Seventeen Contradictions and the End of Capitalism (25 page)

Struggles over distributional shares have often been fierce and the
outcomes hard to predict. In the wake of a coup, such as that which occurred in Chile in 1973, it was to be expected that distributional shares would shift dramatically towards greater inequality as the elites that backed the coup cashed in. In Russia, a small band of oligarchs collared, in an astonishing act of pillage, most of the natural resource wealth of the country after the collapse of 1989. The ex-Soviet Union now boasts one of the highest concentrations of billionaires – an authentic oligarchy – in the world. In Britain after 1945, however, a Labour government built a welfare state that supported the least affluent for a whole generation, much as the Scandinavians had done before them. The strong influence of communism during the Cold War over social policies in the capitalist world, coupled with strong social democratic impulses within that world (deriving from a history of working-class organisation and a sharpened class consciousness), meant capitalist states in general had to put a floor under conditions of life for whole populations. The welfare state that resulted was far from being socialist. It had strong elements of gender bias and was paternalistic and even pro-capitalist to the extent that it became demeaning, punitive and bureaucratic in its approach to its own clientele. To be a ward of the welfare state was more often than not unpleasant and inhuman, even as some state benefits (like social security and old age pensions) brought more security to everyone. This was the kind of state that was criticised by the progressive left and then later obligingly abolished during the Thatcherite neoliberal counter-revolution of the 1980s. The collapse of communism in 1989 removed the external pressure on states to either look to the well-being of their populations or face strong political opposition.

Even in the absence of such dramatic realignments, the to and fro of social struggles between classes and ethnic/racial groupings, along with the fluctuating conditions of boom and slump in the economy, have impacts on distributional arrangements that vary a great deal from one part of the world to another. The distribution of income and wealth in Nordic countries, for example, has until recently been much more egalitarian than that in the United States, even before the Reagan revolution started to shift the balance of concern away
from labour and the poor towards subsidising and rewarding capital. But both the USA and Sweden are solidly capitalist. Capital seems to work just fine in a variety of distributional settings.

This variability and adaptability of capital to complex configurations of distribution does double duty when inserted into the incredible complexity and diversity of social groupings that can exist throughout capitalism in general. Gender, sexual, racial, ethnic, religious, cultural, national and place-bound distinctions are everywhere in evidence and questions of status, skills, talents, respect and admiration for achievements and values confer differential opportunities and life chances both for individuals and for distinctive ethnic, racial, sexual and religious social groups within capitalist social formations. To the degree that these characteristics are associated with differential access to and remunerations in, for example, labour markets, wide-ranging differentiations in economic and political power result.

Not all economic distinctions within capitalism are attributable to capital. But neither is capital innocent when it comes to fomenting conflict within and among social groups. This is one of the crucial levers it has to consolidate its control over labour. On the other hand capital often appears indifferent as to which particular social differentiations to support and which to discriminate against. It tends to support whatever form of social emancipation gains traction (such as gay rights and multiculturalism in recent years) provided that this does not challenge overall strategies of labour control and provided that it forms a distinctive niche market to be exploited. But the fact that these social distinctions take on economic and material forms leads inevitably to fierce competition over distributional shares among social groups within a population. We are here positioned at one of those key and sometimes confusing and confounding points of interaction where capital and capitalism cannot be kept clearly asunder. This is particularly the case with regards to questions of race. Racial issues in many parts of the world (such as the United States) have long been so intertwined with questions of class as to make the two mutually reinforcing if not sometimes indistinguishable categories.

A good deal also depends on dominant ideas as to what might constitute ‘just’ or ‘ethically acceptable’ disparities in wealth and income and by what means injustices might be rectified. Concerns of this sort are not confined to workers alone. There has been a long tradition of bourgeois reformism in which the presence of appalling misery and poverty, even when it is no threat to public health (as it was in cholera epidemics that did not stop at class boundaries), is judged unacceptable in any civilised society. Polls repeatedly show, for example, that most Americans have strong egalitarian views and that they are committed not only to equality of opportunities (as the right wing ritualistically maintains) but also to equality of outcomes. In a 2005 survey of more than 5,000 people in the United States, the respondents, irrespective of political party or of income, said they believed on average that the top 20 per cent should own no more than 32 per cent of the wealth. When shown (without attribution) the wealth distribution from Sweden (where 38 per cent of the wealth is held by the top 20 per cent) and parallel data from the United States (where 84 per cent of the wealth is held by the top 20 per cent), 92 per cent of respondents preferred the Swedish distribution. The repondents, it turned out, had little or no idea of what the actual distribution of wealth in the USA actually was. They believed that the top 20 per cent controlled 58 per cent of the wealth rather than the 84 per cent which was actually the case. Either way, this was a far cry from the 32 per cent they thought would be fair.
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So why is there so little political movement in the USA to rectify this lopsided distribution in the face of their beliefs as to what should be? The answer mainly lies in the intense popular hostility towards state interventions. This prevents the one institution capable of rectifying income and wealth disparities from doing very much about it. In the debate over Obama’s health care law, for example, Republicans did not oppose the principle of universal access to decent health care, but violently denounced the right of the ‘nanny’ state to mandate it or to mandate individual behaviours. And so it goes with any tax proposals to redistribute from the rich to the poor. In recent times the redistributions have actually been in the other direction in the name
of austerity, budget deficit reduction, tax cutting and mandating a smaller and less intrusive government. It is hard not to conclude that capital’s intense interest in putting a downward pressure on wages lies behind these budgetary and fiscal manoeuvres.

