Grace Blakeley has an infuriating piece in the new Jacobin, Corporate Welfare Props Up the Billionaire Class. “The last year,” she wrote, “has seen the largest increase in billionaire wealth in history, but it has little to do with innovation— states across the world are pursuing policies which guarantee that the rich get richer. Last year, during the peak of the global pandemic, the world created more than seven hundred new billionaires. In the year since, another five hundred have been created— but the total wealth on the Forbes list has increased from $5 trillion to $13 trillion, the largest increase ever recorded in any one-year period. China topped the list for the highest number of new billionaires, with the United States coming in second. Meanwhile, global GDP shrank by 3.3 percent in 2020 and unemployment rates are around 1.5 percentage points higher than they were before the pandemic in most economies. This doesn’t simply raise moral questions about the distribution of wealth during a pandemic— it requires us to ask exactly how those at the top are doing so well while demand in the global economy is so subdued. The main reason for the explosion in billionaire wealth over the course of the pandemic has been the asset-purchasing programs undertaken by central banks. In the wake of the financial crisis, and following in the footsteps of the Bank of Japan after its crisis a decade earlier, central banks set about creating new money to purchase long-dated government bonds and some other assets in order to reduce yields (previously, they had primarily dealt in short-dated bonds as a way to influence interest rates).”
In an introduction to his book, Tax The Rich, Patriotic Millionaires founder Morris Pearl, former managing director of BlackRock, wrote that "An article in the New Yorker a while back described a bunch of millionaires and billionaires building luxury bomb shelters on private islands in anticipation of some sort of apocalyptic scenario-- high end sanctuaries for the end of days. It made me angry and kind of sad too. These people are willing to pay millions to live through the collapse of society in comfort, but how many of them have spent millions-- or any amount, for that matter-- to change the dynamics that caused the threat in the first place? How many of those millionaires are willing to admit that they helped create or worsen the societal conditions that are causing their fear? Do any of them understand that much of-- even most of-- what is happening today is their fault?
Pearl's co-author, Erica Payne, in her own introduction to the book, noted that "Our tax system is the primary mechanism through which everything produced in our economy is ultimately divided up. Even small changes to the tax system can have major effects on how the benefits to the economy are dispersed across the population. Whoever controls the tax system, controls the distribution. Because millionaires and billionaires and corporate lobbyists currently have the most power in the political arena, they are the ones controlling the tax system and deciding who gets the biggest payout from the economy. They can rig the tax system so it delivers outsized benefits to them, even if it destroys the lives of millions of our people in the process."
Back to Blakeley for a moment. She wrote that "The pandemic has seen a massive revival of corporate welfare— only this time, rather than bailing out their financial sectors, governments are bailing out the entire capitalist class. On top of the $9 trillion worth of QE that’s been undertaken since the pandemic began, governments all around the world have spent trillions on loans and subsidies to big businesses, financiers, and landlords. Most have also provided some support for workers; yet without breaks on debt, rent, and bills, much of this has ended up in the pockets of the wealthy too."
These are only the indirect channels through which capitalist states support the global billionaire class. Oxfam identified in 2015 that a third of billionaire wealth comes directly from crony connections to the state or monopolies. Whether through outsourcing, subsidies, or privatization, state policy has created many billionaires over the years— as should be clear from the fact that state-capitalist China created the most new billionaires this year.
It is not an exaggeration to say that the dramatic increase in the wealth of those at the very top of society would have been impossible without the direct intervention of capitalist states all over the world. Those who attempt to justify the extraordinary levels of inequality on the basis that they are the natural result of the operation of the free market would do well to remember this.
But so would those on the Left who see state intervention as the answer to all of capitalism’s problems. More often than not, capitalist states undertake policy in the interests of capital. This is not because states are mere instruments of the ruling class; it is because the balance of power between capital and labor has shifted decisively in favor of the former in recent years, which has influenced the class struggle taking place within state institutions.
It may be possible to imagine a world in which public power is used to support the interests of labor over capital, but there is no way this can be achieved without class struggle within and— crucially— outside of the capitalist state.
A few days ago, Umair Haque was musing on why the world is going insane and how it’s possible that we’re being led “into a dark age of extremists, authoritarians, kleptocrats, and throngs cheering it all along.” He asserts that inequality is “the prime mover of today’s problems. Inequality within countries has skyrocketed— and that’s in every country around the globe, more or less, even well-managed ones, like Canada and Sweden. As inequality jumps, social distance grows. Rich and poor share little in common— not schools, roads, hospitals, and so on— and so a society begins to corrode from within— it loses trust. Politics grow polarized. The civic sphere corrodes. Decent jobs turn into minimum wage gigs, and becoming a CEO turns into a lottery ticket for a fortune that will last generations. Any sense of higher, enduring values decays, degenerates, and everything becomes about money, money, money… [W]hat is lost when inequality grows is dignity, stability, opportunity, gentleness— a sense, in the end, that a society is a worthy, healthy, vibrant place.”
