Capitalism and the roots of inequality

By Fred Goldstein

The Occupy Wall Street movement has made the inequality in capitalist society an issue that has put the rich on the defensive, at least in public. The growth of inequality in the last 30 years, and especially in the last decade, has been talked about for years in many quarters by economic analysts and even some politicians. But before the Occupy Wall Street movement raised the slogan of the 1% versus the 99%, this condition went entirely unchallenged and was merely observed as an inevitable, undesirable (unless you were part of the 1%) fact of life.

The inequalities that gave the OWS its battle cry are truly obscene, reminiscent of the gap between monarchs of old and the peasant serfs. On the one hand, 50 million people live on food stamps, 47 million live in official poverty, half the population is classified as poor [i], 30 million are unemployed or underemployed, and tens of millions of workers live on low wages.

On the other hand, from 2001 to 2006 the top 1 percent got 53 cents out of every dollar of wealth created. From 1979 to 2005 the top one tenth of 1 percent (0.001 percent) — 300,000 people — got more than 180 million people combined.[ii] In 2009, while workers were still being laid off in huge numbers, executives at the top 38 largest companies “earned” a total of $140 billion.[iii]

These numbers are just one reflection of the vast income inequality between the bankers, brokers, and corporate exploiters on the one hand and the mass of the people on the other. This has become a scandal, but no one made a move to do anything about it. So the Occupy Wall Street movement began its struggle in the name of the 99% versus the 1%. And it caught on like wildfire.

Since the fundamental moving force of the movement is the struggle against obscene income inequality, Marxists must give support to and participate fully in the struggle. But Marxism must also address this question and give it a class interpretation.

One can begin by asking the question: What does it mean to fight against obscene inequality of wealth?

It certainly means fighting to tax the rich and using the money to help the workers and the oppressed survive the economic hardships of capitalism. It means fighting for jobs. After all, being unemployed makes a worker about as unequal as you can get under capitalism.

Equality within the working class and inequality between classes

Usually, when we think of fighting for economic equality, we think of the struggle for affirmative action in employment for Black, Latino/a, Asian and Native peoples. The fight for equality entails fighting for equal wages and working conditions with whites.

It also involves fighting for equal pay for equal work for women workers — i.e., for women to get the same pay as men for comparable work. And the fight for equality includes the struggle to ensure economic equality for lesbian, gay, bi, trans, and queer workers with straight workers.

Demanding equality for immigrant and undocumented workers with workers born in the U.S., especially with white workers, is an essential ingredient in building solidarity and advancing the class struggle of all workers.

Indeed, the struggle for economic equality within our class and between the oppressed and the oppressors is fundamental to building solidarity against the bosses. Inequality and division within the working class is both an economic problem and a dangerous political problem. It breaks solidarity and strengthens the bosses and their government.

But the problem of gross economic inequality in capitalist society is not fundamentally a problem of inequality within our class or between the middle class and the working class. The fundamental problem of massive inequality is inequality between the capitalist ruling class and all other classes, but primarily the multinational working class.

The inequality between the working class and the capitalist class is built into the system and is at the root of the question. So-called “excessive” inequality between the ruling class and the rest of society is constantly under attack, as it should be. But the general inequality between the ruling class and all other classes is taken for granted as a given and rarely questioned.

Inequality built into capitalism

That is because of the way income is distributed under the profit system. The income of the capitalist class comes from the unpaid labor of the workers in the form of profit, or surplus value. Everything created by the workers belongs to the bosses. And everything created by the workers contains unpaid labor time in it. The bosses sell goods and services and get the money for the unpaid labor time of the workers — that is, profit. They keep part of it for themselves and become rich. The other part they reinvest so that they can get richer in the next cycle of production and selling.

The income of the workers, on the other hand, comes from the sale of their labor power to a boss, an exploiter. The workers receive wages or salaries from the bosses. The amount is always kept somewhere within the range of what it takes to survive. Some workers are paid somewhat more than that and can have a degree of comfort. Many workers, more and more these days, get just about enough to live a life of austerity while others barely get enough to survive. Wages under capitalism are basically what it costs a worker to subsist and to keep the family going so that the bosses are assured of the next generation of workers to exploit.

Workers’ wages always remain within a narrow range when contrasted with the income of the bosses. No workers can ever get wealthy on wages, no matter how high-paid they are. But the capitalist class as a whole automatically grows richer, even if individual capitalists go out of business or are swallowed up. The bosses continuously reinvest their capital and keep alive the ongoing process of the exploitation of more and more labor.

The bosses leave their personal wealth to their children as well as their capital. Their descendants, as a rule, get richer and richer from generation to generation, while the workers leave their children their meager possessions generation after generation. The workers have to struggle to preserve whatever they can through the ups and downs of capitalist crises and periodic unemployment.

How do you ever achieve social and economic equality under these circumstances?

In this context, for the OWS movement and all others who are for genuine equality, the question arises as to what exactly they are fighting for. If the ultimate goal is to reform the tax code, or to reduce corporate money in politics, or to regulate the predatory capitalist class and the greedy bankers — then the ultimate goal reduces itself down to a fight for a less obscene form of inequality.

That is certainly a progressive goal and should always be pursued as a means of giving relief to the workers and to the mass of the people in general. But no matter how you boil it down, if you limit the fight against inequality to keeping it within the framework of capitalism, then it means fighting to lessen inequality, but also to retain it and allow it. Extreme class inequality is built into the system of class exploitation.

[i] “Census data: Half of U.S. poor or low income,” Associated Press, Dec. 15.

[ii] Jacob S. Hacker and Paul Pierson, “Winner-Take-All Politics” (New York: Simon & Schuster, Kindle Edition, 2010), p. 3.

[iii] Perry L. Weed, “Inequality, the Middle Class & the Fading American Dream,” Economy in Crisis online, Feb. 12, 2011.

Next, Part 2: How the character of wealth distribution flows from the mode of production, and Control of corporate wealth: The source of extreme personal wealth.

Reprinted from the addendum to the forthcoming book, “Capitalism at a Dead End” by Fred Goldstein. Goldstein is also the author of “Low-Wage Capitalism.”

Goldstein’s books, articles and talks can be found at lowwagecapitalism.com and on Facebook at lowwagecapitalism.

---