Struggles over the distribution of wealth and income are not the only kinds of distributional struggles that matter. Struggles for recognition, respect, true equality before the law, over citizenship rights and cultural and religious freedoms, over proper political representations, educational opportunities and access to job opportunities and even over the right to be lazy are ongoing. Many of these struggles are collectively waged by particular segments of the population seeking redress or advantage as the case may be (for example, women, LGBT groups, racial, ethnic or religious minorities, senior citizens, trade unions, chambers of commerce, to say nothing of the social and political institutions that seek to defend the interests of labour). The flux and flow of these social struggles produces diverse outcomes, many of which have side implications for the distribution of wealth and income. Access to educational opportunity, for example, has clear impacts on future income distributions.

Capitalism, taken as a whole, is riven with such conflicts and struggles. But the questions I wish to pose here are far narrower. In what ways does capital, understood as the organisation of the economic engine of capital circulation and accumulation, rest upon certain basic principles for the distribution of wealth and income? Are the identifiable large-scale shifts in income distributions that have occurred over the last forty years attributable to the way the internal contradictions of capital have been reconfigured? Finally, does the plainly intensifying contradiction between poverty and wealth pose a threat to the reproduction of capital?

The statistical evidence confirms the adaptability of capital to wildly disparate distributional arrangements. But while there clearly is no unique distribution of income and wealth that might be considered optimal from the standpoint of the reproduction and growth of capital, no one believes that perfect equality of distribution is possible. It has been suggested, on the other hand, that grossly lopsided
distributions might spell trouble not only because of the social instability and unrest they may provoke (a fear the IMF and the Davos conferences of the global capitalist elites frequently invoke), but because the historical evidence suggests gross inequalities might be a harbinger of a macroeconomic crisis to come. This is so because the contradictory unity between production and realisation becomes far harder to keep in balance when realisation depends on the vagaries and discretionary habits of wealthy people as opposed to the solid and reliable non-discretionary demands of the working poor. The last time the USA experienced equivalent levels of inequality to those now prevailing was the 1920s and this clearly played an important role in fomenting if not triggering the depression of the 1930s. The situation today seems broadly comparable. Can we hope to get out of the current stagnation without radically reordering distributional arrangements?

Consider some recent trends in distribution. An Oxfam media briefing offers the following capsule description:

Over the last thirty years inequality has grown dramatically in many countries. In the US the share of national income going to the top 1% has doubled since 1980 from 10 to 20%. For the top 0.01% it has quadrupled to levels never seen before. At the global level, the top 1% (60 million people) and particularly for the more select few in the top 0.01% (600,000 individuals – there are around 1200 billionaires in the world) the last thirty years has been an incredible feeding frenzy. This is not confined to the US, or indeed to the rich countries. In the UK inequality is rapidly returning to levels not seen since the time of Charles Dickens. In China, the top 10% now take home nearly 60% of the income. Chinese inequality levels are now similar to those in South Africa, [the most unequal country on earth, where incomes are] significantly more unequal than at the end of apartheid. Even in many of the poorest countries, inequality has grown rapidly. Globally the incomes of the top 1% have increased 60% in twenty years. The growth in income for the top 0.01% has been even greater.

The crisis of 2007–9 onwards made matters worse: ‘The top 100 billionaires added $240 billion to their wealth in 2012 – enough to end world poverty four times over.’
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Billionaires have erupted all over the place, with large numbers now recorded in Russia, India, China, Brazil and Mexico, as well as in the more traditionally wealthy countries in North America, Europe and Japan. One of the more significant shifts is that the ambitious no longer have to migrate to the affluent countries to become billionaires – they can simply stay at home in India (where the number of billionaires has more than doubled over the last few years), Indonesia or wherever. As Branko Milanovic concludes, we are witnessing the rise of a global plutocracy in which global power ‘is held by a relatively small number of very rich people’.
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The threat to the contradictory unity between production and realisation in the global economy is palpable.

Yet by other measures the world is a much more equal place than it once was. Millions of people have escaped from poverty. Much of this has been due to the phenomenal growth of China, along with substantial bursts of growth in the other so-called BRIC countries (Brazil, Russia and India). Disparities in the global distribution of wealth and income
between
countries have been much reduced with rising per capita incomes in many developing parts of the world. The net drain of wealth from East to West that had prevailed for over two centuries has been reversed as East Asia in particular has risen to prominence as a powerhouse in the global economy. The recovery of the global economy (anaemic though it was) from the traumas of 2007–9 had largely been based by 2013 on the rapid expansions in so-called ‘emerging’ markets (mainly the BRIC countries). This shift had even extended to Africa, which was the one part of the world that seemed to have escaped almost entirely from any effects of the crisis. The uneven impact of the crisis within Europe, however, meant rapidly widening disparities in economic well-being between southern and northern countries. But none of these trends seemed very stable. At the mere mention of a shift in Federal Reserve monetary policy in mid-2013, for example, there was an immediate outflow of capital from emerging markets such that the latter went
into a swoon, only to revive when the Fed announced it was rethinking its policies.

There has been a double movement over the last forty years: on the one hand a general trend towards a levelling up in per capita wealth and incomes across states (apart from those, like Greece, hit hard by the recent crisis) and on the other dramatic increases in income and wealth disparities among individuals and social groups in almost every country of the world. Very few states or regions have bucked this trend and for the most part in backwaters of the global economy (for example, a country like Bhutan or, for a while, the state of Kerala in India). Only in Latin America have we seen some reductions in social inequality as a result of state policies. Disparities in monetary wealth are far harder to get a handle on compared to incomes. But in some respects monetary wealth is more important, since it has a long-standing rather than a volatile relation to political power. The monetary measure of wealth is difficult because the valuation of certain assets – everything from art collections to expensive jewellery and property – is often a matter of guesswork and in any case fluctuates wildly, as in the case of the market value of stocks and shares. In most countries the distribution of monetary wealth seems even more lopsided than the distribution of incomes.