The 1% and the Rest of Us

by Tim Di Muzio

  The proposal for a party of the 99% and the ten-point plan sketched above are designed to break this logic. The only major way of doing this is to de-capitalise the economy and for the public to take control of creating its own money and to decide how to spend it democratically. In a society in which the only additional income one can gain is from one’s own direct labour, salaries are democratically decided based on merit, and top salaries are capped, no one will be able to dominate the social order or consume wastefully. With a debt-free monetary system we will no longer have to be slaves to interest and economic growth. We will be free to pursue other, more worthwhile goals that enhance our well-being and happiness. The major fetter on our creativity will be removed and people will be able to self-organise in free associations to pursue their dreams – so long, of course, as they do not harm other people. The system described by Smith will be abolished:

  The labour and time of the poor is in civilized countries sacrificed to the maintaining of the rich in ease and luxury. The landlord is maintained in idleness and luxury by the labour of his tenants. The moneyed man is supported by his exactions from the industrious merchant and the needy who are obliged to support him in ease by a return for the use of his money (Adam Smith quoted in Perelman 2000: 211).

  Making it socially unacceptable and illegal to privately capitalise the work of society is one of the key challenges of our time, as is reforming our monetary system. Private property should be for personal possessions, not for additional income streams, as it is now. But the deeper philosophical question is our legacy as a species. At the end of his reading of the collapse of nineteenth-century civilisation, Karl Polanyi argued that the biggest philosophical question of the twentieth century was how to think about freedom in a complex society. He argued that ‘institutions are embodiments of human meaning and purpose’ and that ‘no society is possible in which power and compulsion are absent, nor a world in which force has no function’ (Polanyi 1957: 254, 257). We can agree with Polanyi that power and its exercise can sometimes be legitimate. We can also agree that it would be impossible to evacuate power from our societies. But ours is a question of legitimate power. For the last 5,000 years or so, since human beings formed more complex societies, we have been steadily losing our more egalitarian nature:

  At that time [5,000 years ago], people were beginning to live increasingly in chiefdoms, societies with highly privileged individuals who occupied hereditary positions of political leadership and social paramountcy. From certain well-developed chiefdoms came the six early civilizations, with their powerful and often despotic leaders. But before twelve thousand years ago, humans basically were egalitarian (Knauft 1991). They lived in what might be called societies of equals, with minimal political centralization and no social classes. Everyone participated in group decisions, and outside the family there were no dominators (Boehm 2001: 3–4).

  As the statistics bear out, we can be very sure that we have a small class of dominators who profit from their ownership of virtually everything. This is not legitimate power rooted in productive contributions to society but domination based on past violence and current relations of power over individuals and society in a debt- and price-denominated system. Given this knowledge, the ultimate question may be whether we really want our creativity subjugated and subject to the accumulation of symbolic power by the few, or whether we want to have a better world for us and our children – a world of democratic decision making, cooperation and creativity, where we combat disease, illiteracy, malnourishment, homelessness, dire poverty, indignity, global climate change and a looming energy crisis. Wouldn’t that make us all happier? And isn’t that the meaning of life?

  The tiny minority pathologically chasing ever more money will not yield in the present environment. They will tell us that a party of the 99% is politically impossible. We must tell them that it is politically necessary. We will not be able to solve all our problems, but a world of legitimate power and creative cooperation would be far superior to the rule of the 1% and their pathological pursuit of money at the expense of future generations and the planet.

  NOTES

  Introduction

  1 I would like to thank Ashley Waterman for helping with research and Hanna Kivistö, Stephen Gill, Silke Trommer, Taavi Sundell, Natasha Popcevski, Leonie Noble and Adam Harmes for reading portions of the manuscript; Matthew Dow for his comments and compiling the index. All errors are, of course, my own.

  2 At the time of writing, Piketty’s Capital in the Twenty-First Century is receiving much fanfare for its detailed empirical study of growing inequality. Piketty, however, shows little indication that he understands how money is created and therefore his solution to the problem (a wealth tax) does not go far enough.

