What is causing extreme inequality?

[Mr. Piccolo]

According to a recent Oxfam report, the richest 1 percent of the world's population currently controls 48 percent of the world's total wealth. Oxfam believes that if trends continue, the rich will possesses more wealth than the remaining 99 percent by 2016.

My question is: what is driving this massive increase in inequality? What is it about capitalism, or more specifically neoliberal capitalism, that is causing this giant growth in inequality?

Defenders of neoliberalism would state that this is just a fair return to the "creators," those who are more intelligent, hard working, and entrepreneurial. I don't buy this argument but I want to ask members here what they think are the major drivers of inequality today.

[RedKobra]

According to a recent Oxfam report, the richest 1 percent of the world's population currently controls 48 percent of the world's total wealth. Oxfam believes that if trends continue, the rich will possesses more wealth than the remaining 99 percent by 2016.

My question is: what is driving this massive increase in inequality? What is it about capitalism, or more specifically neoliberal capitalism, that is causing this giant growth in inequality?

Defenders of neoliberalism would state that this is just a fair return to the "creators," those who are more intelligent, hard working, and entrepreneurial. I don't buy this argument but I want to ask members here what they think are the major drivers of inequality today.

I think that is the wrong question to ask. You should ask what changed that made inequality start to grow? This is Capitalism in its natural environment, doing what Capitalism was designed to do, create a plutocracy. I don't mean it was meant to, in a sort of conspiracy sense, what I mean is that Capitalism siphons off the surplus for itself. The surplus is the section of the profit that grows. Back when inequality wasn't the front page news that it is now we lived in a very different world. Capitalism was restrained because of the victories of the working class, with the USSR providing a constant reminder to the Capitalists what can happen if you're too greedy. Capitalism had to concede ground, to give the working class the trappings of State Capitalism (USSR) i.e - welfarism, without surrendering the means of production or their position as a privileged class. With the slow and steady demise of the USSR the Capitalists became emboldened and inflicted defeat after defeat on the working class. This meant that slowly but surely they have removed all obsticles to their appropriating all of the surplus for themselves. In a nutshell.

[tuwix]

My question is: what is driving this massive increase in inequality? What is it about capitalism, or more specifically neoliberal capitalism, that is causing this giant growth in inequality?

A lack of progressive taxes. Especially on whole property. When due to fear of the Soviet Union the Keynesian economics were introduced, there were progressive taxes on riches. Then the gap between working class and bourgeoisie was lower. When the SU had started to collapse, taxes were modified to to be more flat. And the you have larger gap.

But all inequalities will eliminate only a lack of private property.

[Sewer Socialist]

Capitalism is a system which encourages the accumulation of wealth, mostly by those who already have it. The right to private property is one of the most heavily defended rights in capitalist societies - nothing brings out the cops like a challenge to the property of the wealthy.

Through that right, an owner of productive property can hire people to all the work, pay them nothing more than the bare minimum they need to survive day-to-day, charge prices well above what pay for the wages, and pocket the difference. That income the boss makes can be reinvested into more productive property, while the workers don't have much extra to reinvest.

Yeah, the rich are probably able to buy more education, and they're more entreprenurial. But they're only more educated because the education system caters to them, and I don't see why entrepreneurialism is objectively helpful to society.

[Comrade #138672]

Capital always accumulates, making "the rich richer and the poor poorer", and this is heavily intensified during a crisis.


Defenders of neoliberalism would state that this is just a fair return to the "creators," those who are more intelligent, hard working, and entrepreneurial.I don't think even liberals dare to say this anymore. Surely they would get a punch in the face for it.

[cyu]

Found this a few days ago:

http://i.imgur.com/Ae0VQFM.gif

[contracycle]

Seems to me no-one has put it quite as bluntly as it needs to be put: the purpose of capitalism is to transfer wealth from the many to the few.

There's some rigmarole and malarky about this, but ultimately, this is what capitalism is FOR; this is what it DOES. It is not a bug, it is a feature; it is not an accident, or even an unfortunate necessity, it is THE POINT.

