Tag: Wealth inequality

No, the Rich Don’t Deserve Their Wealth / by Tom Malleson

Cartoon of Andrew Carnegie, 1900. (Udo J. Keppler / Library of Congress via Wikimedia Commons)

Originally published in Jacobin on May 1, 2023

Capitalism is built on the meritocratic idea that everyone gets what they deserve in the marketplace. This May Day, let’s reject that idea — wealth creation is a fundamentally social process, and the rich have no right to hoard all the resources and power.

A foundational belief in capitalist societies is the notion that individuals deserve the income they receive in the market: your bank account reflects your talent and efforts and is therefore rightly yours, and yours alone.

A recent survey found that 66 percent of Republicans believe the rich are rich because they “worked harder” than other people, not because of other advantages in life. As the late conservative activist Herman Cain put it, “Don’t blame Wall Street. Don’t blame the big banks. If you don’t have a job and you’re not rich, blame yourself.”

Hence Bill Gates and Elon Musk truly deserve their mountains of wealth ($110 billion and $190 billion, respectively), whereas disabled people supposedly deserve their paltry earnings of only $25,000 on average per year. Such ideas of deservingness and merit are the mortar between the bricks of our society’s foundation.

But on International Workers’ Day, it’s worth asking: do the rich really deserve their piles of lucre?

The Ideological Origins of Meritocracy

The notion that inequality is justified because it reflects individual merit is an old one. Beginning in the decades after the French Revolution, as the old bastions of feudal privilege were decaying, a panicky elite worried that the masses might use their growing democratic powers to equalize wealth. Conservative thinkers started marshaling novel justifications for their riches. In 1872, Émile Boutmy, the founder of the prestigious Parisian university Sciences Po, expressed the mounting elite anxiety like this:

The classes that call themselves superior can preserve their political hegemony only by invoking the law of the most capable. Because the walls of their prerogatives and tradition are crumbling, the democratic tide must be held back by a second rampart made up of brilliant and useful merits, of superiority whose prestige command obedience, of capacities of which it would be folly for society to deprive itself.

The rising discipline of economics would provide much of the ideological ammunition for which the Right was desperately searching. In 1899, the economist John Bates Clark fretted that “workmen” were increasingly embracing the socialist idea that they “are regularly robbed of what they produce” and would thus “become revolutionists.”

To counteract the dreadful possibility of human beings sharing the fruits of their labor, Clark developed what came to be known as marginal productivity theory. His core claim was that a competitive market will distribute income to each “factor of production” — each worker or each business owner — in accordance with the marginal contribution of each person. Capitalism could thus be portrayed not an exploitative system but a deeply moral one: it gives every person precisely the value they have created.

That meritocratic shibboleth still has deep purchase today. When Occupy Wall Street protests broke out against economic inequality a decade ago, Greg Mankiw, chairman of the Council of Economic Advisers under President George W. Bush, published an influential article entitled “Defending the One Percent.” He repeated Clark’s argument that market incomes, even for the very rich, are not a problem because they simply reflect the enormous value gifts the rich have made to our wellbeing.

John Bates Clark. (Gunton’s Magazine,
Vol. 19, 1900 via Wikimedia Commons)

The Root Problem of Meritocracy

Progressives typically reject the meritocratic argument, pointing out that the economic rat race is extremely unfair. Some people are blessed with private inheritance, elite schools, and well-connected family networks, while others are obstructed at every turn by economic insecurity, sexism, and racism. Since there is nothing like equal opportunity, the economy is an uneven playing field, and so the “winners” don’t really deserve their income any more than a heavyweight boxer “deserves” a prize for beating a featherweight, or a Lamborghini driver would “deserve” the yellow jersey for outracing cyclists in the Tour de France.
These progressive arguments are correct as far as they go. The problem is that they don’t go nearly far enough in diagnosing what is wrong with meritocracy.

The fundamental problem is that mainstream economics, as well as the dominant culture, typically conceives of earning an income as if we were Robinson Crusoes, producing our own private property out of nothing but the sweat of our brow, then trading newly created property with others in a free market.

