Oxfam's new report, An Economy for the 1%, is a damning indictment of capitalism. It presents chilling data showing that global inequality has reached “new extremes”. The aid organisation has calculated that just 62 people have the same amount of wealth as half the world.
The report was released on the eve of one of the biggest global capitalist gapfests — the World Economic Forum (WEF) held each year in Davos-Klosters, Switzerland. Each January, about 2500 of the world's richest capitalists and their politicians get together to discuss how to patch up the broken system to enable themselves to keep making it more unequal.
Oxfam was, no doubt, making a statement with the timing of the report's release and its key demand was to tax the rich and spend those billions on essential services.
The 43-page report, which draws from Credit Suisse and OECD figures, is useful in highlighting the frightening speed at which neoliberal capitalism is making life worse for the 99%. As the global economic situation deteriorates, this trend will only get worse.
Here are some statistics:
• In 2015, just 62 individuals had the same wealth as 3.6 billion people. Five years earlier, this figure was 388 individuals;
• The wealth of the richest 62 people has risen by 44% in five years, while the poorest fell by 41%;
• Since 2000, the poorest half of the globe received just 1% of the total increase in global wealth: half of that increase went to the top 1%;
• The average annual income of the poorest 10% in the world has risen by less than $3 each year for around 25 years. Their daily income rose by less than a single cent every year; and
• The poorest people are the more vulnerable to climate change, but are only responsible for around 10% of total global emissions.
“Instead of an economy that works for the prosperity of all, for future generations, and for the planet, we have instead created an economy for the 1%”, the report said.
It explains that the process of accumulation and concentration of capital have been at the expense of workers, unemployed and underemployed. It identifies the falling share of national income going to workers as a key cause of the growing wealth inequality.
“The owners of capital have seen their capital consistently grow (through interest payments, dividends or retained profits) faster than the rate the economy has been growing,” the report states. It adds that tax avoidance and governments cutting taxes on capital gains have added to the problem.
Workers' wages in advanced capitalist countries, such as Australia, have been in a long-term decline. Since the 1980s, the beginning of the neoliberal phase of capitalism, the gap between real wages growth and productivity growth has continued to widen.
Wages have stagnated while the capitalists' income share has skyrocketed. An example of this is union-busting Qantas CEO Alan Joyce's 2015 “wage”: he gave himself a 490% pay rise — $10 million more than the previous year.
The Oxfam report reaffirmed other long-term structural problems of a global economy geared to the 1%:
• The gender pay gap is higher in more unequal societies. Women make up the majority of the world's low-paid workers and are concentrated in the most precarious jobs;
• Capitalist firms and individuals “often use their power and position to capture economic gain for themselves”;
• Deregulation, privatisation, financial secrecy and globalisation have “super-charged the age-old ability of the rich and powerful to use their position to further concentrate their wealth”;
• The economic system is rigged to allow the wealthiest individuals and companies who should be paying more tax to avoid doing so. Tax dodging by multinationals costs poor countries at least $100 billion every year; and
• Corporate investment in tax havens almost quadrupled between 2000 and 2014. Globally, $7.6 trillion of wealth sits offshore in tax-free havens. If tax were to be paid on this, the report estimates an extra $190 billion would be available to spend on essential services.
However Oxfam's new data is not likely to encourage the WEF to change its approach. According to Oxfam Canada's chief Julie Delahunty nine out of 10 countries at the meeting have a connection to at least one tax haven.
Delahunty said: “How can we trust the trickle down effect when the recent explosion in the wealth of the super rich has come at the expense of the majority? The bottom line is that hard working people and those living in poverty, especially women, are not feeling the benefits of economic growth — and they should.”
The Oxfam report admits the economic system is “broken” but it also implies it can be “fixed” through a few reforms. Oxfam is right to demand an end to corporate tax avoidance and tax-free havens and to call for those billions to be invested in the social good. But the report is silent on the politics of how to tackle this obscene and worsening wealth inequality.
There is no indication that capitalist governments are prepared to seriously tax the rich. In Australia it is going in the opposite direction. The Coalition's finance minister Mathias Cormann told ABC Radio on January 21 from Davos that the federal government would not rule out an increase in the GST — a tax that disproportionately penalises the poor — and wanted to “make it easier for investment opportunities”. Further cutting taxes on the rich and attacking wages and penalty rates are also on its agenda.
A just and equitable economic system — a post-capitalist one — will only come about through a struggle by the majority to wrest power from the richest 1%.
The Socialist Alliance's view is that humanity has reached a critical crossroad because capitalism cannot advance society as a whole. Indeed, capitalism has put humanity's very survival at risk.
“Already, large sections of the world live in poverty, repression and endless war, but in addition the insatiable drive for profits by a highly monopolised and globalised capitalism is leading to irreversible and catastrophic climate change,” it states in its latest edition of Towards A Socialist Australia.
The threat to our common future arises from “the unprecedented drive for profit at all costs by a tiny rich elite and the giant corporations that now own or control most of the world's wealth”.
Ultimately, if humanity is to survive, it must liberate itself from capitalism. The only way of doing that is to take ownership and control of society's productive resources and wealth from the 1% and replace this rotten system with the democratic self-management of ordinary people who make the wealth in the first place.
Time is running out for huge numbers of people who will not survive the social, economic and climate crises. Those of us who can, must act. The Oxfam report gives us ammunition for that struggle.