American century... for the rich

Michael Roberts looks into the enormous concentration of wealth in the hand of the few at the top.

Two new reports were released last month that revealed in different ways what it means to live under 'successful' capitalism.

New York University economist, Edward Wolff published his occasional analysis of the concentration of wealth in the US - the world's most successful capitalist economy. As we approach the end of the American Century, Wolff reveals that the top 10% of households in the US own 73% of the country's net worth. That's well up from 68% in 1983.

Within the top 10%, the inequality of wealth is even more staggering. The top 1% of American households (that's families with a minimum of $2.4m) own 42% of all the nation's wealth! The world's richest man, Bill Gates, the owner of Microsoft, personally owns more wealth than the bottom 40% of US population! And if you exclude the ownership of a house, which is the main form of wealth for most middle-class Americans, then just 450,000 households own 42% of the nation's marketable wealth. There are now 65 billionaires in the US.

And this inequality is growing. Thanks to a sky-rocketing stock market (rising 13 times between 1982 and 1998) and rising top management pay, the rich have got richer and the poor poorer. Between 1983 and now, the poorest 40% of Americans saw their wealth shrink from $4,400 to just $900. Even the middle-classes saw a reduction in their wealth by 11% in the same period. The reasons are clear. While the rich saved their huge incomes and invested, the poor could save nothing and just spent. The result: the rich got richer and the poor poorer.

And how those incomes have been growing for the rich. Whereas in 1980, the salaries and bonuses of the top business executives were 42 times larger than the pay of the average American factory worker, now they are 419 times larger.

And it's even worse for American blacks and latinos. The net worth of the average black household was just $7,500 compared to $61,000 for the average white household. If you exclude property, then black households had just $200 in savings on average compared to $18,000 for whites! One third of black families had not savings or were heavily in debt. It was even worse in latino homes. Half of those had more debt than assets.

The top 1% of American families have never held so much of the nation's wealth in this century as now. In 1945, they owned one-third. In 1976, during the era of strong labour movements, poor stock markets and progressive taxation, that share fell to 22% . But since then their share has doubled.

Of course, the cry of the apologists of capital is that inequality does not matter as long as everybody is improving their incomes and standards of living. And in 1999, unemployment in the US is at all-time lows and real incomes are rising for the average family. But incomes are up only after 25 previous years of stagnation!

And American families have to work very hard for the crumbs they get off the tables of the rich. According to a new report by the International Labour Organisation, US workers put in the longest hours among industrialised nations. They clock up on average 2,000 hours a year, more than two weeks more a year than their Japanese counterparts and ten weeks more than in Germany! No wonder US workers are 20% more productive for their capitalists than the Japanese and Germans are for theirs. And don't forget, British workers remain the sweat-shop workers of Europe, working nearly 200 hours more a year than German workers, but still not as productive thanks to the failure of British capitalists to invest at home in their businesses rather than abroad.

That's the story of successful capitalism: a growing divide between rich and poor. While the rich get richer, the average worker can save little or nothing. And even if most have a job, they are working harder and harder to keep it and get any income from it. Goodbye to the 20th century!