Work

THE DYNAMICS OF GLOBALIZATION: THE CONCENTRATION OF WEALTH

“Why are you so upset with people coming from other parts of the world?” Leave Nova Scotia

The poster, inadvertently perhaps, has identified part of a dynamic of globalization which some claim may result in a threat to our democratic institutions. At the low end of such globalization migrant workers come from other countries to replace those who do not want to work in certain areas like agricultural field-work because of harsh conditions and low pay. At the same time, some see an “upward creep” where such foreign workers have begun to replace Canadians at low-end fast-food outlets for now but perhaps shortly in other not-so-low-end positions. The inflow of foreign workers is matched by companies “outsourcing” other low-end jobs to third-world countries, particularly in the field of internet technology. (“Hello, are you speaking to me from New Delhi?”) But what is going on? What does all this mean?

It means two things. It means that there is an increasingly large percentage of the population engaged in low-end jobs who, if the trends continue, will become a floating army of unemployed resulting in a radically decreased tax base, a failure to maintain essential services, and a general decline of our society into a pauperized state. That is at the low end.

What it means at the high end in developed industrialized capitalist societies is that there will be an even more rapid concentration of wealth in fewer and fewer hands. All of the cost-saving measures listed above are in the interests profit accumulation in the hands of those, the plutocrats, who manipulate the economic levers of contemporary industrial capitalism.

Consider: In 2012 the top 1 percent of American households collected 22.5 per cent of the nation’s income, the highest total since 1928. The richest 10 per cent of Americans now take a larger slice of the pie than in 1913, at the close of the Gilded Age, owning more than 70 per cent of the nation’s wealth. And half of that is owned by the top 1 percent.

In his “Capital in the Twenty-First Century” (2013) the French economic theorist Thomas Piketty simply “followed the data” which led him to the conclusion that the increased wealth of modern industrial capitalism, contrary to current orthodoxy, does not “lift all the boats.” On the contrary, the rate of growth of income from capital is several times larger than the rate of economic growth generally resulting in an ever shrinking share going to income earned from wages. Inequality surges when population and the economy grow slowly. The assumptions of the 1950’s and 1960’s, that inequality would stabilize and diminish on its own, proved to be an illusion. Returns on capital are presently 4 to 5 percent a year compared to economic growth of only around 1.5 percent a year.

In effect, we are even now close to living in a plutocracy, a society governed by wealthy capital, rather than democracy, a society governed by the majority of the citizens, and the future path favours the former rather than the latter. Was Marx right after all? Will there be a revolution of the proletariat to establish the classless society or will a new fascist night controlled by wealthy capital descend upon us? Stay tuned.

A pleasure as always.

Cheerio!