An inhumane system...
Capitalism is a fundamentally inhumane system. Corporations controlled by a tiny handful of the ultra-rich monopolise society’s wealth, technology and productive power. The land, natural resources, machinery and factories — the "means of production" — are owned by private individuals, the capitalists. And governments in the wealthy countries wage wars on their behalf to control sources of wealth like oil.
While this minority enriches itself off corporate profits and lives the high life, the rest of society can survive only by working. The vast majority of people make their living by selling their ability to work to the bosses, the owners, the capitalists. Even if you work for one of the few remaining "public" state-owned companies, capitalists still profit from your work through the subsidies that governments give to big business out of the profits of state companies, through your taxes and through the services the public sector provides to private enterprises to make profit-making just that little bit easier.
This division of society into "haves" and "have-nots" is not new. Past societies were also divided into classes. In ancient Rome there were slave owners and slaves. In the Middle Ages there were feudal lords, vassals, guild masters, journeymen, apprentices, serfs. The development of capitalist society didn’t do away with class divisions but it made them simpler.
Capitalism increasingly divides society into two classes: capitalists and workers. Those who inhabit the "middle class" of small businesspeople, small farmers and self-employed professionals all too often find themselves cast into the ranks of those who must sell their labour power to someone else when they are squeezed out of the market by big business.
Against the might of giant transnational corporations, there’s little room for the "free competition" and "individual success" that form the mythology of capitalism. As industrial production became bigger and more concentrated, the free competition of early capitalism gave way to monopoly. Along with giant companies, giant banks came to control the economy, gathering in everyone’s savings to be used by capitalists to expand even further.
The wealthiest companies soon spread internationally, dominating the world market. Today, these are known as transnational corporations.
Corporate control of technology and finance allowed the developed, industrialised capitalist countries to dominate manufacturing industries. When size alone was not enough, trade blocs and military force were used. The technology and money needed to industrialise the Third World are monopolised by the multinational companies based in the rich countries.
The 1993 United Nations World Investment Report stated that 90% of the world’s 37,000 multinational corporations had their headquarters in the developed capitalist countries. The 2007 World Investment Report showed that in 2005, 72 of the top 100 multinational corporations were based in the US, Britain, France, Germany and Japan. They make outrageous profits. Fortune Magazine and the World Bank showed that Wal-Mart, ExxonMobil and Royal Dutch Shell all posted profits greater than the GDP of Denmark. Wal-Mart profitted US$351 billion in 2007; Denmark's GDP was US$308 billion.
To extract the raw materials and sell agricultural products to the developed countries, Third World economies must work through the multinationals, whic take most of the profits. Then the finished products, the manufactured goods, are sold back to the Third World at a huge profit. Multinationals have been able to use their monopoly power to make Third World nations sell their raw materials for less and less.
This system of international economic control, reinforced by military force when needed, is known as imperialism. Capitalist corporations become bigger and bigger, but more people become increasingly poorer. More than 2.8 billion people, close to half the world’s population, live on less than US$2 a day. More than 1.2 billion people, or about 20% of the world’s population, live on less than US$1 a day.
The United Nation's Human Development Report in 2005 said that the richest 50 individuals in the world have a combined income greater than that of the poorest 416 million.
Instead of getting help from the industrialised countries, Third World countries are drained of their wealth by the imperialist powers. Between 1982 and 1996, Latin America repaid US$740 billion in debt, more than double the $300 billion that was owed in 1982. Yet the debt has not diminished: in 2002 it was nearly $800 billion because of large rises in interest rates at the behest of First World investors.
The World Bank showed in 2006 that for every $1 in aid an underdeveloped country receives, more than $25 is spent on debt repayment ($106 billion and $2.7 trillion respectively).
The international gap between rich and poor countries mirrors the gap between rich and poor that grows continually within all capitalist countries, including in the First World. In 2008 in Britain, the richest 20% were 16 times wealthier than the poorest 20%. Today in the US, around a quarter of a million people are millionaires, while 2-3 million are homeless. According to 2003 US census figures, around 12.3% of the population (about 35 million people) survive on incomes below the official poverty line.
In 2008, a report by the Melbourne Institute showed that 638,000 households in Australia could be considered millionaires. In comparison, the poorest 20% had higher levels of debt than assets. The people in the middle of this decile have a net worth of just $24. Meanwhile, 2 million Australians live in poverty. That’s what they mean by "equality".
Pull-out 1: The growth of inequality
In the US in 1968, according to census data, the wealthiest 20% of the population received 42.8% of national income, while the poorest 20% receieved just 4.2%: a 10:1 gap. Thirty years later, in 1998, the gap had widened to almost 14:1, the richest 20% expanding their share of national income to 49.2% while the poorest fifth’s share dwindled to 3.6%. The pattern is mirrored internationally. In 2008, the richest 2% owned more than half of all global wealth. The richest 1% alone accounted for 40% of global assets. In contrast, the poorest half together held barely 1% of all global wealth.
Pull-out 2: The billionaries
In 2008, the 1125 billionaires that existed worldwide registered a combined wealth of $4.4 trillion (Forbes, 2008). The combined gross national products of all nations of sub-Saharan Africa was only $987.1 billion.
The collective wealth of these billionaires is also greater than the combined income of the poorest half of humanity.
