Elite Capture

October 10, 2025

While reading Noam Chomsky's Who Rules the World? I came across an idea about the gap that exists between the demands of the commons and policies implemented by politicians in the United States. It's commonly known as elite capture, when those with wealth end up shaping the rules in their favour. The idea stuck with me because it is not unique to America. Every democracy seems to suffer from some version of it. What changes is the way it works.

The commons are consistently ignored, as politicians are driven to support only the needs of the elite. This happens because elites, who have amassed disproportionate levels of wealth, are the only ones who can bankroll these politicians during elections. These politicians then adopt policies that enrich the elite, leaving out the commons, and the cycle continues.

Some examples of these contradictions are easy to spot. Climate policy often reflects the interests of Big Oil. Budgets protect defence contractors while cutting Medicaid. Other relevant examples include downsizing the budgets of important regulatory bodies like the SEC and the FDA, and repeated tax cuts that disproportionately benefit the wealthy. You can see how this works in the case of Jeff Yass, the billionaire with a big stake in TikTok. He happened to be the top Republican donor in 2024. Quite predictably, Trump eventually reversed course on banning TikTok after meeting Yass. [1]

The credit for elite capture in the US goes to its reserve currency status. Global savings started flowing into the US, as the US dollar was considered the safest currency. [2] This caused a massive wave of financialization across the US economy. Finance began pulling resources away from other areas of the economy. Manufacturing was outsourced as it could not compete with the financial industry for capital or labour. The financialization led to a massive concentration of wealth within the finance industry, kick-starting the cycle of quid pro quo between Wall Street and policymakers. The effect is visible in the extreme wealth inequality: the US had a Gini coefficient of 41.8 in 2023. [3]

Seeing how finance shaped politics in the US made me wonder how things look in a place like India, where the economy and politics work differently. We never had that kind of financial dominance, and our politics never gave money the same freedom.

For all the criticism that socialist schemes get in India, I think we've ended up in an odd kind of equilibrium. It slows us down in some ways but protects us in others. Money that could have gone into education, research, or industry ends up funding welfare schemes, which limits growth. But the same welfare politics also stops the rich from taking over completely. The elite still have influence, but mostly in getting contracts or access to natural resources. They haven't been able to touch welfare spending. So, we've ended up in a strange balance where the country doesn't grow as fast as it could, but the power stays a little more evenly spread.

It is an equilibrium because if any party chooses to tilt towards the wealthy too much, there is a high probability of them losing elections. The other party, which offers more socialist benefits, is likely to win. Elites still lobby, but their influence remains confined. They can shape who gets a licence or a contract, but not whether the poor get food or healthcare.