This is deeply misleading. Economic production in a modern society is never a solo effort. No one produces anything by themselves. All production is, at root, a fundamentally social and collaborative process.

The often ignored — but truly vast — contribution of other people’s labor is what I call the “understructure.” Consider one mundane example: every day in every city in the Global North, thousands of semitrucks shuttle back and forth carrying our goods. Each one of these trucks can haul roughly seventy-eight thousand pounds and travel approximately two thousand miles before needing to refill its tank. Yet this stupendous feat is not just due to the individual truck driver alone; it is made possible by the countless miles of concrete highways, the years of labor that built them, and the generations of learning that developed concrete; so too with the trucks, with their fuel, and so on.

To get a sense of the potency of this single example, we can ask what it would take for human beings to accomplish this one simple task by simply carrying the goods on our backs. What one truck driver can accomplish in a single day today would take an individual without our modern understructure about 2,700 years.

All production relies on this understructure — the combination of infrastructures, physical assets, institutions, laws, norms, intellectual concepts, emotional supports, and natural resources that underlie and enable production.

What Powers the Economy

Start looking, and you’ll see it everywhere:

The physical infrastructure (such as roads, bridges, railways, water systems, sewers, electricity grids, and telecommunication networks) magnifies the productive capacity of any individual participating in the economy.

The political-legal infrastructure of the state provides the social stability and predictability that is necessary for any market to function well. There is no such thing as a literally “free market.” All market systems are embedded in a political-legal infrastructure; they are shaped and defined by rules, regulations, and institutions. These include a system of property rights that defines who owns what, what is allowed to be sold and what is not, the types of businesses that are permitted to operate (such as corporations or worker cooperatives), the various rights of business owners versus workers (do owners have full or limited liability? Do workers have rights to participate in board governance?), the taxes that must be paid by different parties, a police force to enforce such rights, and a judicial system to adjudicate them.

This means that the state and all the various workers who administer and maintain it are “silent partners” in the production of every new piece of private property. They are its cocreators.

Knowledge infrastructure. A major source of modern prosperity (if not the most important one) is the accumulated collective knowledge that we inherit from the past. The bulk of our modern wealth cannot be attributed to the effort or investment decisions of isolated individuals, but is rather the result of individuals building on the immense knowledge infrastructure passed down to us via vast networks of engineers, scientists, theorists, technicians, teachers, scholars, practitioners, and so on.

Workers on the southwestern pylon of the Sydney Harbor Bridge, Sydney, Australia, 1932. (Powerhouse Museum via Wikimedia Commons)

Care infrastructure. Perhaps the most commonly neglected of this bunch, care is, among other things, the production of human capacity. None of us could walk, talk, or think were it not for our caregivers. This is most obvious in early childhood, but it persists more subtly throughout our lives as we rely on friends, families, and lovers. Care is thus the invisible infrastructure of (mostly feminine) labor that we all climb on to reach our goals.

Even the very paragon of liberalism, Adam Smith, would not have been able to walk, talk, or sit upright (much less produce economic theory) were it not for Margaret Douglas, his mother (and the broader web of care). Though Smith despised “dependency,” he was deeply dependent on his mother, who cooked his meals every day and provided continual emotional sustenance, allowing him to work away on the book — The Wealth of Nations — that would celebrate economic independence.

The estimated cost of parenting (in other words, how much one would have to pay others to do it) is roughly 30 percent of GDP, a truly gigantic cost. Yet the true magnitude for private business is arguably even higher, since if there were literally no care, no business could function at all. If workers (and consumers) were not nurtured and socialized by their caregivers, they would either be dead or extremely debilitated. We see this in rare tragic cases like that of Genie — the mid-twentieth-century child locked away by her father from the age of twenty months to thirteen years. Her isolation left her severely disabled, incontinent, and unable to speak or make any noise beyond a croaking sound. Although she has now gone through over forty years of attempted rehabilitation, she continues to live as a ward of the state and, according to recent reports, is still speechless and severely impaired.

Natural environment. Ecological systems are a vital component of the understructure in that they provide the basic prerequisites for life itself. The environment is a vital support, a container, and a fixed boundary for every economic system. Natural resources — in particular, energy resources (oil, gas, coal, wood, sun, wind, etc.) — furnish the basic fuel for the economy.

