-2006 392 358 91.33%
2004-2005 392 358 91.33%
2003-2004 394 347 88.07%
2002-2003 389 369 94.86%
2001-2002 396 365 92.17%
2000-2001 397 346 87.15%
1999-2000 398 361 90.7%
1998-1999 393 330 83.97%
1997-1998 395 355 89.87%
1996-1997 394 357 90.61%
1995-1996 390 347 88.97%
Table 9. Nominal Stability
While the nominal stability of the Forbes 400 speaks to the insulation of the list
itself, it is only one-half of the stability equation, speaking to the stability of the list from
external forces. In order to observe the stability of individual rank, a Pearson’s correlation
coefficient was calculated for each successive two-year period. Using pairwise deletion
only individuals who appeared on both lists in each successive year were considered in the
calculation of stability. It is important to note that the Pearson coefficient for each unit is
based solely on individual rank on the list and not amount of wealth, though the two are
directly related. While the stability of the Forbes 400 as a whole was shown with nominal
measures above, the Pearson’s coefficient shows the level of internal stability of individual
41
rankings from year-to-year. Internal stability of the Forbes 400 is as important as external
stability as it speaks to the fundamental self-perpetuation of an individual’s position in the
economic elite. Lower Pearson coefficients would suggest greater levels of mobility within
the list, while higher Pearson coefficients show greater levels of stability and insulation.
Pearson Coefficient N 2009-2010 .931 366 2008-2009 .883 362 2007-2008 .892 358 2006-2007 .871 342 2005-2006 .910 358 2004-2005 .900 357 2003-2004 .904 346 2002-2003 .920 369 2001-2002 .881 365 2000-2001 .824 346 1999-2000 .856 343 1998-1999 .841 330 1997-1998 .886 353 1996-1997 .877 356 1995-1996 .838 347
Table 10. Stability of Rank
The Pearson’s correlation coefficients ranged from a low of .824 in 2000-2001 to a
high of .931 in 2009-2010 with an average of .881 (See Table 10). These high levels of
internal stability, coupled with the nominal external stability, show that not only does the
list have a self-perpetuating characteristic, but that there exists a high level of the stability
of rank for each individual on the list. Therefore the measured stability of the Forbes 400
from 1995-2010 suggests an insulated, self-perpetuating, highly stable economic elite.
CONCLUSION
It has been the purpose of this study to examine the applicability of elite theory to
the current composition of economic elites in the United States. William Domhoff (2010)
42
describes a self-perpetuating insulated economic elite with the ability to wield significant
power in several social arenas. Consistent with this view, this study has demonstrated that
the longitudinal composition of the Forbes 400, representing the pinnacle of the economic
elite in the United States, has shown significant and persistent resistance to change.
Though it has not been the aim of this study to observe or draw conclusions as to the
possible political ramifications of this insulated and stable economic elite, the potential for
a small group of individuals to significantly influence political systems through highly
concentrated forms of wealth ownership cannot be dismissed.
This study has analyzed the demographic composition of the Forbes 400 from 1995
to 2010 and its degree of wealth, concentration and stability. Adding to the previous
studies concerning the Forbes 400 (Canterbury and Nosari, 1985; Petras and Davenport,
1990; Collins, 1997; Gilbert, 2008) this study has expanded the understanding of the
longitudinal composition and degree of stability of the Forbes 400.
The findings presented in this study support the existence of an insulated, self-
perpetuating, homogenous economic elite. The demographics of the Forbes 400 have
shown a consistent overwhelmingly white and male presence in the ranks of the upper
echelons of the American economic elite. The median age of the members of the Forbes
400 has been in the mid sixties, with a slight tendency toward older ages over time. Given
this profile, there is no compelling evidence found in the composition of the Forbes 400 to
suggest any movement toward greater diversity or permeability. The lack of change in the
observed group suggests that Zweigenhaft and Domhoff’s view on the increasing diversity
of elites is not supported at this pinnacle of the economic elite.
43
While views on increasing diversity among elites are not supported in the Forbes
400, it is important to note that the Forbes 400 was selected intentionally as a data set that
included only Americans. This afforded the opportunity of speaking to the perceived
increase in opportunity of the accumulation of super wealth by women and minorities.
