Capital and class
from David Ruccio and Jamie Morgan and the current issue of the RWER
The premise and promise of capitalism, going back to Adam Smith, have been that global wealth would increase and serve as a benefit to all of humanity.[1] However, the experience of recent decades has challenged those claims: while global wealth has indeed grown, most of the increase has been captured by a small group at the top. This has continued into the “recovery” in the United States and globally. The result is that an obscenely unequal distribution of the world’s wealth has become even more unequal. Those in the small group at the top have long been able to put distance between themselves and everyone else precisely because they’ve been able to capture the surplus and then convert their share of the surplus into ownership of wealth. And the returns on their wealth allow them to capture even more of the surplus produced within global capitalism. This is accompanied by growing income inequality.
However, although people are aware of inequality, they are typically unaware of its real extent, and mainstream economics and the popular press contribute to this situation, which in turn leads to the reproduction of the system that produces ever-more-grotesque levels of inequality.
Both class and ideology underpin this worsening situation. The tiny group at the top, both nationally and globally, have both an interest and the means to maintain the economic and social rules and institutions that allow them to capture the surplus, and thus create more distance between themselves and everyone else. Meantime, mainstream economic and political discourses, inside and outside the academy, tend to ignore the class conditions and consequences of inequality – and to undermine the possibility of a real debate about the kinds of changes that are necessary to give the majority of people a say in how the surplus is utilized.
Global wealth inequality
Since Thomas Piketty published Capital in the Twenty-First Century, the World Inequality Lab has become one of the best known and most reliable sources of data on wealth and income inequality. So far, the Lab has collected reasonably good data for the United States, China, and Europe (which is represented in what follows by France, Spain and the United Kingdom) up to 2015 and provides projections from there. Globally, wealth is substantially more concentrated than income: the top 10 percent owns more than 70 percent of the total wealth. The top 1-percent wealthiest individuals alone own 33 percent of total wealth in 2015. This figure is up from 28 percent in 1980. The bottom 50 percent of the population, on the other hand, owns almost no wealth over the entire period (less than 2 percent). The projection looking forward is similarly dramatic: according to the World Inequality Lab, if present trends continue the share of each of the top groups – the top 1 percent, the top 0.1 percent, and the top 0.01 percent – would grow by one percentage point every five years. What that means is that, by 2050, the share of each group would increase dramatically. In particular, the share owned by the top 0.1 percent would eventually match that of the declining middle group – at a quarter of global wealth: read more and see the charts and graphs
Leave a Reply
—– look inside —– $5.94 / $20.00
—– look inside —– $4.90 / $8.00
—– look inside —– $15.99
—– look inside —– $5.99 / 12.99
—– look inside —– $5.93 / $12.99
—– look inside —– $4.97 / $9.90
—— Ugarteche, Puyana and Madi ——
Gerson Lima / Maria Alejandra Madi
Edward Fullbrook and Jamie Morgan
————— Michael Hudson ————–
Maria Alejandra Madi / Jack Reardon
————- Edward Fullbrook ————-
—————— Steve Keen —————–
————— Richard Smith —————
————– Gustavo Marques————
– Victor Beker and Beniamino Moro –
————– Lars Pålsson Syll ————-
—————– Stuart Birks —————-
Edward Fullbrook and Jamie Morgan
———— Armando Ochangco ———-
Shimshon Bichler / Jonathan Nitzan
————— Mauro Gallegati ————–
————— Herman Daly —————-
————— Asad Zaman —————
—————– C. T. Kurien —————
————— Robert Locke —————-
Real-World Economics Review Blog 
Quantitative economic growth leave normal life enjoying humans behind and favors artificial intelligence and immortal corporations
Qualitative growth is a different story. It outside of capitalist economics.
The million dollar question is does it have to be, or is there a better model (political philosophy)?
If you consider the imperious behavior of Mr Trump, this directly correlates with social/economic class in many global settings over written history.. Some people don’t matter at all, while others hardly matter. Recall that ancient British TV classic, “Upstairs, downstairs”? Or Marie Antoinette & her “Let them eat cake” remark. I really think our economic progenitors had much of this written into their cultural code. Exceptions might be a village priest or parson, it seems to me.