Our cars, homes, workplaces — indeed, much of complex industrial life itself — are only possible because they are powered by a massive natural inheritance of fossil fuels. And if we are able to transform our economies to use renewable energy, they will still be fed and sustained by the immense power contained within various natural resources.

Wealth Creation Is a Social Process . . .

Defenders of meritocracy love holding up Bill Gates or Jeff Bezos or Elon Musk, justifying their wealth by pointing out that millions of people voluntarily, and eagerly, purchase their products.

But we can now see the truth of the matter. Bill Gates, for instance, was only able to create Microsoft products with the help of an immense understructure: a wide network of parents and teachers who socialized him; a safe community; generations of scientists and computer engineers who created the vast intellectual edifice for him to build on (plus the countless ancillary workers and caregivers supporting them); and a political-legal infrastructure providing him with all kinds of legal rights, such as “shareholder primacy” (allowing him to appropriate the bulk of the profits made by thousands of workers while depriving those workers of any say in firm governance), and perhaps even more important in this case, the privilege of copyright.

Without copyright protection Microsoft products would simply be shared for free, and profits would tank. Copyright is a state-provided monopoly, but there is nothing natural about it. If it were replaced by open-source access (an arguably more efficient system) and coupled with public funding and prizes to reward innovation, Gates’s income would plummet.

Bill Gates is not a giant. He is a regular human being, but one sitting in an operating cabin, controlling a giant and powerful tower crane, looming over all of us.

The essential point is this: one’s total productivity comes in small part from personal inputs (such as talent and effort) but in large part from the societal inputs that one can access. Not only are the societal inputs much more important in terms of one’s total productivity, but they are also a matter of luck, which dramatically advantages some over others, and so undermines any claim of deservingness. The understructure is really a vast social inheritance.

. . . And So It Belongs to Us All

Imagine living in simple hunter-gatherer societies with little accumulated capital, technology, and legal structures. All the “income” generated in such societies stems entirely from the talents and efforts of individuals working in that society. Such income, in other words, may be said to be completely deserved.

How large is this “income”? Angus Maddison has estimated subsistence at roughly $810 per person per year (in 2020 dollars); the World Bank defines “extreme poverty” or “absolute poverty” by the international poverty line of $2.15 per day (in 2017 USD PPP), or $783 per year. So let’s use $800 as a very rough ballpark approximation and compare it to the median income in the United States today — $38,000 — and the average income of the top 1 percent, which was roughly $824,000 (it would be much higher if we included accumulated wealth in addition to income). This means that 98 percent of the income of the contemporary median worker, and a whopping 99.9 percent of the income of the top centile, cannot be attributed to individual effort or talent but is in fact due to the social inheritance provided by the understructure. It is therefore entirely underserved.

The standard meritocratic view of deservingness is a lie and a deception. Modern production is a deeply interdependent process involving the background labor and background institutions of much of the community as well as millions of our ancestors long dead.

The wealth of the rich is not deserved. It is our social inheritance. And we have every right to take it back.

Tom Malleson is an associate professor of social justice and peace studies at King’s University College at Western University, Canada and the author of Against Inequality: The Practical and Ethical Case for Abolishing the Superrich.

Martin Luther King Jr Dreamed of a Society Without Poverty. We Can Achieve It / by Jeffrey Nall

Dr Martin Luther King Jr in Montgomery, Alabama, May 1956. (Michael Ochs Archives / Getty Images)

Martin Luther King Jr once said that there’s “nothing but a lack of social vision to prevent us from paying an adequate wage to every American citizen.” Decades after his assassination, we can realize his vision of an economically just society.

In our highly polarized political climate, Americans can agree on few things. One rare point of unity is the legacy of Reverend Dr Martin Luther King Jr, whom 90 percent of Americans view favorably — a considerably higher percentage than when he was alive.

Our nation’s collective memory of King is perhaps best summed up by the “fun facts” coloring page my son brought home from his first grade classroom in 2019. A cartoon depiction of King stands in the center of the page holding two flags, one reading “freedom” and the other reading “equality.” Surrounding him are four statements:

“I was a key leader in the American Civil Rights Movement.”