  3 Petras (2008: 324) has recently argued that in the case of multimillionaires and billionaires, the key to their growth has been a ‘deep supply of cheap capital and land and vast armies of low paid labor’. This is certainly part of the answer for the rise of the billionaire 1%.

  4 On the question of addiction to money, see Polk (2014).

  5 See, for example, CNBC’s Dangerously Rich: Billionaire super security, currently available on You-Tube. Stephen Gill (in Bakker and Gill 2003: 190–208) points to the paradox of securing wealth: the richer one tends to be, the more paranoid one becomes about security and the more one spends on protection. In other words, the more money someone has appears to be correlated to how insecure they feel.

  6 I define the logic of livelihood as the pursuit of a decent and dignified standard of living versus the logic of differential accumulation, which is the pathological addiction to accumulating money as an end in itself.

  1 The unusual suspects

  1 The website www.globalrichlist.com/ was used to calculate the professor’s position by astute commentators.

  2 Britain abolished the slave trade in 1807 and, with some exceptions, slavery throughout the empire in 1833.

  3 Of course, this simply stands for Mill’s definition of wealth. After some preliminary remarks on wealth, Mill promises his reader: ‘we shall next turn our attention to the extraordinary differences in respect to it, which exist between nation and nation, and between different ages of the world; differences both in the quantity of wealth, and in the kind of it; as well as in the manner in which the wealth existing in the community is shared among its members’ (Mill 2004: 11).

  4 See www.investopedia.com/terms/w/wealth.asp (accessed 24 October 2013).

  5 See www.wealthx.com/about/introduction/ (accessed 29 October 2013).

  6 Robert Frank of the Wall Street Journal suggested a fourfold taxonomy based on household net worth for what he calls ‘Richistan’ or the virtual country the wealthy inhabit. Lower Richistan consists of individuals with US$1 million to US$10 million in net worth, Middle Richistan consists of individuals with US$10 million to US$100 million, and Upper Richistan consists of households with a net worth of US$100 million to US$1 billion. The upper ceiling is what he calls Billionaireville (Frank 2007: 5–12).

  7 In its UBS-sponsored report, Wealth-X estimated the ultra-high-net-worth population far higher at 199,235 (Wealth-X 2013: 9). This is because it uses total net worth rather than investable assets.

  8 From 2011 to 2012, the growth rate was 9.2%, suggesting that it may be quite a while before HNWIs reach anywhere close to 1% of the global population.

  9 The Mayfair Set (1999) by Adam Curtis is a four-part documentary that demonstrates how the process worked in the UK.

  10 To remind the reader: ultra-HNWIs are those with US$30 million or more by net worth.

  11 Numbers have been rounded.

  12 See www.forbes.com/sites/luisakroll/2013/03/04/inside-the-2013-billionaires-list-facts-and-figures/ (accessed 9 November 2013).

  13 See www.bloomberg.com/billionaires/2014-01-17/cya (accessed 17 January 2014).

  14 The G7 includes Canada, France, Germany, Italy, Japan, United Kingdom and the United States, while the BRICs are Brazil, Russia, India
and China.

  2 Capital as power

  1 See also the brief exchange at Dissident Voice: dissidentvoice.org/2013/11/can-pensions-afford-recovery/ (accessed 27 February 2014).

  2 Smith’s conceptualisation of capital begins with ‘stock’, which is never clearly defined. Stock then gets divided into ‘capital’, which generates a revenue, and ‘immediate consumption’, which does not. He then moves on to say that this revenue can be generated in one of two ways: 1) circulating capital, which is more or less merchant capital where goods change masters; and 2) fixed capital, or the improvement of land or machines and instruments of trade that do not change masters (Smith 2005: 224).