Also, while representing the elite of the economic elite in the United States, the top 400
individuals in terms of wealth are not the only members of the elite. While beyond the
reach of the current study, Domhoff’s position of increased diversity may hold true for even
the top 1%, but not the Forbes 400. Other analyses of economic elite have cited globalism
as a mechanism for increased diversity (Taylor, Harrison and Kraus, 2009); however,
limiting the study to the Forbes 400 Richest Americans, as opposed to using the World’s
Billionaires list compiled by Forbes, allows the discussion of findings to be centered around
a sociological approach of factors operating in the United States shaping who controls
massive wealth.
The concentration of wealth, even within the Forbes 400, as well as the stability of
both the individuals on the list and their position on the list support what Bodley (1999)
recognized as being inherently contradictory to the presumption of an open society. The
concentration and stability of wealth among the Forbes 400 suggests the existence of a
form of economic aristocracy, with new entrance typically only in the lowest ranks, and a
well-insulated and established hierarchy among the key players. This characteristic of the
Forbes 400 directly violates the myth of the American Dream of a society with an open
economic system based on meritocracy (McNamee and Miller, 2009). Further, with such a
high level of wealth concentration comes higher levels of economic power, which has been
suggested to have an inverse relationship with democracy (Mizruchi, 2004) leaving serious
44
considerations as to what effect such economic concentration has on the political system of
the United States.
Perhaps the greatest contributing factor to the emergence of an economic
aristocracy is that of inheritance. While inheritance as the primary source of wealth has
shown a decline from 1995 to 2010 as reported by Forbes, it is important to note that the
Forbes measure of inheritance is very conservative, reserved for individuals who have
entirely inherited an amount of wealth and assets that provide them with a spot on the list.
By using such a conservative measurement of inheritance, factors such as social class
placement at birth and inter vivos transfers, which have been shown to have as significant
an impact on an individual’s wealth prospects (McNamee and Miller, 2009), are not taken
into account. In fact, being born to the “right” parents, that is parents who are able to use
social and economic clout in order to advance their children’s social, educational and
ultimately economical standing in life, has been found to be one of the most important
factors leading to economic mobility and placement within the economic elite (Shapiro,
2004; McNamee and Miller, 2009). McNamee and Miller (2012) in a working paper
entitled “American and British Economic Elites” found that the higher ranks of the Forbes
400 showed a greater likelihood for not only inheriting wealth, but also inheriting greater
amounts. However measured, inheritance, in one form or another, remains a key
component of wealth accumulation, with negative implications for meritocracy, and
possibly even democracy.
While recognized as the most legitimate source for information on the wealthiest
Americans, the Forbes 400 list is limited in the respect that the user is at the mercy of
45
coding guidelines set forth by the original data-collecting agency. The main limitation of
the current study is in the lack of in-depth biographical information for each member of the
list. With 923 different individuals being on the list between 1995 and 2010, extensive
biographical research on each member could not be obtained.
The current study, for instance, lacks data on religious affiliations of members on
the list, making it impossible to draw conclusions as to the representation of the classic
White Anglo-Saxon Protestant (WASP) presence among the economic elite. In addition to
religious affiliation, there were no data collected on social, political or other memberships
and affiliations of the Forbes 400 other than their source of wealth. An in-depth analysis of
such affiliations would address the degree of interconnectivity of Forbes 400 members,
which has been observed among the economic elite at large (Jenkins and Eckert, 2000;
Mizruchi, 2004; Burris, 2005; Domhoff, 2006; Foster and Holleman, 2010). While there
certainly exists the potential for great influence on political systems and government
affairs, the political activism or involvement by members of the Forbes 400 has not been
analyzed, making conclusions as to the degree of influence such wealth affords difficult to
establish. In some cases, individual members of the Forbes 400 have donated substantial
amounts of money to so-called Super PACs, made possible by the recent outcome of the US
Supreme Court decision in the 2010 Citizens United v. Federal Election Commission.
Without more systematic data, however, it is difficult to establish the degree to which
economic elites influence political outcomes. Finally, while there is much literature to
suggest the importance of intergenerational transmissions of privilege (McNamee and
Miller, 1989; Shapiro, 2004; Elmelech, 2008; McNamee and Miller, 2009) no data were
collected on factors such as parental occupation, education, income or other socioeconomic
46
status indicators. Future studies would further the understanding of the pinnacle of
economic elite by including more extensive biographical data on the Forbes 400, examining
connections found in religious, educational, political and economic affiliations, as well as
intergenerational biographical data.
47
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