Cooking the Books: Who does capitalism work for? (2026)

The Cooking The Books column from the May 2026 issue of the Socialist Standard

‘AI risks widening inequality, warns Fink’ was the headline in the Times (24 March) reporting on the annual letter from billionaire Larry Fink to the shareholders of his asset management company BlackRock. The caption under a photo of Fink read:

‘Larry Fink said that most people who work for an income would be left behind by those enjoying returns on investment.’

These weren’t Fink’s exact words but they expressed his meaning. They also point to the two classes of capitalist society — the working class (those who work for an income) and the capitalist class (those who enjoy returns on investment).

More accurately, the working class is composed of all those who have to work for an income to survive, and the capitalist class of those who have sufficient returns on investment to survive without having to work.

What Fink wrote was that over recent decades:

‘… the vast majority of wealth has flowed to people who owned assets, not to people who earned most of their money by working. Since 1989, a dollar in the U.S. stock market has grown more than 15 times the value of a dollar tied to median wages. Now AI threatens to repeat that pattern at an even larger scale—concentrating wealth among the companies and investors positioned to capture it. This is where much of today’s economic anxiety comes from: a deeper feeling that capitalism is working—just not for enough people.’

He may be exaggerating — he himself later pointed out that when there is some technological innovation the companies producing and adopting it benefit and that this is ‘not unusual’ nor ‘inherently problematic’ — but he has an axe to grind. He argues that widening inequality could be avoided if more people owned stocks and shares; if they owned shares in these companies they would benefit from the rise in their stock market capitalisation. And of course BlackRock will be there to manage their share portfolio, for a fee.

It’s the old fraud of a ‘people’s capitalism’ that the Tories and the Liberals over here used to propose — making capitalism work for more people by giving them a share in profits.

Quite a few workers do own shares, though not enough to bring them an income to allow them to live without having to work, like capitalists. Fink quoted figures showing that in the US more than half of households own shares and that this is ‘a distinctive feature of American capitalism’ compared with Europe where only a third of households do.

This doesn’t mean that workers in the US are better off than those in Europe. It simply means that more workers there hold their savings as shares compared to Europe where more hold theirs as savings in a bank. The source of both the dividends on shares and the interest on savings accounts is profits made in capitalist industry, only in the case of interest on bank savings in a roundabout way.

Banks and assets management companies are in competition for the savings that workers might have. In Britain the asset management companies are currently running an aggressive advertising campaign to persuade workers to entrust their savings to them. Workers can make up their own minds on this. Savings in a bank are secure but, as they say, shares can go down as well as up.

One thing, however, is clear: workers will never have enough savings, whether in shares or in a bank, to allow them to live without having to work for wages. After all, if they did, who would produce the profits? Or the wealth society needs to continue to exist?

Socialism is not a Dream. It can be Reality. It’s up to You . . . (2020)

From the October 2020 issue of the Socialist Standard

Socialism is the great beacon of hope for humanity. The working class, black and white, have put up with endless injustice in capitalism. Socialism will be a huge relief after the long nightmare of capitalist exploitation, inequality, and poverty in the midst of material prosperity. Socialism is not an end, but a beginning, it is the beginning of the real history of humankind, an awakening to a new age of socialist justice. Socialism means the free development of each man and woman, black and white, as the condition of the free development of all men and women.

The black and white working class cannot walk alone, they are united together as brother and sister. In socialist society all black and white men and women will be able to say they are free at last. The working class need to realise that they create the world’s wealth and that their interests are in common irrespective of race and opposed to the interests of the capitalist class. When the united black and white working class recognise their own immense potential power to transform society, act in conscious unity to solve their problems by abolishing capitalism, then they will be truly in touch with their own emancipation. There is an urgency now to get rid of capitalism and move forwards to a world socialist society through cooperative, revolutionary political action.

Capitalism fosters inequality, prejudice, unfairness, racism, injustice, unemployment, homelessness, police brutality and the criminalisation of our young people. Racism thrives when capitalism is in a slump and adopts austerity. Racism results from the economic anarchy of capitalism, the prejudice diverts the working class from facing the real cause of modern society’s problems which is the existence of capitalism. Capitalism promotes and aggravates conflicts such as racism. The cure for racism is the abolition of capitalism.

Socialism is organised on the basis of human co-operation for the common benefit of all humankind where things will be produced solely to meet human needs. Socialism will mean the greatest flowering of imagination, creativity and achievement in history, it will be a world of abundance and freedom. People will relate to each other as equals, as sisters and brothers. Co-operation will be the norm and an established reality, not an impossible dream.

