WealthThe upper class are typically defined as the top one or two percent of families in terms of wealth. This makes the upper class about 2% of the population such that the bourgeois, middle class and lower class are all larger groups. Despite this, the upper class can potentially control more wealth than all of these groups combined. This largely depends on the tax policy of a nation as high taxes on the upper class can prevent this from occurring.
IncomeIn order to preserve their wealth, the upper class typically need to put it to work as productive capital to generate income. The upper class that do this well can theoretically sustain their family wealth for many generations.
LaborThe upper class can live from their capital alone and don't have to labor to earn a living. Many members of the upper class may choose to work nonetheless.
Old MoneyUpper class families that have maintained their wealth for at least three generations are known as old money and those that have been wealthy for a generation or two are known as nouveau riche. In many cases, the talents needed to generate money or inherit money are very different from the talents required to sustain wealth over time when there is constant temptation to overspend and people are regularly approaching you with investment pitches. For these reasons, old money families are generally frugal, fiscally conservative and understated such that they may avoid showy displays of wealth.
Cultural CapitalCultural capital is the ability to influence within a culture. The upper class have their own set of norms, expectations and shared experiences that allow them to quick identify each other in conversation. This is particularly true of old money families. For example, the upper class of a nation tend to vacation in the same spots, go to the same schools and know the same people. This helps these families to stay wealthy as knowing other wealthy people provides a great number of opportunities in life such as positions, jobs, titles, awards and favors from those in power.
Social StatusSocial status is the respect you get from society. The upper class often enjoy a significant degree of social status and may work hard to improve the social status of their family. For example, by getting their children into ivy league universities.
SignalingSignaling is an attempt to build social status with highly visible displays of wealth, intelligence, coolness or youthfulness. For example, buying a supercar signals wealth, coolness and youthfulness while attending expensive conferences about "ideas" signals intelligence. Every social class is prone to signaling but the upper class have the resources to take this to extremes. Generally speaking, signaling is detrimental to long term wealth preservation and some old money families avoid it as a matter of principle.
CountersignalingCountersignaling is the use of quiet confidence and understatement to communicate social status. For example, a wealthy individual who never talks of their wealth to peers at school because they already know. Countersignaling is generally more effective than signaling if done right and should not be confused with true humility.
Conspicuous ConsumptionThe entire luxury industry is devoted to trying to separate the upper class from their money. Some members of the upper class become excessive consumers. Others are pragmatic such that they buy some quality stuff but aren't overly obsessed with consumption.
Conspicuous ConservationSocial life in upper class circles often revolves around charities and support for art and culture. This can be viewed as a type of conspicuous conservation.
ValuesThe upper class of a society may have a shared set of values. Sharing these values, or at least pretending too, is an element of the cultural capital required to build relationships with the upper class. For example, it is very common for the upper class of nations to have a strong ethic of cosmopolitanism.
CharityIn many cases, the upper class actively contribute to charitable causes and in some cases they donate their entire fortunes to charity. It is possible for a charity sponsored by an upper class individual to create negative value for society. For example, a wealthy individual who wants to play with submarines so they found a "research foundation" that makes the submarines tax deductible.
Relational CapitalRelational capital is the people you know and the potential for these relationships to have future value. The upper class may know a great number of powerful individuals and may work to generate social and business value from this network.
Political PowerThe upper class use their relational capital and wealth to exercise political power as a class. For example, they may financially support political candidates in order to influence public policy.
Rent SeekingIn some cases, the upper class use their political power to seek a greater share of wealth without creating a greater share of value. This is known as rent seeking. Historically, many nations had an aristocracy that were a rent seeking class that benefited from public lands and taxes without producing much by way of goods and services that added value. This persists today as the wealthy may lobby government for protection from competition such as tariffs, overpriced government contracts, reduced taxes for the wealthy, special tax treatments, protection from liability, license to create economic bads, rights to government assets and subsidies.
NotesIn a communist society run by a bureaucratic elite, the upper class are those bureaucrats that control the immense resources of the state such that they can be leveraged or enjoyed much like personal wealth.
|Overview: Upper Class|
A group that hold the top levels of wealth, political power and social status in a society.
The top two percent of society in terms of family wealth or defacto control of resources.