The power elite is a phrase coined by sociologist C. Wright Mills in the 1950's in book of the same name to describe structural changes he saw in American society in the flow of political power.
Some people think the power elite is a grand conspiracy. I use the phrase in the subtitle of my The War State to refer to the phenomena that Mills describes. He really was speaking of changes that took place in the United States during World War II and into the 1950's that set the stage for the world we live in today.
There have been several times in American history when the composition of the American economy and the elites at the top have changed. Two hundred years ago the United States was a nation dominated by small farms and small businesses. After the Civil War came what Mark Twain called The Guilded Age in which the "robber barons" and railroad kings came to dominate the economy and the political landscape. The company became corporate.
Men such as J.P. Morgan and Nelson Rockefeller came to be the most powerful people in the United States. Morgan had men on the boards of directors of the largest 100 corporations in America. He helped to found the Federal Reserve system and had men of influence throughout several Presidential administrations.
But his power did not last forever. The policies he supported behind the scenes at the Federal Reserve helped contribute to the stock market crash of 1929 and the Great Depression. Murray Rothbard documents in his book A History of Money and Banking in the United States how President Roosevelt threw out all of the Morgan agents from the Federal Reserve and put in his own men and started to make changes.
The Great Depression wiped out many of the old robber barons and broke their political power. Almost all of Morgan's men got removed from their directorship positions. The country was in flux.
In World War II large corporations tied to the defense industry rose in power and influence. They formed the origins of what President Eisenhower called the military industrial complex. The war brought a bureaucratic centralization of power inside Washington and around the President when it came to issues of war and peace.
The Pentagon got built. The CIA was born. The city of Washington grew in size. The nexus of men moving in out of the top American corporations and the Washington political system became a power elite. This was a new thing.
In Mills's description of the power elite theory they were simply the men at the top of the military, corporate world, and political world. They shared the same views and often worked together, because they thought it was it was the right thing to do, and what was right was often profitable.
This is much different than the idea of the "one percent" that you have probably heard people talk about in the past few years.
Relationships of interlocking power came into being. Political scientists call this an iron triangle. This is when lobbyists work on behalf of corporate masters to encourage Congressmen to pass bills in their favor. Both work with the bureaucracy to get things done and the three groups themselves together form a triangle of power and group think.
The military industrial complex is the best example of this. It came into being in the 1950's when Mills wrote his book. Today it is more powerful than ever.
Here is a great interview by journalist Glen Greenwald and Noam Chomsky about today's Power Elite and how it functions:
To be a member of the American power elite you essentially need to have an important position in a key government institution or private organization that is tied to the government in some way - either it is one of the corporations that feed at the government trough or a "think tank' that lobbies to get the government to do what its funders want it to do.
Mills saw there was an "inner core" of the power elite that consisted of individuals that moved from one seat of institutional power to another in a revolving door. That sets them up to be "professional go-betweens of economic, political, and military affairs."
Today I believe the power elite is actually becoming smaller in size and more power due to the growth in size of the federal government over the past twenty years not only in terms of its budget, but also its influence in the American economy. Obama's health care bill and Wall Street bailouts are only the most visible example, but the military industrial complex has exploded in size too thanks to the increase in defense spending associated with the post 9/11 "war on terror."
The political scientist Sheldon Wolin claims that the further centralization of power in the United States has created what he calls "inverted totalitarianism" to explain the political dynamics of the United States. Wolin sees the growth of government in the past several decades as a key to understand what is happening to the United States. He talked about his ideas on PBS about 20 years ago. They seem prophetic when viewed from today.
A problem with today's power elite is that it has become more and more bureaucratic and therefore isolated from reality due to groupthink. Centralization of power has led to rigidity and a seemingly inability to come up with solutions to today's problems - problems many of which they have caused. I write about Mill's work and theories in my book The War State.