Socialism will be the end of racism; it will be a world free of social conflict in which human beings live and work in unity without distinction of race.

The Size of the cake (1975)

From the July 1975 issue of the Socialist Standard

A popular and specious argument against Socialists is that — “if all the wealth in the world were shared out equally amongst the world’s population,” (a) all the individuals would still be poverty-stricken and (b) in a short time the “clever” people would be rich again and the “not-so-clever” would once more be poor. Both arguments reveal a total ignorance and misconception of the scientific Socialism as elucidated by Marx and propounded by the SPGB and its counterparts in other parts of the world.

To start with, Socialists never make the slightest suggestion that we shall “make people equal” by giving them equal amounts of the world’s wealth. We mean that they’ll take not an equal amount of that available, but an amount desired and needed by each one as an individual. Each will take freely according to his or her needs. Under these circumstances it is absurd to say that “after a while the clever will get a lot and the not-so-clever only a little.”

The argument about the “share of the cake” each would receive under present economic circumstances is equally irrelevant. There certainly is not enough to go round under capitalism, because its production is geared to what can be sold for profit and not what is needed by the world population. But just consider how big "the cake” could be were capitalism abolished and a sane, benevolent order of society substituted.

First, look at the teeming millions of the world's population who, at present, are completely unproductive, or, outright destructively employed. Armies of clerical workers adding up wages, profits, rents, interest on investments, or employed in advertizing, insurance, customs and excise, salesmanship, real estate, banking, stock exchange, shops, stores and supermarkets, or in millions in armies, navies, air and police forces, and many more besides — would be liberated from these useless and degrading occupations to do something creative and productive of their own choice and enjoyment.

Food and other wealth would not be destroyed on a gigantic scale the world over in order to preserve high prices, nor vast tracts of land laid waste in peace and war, as is the case under capitalism. Moreover, products made for use, rather than for sale, would be made to last rather than to wear out by the time the guarantee expires. Only the best and most durable would be produced, no effort being wasted on the manufacture of the cheap and nasty for “the poor people”.

We are aware of the fact that many inventions capable of enormous increases of wealth and energy are not made available to the community because patents have been bought by capitalists in order to suppress their potential rather than to utilize it. Just how many more wonders of science we are denied we do not know. It could be that we only see the “tip of the iceberg”.

Quite right, under capitalism there isn’t enough to go around. But the potential size of the cake is staggering in its super-abundance.

R. B. Gill

The Monopoly of Wealth (1967)

From the March 1967 issue of the Socialist Standard

The basis of present-day society is the class monopoly of the means of living, that is, the land, factories, railways and so on. Accumulated wealth is monopolised by a privileged minority. The rest, separated from the means and instruments of labour, are forced to work for those who own them. This inequality, poverty and slavery is capitalism.

In Britain the capitalist class own the means of production through having paper titles such as bonds or shares which are backed by the law and enforced by the state. So that from these titles an estimate of the concentration of wealth ownership can be made. One of the results of the 19th century struggle between the industrial and landed property-owners was Estate Duty, a tax levied on the wealth of those who died. The figures of the collections from this tax are published every year in the report of the Board of Inland Revenue. The various figures in this report, together with mortality rates from the Registrar General, have provided the basic data for all the estimates of the concentration of wealth that have been made over the years.

It so happens that one of the first of such estimates was made at the time the Socialist Party of Gt. Britain was founded. For 1905 Sir Leo Chiozza Money came to this conclusion in his Riches and Poverty:

  About one-seventieth of the population owns more than one-half of the accumulated wealth, public and private, of the United Kingdom.

Money's calculations were no doubt crude by modern statistical standards. Yet every study since has shown a similar inequality, despite the reign of two governments committed to redistribution in favour of the poor—the Liberal of 1906 and the Labour of 1945.

Take a few of the recent estimates: On 8 April 1962 the Economic Editor of the Observer spoke of “this fantastically unequal distribution of wealth”:

   Judging by the latest Inland Revenue estate duty figures, fewer than 200,000 people (about ½ per cent of the adult population) own a quarter of total personal wealth, worth over £50,000 million. Nearly half of this total personal wealth is held by the top 2 per cent owning more than £20,000 each.

On 15 January 1966 the Economist, using amended investment income figures from the Inland Revenue report, estimated that in 1959-60, fifty-five per cent of personal wealth was owned by 2 per cent of taxpayers, while 88 per cent owned on average just over £100.

On 13 January 1967 the Financial Times wrote of figures showing that in 1960 the top 1 per cent owned 42 per cent of personal wealth (the top five 75 per cent and the top ten 83 per cent), that although there might be some exaggeration “it still remains true that the bulk of the population own very little personal property”.

