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Power & Inequality

Dickson Igwe. Photo: VINO/File
By Dickson Igwe

Karl Marx, the Great Enlightenment Philosopher, stated in his magnum opus Das Kapital that the route to true social equality was through violent revolution.

The French Revolution of 1789 and the US war for independence in the late 1700s are thought to have had considerable influence on Marx and his colleague Friedrich Engels. Both men were Bohemians who were part of the Parisian intellectual class of the late 1800s. The Russian Bolshevik Revolution of 1917 that led to decades of Communism and Cold War was the direct result of Marx’s Communist Philosophy.

In the world of 2015, the landscape is a lot different from what it was when the world was divided by an Iron Curtain with its center in Berlin with a Communist culture on one side and a rendition to capitalism on the other. Communism has been rendered to the basket of history. Today, social equality, the song to a more egalitarian world, is much more likely to be achieved through the political process, than through the barrel of a gun.

OK. Robert Reich is Professor of Public Policy at the University of California in Berkeley. Reich served in the administrations of three US Presidents. Reich’s last Benefactor was President Bill Clinton, under whom Reich served as Secretary for Labour.

The following story is part one of a narrative that assesses Robert Reich’s Article: “The Political Roots of Widening Inequality”.

Now, Reich puts one reason for global inequality this way: “globalisation and technological change have made most people less competitive. The tasks people once did in rich developed countries to earn a living are today carried out by low paid workers in poor and developing countries, and computers.” This Old Boy takes Reich’s assertion that technology has made people less competitive with, “a pinch of salt”.

Globalisation is an economic model driven by science and technology. It has transferred economic power from wage earners to the owners of capital, especially in the developed world. Digitisation and computing has been a driver of wealth inequality. So, Reich is correct in his assertion that globalisation has led to greater inequality in the developed world.

Paradoxically, globalisation has created a new middle class in Asia, Africa, and Latin America of over a billion souls. This is the result of huge transfers of capital from developed to developing countries.

However, this capital transfer has benefitted the tiny minority of owners of big corporations in the US especially. This has further led to the weakening of the middle and working classes in the developed world. Higher unemployment and slow growth has been a direct result of globalisation, and wealth inequality, according to key contemporary Nobel Peace Prize Winning economists. This is far from what was intended when the free trade idea exploded in the early 1980s. Free trade and globalisation was believed to be a win-win for all. 

Globalisation has been a win-win for the 1% that owns 90% of global wealth and the middle class in the developing world. The middle class in the developed world has been the biggest loser.

But the new middle class in the emerging and developing economies is vulnerable and could easily fall back into poverty. This owes to the weak political, social, and economic institutions these countries possess. The developing world especially the emerging BRIC nations, are furthermore export oriented economic cultures. That makes them dependent on the economies of the developed world especially net importing nations such as the USA, and certain countries in Western Europe. In any event, possessing strong domestic markets with strong consumer demand and relatively self sufficient production of everyday necessaries such as food and drink can insulate a country from the vagaries of the global marketplace.  

So what is the solution to wealth inequality in the developed West? Reich does not mince his words on a prognosis. In fact, Reich could be accused of socialism in his assertion. Reich states that governments should simply tax the wealthy and spend the cash on programmes that benefit the poor and middle class such as quality education, training and development, and social welfare. Reich advises that wealth should be redistributed from the top to the middle and bottom of the social and economic pyramid.

Reich states that this redistribution is exactly what the 1% have done but in the opposite direction. The 1% has used its power to pull wealth from the bottom and middle of the pyramid to the top. The wealthy have utilised their enormous power to create an environment of small government, low taxation, public spending cuts, and austere unemployment. This environment is termed austerity and is a feature of Supply Sided Economics.  

Of course Reich is using hyperbole to make his point. However, Reich insists that Austerity is driven by the wealthy and powerful minority: the 1%.

Austerity is possible because of the increasing concentration of political power in a corporate and financial elite. This elite has been able to rule the global economy according to its own terms and interests. The legal and political institutions that define the market are controlled by this wealthy elite.

Reich provides the math to back his assertions. The wages of the 90% rose with productivity for 30 years after World War 2 ended in 1945. However, wage and income growth has stagnated since the early 1980s.

On the other hand the wealthy control the capitalist infrastructure. This control became entrenched with the establishment of Supply Sided Economics in the West starting in the 1980s. As a consequence the 1% grows increasingly wealthier in a system rigged to ensure its overwhelming dominance and influence. This may be a new feudalism as bad as the feudalism of the 1600s when the lord of the manor ruled the roost and everything else, as far as his eyes could see.

There has been an enormous increase in the power of US corporations. On the opposite end, the social and economic power of the 90% has decreased to such an extent that in real terms there has been no increase in wealth of the middle class since the 1980s. However, the power and wealth of the 1% has increased dramatically.

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3 Responses to “Power & Inequality”

  • .......... (23/05/2015, 06:57) Like (1) Dislike (0) Reply
    We want to hear about politics igew
  • xxxxxxxx (23/05/2015, 07:30) Like (0) Dislike (0) Reply
    Since dem wicked man in the Ministry silence he deeds articles are boring…but god does not like ugly
  • Stewie (25/05/2015, 14:14) Like (0) Dislike (0) Reply

    Yes, there is prejudice, and people are people and striving to succeed because they aspire to those positions of greater honor and authority - but those positions must be earned.


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