What struck me from the longer version online is how wrong so many citizens were when queried in a poll as to what the ratios of CEO to average worker pay were: they vastly underestimated how much worse the ratios actually were.
To add an edge to this article: part of the mythology of the ideology of the Republican Right and the Libertarian Right is that government is the problem in our lives, while the private sector is a miracle worker full of competence. But the very ideology of the Right undermines the fabric of everyday life, which has unraveled: infrastructure is aging if not failing – roads, rail, airports, ports, the electric grid – and the old private pensions have come apart; Social Security payments increase by a micro amount per year, falling behind the Medicare Part B private premium increases and the system’s own deductible. Yes, we have abundant technological innovation but we cannot address global warming adequately, and the “hackability” of our greatest IT achievements leaves everyone with a growing sense of vulnerability.
Meanwhile, in the worldview of progressives in the US, class and economic power structures are seemingly last in line for explanations of our trouble; the transformations in the Democratic Party, making America’s second Business Party, have deeply undercut labor; feminists believe patriarchy is problem No. 1, black activists believe racism and the Great Incarceration’s policing are more important than wealth and income distribution, Hispanics believe immigration policy in problem No. 1 and environmentalists on the whole believe the size and scope of the economy are nature’s greatest enemy. So we in an age of intellectual fragmentation even among progressive forces. Instersectionality? Yes, a hope but so far it doesn’t have the power to hold the fragments together.
Well spoken, gracchibros. In America, a Donald Trump, whose family immigrated from Europe, causes many to breath a little easier–even if women from the same background continue with same old body contact & glass ceilings. There is lot of work to do in politics & the economy. At least people are talking back & even fighting back as many professional athletes have.
Adam Smith (1723-1790), moral philosopher and economist, wrote one book for which he is remembered and worshipped by classical and neoclassical economists, Wealth of Nations (1776). But Smith also wrote a second book without which the first in incomprehensible, Theory of Moral Sentiments (1759). Contrary to what economic textbooks print, these two works do not exist in isolation from one another and TMS is not superseded by WN. Whereas WN is concerned more directly with economic matters, TMS explains a moral system that provides a general framework for the economic domain. In WN Smith makes economics the study of spontaneous and unintended order which arises when voluntary exchanges among individuals produce benefits for the parties involved. Though spontaneous and useful for individuals, this order in not necessarily moral. In TMS, Smith examines the process by which individuals adopt moral standards through which they judge actions by others and themselves. This book explains how individuals can overcome the selfish impulses of the commercial realm. Recognizing that there is more to life than commerce and economics and that humans possess more than self-regarding sentiments, Smith discusses the phenomena of moral sentiments and sympathetic feelings among humans and their desire to please others and gain their approval. TMS and WN are really one book. A proper education for the study of economics or for commerce must include both. WN provides a foundation for wealth seeking and maximization while TMS provides a foundation in the assembling of moral actions and the maximization of virtue.
The creation of the culture that supports modern commerce in the west focuses almost exclusively on WN. In fact, many neoclassical and libertarian economists that have guided business and commerce, as well as the education of professional economists in the west for the last 50 years have likely never even read TMS. Thus, it is impossible for them to create either a functional business economics or an enlightened education for economists. Gross and unsustainable economic (wealth and income) inequality is only one of several consequences of the “half baked” business economic and economics education used to guide actions in the USA and Europe. This culture is deep-rooted in the west, particularly due to the phenomena identified by Ruccio and Morgan in this paper – it permits the small group at the top to become ever wealthier.
Ken, totally agree that the two Smith volumes should be read side by side. Reading WN alone gives us Marx’ inevitable collapse model, although with somewhat different processes.
James, as an historian I’m always amazed that culture defining changes effecting billions of human lives are so often the result of misunderstanding or just plain laziness by supposedly “brilliant makers of society.” Two of these particularly interest me. Milton Friedman and Karl Marx. I have a similar interest in psychopathic “leaders.” Some obvious, like Joseph Stalin. Others less so, like Ayn Rand
Ken, you have given four notable examples, in terms of their apparent impact on millions of humans, it seems to me.