A more scholarly study for 1945 appeared in the Bulletin of the Oxford University Institute of Statistics in February 1961. The authors, H. F. Lydall and D. J. Topping, noted that “Personal wealth is very unequally distributed in this country”. They wrote of one of their tables:

   In broad outline these figures suggest that total personal net capital in early 1954 was about £40,000 million. Of this nearly £31,000 million was owned by three million persons possessing over £2,000 each; and the remaining £9,000 million was owned by the other 32 million aged 20 and over. In the top capital group there are 20,000 persons with more than £100,000 each and an average holding of over £250,000; in the bottom group there are 16 million persons with less than £100 each and an average holding of less than £50.

And, of another table:

  These estimates suggest that in 1954 the top one per cent of British adults owned 43 per cent of total net capital and the top 10 per cent 79 per cent.

Comparing their figures with those for previous years, they wrote that “over the past twenty years there has been some reduction in the inequality of personal wealth in Britain”.

Not all who have studied the figures agree with this conclusion. For one of the disadvantages of using the death duty figures is that they miss those who manage to avoid paying them and, over the years, the wealthy have evolved quite sophisticated ways of doing this. J. R. S. Revell, in an address to the British Association in 1960 (discussed in the Socialist Standard of November 1960), mentioned a few: distribution within families and especially the discretionary trust:

   Under that form of property the trustees had the discretion to pay income to any of a specified class of persons and to distribute the capital when they thought fit. When the person who had been receiving the income died, the trustees merely nominated another person from the specified class, and there was no passing of capital which could attract death duties.

R. M. Titmuss, in his Income Distribution and Social Change (1962), studied the supposed trend towards equality of incomes and showed how the Inland Revenue figures were not a reliable guide. Titmuss explained in detail some of the dodges to avoid surtax and estate duty. While pointing out that there were no really accurate and reliable figures he suggested:

  There is more than a hint from a number of studies that income inequality has been increasing since 1949 whilst the ownership of wealth, which is far more highly concentrated in the United Kingdom than in the United States, has probably become still more unequal and, in terms of family ownership, possibly strikingly more unequal in recent years.

Whichever way you look at them, these figures bear out the validity of the first clause of our Declaration of Principles. What, then, do Socialists suggest? In the past we were accused of wanting equal sharing and to divide up amongst the poor the wealth of the rich. This, of course, was a lie. What we do advocate is the social ownership and democratic control of the already socially-operated means of living. Ironically, it is the open defenders of capitalism, the Tories and Liberals, who talk of a “property-owning” or a “share-owning” democracy. Which is as much an illusion as is the Labour promise to redistribute wealth more equally through taxes. All such attempts have failed, and will fail, because the very basis of capitalism — the system they accept —is the concentration of the ownership of the means of living in the hands of a few and the resulting poverty and degradation of the rest.

Adam Buick

The Case for Equality (1990)

From the June 1990 issue of the Socialist Standard

In a socialist society all human beings will be equals. Without equality there could be no society which could accurately call itself socialist. So, the class-divided, extremely hierarchical nations such as Russia and China, which have a class of privileged party bureaucrats ruling over the majority of the population who are wage slaves, are clearly not socialist—they are part of the social inequality which characterises capitalism.

What do we mean by social equality? We mean that we seek to create a condition of social organisation in which no person is entitled to be regarded and rewarded as superior to others and no person is to be condemned to the disadvantaged position of being socially inferior. In a society of equality there will be no socially superior or inferior people.

We are not advocating a social situation in which no person is superior to another person in any respect. In a society of human equality one person might be a better violinist than another. The inferior violinist might be a better poet or bricklayer than the superior violinist. The significant point is that such differences of achievement (which are almost certainly conditioned rather than innate) will not lead to social inequality. In a society of equals the better violinist will have no opportunity to live a more confortable life than the violinist whose music sounds awful. The person who is an expert at cutting up human bodies (a surgeon) will have no greater access to pleasant accommodation or decent cigars than the person who is skilled at fixing motor cars (a mechanic). Society needs surgeons and mechanics, violinists and poets.

