Recent report on wealth distribution confirms what we already knew

Marx long ago pointed out that the capitalist mode of production naturally leads to greater and greater concentration of wealth in the hands of the few. The recent report of the World Institute for Development Economics Research of the United Nations University (UNU-WIDER) reveals how far this process has gone. What better argument do we need for socialism?

When Karl Marx was writing Das Kapital he made a point of including many extracts from official reports and testimonies, parliamentary statements, newspaper reports and so on. The reason was simple: to damn the capitalist system with their own voices, to expose its true nature with evidence which could not be pushed aside as biased propaganda.

Imagine therefore what Marx would have done with a new report on the distribution of wealth worldwide produced by the Helsinki-based World Institute for Development Economics Research of the United Nations University (UNU-WIDER). Sneaked out during December, the conclusions of this study will come as little surprise to Marxists but rather will confirm what we have long suspected - the rich are getting richer and richer at our expense.

According to its own press release, the "most comprehensive study of personal wealth ever undertaken" reveals such facts as that, at the turn of the century, the top 2% of the world's population owned more than half of all global personal wealth. Within that "the richest 1% of adults alone owned 40% of global assets in the year 2000, and that the richest 10% of adults accounted for 85% of the world total."

The downside? Well of course if a few own a lot the many must own... well let the report explain: "Average wealth amounted to $144,000 per person in the USA in year 2000, and $181,000 in Japan. Lower down among countries with wealth data are India, with per capita assets of $1,100, and Indonesia with $1,400 per capita." In effect over half the world's population are left to enjoy just 1% of the world's assets.

Interestingly, although the report confirms that the bulk of the world's wealth resides in the so-called developed countries, it also has something to say about the levels of inequality within them. The report provides figures on the degree of wealth inequality using the gini value which measures inequality on a percentage scale: The global figure is 89% which the report explains as meaning, "The same degree of inequality would be obtained if one person in a group of ten takes 99% of the total pie and the other nine share the remaining 1%." As regards individual countries "gini values for wealth inequality are usually between 65% and 75%, and sometimes exceed 80%." The figure for the USA is one of those to pass the 80% mark! The most powerful nation on earth is also one of the most unequal. So much for the Great American dream.

Introducing the report, its authors clarified how they interpreted wealth as follows: "We use the term in its long-established sense of net worth: the value of physical and financial assets less debts. In this respect, wealth represents the ownership of capital. Although capital is only one part of personal resources, it is widely believed to have a disproportionate impact on household wellbeing and economic success, and more broadly on economic development and growth."

Using this interpretation they make an interesting point that many people in the "third world" may be in effect better off than those in the West because: "While many poor people in poor countries are in debt, their debts are relatively small in total. This is mainly due to the absence of financial institutions that allow households to incur large mortgage and consumer debts, as is increasingly the situation in rich countries."

They conclude, "many people in high-income countries have negative net worth and - somewhat paradoxically - are among the poorest people in the world in terms of household wealth." Now given the grinding poverty in which millions in the underdeveloped world have to live, compared with workers in the more advanced countries, this analysis may seem somewhat suspect and removed from reality but it does reveal both the massive increase in personal debt and the fact that the "financial institutions" (as the report calls these vultures) are targeting the workers and middle classes of the West rather than the masses in the "third world" simply because they have been bled dry already. When Marx explained that the bosses would seek to steal for themselves as much of the wealth produced by the workers as possible it is worth remembering that he spoke not only of Profit (where the cash is nicked before you get it) but also of Interest and Rent (where they recover some more after you have got your meagre share). For many this means having debts which not only exceed what you own but also exceed what you will ever own in your lifetime. So heavy is this burden that many can expect their inheritance to their children to be one of debt alone as houses are sold and accounts emptied to pay these off.

Of course the right wing have been quick to rubbish the report. According to The Guardian on December 6th: "Madsen Pirie, director of the Adam Smith Institute, a free-market thinktank, disagreed that distribution of global wealth was unfair. He said: ‘The implicit assumption behind this is that there is a supply of wealth in the world and some people have too much of that supply. In fact wealth is a dynamic, it is constantly created. We should not be asking who in the past has created wealth and how can we get it off them.' He said that instead the question should be how more and more people could create wealth." In one sense he is correct, wealth is not an independent substance floating around in space waiting to be picked up, it is created by the labour of the working class (and the working class alone, Mr. Pirie!) and then expropriated by the bosses for their own greed. One class feeds off another but provides nothing in return, as is the way of a parasite.

This report will not be acted on either by the UN, the Great Powers, or any other body of power. Well meaning people will weep tears about the plight of the poor and that will be it. This unequal distribution of wealth can only be tackled by tackling the system that caused it and replacing it with a socialist one, charged with the task of benefiting the many not the few. A fundamental problem demands a fundamental solution.