If we were to believe the fairy tales of capitalism, we would have to believe that 500 multi-billionaires work harder than the entire population of Japan. OK, I know that sounds crazy, but that is nothing more than following capitalist ideology to its intended conclusion: The wealthy are wealthy because their worked harder than you.
The 500 richest people on Earth are worth a collective US$4.7 trillion, Forbes magazine breathlessly informs us, and that total is a little more than the gross domestic product of Japan, the world’s third-largest economy.
The 20 richest people alone are worth a collective $900 billion! There are only 16 countries on Earth that have a larger gross domestic product than that. Quite a feat — 20 people possess slightly more assets than what is produced in an entire year by the 250 million people of Indonesia or the 17 million people of the Netherlands, one of the most highly productive peoples among the world’s advanced capitalist countries.
So these billionaires must work awfully hard to accumulate such riches, right? Let us see.
Among the 20 riches people on Earth we find six technology moguls who took advantage of the Internet and world wide web created by governments using public money; seven people who inherited their wealth; a monopolist who was handed his country’s telecommunications system by a president to whom he made a large donation; one who made a fortune from the fashion industry; another who made a fortune in luxury goods; and a casino magnate. Two of those who inherited a fortune and their fathers’ business, Charles and David Koch, spend fortunes (not for them, but it would be a fortune to almost anybody else) to counter all efforts to reverse the global warming and environmental devastation that their business interests requires. Four others, members of the Walton family, receive billions of dollars a year just for being born into the right family.
To zoom out to a bit to more of the tip of the pyramid, Credit Suisse’s Global Wealth Report 2015 reports that the richest one percent of the world’s population owns 50 percent of the world’s wealth, a higher percentage than the one percent owned at the start of the global economic downturn in 2008. The bottom 70 percent of humanity owns three percent. That the richest have so much more means that the rest of us have less. The global median wealth per adult has fallen from US$4,200 in 2007 to $3,200 in 2015. In a very rare concession in a report that otherwise dispassionately reports trends in wealth as if they are as part of the natural world as ocean tides, the Credit Suisse report said:
“Part of the decline is due to adverse exchange rate movement movements, but rising inequality is the principal reason why the global trend in median wealth has not followed the path of mean wealth per adult.” [page 20]
Exchange rates are referenced because the Credit Suisse report converts wealth holdings elsewhere into U.S. dollars for the sake of comparison, and most currencies of the world have lost value against a strong U.S. dollar, thereby rendering those holdings artificially lower than they actually are. But the main point here is average wealth increases but median wealth has been declining. The reason is this: Average measures the difference between the highest and lowest, while median is the point where half are higher and half are lower. As the joke goes, if Bill Gates walks into a bar, everybody there has become, on average, a millionaire.
Unfavorable exchange rates or not, it is no surprise that the U.S. in particular, and the global North in general, are home to a huge majority of the world’s millionaires. Centuries of one-sided extraction of natural resources, control of land and financial plunder have increased global inequality. This is hinted at in a 2009 paper written by Branko Milanović, then a World Bank researcher, who calculated that the standard measure of inequality, a statistic known as the gini coefficient, has increased greatly since the early 19th century. But, he wrote, most of the inequality of the early 19th century was due to differences among individuals within countries and less by difference in wealth between countries. In the early 21st century, by contrast, the author estimates that about 90 percent of global inequality is due to differences between countries and only a small percentage due to differences among individuals within countries. He concludes:
“[I]nequality between individuals is much higher today than 200 years ago, but—more dramatically—its composition has totally reversed: from being predominantly driven by within-national inequalities (that is, by what could be called ‘class’ inequality), it is today overwhelmingly determined by the differences in mean country incomes (what could be called ‘location’ or citizenship-based inequality).”
We wouldn’t expect issued by a World Bank economist, even a working paper that is “unofficial,” to acknowledge class differences. The implication that class differences have ceased to be relevant can easily be corrected every time we walk into our place of employment, both by the relations there and by who pockets the value created by the workforce. Not to mention the drastic and growing inequality within countries. Nonetheless, Dr. Milanović’s reference to differences between countries is of course true, and although the World Bank certainly wouldn’t use the term, we can call that international inequality by its name: Imperialism.
As they have needed to expand under the pressures of competition, the capitalists of the global North moved in to newer locations, from which they could ship massive profits back home while leaving the local populations destitute and forced to work for starvation wages. This process of primitive accumulation, not much different from the sort of primitive accumulation that occurred in England and elsewhere at the dawn of capitalism, kept local elites happy but, more so, fattened the wallets of the corporate elites who set up operations. This transnational profiteering, a process known as imperialism, primarily filled bulging corporate coffers, but inevitably some tiny amount of it filtered down for some working people in the North. Jobs for administrators, sales representatives, warehouse workers and others related to supporting exports as new markets are forced open would be a direct manifestation, and manufacturing jobs tied to the expansion of production destined for export are created.
But competitive pressures inevitably force production to be moved to countries with much lower wages — thus the age of buoying living standards through export of locally made products comes to an end, supplanted by corporate globalization that moves jobs overseas and drives down wages. The shipping of production to locations with ever lower wages and regulations, accelerated by multi-national corporations pressing governments to adopt ever more one-sided “free trade” agreements, although a new form of imperialism, is one that drives down wages in the global North and increases inequality.
Thus, the era of corporate globalization promises more inequality. In your next life, work harder to be born into the right family.