Just as a society of equality will include people with different levels of talent and skill in various areas of life and work, so it will be a society of humans who are different from each other. The distinction must be understood between equality and sameness. If the present writer is asked whether he prefers the plays of Chekhov or Pinter he will reply that he enjoys them equally; this does not mean that he regards them as being the same—in fact, the two writers are very different from one another. The two playwrights (in the view of the present writer) are worthy of equal respect. To say that the dedication of a nurse and a firefighter is equal is not to suggest that both types of work are the same. Equality does not imply conformity or uniformity. On the contrary, it implies that our appreciation of our fellow human beings is not governed by a monolithic value structure, but that we have the capacity to respect different abilities without subordinating one to the other. Rather infantile critics of the case for social equality suggest that we are advocating some kind of absolute natural equality. Jerome K. Jerome wrote a rather foolish satire about utopia in which he depicted a society in which everyone had to be the same height and weight. Clearly, social equality will not require the elimination of natural human differences. If one person has natural advantages over another (such as the physical strength of the young over the old and feeble) that will not allow such a person to have social domination over those who are so-called natural inferiors. Natural differences such as gender or skin colour are no basis for social differences; it is only in a society of human inequality that these natural distinctions become parts of a battle for power

The facts of social inequality
Only a fool or a liar would contend that we are now living in a society of human equality. World capitalism has as its first characteristic the unnatural, artificial inequality between class and class. In Britain today the richest 1 per cent of the population own more of the marketable wealth than all of the poorest 80 per cent added together. The richest 10 per cent own between them more than half of all the wealth in Britain. In short, even if the 90 per cent joined together we would still be poorer than the richest 10 per cent. Approximately one in four humans alive today are malnourished because they cannot afford to buy food. In Britain and the USA one in four children live on or below the official poverty line. The most recent World Land Census, carried out by the United Nations Food and Agriculture Organisation, showed that 2.5 per cent of the people who own land of over 250 acres own between them 75 per cent of all the world's privately owned land.

These are the dry statistics of inequality. The more visible and emotionally comprehensible features of inequality are before us every day. The sight of kids sleeping on the streets on cold nights while estate agents advertise six-bedroom houses for over a million pounds—often as suitable second homes for the useless rich. The queues in the casualty departments of NHS hospitals where the poor must wait for serious injuries to be treated, while round the corner in the private wing there are comfortable lounges for the rich to wait in while they demand the very best in health care, regardless of whether they are ill or not. The mothers who cannot afford to feed their children and keep them warm on £40 a week, while a couple of miles away five-star hotels are serving dinner to parasites at £250 a head. Only the socially blind will deny the existence of social inequality: only the socially brutalised will regard it as a desirable condition of affairs.

Is social equality possible? Some have argued that it is not. and if we are to argue scientifically we must examine and dispose of their claims. We can commence with the most stupid argument against equality; the religious objection. In 1784 George Pitt argued against the doctrine of equality";

  A doctrine, the fallacy of which is proved by the experience of every day. by the concurrence of all history from the earliest times, and above all by the contemplation of all the works of the Creator, the very essence of which appears to be gradation or inequality. (Letter To A Young Nobleman.)

In short, humans are created to be unequal. The Church has pursued this propaganda with vigour: The rich man in his castle, the poor man in his hut. God made them high and lowly . . . Apart from the fact that this nonsense ignores the first 40,000 years of human society (the great majority of our history) in which classes did not exist, its entire reasoning depends upon the completely unproven and utterly unprovable belief that the world was designed by an over-seeing being who decided how it would be organised. The religious defence of inequality is an ideology designed by the defenders of the rich who offer a creationist account of human inequality as a way of keeping the ignorantly—believing inferiors in their place. Lest there be any doubt about this we can turn to the writings of the prominent 18th century Christian and conservative, Edmund Burke, who spelt out the religious purpose in clear terms:

   The great body of people must not find the principle of natural insubordination . . . rooted out of their minds. They must respect that property of which they cannot partake. They must labour to obtain what by labour can be obtained; and when they find, as they commonly do, the success disproportionate to the endeavour, they must be taught to console themselves with the prospect of divine justice.

The claim that inequality was designed by a god requires a belief in an unprovable. immaterial deity, and then a respect for such a supernatural being who designs poverty and social misery for the majority class in society.

Biology not determinant
Different from the religious case against equality—but not all that different—is the biological theory. The infamous Professor Eysenck states that "biology sets an absolute barrier to egalitarianism"; we are all born with unequal capacities to become intelligent; this intellectual inequality is genetically inherited and determines our status in life: "Clearly, the whole course of development of a child's intellectual abilities is largely laid down genetically" (The Inequality of Man).

