Peter Mandelson, arch ‘reformer’ of New Labour and passionate defender of globalisation i.e international capitalism, has time and again sought in the national press to defend their (not ours!) system as being the best way of resolving the economic problems of the world, reduce poverty, hunger, etc. But the reality is that inequality is growing not reducing. This is the real price of 21st Century capitalism – even before the current crisis!
In The World
Alongside
the waste of resources from capitalist slumps comes inequality and
injustice. Branco Milanovic of the World Bank has analysed the level
of inequality of income and wealth in the world of capitalism. In
2002, he found that if he divided the world’s population into three
groups: those with incomes greater than the average income of
Italians could be regarded as rich; those with incomes less than the
poverty levels of the advanced capitalist economies could be
considered poor; and those in between could be categorised as
middle-class. Milanovic found that 78% of the world’s 6bn
population were poor and 11% were rich, with another 11% being
middle-class. In 2007, Milanovic redid his sums and he found that he
had underestimated the inequalities. It really was a 20:80 split
between rich and poor. Indeed, the top 10% of the world’s
population had 39 times more income than the bottom 10% – and it was
getting worse.
In
the USA
The
United States of America is the greatest capitalist economy in the
world. What does capitalism bring? One thing it does not bring is
equality of income and wealth.
The
last 20 years saw a massive boom in stock markets for the rich and a
huge reduction in the welfare state or social safety net for the poor
and weak. Given the current collapse in capitalist economies into
the greatest recession since the Great Depression of the 1930s, we
now know it was not worth it.
The
extent of the inequalities in income and wealth in the US has now
been revealed by the US Federal Reserve Bank. Hidden in an obscure
working paper, the Fed’s researchers have found that the top 1% of wealth-owning
households own 33.8% of all US household wealth (namely property,
stocks and shares and cash). That’s up from 30.1% in 1989. The
top 10% of wealth-owners own 71.5% of all personal wealth! That’s
up from 67.2% in 1989.
Much
of this wealth has been accumulated from the rising value of stocks
and shares and bonds (namely financial wealth rather than in
property). The top 1% of wealth holders own 52% of all shares and
62% of all bonds, up from 41% and 52% respectively in 1989. The top
10% now own 90% of all shares and 98% of all bonds!>Inequality
of income among American households is less than it is for wealth,
but it is still very unequal. The top 1% of households got 17% of
all income earned in 1989. Now that figure is over 21%. The top 10%
got 42% in 1989, but they now receive over 47% of all income.
The
share of income taken by the bottom 50% of American households has
fallen from 15.6% in 1989 (yes – that’s all they get) to 14.6%
now. And as for wealth, the bottom 50% can forget it. Many don’t
own homes and none have stocks and shares. Their ‘wealth’ is
restricted to a bit of cash savings. In 1989 the bottom 50% had just
3% of all America’s household wealth; now they have just 2.5%.So
much for the American dream.
In Britain
Here in the UK much has been made of how the rich will "suffer" following the bringing in of the new 50% tax band for those earning £100,000 or more (click here for more on this) but the truth is that over the last few years the rich have done rather better than the rest of us. According to data published by the Labour Representationn Committee (LRC), the OECD have confirmed that the gap between rich and poor in the UK is greater than in three-quarters of all other OECD countries. The most wealthly 1% of the population had a 29% share of UK wealth in 1976, now (as at 2003) they have 34%. The share for the most wealthly 50% was 88% in 1976, now (again as at 2003) it is a massive 99% – this leaves just 1% for the remaining half of the population. It is understood that this growing differential has continued to worsen over the last five years. The Institute of Fiscal Studies have confirmed that inequality has risen sharply over the last two years and is now at its highest level since records begun in 1961.
Of course, the grim reality is that the rich will always complain about tax rises (and taxes in general) and that is why they are so good at avoiding them. It is for that reason Marxists have always sought to explain why using the tax system as a means of reducing inequality in society will never really work – indeed as a means of reducing the bill for the huge increase in government expenditure in order to bail out the banks it will also fall short. Hence the coming attacks on the public sector by who ever wins the next election.In the end, whilst we are quite happy to see the rich being whacked with whatever taxes are going, the only real way to resolve this growing increase in inequality is the socialist transformation of society where the wealth of the capitalist class – stolen from those who actually produce it - can be taken out of their greedy hands and used for the good of all.Contrary to the pius hopes of Mandelson and co., Capitalism, internationally and at home, exists to make money for themselves not u. They have no other reason for existence. So we are not surprised by all these figures – they just confirm why we must fight for a socialist way forward.