  3 Marx writes: ‘As a matter of history, capital, as opposed to landed property, invariably takes the form at first of money; it appears as moneyed wealth, as the capital of the merchant and of the usurer. But we have no need to refer to the origin of capital in order to discover that the first form of appearance of capital is money. We can see it daily under our very eyes. All new capital, to commence with, comes on the stage, that is, on the market, whether of commodities, labour, or money, even in our days, in the shape of money that by a definite process has to be transformed into capital’ (Marx 1996: 102).

  4 Marx’s big promise comes in Chapter 6: ‘Accompanied by Mr. Moneybags and by the possessor of labour-power, we therefore take leave for a time of this noisy sphere, where everything takes place on the surface and in view of all men, and follow them both into the hidden abode of production, on whose threshold there stares us in the face ― No admittance except on business. Here we shall see, not only how capital produces, but how capital is produced. We shall at last force the secret of profit making’ (Marx 1996: 121).

  5 For the full critique of the Marxist approach to explaining capitalist profit in the labour process, see Chapters 5 and 6 in Nitzan and Bichler (2009).

  6 This was a ‘scholarly’ return to its old meaning as a fund of money values for investment or money already invested in an income-generating enterprise. Of course, it should be noted that the process of capitalisation, the primary act of capitalists, dates further back than the emergence of corporate America.

  7 See www.crmz.com/Directory/ (accessed 17 November 2013).

  8 See databank.worldbank.org/data/download/GDP.pdf (accessed 17 November 2013).

  9 JPMorgan Chase lists its business practices here: www.jpmorganchase.com/corporate/About-JPMC/client-solutions.htm (accessed 23 August 2013).

  10 See www.marketwatch.com/investing/stock/jpm/financials (accessed 18 November 2013).

  11 See www.opensecrets.org/orgs/summary.php?id=d000000103 (accessed 18 November 2013).

  12 See www.alexa.com/topsites and Hern (2013).

  13 Fuchs (2012: 143) attempts to demonstrate how Facebook exploits its user base from a Marxist perspective. He fails to realise that Facebook’s earnings are contingent on many more factors than Facebook workers and its worker bee user base.

  14 A list of issues that Facebook has paid lobbyists working on can be found here: www.opensecrets.org/lobby/clientissues.php?id=D000033563&year=2013 (accessed 20 November 2013).

  15 See www.sipri.org/research/armaments/production/Top100 (accessed 20 November 2013).

  16 The amount of government debt increases by the second. At the time of writing, government debt stood at US$52 trillion and counting. Figures on Japan and the debt of the United States were taken from the Economist’s debt clock: www.economist.com/content/global_debt_clock (accessed 22 November 2013).

  17 Given the tumult over the size of government debt in the United States and the sovereign debt crises in Europe, Tett (2011) asked whether or not the sovereign debt of Western governments could indeed be considered ‘risk-free’.

  18 See www.goldmansachs.com/what-we-do/investment-banking/industry-sectors/municipal-finance/ (accessed 22 November 2013).

  19 See www.hardassetsinvestor.com/hard-assets-university/18-hard-assets-101-an-introduction-to-commodities/431-types-of-commodities.html?Itemid=4 (accessed 28 November 2013).

  20 Competitors make up the remaining 5%.

  21 Quoted from the ‘Credit Rating Agencies and the Financial Crisis’ hearing before the Committee on Oversight and Government Reform, House of Representatives, 22 October 2008 (serial no. 110-155). See house.resource.org/110/org.c-span.281924-1.pdf (accessed 23 January 2014).