Over time, as societies become more unequal places, economies— and the lives within them— begin to stagnate. That is because the lion’s share of gain are going to the already very rich— as in America, for example, where over the last two decades, almost all gains have accrued to the top .01%. As stagnation sets in, a healthy nation’s social structure begins to fracture, buckle, collapse. A “middle class,” to which anyone can ascend , belong, and stay a part of— key to a vibrant democracy, a sense of optimism, a society that coheres and hangs together, a country that is not a hostile and cruel and indifferent place— becomes a new poor. The old poor become the wretched. And rich become the dynastic. For anyone but the richest, lives of dignity, meaning, purpose, belonging become unaffordable luxuries.
What usually happens next is this: the average person, having become the newly impoverished one, falls prey to a myth of folk economics: “because I am going bankrupt, we must be going bankrupt!” And so up spout MSNBC pundits and crackpot economists, who warn a nation of impending financial ruin, when precisely the opposite is true: a nation can’t go bankrupt, only people can, and for precisely that reason, stagnant economies are the ones that demand investment most— and can’t have it, because money is piled up at the top, usually in colossal amounts, which is what caused slowdowns to begin with— remember? Money is abundant in stagnant economies— it is only stoppered up in all the wrong places.
But usually the folk myth wins— demanding belt-tightening, because they are growing poorer, people say: “less government spending!”— and do not understand that just means: “I don’t want my neighbours to invest in me!” And so there go public healthcare, media, finance, infrastructure— there go safety nets, retirements, decent jobs. But as they go, that newly impoverished person grows poorer still— because all those could have raised their income, savings, standard of living. All those things could have restored the lost belonging, meaning, purpose, sense of worthiness that people have lost, and hunger desperately for. But they have denied themselves.
So the average person is baffled. Nothing works! He or she loses what little trust they had in the system, themselves, the future, their society. Despair and rage grow hot and heavy in their hearts. What can they do? Now they are easy meat for authoritarians. And usually, the average person seeks safety in the arms of the first one who comes along, shouting and screaming.
What does the authoritarian do to fix this mess— a society whose social structure has collapsed from the middle, an economy that needs investment but can’t get it, and people who have been told exactly the wrong things to do about it all?
Well, the first thing authoritarians usually do is enact aggressive nationalisms.“This land! It is ours!” they bellow. Substitute “land” for healthcare, finance, jobs, or trade, and the story remains the same. So authoritarianism is a way to ration dwindling prosperity— if you are of pure blood, from the right tribe, and so on, you can have a piece of the shrinking pie. But the problem remains that the pie is shrinking in the first place— and so where once there is a soft nationalism, usually, a decade or two later, there is a hard, vengeful, cruel one, in which yesterday’s fortunate are today’s unwanted. That is the story of Soviet Russia and Nazi Germany both.
So nationalism soon enough becomes extremism, because rationing a shrinking pie leads nowhere but to a Lord of the Flies plight. And that is where this cycle ends— with nations teetering on the brink of hostility, war, violence. Usually, they descend headlong, enthusiastically, into it.
…You are right if you already suspect it was the story of the 1930s. But there is more to it than that. It was also the story of Rome’s fall. It was the story of Athens’ descent into tyranny. It is how the Maya and Inca fell, too. The only differences in these are the initial triggers of inequality and stagnation— was it some kind of foolish human choice, hubris, as in Rome? Was it natural calamity, as for the Maya and Inca? Or was it famine and drought, as in Athens? This is a universal pattern of how human organizations— the biggest ones, societies— fall apart.
Ours? It’ll be the calamities brought on by climate change— better called Extinction. So the question for societies, and people, today is this: which ones will be able to see the pattern before it is too late? After all, seeing a pattern gives one power not to repeat it, to understand it, to try, at least, to prevent it.
…We might not make it out of the cycle at the rate we’re going. If you can’t see it, you can’t stop it, remember? And people are not shown this cycle much at all— by design. Maybe the media wants to sell clicks, maybe too many politicians haven’t studied history— who knows? The motives aren’t the point. The point is just pragmatic.
If you can’t see this pattern, where is a society likely to end up? Well, at the end of the pattern. Ruled by the most insane among it. The most extreme, the most hostile, the most cruel, the most ignorant.
Remember Soviet Russia and Nazi Germany? That is the way we’re heading now, as a planet. Maybe we won’t end up all the way down that road of darkness— but that’s not saying much, is it? And so a big question for the world is this: who won’t let themselves end up that way this decade?