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Capitalism in the Twenty-First Century: Global Inequality, Piketty, and the Transnational Capitalist Class

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Capitalism in the Twenty-First Century: Global Inequality, Piketty, and the Transnational Capitalist Class Chapter 13 Capitalism in the Twenty-First Century: Global Inequality, Piketty, and the Transnational Capitalist Class William I. Robinson Introduction Why has Thomas Piketty’s tome, Capital in the Twenty-First Century, sparked such a firestorm of debate on global inequalities in the world media, academic and policy circles? These inequalities are indeed truly savage. In 2015, the year after Piketty’s book was released in English,1 the development NGO Oxfam re- ported that the richest one percent of humanity would own more than the rest of the world in 2016.2 This is up from the one percent owning 44 percent of the world’s wealth in 2010 and 48 percent in 2014. If current trends continue, the one percent would own 54 percent by 2020. Even more shocking, the top 80 billionaires were worth $1.9 trillion in 2014, an amount equality to the bottom 50 percent of humanity and these 80 saw a 50 percent rise in their wealth in just four years. At the same time, the poorest 50 percent saw a drop in their wealth during this same four-year period from 2010 to 2014. In other words, there has been a huge transfer of wealth in a very short period of time from the poorest half of humanity to the richest 80 individuals on the planet. I do not think however, that outrage over these inequalities explains the attention that Piketty’s study has received. After all, Piketty is far from the first to draw attention to such expanding inequalities in recent years and he does not even show just how pronounced they are in the same way that Oxfam and other studies have done so. His exposition exhibits theoretical and analytical limitations, political blind spots and historical flaws, as I will discuss below. His proposed remedies—a global tax on capital and redistribution through pro- gressive tax reform—are welcome yet hardly novel. 1 Thomas Piketty, Capitalism in the Twenty-First Century (Cambridge: Harvard University Press, 2014 [2013]). 2 Oxfam. Wealth: Having It All and Wanting More (London: Oxfam, 2015), https://www.oxfam. org/en/research/wealth-having-it-all-and-wanting-more. Accessed on November 3, 2015 © Koninklijke Brill NV, Leiden, 2017 | doi 10.1163/9789004357044_015 Capitalism in the Twenty-First Century 241 But that is precisely the rub. Capital in the Twenty-First Century has been so well received by the academic, media, and political establishment pre- cisely because it converges with the reformist agenda of a rising number of transnational elites and intelligentsia. These elites have become increasing- ly concerned that the social conflicts and political turmoil sparked by such egregious inequalities may destabilize global capitalism and threaten their control. They seek to save capitalism from itself and from more radical proj- ects from below. Like Piketty, they call for mildly redistributive measures such as increased taxes on corporations and the rich, a more progressive income tax, the reintroduction of social welfare programs, and a “green capitalism.” They are also alarmed that extreme levels of inequality will undermine the prospects for growth and profit making. The Organization of economic Co- operation and Development (OECD), the club of the 34 richest countries, for instance, warned in a 2015 report that the “global inequality gap” has “reached a turning point.” The report did not have much to say about the social injustice that such inequality represents, nor about the mass suffering it brings about. It did, however, highlight that “high inequality drags down growth” and recom- mend raising taxes on the rich.3 What accounts for escalating worldwide inequalities that have so alarmed transnational elites? As Marx analyzed in Capital, there is something going on in the capitalist system itself beyond sets of government policies that generates inequalities. Simply put, capitalists own the means of producing wealth and therefore appropriate as profits as much wealth as possible that society collec- tively produces. Capitalism produces social inequalities as a consequence of its own internal workings. But such inequalities end up undermining the stability of the system since the mass of working people cannot purchase the wealth that pours out of the capitalist economy to the extent that capitalists and the well-off retain more and more of total income relative to that which goes to labor. If capitalists cannot actually sell (or “unload”) the products of their plantations, factories, and offices then they cannot make profit. This is what in critical political economy constitutes the underlying internal contradiction of capitalism, or the overaccumulation problem. Left unchecked, expanding social polarization results in crisis—in recessions and depressions, such as the 3 Organization for Economic Cooperation and Development, In It Together: Why Less Inequality Benefits All (OECD Publishing, 2015), http://www.keepeek.com/Digital-Asset-Management/ oecd/employment/in-it-together-why-less-inequality-benefits-all_9789264235120-en#page1. Accessed on November 3, 2015. Notably, the report also called for greater gender inequality, not as a matter of justice but because gender equality is shown to decrease income inequality. 