The secret economy of the aristocracy.

Toffs. Why do we still have them? They inherit money but they do not always inherit brains. In a truly meritocratic market economy they should have faded away- and yet they persist.

This is an important question. If there is nothing special about the aristocracy and old money in general that could account for their survival, then Marx was right and the only way to level the field would be Madame Guillotine. If, on the other hand there was some secret that we could copy, there is hope for us all.

It would be better for the world and us as individuals if the second possibility were true and so I will go with it initially. We see in the picture above at least two of these principles in play.

The aristocracy marry well from an economic viewpoint. Money marries money so there is little reason to divorce for a settlement. This results in longer unions than are found in the financial community where money will often marry beauty- a far less stable bond. Partners are chosen according to two criteria. Firstly, shared values (usually a milk and water religion such as the Church of England represented by St Paul's cathedral in the distance). Secondly, attitudes towards money. The purpose of marriage from an old money perspective is to preserve wealth for the next generation. A partner who loves to spend is therefore a bad bet and will not be considered. Matters such a fidelity are of lesser importance provided the lineage is preserved.

Old money also invests differently. Old money generally does not invest in things that will not be around in a hundred years. When they look towards real estate they are not attracted to the glass cathedrals that dazzle the rest of us. These will be knocked down in less than a generation and replaced with another building belonging to someone else.  They would rather buy the land the building stands upon which will neither vanish nor be devalued by extra land appearing on the market.  They do this because the time horizon of old money is typically around 400 years rather than the 20 years of the rest of us. Old money will sometimes under preform in the short term (particularly during speculative bubbles) but it will over preform over the long term. This gives them a natural advantage that has ensured their continued existence over the centuries.

The good news in all of this is that this is something all of us can do. We may not become rich in a single generation but our families may do so in three.