Open Secret (2016)

Book Review from the September 2016 issue of the Socialist Standard

'Wealth Secrets of the 1%', by Sam Wilkin. Sceptre £9.99

There’s no secret, really, is there? The one percent get their wealth by exploiting the rest of us, by paying us less in wages than the value of what we produce. This is not, however, the kind of thing that Sam Wilkin deals with here, since he is really concerned, not with how the capitalist class in general become rich, but with how and why some capitalists, in contrast to others, become very rich indeed. His answer is by ‘gaming the system’: by having the government introduce regulations that make competition difficult, and by making it more or less impossible for companies, especially banks, to lose money.

One chapter deals with the robber barons, the common term for a number of American capitalists who made vast fortunes in the last few decades of the nineteenth century: the likes of Carnegie, Rockefeller, Vanderbilt, Pierpont Morgan. As a comparison, Bill Gates’ wealth is less than one percent of US economic output, whereas John D Rockefeller’s net wealth was nearly two percent of US economic output at the time. The robber barons all despised competition, as it reduced their profits, and were able to acquire valuable patents and enforce vastly-profitable monopolies. For instance, Vanderbilt controlled all the railway lines into New York, while by means of a cartel Rockefeller owned nearly all of the oil-refining business. Morgan’s US Steel made tremendous profits by buying up other steel companies, eliminating competition and keeping prices high.

Wilkin also examines the methods used by Gates and Microsoft, focussing on the way they employed intellectual property ownership to gain a monopoly on some lucrative technologies. Microsoft did not create DOS, the operating system it originally made its money from; it just used its power and cunning to obtain a contract to sell DOS, helped by the fact that Gates’ father was a lawyer, so he had some background in legalese. As Wilkin says, there are two distinct issues: coming up with technological innovations and making money from these innovations are by no means the same thing. And profiting from a technology product has more to do with it being widely used than with it having the best features.

One point that emerges from the book is that there is no basis for claims that capitalism used to operate by means of a free market with unfettered competition, with this having been replaced by crony capitalism, where the state provides licences and protection for some companies. There has always been state interference with the workings of the capitalist economy, and competition has always been limited in various ways.

We mentioned earlier that Wilkin is not concerned with exploitation and the real origin of profit: those who produce the wealth receive little attention here. He does refer to the Homestead strike and lockout of 1892, at the works of Carnegie Steel, in which nine workers were killed by thugs employed by Carnegie and Henry Clay Frick. This is given the euphemistic description ‘an exceptionally heavy-handed crackdown on striking workers’. 

Paul Bennett