  22 See www.icifactbook.org/fb_ch2.html (accessed 23 January 2014).

  23 See www.barclayhedge.com/research/indices/ghs/mum/Hedge_Fund.html (accessed 23 January 2014).

  24 See www.newyorkfed.org/aboutthefed/fedpoint/fed22.html (accessed 27 January 2014).

  25 At 5 May 2014 prices, the gold would be worth US$4,945,920,000 billion.

  26 See www.bankofcanada.ca/about/educational-resources/faq/ (accessed 25 January 2014).

  27 Of course, this claim should be subject to further treatment but debates leading up to and during the American Civil War suggested that slaves were actually better cared for than waged industrial workers of the north. The key difference here was that slaves were owned and therefore taken care of to some degree. Wage workers are rented and can be let go as the employer pleases (with some difficulty for protected workers), creating considerable insecurity for the working population – an argument used by plantation owners and slave drivers.

  3 Wealth, money and power

  1 See Marx on estranged labour at www.marxists.org/archive/marx/works/1844/manuscripts/labour.htm (accessed 4 February 2014).

  2 Christianity (a Middle Eastern religion) came to England on the heels of the Roman Empire.

  3 Marx famously critiqued Malthus for failing to consider the distribution of wealth and how this affected the distribution of food (he also believed Malthus to have plagiarised previous authors). Radically unequal social property relations were probably the main cause of starvation during Malthus’ time, just as they are today. The evidence is that we can produce enough food to feed the present population but many still go hungry, starve or are malnourished because they do not have money to buy food – and in a capitalist system, food is a commodity produced for profit first, not nourishment (Albritton 2009; George 1988; Patel 2008).

  4 Of course, hunger was not enough in Britain either – the lower orders of society were subject to grossly terroristic laws to encourage labour and protect property, as Marx identified in Chapter 28 of Capital, Volume 1 (1996). E. P. Thompson also discusses the Black Acts in his Whigs and Hunters (1990), and Hay et al. (1975) provide further evidence to corroborate Marx’s original point. Other than a new series of punishments to induce the poor to work or to penalise them in some way (such as transportation), more fanciful schemes were proposed such as Bentham’s Panopticon: a capitalised (for profit) workers’ prison efficiently designed to encourage worker self-discipline through low-cost surveillance (Foucault 1975).

  5 I thank Adam Harmes for recommending Fioramonti’s wonderful, must-read book.

  6 I recognise that to some this may seem quite Eurocentric: that political economy was born in Europe and spread and was modified by others outside Europe. This seems to be borne out by the facts. However, this is very different from saying that capitalism was endogenous to Western Europe in general and England in particular (Wood 2002). For challenges or problematisations of this view from the perspective of combined and uneven development and international interconnections, see Hobson (2004), Bhambra (2009; 2010) and Anievas and Nisancioglu (2013).

  7 See socserv.mcmaster.ca/econ/ugcm/3ll3/petty/taxes.txt (accessed 26 December 2013).

  8 In his Theories of Surplus Value (1861–63), Marx traces this back to Hobbes. See www.marxists.org/archive/marx/works/1863/theories-surplus-value/add1.htm#s1 (accessed 5 February 2014).

  9 Taken from Henry George’s The Science of Political Economy (1898) at www.politicaleconomy.org/speII_3.htm (accessed 5 December 2013).

  10 Marx does say that: ‘The public debt becomes one of the most powerful levers of primitive accumulation. As with the stroke of an en
chanter’s wand, it endows barren money with the power of breeding and thus turns it into capital’ (Marx 1996: 529). Still, even if Marx understood what was happening in the monetary sphere, the consequences of creating money by extending loans is never fully theorised in his system. Put simply, there is no discussion of the private capitalisation of money.

  11 When a bank makes loans, it creates only the principal, not interest. This means that there is always more debt in the system than there is the ability to repay it.

  12 The creation of the national debt was without doubt the master stroke of the early bankers. But as Brewer (1989: 14) reminds us, ‘the fiscal demands of the crown also prompted the sale of trade privileges and monopolies’ in the reign of Elizabeth I. Brewer quotes Hurstfield, who described this as ‘putting up for auction the machinery of government itself’. Monopolies were granted on ‘starch, coal, salt and soap’ and raised £80,000 a year for the Crown in the 1630s and ‘between £200,000 and £300,000 for the monopolists’.