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wealth inequality in america

November 13, 2013

The statistics in this video about wealth inequality are pretty shocking to many. For one, it creatively illustrates the fact that the top 1% alone controls about 40% of the total wealth of the US, while the bottom 80% only has 7% of that wealth shared between them, statistics that are a lot worse than people think they are. But the statistics themselves aren’t the full story, and I think it’s worth digging deeper to find out what that story is. I’m sure some will disagree with my particular answers, but the two main questions that I think need to be asked are: ‘Why is there so much disparity when it comes to wealth distribution?’ and ‘Where does all that wealth come from in the first place?’

In answer to the latter, I think we need to begin by taking a broader look at history and the evolution of capitalism, which has succeeded in greatly increasing both wealth and the efficiency of commodity production. For starters, I think it’s worth noting that much of the wealth we’re talking about has its roots in theft and violence, i.e., the primitive accumulation of capital in the form of colonialism and imperialism. The initial ‘start up’ capital for many early capitalists and industrializing nations came from the expropriation and consumption of the labour and resources of other places, particularly large parts of Africa, the Americas, and Asia. And here I’m talking about everything from land grabs to slave labour. Today, we do similar things via more civilized methods such as sweatshops and the IMF, which forces countries experiencing economic instability to adopt certain favourable policies (to the US and Europe, at least) in exchange for financial loans, etc.

Wealth is also created via the capitalist mode of commodity production, which is why capitalism was a revolutionary mode of production that eventually supplanted feudalism. The logic of capitalism spurs both the production of surplus value (which is where profits come from) and constant evolutions in technology, and this has both positive and negative consequences. One positive is that capitalism has revolutionized production methods, and the drive for the accumulation of profit constantly pushes the development of new and labour-saving technologies. A negative is that the internal contradictions in the capitalist mode of production create crises that cause economic instability, and capitalist social relations are a major source of inequality.

I’d concede that some of the wealth inequality we’re currently experiencing (at least in the West) is due to polices and laws that have weakened unions, eroded the minimum wage to the lowest level (in real terms) since the 1950s, put Wall Street’s toxic innovations ahead of workers, etc. Nevertheless, I’d strongly argue that a great deal of this inequality is a direct result of the way capitalism functions and the social forms (including the state) that that functioning engenders. I think our politics have always been ‘sick’ in the sense that they’ve always dominated by the interests of a privileged class of wealthy, ruling class elites — whether it’s been the white, male landowners of the late 1700s or the 1% of today — and their ownership of the means of production and finance give them the means to appropriate the lion’s share of wealth, whether created or simply expropriated from elsewhere (i.e., accumulation by dispossession).

This seed of inequality, however, is easily obscured, as are capitalist social relations and the origin of profit, which from the Marxist perspective, arises out of the division of the workday into necessary labour and surplus labour. But since all labour appears as paid labour, it’s easy for the capitalist apologist to argue that capital is the source of value (essentially separating capital as an independent and autonomous factor of production) despite the actual complexity of capitalist production and distribution, completely obscuring labour’s contribution in the creation and realization of profit.

But as David Harvey illustrates in Limits to Capital, part of Marx’s critique in Capital details precisely how the contradictions inherent within the capitalist mode of production produces a fundamental contradiction between the equality presupposed by exchange and the inequality via the exploitation of labour required to gain profit. So from the very onset, the kernel of inequality is already present within our political-economic system. And that inequality is the basis for much of the struggle between capital and labour and how surplus value is distributed.

On the one hand, workers are, in principle, “free to sell their labour under whatever conditions of contract (for whatever length of working day) they please” (30), which highlights the equality, freedom, and individuality characterizing exchange relations, recalling both Aristotle’s argument that “exchange cannot take place without equality” and Marx’s argument that “the circulation of commodities requires the exchange of equivalents” (19).

However, workers must also compete against one another in the labour market, where capitalists who are forced to internalize the profit-seeking motive due to the coercive laws of competition purchase workers’ labour time with the sole purpose being the accumulation of profit (accumulation for accumulation’s sake), and who more often than not dictate the duration and conditions of labour workers must accept or else risk privation while seeking something better, putting workers at a disadvantage on an individual level. (28-30) (One of the main reasons I favour some kind of universal basic income is that it has the potential to empower workers, decommodify labour-power by helping free workers from absolute dependence on wage labour for subsistence, and enlarge the nonmarket social economy.)

The expansion of value in this process occurs via the production of surplus value by capitalists who employ wage labour, a social relation in which the worker — who gives up their rights to control over the production process, the product of their labour, and the value incorporated in the production — receives the value of their labour power and nothing else (42-3). And this is important because this is the point where the surplus value created in the labour process is appropriated by capitalists who are forced, due to the coercive laws of competition, to internalize the profit-seeking motive to purchase workers’ labour time with the sole purpose being the accumulation of profit (accumulation for accumulation’s sake), i.e., how they transform money (M) into commodities (C) and then back into money plus a surplus (M + ∆M), the added value being the result of the additional amount of labour time capitalists can extract/contract out of the worker in excess of what it takes for them to produce the value of the wages they receive.

More broadly speaking, however, workers generally seek (and one could rightly even say are compelled) to purchase commodities with the money they earn through their role in the production of commodities (C-M-C); and through the maintenance and reproduction of the working class (primarily through their role as consumers of commodities), the reproduction of capital is created. Surplus value, then, is produced via the production process and realized via market exchange, where workers as producers and consumers give of themselves twice to capital—first as what’s conventionally viewed as unpaid labour and second as wages for commodities (as well as things like rent, etc.) (56).

And that inequality in the economic sphere is further carried into the political sphere since the accumulation of profit on the part of capital in the form of money, which itself is a form of social power, gives capital (particularly as a class) a disproportionate political advantage, putting workers at a disadvantage on a broader political level. In addition, the more workers collectively resist the depredations of capital, the “more the capitalists are forced to constitute themselves as a class to ensure collectively that the conditions for progressive accumulation are preserved” (30). (And the state is primarily the political representation of capital, the social relation, that subsumes the capitalist class and working class alike, and which seeks to help resolve the reoccurring crises of overaccumulation that result from the intrinsic contradictions within the capitalist mode of production itself.)

Of course, one can always look at the numbers and argue that the massive wealth in the hands of the uber-rich is simply due to the amount of the proverbial pie being a lot bigger than in the past, and that the ends of increased wealth (assuming it’s not just inflationary numbers we’re talking about here) and evolutions in technology justify the means (which include a lot of ugly truths), especially from the relative comfort of the US, which has appropriated and expropriated a vast quantity of global wealth that’s trickled down to its working class. But I think it’s misleading to look at the size of the pie without also looking at how the slices are distributed and where the ingredients come from.

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