A new Oxfam study shows that the 62 richest people own as much as the bottom half of the world’s population, some 3.6 billion people. It also shows that the top 1% own more wealth than the rest of the world combined. I take a look at the report and what’s causing this obscene level of inequality.
Quick note to my readers: I got busy over the holidays and it put me out of writing for a bit. I’m getting back in the game now and have been working on two articles: one on TPP and the lies President Obama said about it during the State of the Union Address and the other on how what’s going on in Detroit and Flint is the predictable result of neoliberal capitalism (and what we can do about it).
I was going to wait until those two articles were done to post anything new, but this new Oxfam report on global wealth inequality has some startling conclusions. So I wanted to bring this study to the attention of my readers.
The Oxfam study reaches the following conclusion:
The richest 1% now have more wealth than the rest of the world combined. Power and privilege is being used to skew the economic system to increase the gap between the richest and the rest. A global network of tax havens further enables the richest individuals to hide $7.6 trillion. The fight against poverty will not be won until the inequality crisis is tackled.
Let that sink in. The richest 1% own more wealth than the rest of the world’s combined. In the executive summary, Oxfam calculates that
- In 2015, just 62 individuals had the same wealth as 3.6 billion people – the bottom half of humanity. This figure is down from 388 individuals as recently as 2010.
- The wealth of the richest 62 people has risen by 44% in the five years since 2010 – that’s an increase of more than half a trillion dollars ($542bn), to $1.76 trillion.
- Meanwhile, the wealth of the bottom half fell by just over a trillion dollars in the same period – a drop of 41%.
- Since the turn of the century, the poorest half of the world’s population has received just 1% of the total increase in global wealth, while half of that increase has gone to the top 1%.
- The average annual income of the poorest 10% of people in the world has risen by less than $3 each year in almost a quarter of a century. Their daily income has risen by less than a single cent every year.
62 individuals have the same wealth as 3.6 billion people. That’s an incredible concentration of wealth — possibly far more concentrated than any other period in history.
What’s also startling is that within 5 years (2010-2015), the number of wealthy individuals it takes for their total wealth to equal the bottom half has decreased by about 84%. Between the study’s summary and these bullet points, we get a general idea how this happened: concentration of wealth at the top 1% occurred at the expense of the bottom half of the world.
The report has come under some criticism from Chris Giles, economics editor at the Financial Times. I’ll let you read economist Michael Roberts’s blog post on that for more details. I agree with Roberts’s conclusion that
There is no getting away from the conclusion that the world is grotesquely unequal in the ownership of cash, bonds, stocks, land, buildings and means of production and in the incomes ‘earned’ by people globally. It is unequal to the extreme between countries and within countries. And the evidence suggests that inequality is not being reduced, at the very least, and probably is worsening.
As far as I see it, there are two problems in the study worth mentioning. The first is the wording as to the cause of the increase in wealth inequality. To quote again from the summary, Oxfam concludes that “Power and privilege is being used to skew the economic system to increase the gap between the richest and the rest.”
Now this isn’t necessarily wrong, but it is misleading. By saying that “power and privilege skew” the economic system in favor of the wealthy, it’s implied that capitalism before the neoliberal turn did not do so. This is liberal fantasy. The social democratic states still had large inequalities in wealth. More importantly, control and ownership of the economy was in private, unaccountable hands. The inner motions of capital — accumulation for accumulation’s sake based on the exploitation of labor — remained untouched. The inevitable result is the assault on the gains of social democracy.
The second issue is that by failing to have a real, class-based analysis of changes in the global economy, the report cannot succeed in providing any serious alternatives to the present state of things. We can see this by looking at what the neoliberal turn actually is. I plan on writing a more detailed post about this soon, but for now, the following brief summary will suffice.
Neoliberal capitalism represents an assault on the working class for what capital perceived to be too high costs of labor in advanced countries and too low rates of profit. By the mid-1970s, economic stagnation was well underway in the advanced economies, especially in the United States. The loss of the US’s unique position as the dominant capitalist power with the restoration of Japan and Europe as competitors forced a sort of existential crisis on American capitalists. From the standpoint of American capital, the US economy suffered from over-investment in the real economy and too high costs of labor.
The capitalist solution was to financialize the economy and assault the gains of social democracy. So in the interests of profit, the social democratic welfare states had to be dismantled. Because of the stagnation in the real economy, financial asset investment was seen as a way to restore profitability. It’s no coincidence that neoliberalism gave a dominant role to monopoly-finance capital. Many economic myths started to float around that unregulated finance can fix the economy permanently. Obviously, with the financial crash of 2007-08, that proved to be erroneous.
Another key aspect of neoliberalism is globalization. Globalization has been one of the primary methods by which large corporations increase their profits by creating a “global reserve army of labor” — to use John Bellamy Foster and Robert McChesney’s term from their book The Endless Crisis.
The idea is simple. By liberalizing the flow of capital across borders, capital finds itself with an increased, global labor market. Semi-peripheral countries like China can draw from a large surplus of rural workers. These rural workers are then proletarianized, i.e. forced into the regime of wage labor. Corporations can extract super-profits from the hyper-exploitation of labor in low wage countries like China. This also deteriorates the conditions of labor in advanced economies like the United States. There, a downward pressure on wages results from both increased unemployment due to outsourcing and from the mere threat of outsourcing.
The Oxfam report suggests eliminating tax havens. While this will surely bring in more money for states to spend on military budgets, mass surveillance systems, and token welfare initiatives, it won’t end the global economic regime that promotes egregious inequality within states and between them. Furthermore, without actual popular control over the nature of work and how our economic surplus is used, there is no guarantee that the increased revenues from eliminating tax havens will be used in socially responsible ways. Given that the United States conducted one of its bloodiest wars (in Indochina) when it was at the height of its social democracy, I am not confident that increased tax revenues wouldn’t just be siphoned off into military spending or subsidies for large, monopoly corporations.
The Oxfam report provides some interesting numbers, but needs to be read critically. Without a serious understanding of class, imperialism, and the nature of capitalism, we’ll make the mistake of advocating for mere surface modifications while fundamentally leaving the exploitative system unchanged. As we know from experience, surface modifications like increased welfare spending and regulation of finance capital can be removed once the capitalist elites deem them no longer necessary or are a hindrance to their bottom line. It’s only by bringing the economy under the popular control of organized workers, that we can then move to a system that replaces the motto “profits above all else” with satisfaction of human needs.