January 21, 2016

Can We All Agree that Capitalism has Failed?


With Davos opening this week and global financial markets reeling, Oxfam has just announced that 62 individuals own as much wealth as the bottom half of humanity.

If that doesn’t surprise you, that number is down from 388 just five years ago, which means it is halving roughly every two years. At this rate, it should reach 1 (meaning a single person being worth more than half of humanity) by 2030.

In those same five years, the wealth of the Top 62 rose by 44% (to $1.76 trillion), while the wealth of the bottom half (about 3.7 billion people) fell by 41%. That is what is known as “negative redistribution” and a pretty strong indication that we are currently living under an economic system of “Trickle Down, Gush Up.” If this were a global game of Monopoly, it would be time to declare it over.

Technically, our 62 people are the 0.0000001% (don’t trying chanting this at home, folks). So how are the 1% doing? The Global 1% are about 74 million people (or a bit less than the population of Germany). According to Oxfam, they have received almost exactly half the total increase in global wealth since 2000 (while the Bottom 3.7 Billion have received about 1%) and, according to Credit Suisse, now own more than half the world’s wealth. In other words, our society seems to have turned the Spencer’s axiom on its head, by allocating the greatest share of its benefits to the fewest possible number.

It’s always healthy to remember that the economy is not a natural phenomenon, based on natural laws, and not inevitable, as much as economists seem to try to convince us otherwise. Economics is a human science that has taken on the aura of a Physical Science. In reality, it is less descriptive than normative—that is, it tells us how we ought to behave. The fact is, we as a global society have chosen this economic system out of innumerable possible others. It is completely artificial and based on rules that are socially negotiated. Throughout human history, different cultures and societies have played different games around the definition of “value” and its distribution. Usury, for example, was once a crime. Today it is the very basis of the global economy. In the Old Testament, they had “Jubilees,” in which all debts were forgiven. I wonder how that idea would go over today?

To say our economic system is “socially negotiated,” is not to say it is the fruit of a negotiation of equals: on the contrary, it is both the result and perpetuator of power imbalances. There seems to be a direct correlation between wealth and power. The people earning the least also tend to be the ones with the least power to defend their interests—or, put another way, the people who have less tend also to get paid less. This is one thing many people didn’t understand about the Occupy Movement: it was less about money than about power. One famous Occupy sign read: “I don’t have enough money to buy my own Congressman.”

With globalization, this correlation between power and access to wealth has taken on a new dimension. Today, Philip Morris can write off the U.S. market and focus on Asia, Apple can move its factories from the U.S. to China, GE can spend hundreds of millions of dollars in U.S. campaign contributions and own a major U.S. news network while parking its money in off-shore tax havens. The power of action of the elite has, in other words, globalized, and international trade deals like the Trans Pacific Partnership are now enshrining this reality into a global body of law that increasingly puts the sovereignty of corporations above that of nations.

At the same time, the power of action of the rest of us is restricted (in the best cases) to our home nations. Thus the nation-state system, imposed upon the world over centuries of brutal Colonial expansion, has ultimately had the effect of globalizing the power of elites while localizing the power of the masses. In much the way the Big Banks have socialized risk and privatized profits in a form of negative wealth redistribution, so has the corporate (and banking) class globalized their own power while localizing the power of the rest of the global population in a form of negative redistribution of power.

World Government, one could thus say, is already here. The two-tiered system of globalized multinational corporate cartels on the one hand and separate nation-states on the other (each influenced or dominated in different ways by the same multinationals) is not only a form of World Government, but one that effectively serves to extend the power of elites while limiting the power of the rest of humanity to change the global power structure.

To say Capitalism has failed, as a system for providing the greatest good for the greatest percentage of the population, is an understatement. When prisons, war and the looting of precious natural resources become moneymaking opportunities, leaving injustice, poverty and global environmental catastrophe as collateral damage, the result is the catastrophe of a system out of sync with human values and with nature that we see today. Looked at in another way, however, as a system for centralizing power and wealth, it has been a stunning success.



Relephant Favorites:

What Would the Buddha Say about Capitalism?


Author: Peter Cohen 

Editor: Travis May

Image: Flickr/Timothy Krause

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