“I believed in, and fought for, equal rights for African Americans.”

“I helped end legal segregation and discrimination in the United States.”

“My famous speech, ‘I Have a Dream,’ promoted freedom and equality for all.”

The King most of us honor each year fits neatly with the vision of our nation triumphantly overcoming its immoral missteps, making King’s dream — the American dream — a reality. Our nation’s unjust past becomes further evidence of its greatness since we generated not only the injustice but also the solution to that injustice. Racial segregation was a test, and we passed.

But this vision of King, however unifying, is ultimately a fable that serves the economically and politically powerful, who are themselves standing in the way of progress toward the just society he died struggling to build. This fable hollows out King’s most incisive social critiques and dulls his prophetic philosophy of social transformation in the service of love. Central to that vision was the elimination of economic inequality.

Breaking Silence About Economic Injustice

On April 4, 1967, one year before his death, Reverend King delivered his boldest national address, “Beyond Vietnam: A Time to Break Silence.” King called for the United States to withdraw from Vietnam and begin a “radical revolution of values” by channeling the millions of dollars spent on war to address the dire needs of the nation’s poor. He contended that the “giant triplets of racism, extreme materialism, and militarism” reinforced one another, preventing the flourishing of a truly just society.

King came to this conclusion after observing that millions of black people remained in dire conditions even as important advances had been made in civil rights, including ending segregation and expanding voting rights. As early as the bus boycott years, King had argued that those in power pit poor whites against ethnic minorities to prevent poor people from working collaboratively to change the social order.

King understood that black people and other minorities disproportionately bore the burden of poverty. But he also knew that all of the poor, including the millions of poor whites, were economically oppressed. In a December 1967 speech, “Nonviolence and Social Change,” King said:

In our society it is murder, psychologically, to deprive a man of a job or an income. You are in substance saying to that man that he has no right to exist. You are in a real way depriving him of life, liberty, and the pursuit of happiness, denying in his case the very creed of his society.

In his book Where Do We Go From Here, also published in 1967, King wrote that the United States could initiate this transition by guaranteeing a livable minimum annual income for every American family as well as ensuring all workers, regardless of industry, are paid a fair wage.

There is nothing but a lack of social vision to prevent us from paying an adequate wage to every American citizen whether he be a hospital worker, laundry worker, maid or day laborer. There is nothing except shortsightedness to prevent us from guaranteeing an annual minimum — and livable — income for every American family.

King’s Other Dream

In what would be the last months of his life, King joined fellow organizers in the Southern Christian Leadership Conference (SCLC) in planning a Poor People’s Campaign. The intent was to bring together two thousand poor people from all different ethnic-cultural walks of life to set up an encampment in Washington DC culminating in a new march on Washington, like the one in 1963 where he gave his famed “I Had a Dream” speech. The aim was to pressure leaders in the federal government to commit $12 billion to address systemic poverty.

During a 1967 planning meeting, King said, “I think it is necessary for us to realize that we have moved from the era of civil rights to the era of human rights.” King and SCLC intended to draw on their organizing knowledge and expertise in nonviolent civil disobedience to do for economic justice what their movement had achieved for civil rights with the passage of the Civil Rights Act of 1964 and the Voting Rights of 1965.

On April 3, 1968, King joined striking sanitation workers in Memphis, Tennessee. The following day, he was assassinated. He was murdered just two months before the Poor People’s March.

After his death, the SCLC, led by King’s colleague Ralph Abernathy, followed through with the plan. The campaign launched in Washington DC on May 12 with a Mother’s Day march, led by Coretta Scott King, through poor neighborhoods. A month later, on June 19, more than fifty thousand people marched to the capital demanding economic rights. An ensuing encampment of about three thousand people from a wide array of ethnic background occupied the National Mall in what was dubbed “Resurrection City” for forty-two days.

