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Great and rising inequality

from Jamie Morgan

An interest in great inequality and rising inequality have become prominent features of our times. According to Oxfam in 2019 the 26 richest people on the planet had equivalent wealth to the 3.8 billion who comprise the lower 50% of the world population. The previous year it required the top 43 to create this equivalence. The 2020 Oxfam report adds a series of statistical claims: the world’s richest 1% have more than twice the wealth of 6.9 billion of the world’s population, the 22 richest men have more wealth than all the women in Africa (and the estimated value of the unpaid work of women in the world is $10.8 trillion); a report from the Institute for Policy Studies, meanwhile, highlights that US billionaire’s tax obligations as a %  of wealth reduced by 79% between 1980 and 2018 (Collins et al., 2020). According to the UK High Pay Centre, the median pay of CEOs in the UK FTSE 100 was £3.9 million in 2017 (11% higher than 2016) and it would take a worker on median pay 125 years to earn this (and the equivalent figures for the Dow in the US are far greater). According to the Equality Trust, FTSE 100 CEO “compensation” as a ratio to their own employees’ pay averaged 145:1 in 2017 (rising from 30:1 in 1970 and 50:1 in 1990).

  1. Romar Correa
    May 24, 2022 at 3:30 pm

    Jamie Morgan continues with his illuminating contributions. Look forward to reading the book edited with Edward Fullbrook. I wondered about the distinction between inequality in the real circulation and that in the financial circulation. The wealth of nations lies in the former and the distribution of the surplus between profits and wages there a perennial struggle. The history and political economy of class conflict light up pathways to the future, particularly through accounts of extraordinary times when successful if impermanent implicit contracts were written between the State, Labour, and Capital, coordinating especially on wages and prices. It is that same spirit of hard-nosed and enlightened give and take, driven by mutual interest, that must inform engagements between the triumvirate on the implications of Artificial Intelligence and Robots as well as Climate Change. Democratic dialogue of the classical kind must be recaptured. Policy here is relatively clear. Earnings which are ploughed back into the accumulation of capital and R&D are supported and a weighting in favour of dividend distribution and the growth of a rentier class is frowned upon. My impression is that whenever the other-worldly hiatuses in numbers are cited, they represent inequality in the financial circulation. In fact, the connection between the two circuits is that between predator and prey. As I write, venerable national treasures like old stores are being dismembered and the pieces sold as financial claims. Jobs are lost. Some private funds lie in wait for firms with soft underbellies to denude. Value is stripped and profits are financialised. The perpetrators decamp with members of the erstwhile working class holding hollow shells of companies. Class distinctions are elusive when nobody is immune from the temptation of short-run astronomical gains. Even if we view the recent tightening of labour markets with optimism, contracts are not long-term and the wage rate does not dominate the rate of return on financial instruments. It is too early to prognosticate the rebirth of the working class with wages that secure housing, and benefits that include health. History provides no guidance to thwart the imperialism of finance and political economy no tension as polity and society are blown away by the gales of creative destruction wrought by finance (The form and substance are the opposite of what Schumpeter envisaged). Barricades like the Dodd-Frank Act will be crushed by the juggernauts rolling down Wall Street. Besides, the essential point here is that the Federal Reserve and the government are cosponsors and policy interventions are therefore weak and insincere. The turning wheels of finance will not miss a revolution by throwing sand at them, as James Tobin expected. A spanner must be thrown in the works.

  2. Meta Capitalism
    May 25, 2022 at 2:19 am

    Robert Reich is a national treasure; the oligarchs (class warriors) are winning.

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