Global inequality: Capitalism is to blame

Friday, February 10, 2017

Hundreds of so-called world leaders met at the World Economic Forum (WEF) in Davos, Switzerland, in January to try to come up with new ways to reinvigorate an economic system that is failing humanity and the planet.

In September 2000, the WEF met in Australia at Melbourne’s Crown Casino. At that time, the WEF was spruiking the message of globalisation as the way out of poverty and the door to prosperity for millions of people.

But the reality was quite different, especially for the majority of the world’s population living in underdeveloped countries, meaning that the 2000 WEF meeting took place against a backdrop of resistance.

People in countries across Latin America, who had suffered under the neoliberal economic policies that had been inflicted upon them for more than two decades, were rebelling. In the belly of the beast — the United States — an anti-globalisation movement had erupted into protest, most notably in Seattle in 1999. Over the three days of the Melbourne WEF 30,000 people protested day and night outside Crown Casino.

This rebellion was based on the growing realisation that, in the words of Cuba’s then President Fidel Castro, neoliberal globalisation “has aggravated existing inequalities and raised to inordinate heights social inequities and the most irritating contrasts between extreme wealth and extreme poverty.”

For example, in 1960, the difference of incomes between the wealthiest 20% of the world’s population living in the developed countries and those of the poorest 20% living in the Third World was 30 to 1. By 1997, that ratio was 74 to 1.

Today, according to an Oxfam report, entitled An Economy for the 99 Percent (based on data collected by Credit Suisse and others), just eight men own the same wealth as the poorest half of the world. This figure has dropped in a year from 68, and shows that under capitalism wealth has been concentrated into fewer and fewer hands.

The Occupy movement, which started as a protest against Wall Street, but ballooned across the US and internationally in 2011, adopted the slogan “We are the 99%” to symbolise the struggle for a better world against the greed of “the 1%”. Some people at the time thought it was an exaggeration to talk about the 1% versus the 99%, but according to Oxfam, since 2015, that richest 1% has owned more wealth than the rest of the planet combined.

Even in Australia, the top 1% have more than 22% of the total Australian wealth and own more wealth than 70% of Australians combined.

The poorest 50% of Australians have only 6% of national wealth between them.

Australia’s “1%” includes the two richest billionaires, Gina Reinhart and Blair Parry-Okeden. Between them they have more than US$16 billion — which is more than the combined wealth of the poorest 20% of Australians.

Far from lifting people out of poverty, the policies imposed on poorer countries by the international financial institutions, such as the World Bank, the International Monetary Fund and the European Central Bank have led to privatisation of public services and cuts to health, education and welfare, throwing millions into poverty and despair.

Meanwhile, the rich have been getting richer at top speed. So much so that according to the report, while the incomes of the world’s poorest 10% of people increased by less than $3 a year between 1988 and 2011, the incomes of the richest 1% increased 182 times as much.

In Australia, the richest 10% enjoyed income growth of 28% in the same period, more than the poorest half of Australians combined.

Capitalism’s drive for profits has led many of the world’s manufacturing industries to move offshore in search of lower and lower labour costs, switching production to countries such as Bangladesh, while their corporate headquarters are maintained elsewhere — in the first world, or more likely in tax havens such as Panama.

The disparity between those at the top of the corporate ladder and those whose labour is exploited for the obscene profits of these companies is illustrated in the fact that a “FTSE-100” CEO earns as much in a year as 10,000 people working in garment factories in Bangladesh combined.

But to survive, Capitalism also relies on its ability to be able to drive down the wages, conditions and standard of living of workers in developed countries, such as the US and Australia. Here, the profit share of national income compared to the wages share is at levels similar to the 1960s, and wages growth has stalled.

In the US, new research by economist Thomas Piketty shows that over the past 30 years the growth in the incomes of the bottom 50% has been zero, whereas incomes of the top 1% have grown 300%.

Women particularly bear the brunt of capitalism’s drive for profits.

Oxfam estimates that at current rates of decline in gender disparities, it will take 170 years for women to be paid the same as men, due to the lack of equal pay and the concentration of women in lower paid and part-time work.

Women are much worse off economically over their lifetime because of economic inequality.

Aside from the exploitation of human labour for profit, Capitalism relies on extracting the planet’s finite natural resources for production. The end result is environmental degradation, pollution and climate change — threatening the survival of humanity and the biosphere.

Oxfam is correct when it concludes that “climate change provides one of the clearest demonstrations of inequality and injustice”. Their report estimates that “the richest 10% of the global population are responsible for half of all total emissions. Yet it is the poorest communities that face the most severe consequences.”

Clearly system-wide change is needed to introduce what Oxfam calls a “human economy”. But how do we get there?

We need to build a powerful people’s movement to challenge the power of the corporations and the rule of the 1%. By mobilising against privatisation, cuts and attacks on the most vulnerable; defending workers’ rights; standing up for women’s rights; rejecting divide-and-rule racism; and defending and protecting our planet’s finite resources, people can start to feel the power we have through organising together.

Such campaigns, if they are broad, democratic and organised on a mass basis, can become powerful political movements and can start to challenge the fundamental dynamics of the capitalist system and begin to point towards the kind of society and the “human economy” that must be built.

Download Oxfam’s report here.

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