Democracy is among other things the rule of majority public opinion. Plutocracy is the rule of the wealthy few over and against the popular majority. To understand the different meanings of these two terms, you can consult a dictionary. You can also look at the very different decision-making processes on display regarding major political-economic policies in Greece (the ancient homeland of the Western democratic ideal) and the United States (the self-declared homeland and headquarters of contemporary democracy).
Greece: “The People Must Decide”
Let’s start with Greece. It has been under pressure from international, principally European creditors to slash social and other governmental expenditures in order to qualify for a five-months extension of the “economic rescue program” (bailout) that European authorities have advanced to keep the nation’s financial system solvent. The austerity (“reform”) proposals advanced by the European Commission, the European Central Bank, and the International Monetary Fund (the “Troika”) include deregulation of the Greek labor market, rollbacks in union power, pension cuts, and an increase in taxes on basic food products. The Troika give Greece until yesterday (I am writing on the morning of Wednesday, July 1, 2015) to accept their terms or face default.
The “reforms” demanded by the European financial power elite promise to further the economic humiliation of a nation that has been struggling for years to meet the outrageous debt payment and austerity commands of its northern creditors. As liberal U.S. economist Paul Krugman explained in the New York Times two days ago, austerity has been a dead end for Greece, denied (thanks to its membership in the Eurozone) the ability to reduce its deficits by devaluing its currency:
“most…of what [Americans have] heard about Greek profligacy and irresponsibility is false. Yes, the Greek government was spending beyond its means in the late 2000s. But since then it has repeatedly slashed spending and raised taxes [as required by the Troika]. Government employment has fallen more than 25 percent, and pensions…have been cut sharply. If you add up all the austerity measures, they have been more than enough to eliminate the original deficit and turn it into a large surplus….So why didn’t this happen? Because the Greek economy collapsed, largely as a result of those very austerity measures, dragging revenues down with it….And this collapse, in turn, had a lot to do with the euro, which trapped Greece in an economic straitjacket. Cases of successful austerity, in which countries rein in deficits without bringing on a depression, typically involve large currency devaluations that make their exports more competitive. This is what happened, for example, in Canada in the 1990s, and to an important extent it’s what happened in Iceland more recently. But Greece, without its own currency, didn’t have that option.”