Reform is not enough to Stem the Rising Tide of Inequality Worldwide

Published on ZNet (first on Truthout), by William i. Robinson, Jan 4, 2015.

… The top 80 billionaires were worth $1.9 trillion in 2014, an amount equal to the bottom 50 percent. These 80 billionaires saw a 50 percent rise in their wealth in just four years, from 2010 to 2014, during which time the poorest 50 percent saw a drop in their wealth. 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 … //

… Causes of Rising Inequality: … //
… The Class Warfare of the Transnational Capitalist Class: … //
… The Cycle of Crisis: … //
… Neoliberals-Cum-Reformers: … //
… Transnational Elites’ Newfound Critique of Free Market Capitalism: … //
… Smoke and Mirrors: … //

… Beyond the Neoliberal Box:

Once we step out of the neoliberal box, we can see the circular reasoning in this thesis. Circular reasoning is when one explanation for a condition or phenomenon is itself said to be caused by that condition or phenomenon. Heightened inequalities from 1970 to 2010 are caused by slow growth and continued high savings. Slow growth and continued high savings are caused by the increase in capital stock relative to income. Yet this increase in capital stock relative to income is caused by slow growth and high savings.

Stepping outside this box, “continued high savings” in the capitalist economy suggests that capitalists are accumulating capital that they cannot reinvest. The ever greater concentration of wealth leads to slow growth and “high savings” or to stagnation in the face of overaccumulated capital. Slow growth is the effect of inequality in this framework, not the cause.

Piketty calls for transfers programs (health, education and pensions), progressive income tax and a “global tax on capital” in order to resolve the problem of escalating inequalities. This call for a “global tax on capital” has sparked considerable interest among commentators. However, it is important to be clear on what he means by this.

One would think typically of a “tax on capital” as corporate tax. But this is not a call for a tax on corporate profits. Recall Piketty’s definition of capital as any asset that has a value. Although he mentions taxing foundations and financial institutions, by a “global tax on capital,” he is referring to taxing individuals in accordance with the value of their assets and in the order of a few percentage points. This “global tax on capital” would amount to extending to all people’s assets – what, in many countries, is currently a property tax.

Piketty’s proposed remedies for rising inequality do not involve control over capital, but rather the capture of small amounts of its accumulated surplus. However important this may be, his reform agenda is considerably milder, in fact, than controls over capital that states imposed during the Fordist-Keynesian era, or what many around the world are now demanding. He does not call for restraining “free trade,” that is, the free movement of transnational capital across borders as epitomized most recently in the Trans-Pacific Partnership agreement. Such measures as nationalizing banks or rebuilding public sectors are simply not on his agenda.

Finally, Piketty does not really address truly global inequalities. There are two omissions of great significance in terms of his conception of global inequalities, as well as the political significance of these inequalities. One is the lack of any historical or analytical treatment of the great North-South or center-periphery divide brought about by colonialism and imperialism. The second is the omission of inequality seen in terms of the global population as a whole, beyond the top centile and the billionaire class, such as that discussed by Oxfam.

According to that report, 52 percent of global wealth not owned by the richest 1 percent of humanity is owned by the richest 20 percent, while 80 percent of humanity has to make do with just 5.5 percent of global wealth. This is the new global social apartheid. A necessary step in overthrowing global apartheid is a critique of its elite critics.

(full long text).

(William I. Robinson is professor of sociology, global studies and Latin American studies at the University of California at Santa Barbara. His most recent book is Global Capitalism and the Crisis of Humanity).

Find Thomas Piketty:
on Paris School of Economics;
on en.wikipedia;
dans fr.wikipedia;
auf de.wikipedia;
on Google Web-search;
on YouTube-search;


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