James, another interesting failing of human imagination seems to be jumping before looking. Look at humans and climate change.
Ken, don’t humans often avoid looking the devil in the face, whether guilt or fear is behind the avoidance? The implications of global warming are horrendous, including what happens in island nations like the UK, Ireland or Iceland. It’s happening in the Pacific & Indian Oceans with great evidence now. Perhaps it is just the matter of public financing which shakes up the knowing. Nearby, Greenland may literally disappear with its loss of ice, only to have exposed rock go under water.
One of several reasons that “cognitive revolution” that changed Sapiens about 70,000 years ago is so important. This form of blindness is one of the negative results of that revolution. Before it Sapiens was a below average species, much more often prey rather than predator and unlikely to ever dominate the planet. After it that was all reversed. Which lead to Sapiens arrogance and belligerence toward the planet and the other species that inhabit it. Soon Sapiens believed nothing was beyond its control, or in the words of the late 20th century and not a few theologians, Sapiens had become god. That god is now on the cusp of destroying itself via climate change or a dozen other extermination methods.
As an historian, who approched the modern world through a 19th century, German perspective, I can’t understand all this emphasis on Anglo-Saxonia. Until 1940 German economists dominated the thought world, the view that Smith set the direction of the thought world is anachronistic. It appeared after 1945,when neoclassical economics rode to victory in the us hegemonic thought world. Trump wishes to keep that world going, but the world is a different place today than in 1945 and the thought world needs to change in like with other tradtions, like the organic as opposed to the proprietary view of the firm
Robert, German thinking certainly influenced America greatly; Germans being the third largest immigrant group in the nation after English and Scots-Irish. But that influence on economics isn’t through the ideas of economists or colleges of economics. Like the US Constitution those rest on English Common law emphasizing individualism and commercial competition. German economic thinking has had much more influence in Europe and Asia. Smith did not set the economic direction for the world directly. But through the dominance of the British and then American empires and their commitment to Smithian ideas Adam Smith has and continues to dominate the world. German thinking directly influences such areas in the US as elementary, secondary, and college education. These would look radically different today but for German influences. For example, kindergarten, universal public education, physical education, and vocational education are all from German thinking. German storytelling, and fables directly influences American literature in the earliest period of American history. Germans helped form the first unions and German farmers were active in organizing American farmers to fight railroads and the Robber Barons. Certainly, the world is different today than in 1945, but the foundations of Americans economics in English Common Law and competition has not.
Good point, Robert, to the victor belongs the spoils. The Germans were rattled by WWI & lost much more in WWII. Now that both the EU can & China is challenging US post-WWII cultural dominance, it may be that a balancing of impact among three powerful cultural entities will emerge. I hope so.
“Soon Sapiens believed nothing was beyond its control, or in the words of the late 20th century and not a few theologians, Sapiens had become god. That god is now on the cusp of destroying itself via climate change or a dozen other extermination methods.”
Ah, so true. And without the graceful balancing of our god like creative natures and the temporal universe pragmatism of Wisdom….an increasingly likely possibility.
Yes, WN and TMS should be read together, and Freidman and Marx, intelligent German moralism and industriousness and its maniacally fanatical counterpart Nazism, and Stalin and Rand together as well. Why? Because it’s the integrative mindset in action. How about a comparative study of the ideas and techniques of the world’s major wisdom traditions and B.F. Skinner’s Behaviorism?
The result of these studies would hopefully evoke an understanding of what I refer to as the cosmic code in action which is superior to the mere dualism of the scientific method because by integrating the first two aspects of the Hegelian dialectic they render a unified entity that becomes a new dualism with the third aspect of it, namely synthesis, that incorporates consciousness into the equation and reminds us of the ultimate and inclusive importance of the end process of the dialectic….so that we become less prone to mere ideological thinking and obsessive contention between the first two aspects of that process…..as most intellectual debate, especially economics has fallen into.