by From David Ruccio and Jamie Morgan and the current issue of the RWER The premise and promise of capitalism, going back to Adam Smith, have been that global wealth would increase and serve as a benefit to all of humanity.[1] However, the experience of recent decades has challenged those claims: while global wealth has indeed grown, most of the increase has been captured by a small group at the top. This has continued into the “recovery” in the United States and globally. The result is that an obscenely unequal distribution of the world’s wealth has become even more unequal. Those in the small group at the top have long been able to put distance between themselves and everyone else precisely because they’ve been able to capture the surplus and then convert their share of the surplus into
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from David Ruccio and Jamie Morgan and the current issue of the RWER
The premise and promise of capitalism, going back to Adam Smith, have been that global wealth would increase and serve as a benefit to all of humanity.[1] However, the experience of recent decades has challenged those claims: while global wealth has indeed grown, most of the increase has been captured by a small group at the top. This has continued into the “recovery” in the United States and globally. The result is that an obscenely unequal distribution of the world’s wealth has become even more unequal. Those in the small group at the top have long been able to put distance between themselves and everyone else precisely because they’ve been able to capture the surplus and then convert their share of the surplus into ownership of wealth. And the returns on their wealth allow them to capture even more of the surplus produced within global capitalism. This is accompanied by growing income inequality.
However, although people are aware of inequality, they are typically unaware of its real extent, and mainstream economics and the popular press contribute to this situation, which in turn leads to the reproduction of the system that produces ever-more-grotesque levels of inequality.
Both class and ideology underpin this worsening situation. The tiny group at the top, both nationally and globally, have both an interest and the means to maintain the economic and social rules and institutions that allow them to capture the surplus, and thus create more distance between themselves and everyone else. Meantime, mainstream economic and political discourses, inside and outside the academy, tend to ignore the class conditions and consequences of inequality – and to undermine the possibility of a real debate about the kinds of changes that are necessary to give the majority of people a say in how the surplus is utilized.
Global wealth inequality
Since Thomas Piketty published Capital in the Twenty-First Century, the World Inequality Lab has become one of the best known and most reliable sources of data on wealth and income inequality. So far, the Lab has collected reasonably good data for the United States, China, and Europe (which is represented in what follows by France, Spain and the United Kingdom) up to 2015 and provides projections from there. Globally, wealth is substantially more concentrated than income: the top 10 percent owns more than 70 percent of the total wealth. The top 1-percent wealthiest individuals alone own 33 percent of total wealth in 2015. This figure is up from 28 percent in 1980. The bottom 50 percent of the population, on the other hand, owns almost no wealth over the entire period (less than 2 percent). The projection looking forward is similarly dramatic: according to the World Inequality Lab, if present trends continue the share of each of the top groups – the top 1 percent, the top 0.1 percent, and the top 0.01 percent – would grow by one percentage point every five years. What that means is that, by 2050, the share of each group would increase dramatically. In particular, the share owned by the top 0.1 percent would eventually match that of the declining middle group – at a quarter of global wealth: read more and see the charts and graphs