US Economic Inequality

More than fifty years after King’s assassination and the summer of the Poor People’s Campaign, the Federal minimum wage stands at $7.25 an hour. For perspective, the federal minimum wage of 1968 ($1.60) had the buying power of more than $11 in today’s money. According to Oxfam, 43.7 percent of workers in the United States earned less than $15 an hour in 2021. More than 50 percent of black workers and 60 percent of Hispanic workers earn under $15 an hour. For those working forty-hour workweeks, that’s $600 a week, $2,600 a month, and $31,200 a year. A third of US workers — 31.3 percent — don’t even make that much; they earn less than $12 an hour.

The problem is not that workers’ labor is worth less than it used to be. In April 2022, the Center for Economic and Policy Research concluded that the minimum wage would have been $23 in 2021 if it kept up with inflation and worker productivity. Instead, the additional profits generated by working people have gone into the bank accounts of the wealthy few.

The percentage of overall wealth possessed by the bottom 50 percent in the United States remains about the same as in the late 1960s during King’s last years. In 2021, the bottom 50 percent owned just 1.5 percent of all wealth. Whereas the top 1 percent of adults had about 25 percent of the wealth in the late 1960s, they now possess 34.9 percent. And the richest 10 percent of the population owns 70.7 percent of all wealth.

Contrary to dominant ideology, hard work does not correlate to increased income under capitalism. Instead, money is made through ownership and investment. Not only do the wealthy own most of the property, but they also own most of the stocks. In 2021, the wealthiest 10 percent of US households owned 89 percent of all US stocks. The bottom 90 percent of Americans held about 11 percent of all stocks.

In his defiant “Three Evils of Society” speech, King cleverly observed that US political policies favor “socialism for the rich and capitalism for the poor.” Part of our problem is that we

have deluded ourselves into believing the myth that capitalism grew and prospered out of the protestant ethic of hard work and sacrifice. The fact is that capitalism was built on the exploitation and suffering of black slaves and continues to thrive on the exploitation of the poor — both black and white, both here and abroad.

Contrary to the culturally exalted model of combating poverty through nonprofit, nongovernmental philanthropy, King believed that poverty could only be remedied through political-structural transformation. “The way to end poverty,” he said, “is to end the exploitation of the poor.” To this he added we could end poverty by also ensuring poor people have “a fair share of the government services and the nation’s resources.”

Attempting to solve the problem of poverty by exclusively teaching poor people how to “improve themselves” and better manage their financial resources is a bit like teaching black boys and men to navigate white supremacy by not wearing hoodies, or like trying to help women combat sexist harassment by encouraging them to dress more modestly. These kinds of suggestions fail to address the root of the problem and simply blame the victim. Ultimately, King believed, we will have to transform the economic structure itself.

Where Do We Go From Here?

On June 18, 2022, the nonpartisan Poor People’s Campaign: A National Call for Moral Revival will hold a poor people’s and low-wage workers’ assembly and march on Washington, DC. Led by Reverend William Barber and Reverend Dr Liz Theoharis, the nonpartisan grassroots group’s aim is to advance the campaign launched by King and his allies in 1967, and to finally fulfill its aims. They seek increased minimum state and federal wages, an end to anti-union laws, fully funded welfare programs, and free tuition at public colleges and universities.

The new Poor People’s Campaign demands immediate federal and state action to address the needs of millions of poor and low-income Americans. The group contends that the official poverty measure, which would not label a family of four earning $26,000 as poor, conceals the extent of the problem. By the official measure, about 12 percent of the US population is poor and another 18 percent near-poor. But other calculations of poverty that account for costs of essentials such as food, clothing, housing, and utilities, conclude that closer to 43 percent of the US population is poor or low-income.

Our task, King makes clear, is to unite in common struggle against an economic system that deprives us of our life, liberty, and rightful pursuit of happiness. As King said,

The dispossessed of this nation — the poor, both white and Negro — live in a cruelly unjust society. They must organize a revolution against that injustice, not against the lives of the persons who are their fellow citizens, but against the structures through which the society is refusing to take means which have been called for, and which are at hand, to lift the load of poverty.

Jeffrey Nall teaches courses in philosophy and humanities at the University of Central Florida. He writes the newsletter “Humanities in Revolt.”

Jacobin, May 31, 2022, https://jacobin.com/