If what you're really asking is HOW it does this, I can expand, but what it will come down to is: waged labour.

[Mr. Piccolo]

Seems to me no-one has put it quite as bluntly as it needs to be put: the purpose of capitalism is to transfer wealth from the many to the few.

There's some rigmarole and malarky about this, but ultimately, this is what capitalism is FOR; this is what it DOES. It is not a bug, it is a feature; it is not an accident, or even an unfortunate necessity, it is THE POINT.

If what you're really asking is HOW it does this, I can expand, but what it will come down to is: waged labour.

Thank you. Is there something about the nature of waged labor in the last 30 or so years that has caused such an explosion in inequality? As some have mentioned, capitalists eliminated many of the ameliorative aspects of the post-war Keynesian consensus that made capitalism a little more palatable for workers. When the USSR collapsed, this process went into overdrive.

So, is it plausible to say that the broad prosperity of the post-war era was a fluke, an exception to the rule, and that neoliberalism is basically capitalism in a more natural form?

[Jimmie Higgins]

Thank you. Is there something about the nature of waged labor in the last 30 or so years that has caused such an explosion in inequality? As some have mentioned, capitalists eliminated many of the ameliorative aspects of the post-war Keynesian consensus that made capitalism a little more palatable for workers. When the USSR collapsed, this process went into overdrive.

So, is it plausible to say that the broad prosperity of the post-war era was a fluke, an exception to the rule, and that neoliberalism is basically capitalism in a more natural form?

I don't think it is any more "natural" or "unnatural" but just different under different conditions.

Capitalism is on it's own terms, as others have said, driven by competitive accumulation of capital... For the sake of further accumulation of capital. But it also dosn't exist in a social vaccume and so pressures from class struggle and pressures within the ruling class itself (national competition, etc) shape how that accumulation is done.

I think the short and crude answer to why inequality has increased is that the ruling class has been successful in undermining the basis of past working class resistance (both reformist and revolutionary). Some of this has been through direct attack through the state or direct labor-employer conflict, some through ideological influence, some through shifting conditions economically that pulled the rug out from under older reform models and Union or protest avenues.

So workers no longer have some of the revolutionary networks and practical experience of the early 20th, in neoliberalism workers also don't even have the ability to rely on the reformist tradditions of the post-war era that, while flawed and short-sighted from a revolutionary perspective, could achieve a sort of less awful exploitation at times (even if this was aimed at de-fanging militancy).

[DAN E BOY]

According to a recent Oxfam report, the richest 1 percent of the world's population currently controls 48 percent of the world's total wealth. Oxfam believes that if trends continue, the rich will possesses more wealth than the remaining 99 percent by 2016.

My question is: what is driving this massive increase in inequality?


First of all, i thought it was more like the top 1% own 99% of the worlds wealth, resources etc. Anyway.

The main reason the wealth gap between the top and the bottom grows ever further, is because there's a whole tax-evasion matrix for the rich to take advantage of.

Big businesses make their fortunes in one country, and then transfer it into another before their taxed on their earnings.

This is why principalities like Monaco,Andorra,Liechtenstein exist: Rich people earn money in their country, and then set up an office in a principality or offshore account to avoid paying their contribution.

So rich people and their families get more and more money, the rest suffer this economic swindle.

[Jimmie Higgins]

The main reason the wealth gap between the top and the bottom grows ever further, is because there's a whole tax-evasion matrix for the rich to take advantage of.

Big businesses make their fortunes in one country, and then transfer it into another before their taxed on their earnings.

While this happens, I think it's more of a side-effect or symptom than a cause. Afterall, plenty of regular folks get paid under the table or evade taxes, but it'll never make us rich. Besides how'd the rich people and families like the Waltons get so much money that they could hide these amounts anyway?

Rich people are able to take advantage of looser of regulations on moving money around and monitary/investment mobility seems to be a big feature of capitalism in the neoliberal era. This mobility of capital, I think, is also tied into how the bosses have been able to increase productivity while suppressing wages and labor costs (which I think is more central to inequality).

