The unequal states of America

Numerous commentators have written about the growing divide in the US between capitalists and workers (and other producers), although they eschew the terms “capitalists” and “workers”.

By 2012, the richest 1 percent of the population received a fifth of the national income, breaking the previous record, set in 1928. The bottom 80 percent, which includes workers, received about 11 percent, and the rest went to the 19 percent of small businesspeople, managers, professionals etc.

Disparity exists within the top 1 percent, too. In 2009, of income reported for tax purposes, the bottom half of the top 1 percent each received between $340,000 and $500,000. The top 0.1 percent received $5 million and up.

These are the incomes the rich admit to. If the real figures were readily available (they’re not), they would show incomes of hundreds of millions annually, according to the more honest economists.

While greater levels of inequality are evident in recent years, the longer term growth in inequality between the two classes began in the 1970s.

A 2011 study by the Congressional Budget Office found that, between 1979 and 2007, real household income after taxes grew by 62 percent on average for all classes. But the income of households in the top 1 percent grew by 275 percent, compared to 65 percent for the next 19 percent, just under 40 percent for the next 60 percent, and 18 percent for the bottom fifth of the population.

From 1947 to 1973, real median family income kept pace with the growth in labour productivity. Then it began to fall behind, and stagnated between 1999 and 2011.

The lion’s share of productivity growth went to the capitalists and their managers, professionals and hangers-on. The share received by the low and middle income households declined.

If we look at wealth (i.e. not simply income, but assets as well), the gap is also widening. In 1983, the bottom 80 percent of the population owned 18.7 percent of total wealth. By 2010, that had fallen to 11.1 percent.

Of financial wealth (stocks and bonds, holdings like money market funds, savings of various types, insurance plans and so forth), in the same period the share of the bottom 80 percent went from 8.7 percent to 4.7 percent.

We must keep in mind that all these figures come from official sources, and the rich have all kinds of ways to hide their real wealth, including offshore accounts and investments.

Also, many of these figures are averages, which obscure reality because of the great disparity of income and wealth under capitalism. An example: If 1,000 workers who make on average $50,000 a year each, are averaged in with 10 capitalists who “earn” $1 million each, the new average income jumps to about $60,000. If we average these 1,000 workers with one capitalist who takes in $100 million, the average jumps to $149,900.

I am in the bottom 80 percent, who owned 4.7 percent of total financial wealth in 2010. My financial wealth consists of pension funds and savings. My pension funds own stocks, bonds and the like.

But I have zero control over how those savings and stocks are invested. The big financial capitalists control them, and invest them to further increase their own wealth. Thus the very wealthy at the top, a tiny fraction of the 1 percent, control far more wealth than they nominally own.

Well over a century ago, Marx proved that the gap between the capitalists and the workers would grow over time. Capital would become ever more concentrated. Wages could not keep pace with the accumulation of capital.

This process is the fundamental cause of the increasing gap between the rich and the rest of us. But a countervailing trend arises when workers fight back by collectively organising in trade unions and political parties.

In the international capitalist long-term boom following World War II, workers made gains, especially in the US.

In the US, this development masked the growing internal weakness of the unions through increasing bureaucratisation. In this period, the class-collaborationist policies of the union bureaucracy could still yield gains for workers. There were strikes, of course, and important ones, but by and large the bureaucracy was able to win gains through bargaining with the capitalists, without much struggle. The capitalists could afford it.

When the long expansion began to come to an end around 1970, international capitalist competition intensified. The ruling class set out to attack the gains workers had won in previous struggles.

In this new situation, the class collaborationist policies of the bureaucracy could not stand up to the ruling class offensive. While there were rank and file rebellions in the 1970s against these policies, these struggles were ultimately unsuccessful.

By the 1980s, the bureaucracy’s policy in practice, and more and more openly stated, was worker concessions to capitalist demands.

The consequence of all this is the trend since 1970 of the increasing gap between the two main classes. It has gotten worse since the beginning of the Great Recession.

It will be turned around only when a new militancy takes hold in the working class. There are some signs in the new struggles of the lowest paid in fast food and Walmart, in movements to raise the minimum wage and the Chicago teachers’ strike, but these are still heat lightning.

Read more
The tragic death of Bang Yeong-hwan
Seona Cho and Nick de Voil

On 6 October the South Korean labour movement lost Bang Yeong-hwan—a comrade, leader and, for many, a friend. 

Students give lesson in solidarity
Louise O'Shea

High school students in Melbourne taught the government and right-wing media a lesson when they walked out of class in their thousands on 23 November in support of Palestine. From Werribee to Greenvale, students came from all over the city to show their horror at Israel’s war on the people of Gaza, half of whom are children, and their disgust at the Australian government’s backing of the genocide.

Why won’t Arab and Muslim countries help Palestine?
Arab leaders won't help Palestine
Omar Hassan

Middle Eastern supporters of Palestine have long bemoaned the failure of Arab leaders to take a strong stance against the Israeli occupation. It’s easy to see why.

Bangladesh garment workers fight for a living wage
Bangladesh garment workers strike
Ben Lourie

For the past month, textile workers in Bangladesh’s ready-made garment industry have been fighting for an increase in the monthly minimum wage from 8,300 taka ($115) to 23,000 taka ($318).

Ceasefire deal won't end slaughter
Josh Lees

A deal has been struck between Israel and Hamas which could see a four day pause in fighting while a limited prisoner swap takes place and some aid is allowed into Gaza.

Thousands vote for union fightback
QTU member and QTU Fightback activist

The Queensland Teachers’ Union leadership has been dealt a major blow by a rank-and-file ticket in the union’s elections, held over October and November. Although the incumbents managed to scrape back in, the success of the opposition QTU Fightback ticket—comprised of rank-and-file union members who have been pushing for improvements in wages and conditions for more than four years—reveals the scale of members’ discontent.