242 Robinson 1930s Great Depression or the 2008 Great Recession. Worse still, it engenders great social upheavals, political conflicts, wars and even revolutions— precisely the kinds of conflicts and chaos we are witnessing in the world today. As Chris Harman showed so clearly in his eminently readable account, A People’s History of the World, the struggle between the haves and the have-nots has driven civilization and its interminable crises for millennia.4 In the view of the reformers as well as that of Piketty, however, it is not the capitalist system itself but its particular institutional organization that is to blame for inequalities. They believe it can be offset by policies such as those Piketty proposes. Radical political economists refer to state redistributive poli- cies or worker struggles for higher wages that offset the tendency towards social polarization, wars that may destroy existing capital stock and have a leveling effect, and so on, as countervailing tendencies. However, seen in light of the systemic contradictions of capitalism, inequality is not the result of “bad poli- cies.” Prevailing policies and institutions are not a “public choice” as insinuat- ed by the choice theoretic paradigm5 employed by Piketty, among others. This approach views state policies and their outcomes as the product of “choices” made by publics, as if publics and states are rational, unitary and coherent actors. Rather, policies are the outcome of ongoing and often unpredictable crises and social struggles among competing classes and groups. The Class Warfare of the Transnational Capitalist Class Capitalist globalization from the 1970s and on undermined the countervailing tendencies that in the mid-20th century attenuated some of the sharpest social polarization. The high rates of inequality registered in the wake of the indus- trial revolution reached a peak in the late 19th and early 20th centuries and then diminished somewhat—in the heartlands of world capitalism—in the wake of two world wars and the Great Depression. Colonialism and imperialism transferred surplus wealth from the periphery to the metropolitan centers of world capitalism and made possible the rise of a labor aristocracy in these cen- ters, as both Vladimir Lenin and Cecil Rhodes noted early in the 20th century. Those sectors are now experiencing under capitalist globalization downward mobility, heightened insecurity and “precariatization” that threaten to undo the hegemonic blocs forged in the 20th century in the core countries through 4 Chris Harman, A People’s History of the World (London: Bookmarks, 1999). 5 Alex Callinicos, Social Theory: A Historical Introduction (New York: New York University Press, 1999). Capitalism in the Twenty-First Century 243 the incorporation of these (often white racially privileged) sectors. When reform-oriented transnational elites bemoan the “loss of the middle class” they are referring to the destabilization of these formerly privileged sectors among the working class and to the erosion of the earlier hegemonic blocs. The “Fordist-Keynesian” social order that took shape in the 30 years fol- lowing World War II involved high growth rates, a rise in living standards for substantial sectors of the working class, and a decrease in inequalities in the developed core of world capitalism. Why “Fordist-Keynesian?” It was Henry Ford who first recognized that the new system of mass, standardized produc- tion (“Fordism”) could not be sustained without introducing as well mass, standardized consumption. This meant establishing a stable employment ar- rangement—or capital-labor relation—for a significant portion of the work- ing classes and wages high enough for the working class to actually consume the goods and services that their labor produced—in exchange for workers’ obedience to capital. In turn, John Keynes analyzed that the Great Depression owed to insufficient demand as a result of the concentration of wealth. The state needed in Keynes’ view to intervene in the economy in order to regulate the market (especially financial markets) and to boost demand through state spending on public projects such as infrastructure and social serves as well as through the establishment of minimum wages, unemployment insurance, pensions, and so forth.6 The period of post-World War II prosperity in the core countries owed a great deal to this combination of Fordist production and regulated capital-labor relations and Keynesian monetary, budgetary and regulatory policies. Main- stream academics and policymakers shifted from the earlier classical econom- ic theories of David Ricardo, Adam Smith, and Jean Baptiste Say to Keynesian economic theory. State intervention in the capitalist market and a component of redistribution came to define economic policy in the mid-20th century in the then-First World, as well as in the then-Third World in the wake of decol- onization.
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