by Michael Roberts
There is a book sweeping the popular media at the moment. It’s called Factfulness.
It purports to argue that, contrary to the conventional wisdom, the
world is becoming a better place. Poverty is falling, life expectancy
is rising; health levels are improving; people have more things and
better services. Even violence and wars are in decline.
This is a hoary old message that has been expounded in the past by
billionaire Bill Gates, among others. Indeed, he gives this new book
much praise – as it justifies his view that things are getting better for the majority
and with the right policies on health, education, population, climate
change etc, the world can progress without any change in its mode of
production and social structure.
I have taken up this optimistic message in previous posts and my latest book, Marx 200,
discusses the dialectical nature of the development of capitalism –
something Marx recognised as early as 1848 in the Communist Manifesto.
Yes, capitalism has taken the productive forces forward like no other
mode of production before (slave society, feudalism and Asian despotism)
but it also carries with it a dark side of increased exploitation,
dominance of the market and machine over people’s freedom and
livelihoods; and global wars and even the destruction of the
In contrast to the optimistic Factfulness, the latest World Inequality Report is a sobering analysis. Inequality between rich and poor is widening at an increasing pace. The authors, the most highly respected experts on inequality of income and wealth globally conclude that the number of billionaires rose by the biggest amount ever in 2017, while over half the world’s population lives on between $2 and $10 a day.
The report shows the share of wealth held by the top 1% of earners in
the US doubled from 10% to 20% between 1980 and 2016, while the bottom
50% fell from 20% to 13% in the same period.
Kofi Annan, former head of the United Nations, called this scale of global economic inequality “staggering and shaming”.
The authors find that income inequality has increased in nearly all
world regions in recent decades, but at different speeds. Since 1980,
income inequality has increased rapidly in North America, China, India,
and Russia. Inequality has grown moderately in Europe.
At the global level, inequality has risen sharply since 1980, despite
strong growth in China. The poorest half of the global population has
seen its income grow significantly thanks to high growth in Asia
(particularly in China and India). However, because of high and rising
inequality within countries, the top 1% richest individuals in the world
captured twice as much growth as the bottom 50% individuals since 1980.
When it comes to inequality of wealth as opposed to income, there are some startling findings in the report. “Economic
inequality is largely driven by the unequal ownership of capital, which
can be either privately or public owned. We show that since 1980, very
large transfers of public to private wealth occurred in nearly all
countries, whether rich or emerging. While national wealth has
substantially increased, public wealth is now negative or close to zero
in rich countries.”
The authors reckon that the combination of large privatizations and
increasing income inequality within countries has fuelled the rise of
wealth inequality, even if it has not yet returned to its extremely high
early-twentieth-century level in rich countries. The rise in wealth
inequality has nonetheless been very large in the United States, where the
top 1% wealth share rose from 22% in 1980 to 39% in 2014. Most of that
increase in inequality was due to the rise of the top 0.1% wealth
In my view, inequality of wealth and income is an inherent feature of
class societies, and capitalism is no exception. But that does not
mean it would rise indefinitely, a point made by the Inequality report.
That depends on dynamics of capital accumulation and policy action by
Naturally, the authors (or Kofi Annan) do not propose a radical
restructuring of the capitalist system ie its replacement. Instead,
they look for progressive taxation of incomes; control of tax evasion
and offshore havens for wealth; ‘more education’ and public investment.
The problem with these worthy policies is that they cannot be
implemented if the interests of capital are to be protected,
particularly when capitalism is struggling to sustain the profitability
of capital precisely by holding down trade union strength (which is an important counter to rising inequality
ignored by the authors); maintaining privatisations (not public
investment) and ‘deregulating’ labour markets ie by increasing the
overall exploitation of labour.
Moreover, recurring crises in capitalist production are not the result of rising inequality (although some leftists argue this); and so the real faultlines of capitalism will not be resolved by reducing inequality.
What is also missing from the report is why wealth inequality has
risen – it is mainly the result of the increased concentration and
centralisation of productive assets in the capitalist sector. The real
wealth concentration is expressed in the fact that big capital (finance
and business) controls the investment, employment and financial
decisions of the world. A dominant core of 147 firms through
interlocking stakes in others together control 40% of the wealth in the
global network according to the Swiss Institute of Technology. A total
of 737 companies control 80% of it all. This is the inequality that
matters for the functioning of capitalism – the concentrated power of
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