[DAN E BOY]

]While this happens, I think it's more of a side-effect or symptom than a cause. Afterall, plenty of regular folks get paid under the table or evade taxes,[/B] but it'll never make us rich. Besides how'd the rich people and families like the Waltons get so much money that they could hide these amounts anyway?

Rich people are able to take advantage of looser of regulations on moving money around and monitary/investment mobility seems to be a big feature of capitalism in the neoliberal era. This mobility of capital, I think, is also tied into how the bosses have been able to increase productivity while suppressing wages and labor costs (which I think is more central to inequality).



Yeah but that's like peanuts compared to the top earners.

In (UK) 2010 a the figure for tax lost was £100 billion. These are the mega rich multi-millionaire/billionaires of the world.

And then the government has to find money due to the lost tax, so they start axing the public sector. And when the public sector gets shrunk, thats less money getting spent in the private sector. And it's just all down hill from there.

[Jimmie Higgins]

Yeah but that's like peanuts compared to the top earners.

In (UK) 2010 a the figure for tax lost was £100 billion. These are the mega rich multi-millionaire/billionaires of the world.

And then the government has to find money due to the lost tax, so they start axing the public sector. And when the public sector gets shrunk, thats less money getting spent in the private sector. And it's just all down hill from there.

Yeah, but in the u.s., we never had that much of a welfare state to begin with and yet inequality has grown faster in the states than in many other similar countries that have seen larger cuts to the social wage. In the us at least, productivity has grown while wages have stagnated and this has fundamentally helped shift wealth to both companies as profits and private bosses as bonuses. On top of that are the shell-games the rich pay to unofficially hide money as well as official policy changes that favor capital going to the rich to supposedly increase the ability to invest.

But this monitary mobility allows capitalists to pit cities or groups of workers against eachother in ways that help create an atmosphere of a race to the bottom. Workers are convinced to give concessions or else a company will move to a different town or country, cities and governments compete to make a more business-friendly environment (i.e. Make people more desperate through austerity, decrease democratic and Union rights, gut environmental and labor regulations) to "attract investment" etc. All this is the common-sense logic of neoliberalism but the fundamental part that has increased inequality is the drive to invest where labor is cheapest and profits are most possible and this would inevitably lead any society towards more inequality no matter what kind of tax or reform policies they had in place.

[Prof. Oblivion]

Seems to me no-one has put it quite as bluntly as it needs to be put: the purpose of capitalism is to transfer wealth from the many to the few.

There's some rigmarole and malarky about this, but ultimately, this is what capitalism is FOR; this is what it DOES. It is not a bug, it is a feature; it is not an accident, or even an unfortunate necessity, it is THE POINT.

If what you're really asking is HOW it does this, I can expand, but what it will come down to is: waged labour.

Capitalism doesn't have a "purpose".

[Jimmie Higgins]

Capitalism doesn't have a "purpose". is there a point to be made about this, or does the anthropomorphisation of systems of relation irk you? Honest question, it's unclear if there's a political or pedantic point being made.

[Prof. Oblivion]

is there a point to be made about this, or does the anthropomorphisation of systems of relation irk you? Honest question, it's unclear if there's a political or pedantic point being made.

I don't deal in pedantry. I just think that claiming that capitalism has a purpose or a goal is a very easy way to depart from Marxian theory and understanding that capitalism as a system is both a structure that governs human interaction while at the same merely a system of human interrelations.

Further, ascribing such a purpose to capitalism is woefully misleading given that it leads to a misinterpretation of history and historical facts. For example, within capitalism there has been the opposite of what contracycle has claimed to be its purpose; the system has not only "transfer[red] wealth from the many to the few" but also from the few to the many in certain historic periods. So claiming that capitalism has such a purpose completely misses the fact that the opposite has happened under capitalism, and that rather than the "purpose" or agency of capitalism as a system, it is merely a set of tendencies that can be increased, decreased or even reversed given specific historical circumstances.

[cyu]

http://media-cache-ak0.pinimg.com/736x/55/2d/30/552d3073a7a423c1c694ee2afd4748d3.jpg