This biological determinism replaces genes for gods and contends that we are all born to fit into an intellectual hierarchy and must make the best of what our genes allow us to become. Eysenck and others have attempted to link superior genetic abilities with white skin colour. Others, such as Steven Goldberg in The Inevitability of Patriarchy, have tried to make a case for the biological inferiority of women. The case for biological inequality rests upon some very weak reasoning. Firstly, its conception of "intelligence' is a very narrow one, rooted in the limited history of European and American capitalism. If Professor Eysenck was left to survive in an African desert region we wonder how "intelligent" he would be in relation to the people who were brought up in such an area. The best evidence regarding human behaviour points to the fact that humans learn to be what we are: the extent to which we inherit genetically any mental aspects of our being is negligible. Even if there was some truth in the Eysenck theory, there would be no more reason for a society of human equality to discriminate against less intelligent people than it would be to discriminate against those who are physically disabled.

Davis and Moore have constructed a sociological theory which is simply an updated version of last century's Social Darwinist defence of social inequality:

  Social inequality is . . . an unconsciously evolved device by which societies insure that the most important positions are conscientiously filled by the most important persons. (Some Principles of Stratification).

According to this theory, society offers rewards to the people it needs most. Superiority is a reward for usefulness. If you are socially useless you will become inferior. The fittest will survive and thrive. The only problem with this theory—a pretty major problem for a would-be scientific analysis—is that it bears no relationship to the experience of how capitalist society actually does run. We know very well that under capitalism the useless stockbroker is rewarded (by income) much more than the nurse; the parasitical Royals are rewarded with billions of pounds for waving at people, while workers who grow food are often so poor that they cannot afford to eat properly. The belief that life is one great competition in which the capitalists win because they are the most able is a nice idea if you are a millionaire, but a lot of rot if you consider that most millionaires inherit their fortunes, and that these were obtained in the first place by exploiting the labour skills of others.

Free society of equals

It will not take long for the thoughtful reader to detect that all of the arguments against social equality are unhistorical. The god-myth has no basis in material history and entirely ignores the thousands of years during which humans lived in a condition of what social anthropologists call primitive communism. Were these humans (the majority of those who have lived on the planet) built by god with a design fault? The biological theory relies upon unproven notions of inherited intelligence and defines intelligence in an unhistorical manner. The modern Social Darwinists can see no further than the social order of the capitalist jungle.

There is one further argument against social equality which is sometimes put by capitalism's defenders and which does make sense. It is said that equality can only occur by limiting certain liberties which currently exist. This is quite true. The liberty of the least needy to push in front of the most needy in the queue for food, clothing and shelter will be taken away in a socially equal society. The liberty to destroy food and take land out of cultivation in order to keep prices and profits up will no longer exist. The liberty of humans to compel others to work for them (or starve) will be ended. In short, a socialist system of human equality can only occur once the expropriators have been expropriated—once the capitalist class has been dispossessed of its monopoly of the earth's resources. This threat to the capitalists' liberty to own and control the world is seen by them as something to be resisted at all costs—including the reputations and lives of those who dare to advocate social equality. The capitalist minority use every means of propaganda at their command to distort the case for equality, to defame its advocates and to defend their own privilege in the name of popular liberty and democracy.

To the majority of us, who are not capitalists but live by selling our mental and physical energies for wages and salaries, the awful danger of the capitalists losing their liberty to be the top dogs ought not to appear as such an awful threat. On the contrary, the removal of the liberty of the capitalist to be superior is the necessary precondition for the liberty of the wealth producers not to be inferior. The right of the worker not to be a wage slave requires the abolition of the right of anyone to be a capitalist. Freedom and equality have the abolition of class society as their social basis.

The only free society will be one where all human beings, without any distinctions of race or sex or age, have free and equal access to the common wealth of the world. Once goods and services are freely available to all, on the basis of self-defined desires, without the interference of money or markets, humans will be able to say in honesty that we are members of a human family—a family of equals.

Steve Coleman

Unfair Shares (2011)

Book Review from the June 2011 issue of the Socialist Standard

Injustice: Why Social Inequality Persists. By Daniel Dorling. Polity Press £19.99.

The sub-title is the more important, as this is really about inequality, what it involves and why it continues to exist. On the one hand there is a small group of amazingly wealthy people, who have acquired their riches through inheritance, profit and interest. These super-rich cluster in enclaves, in particular regions, cities and streets (e.g. near Hyde Park in London). One way in which this elite is maintained is by careful selection of marriage partners: if you’re a member of this group and marry someone else from it (it’s called homogamy), you and your spouse are likely to remain in that upper part of society.

At the other pole is a group, the worst-off part of the working class, who are effectively destitute. One child in five in London has no annual holiday because their parents cannot afford one. A fifth of the population of Britain find it difficult or very difficult to get by on their incomes. People with depression or chronic anxiety are found in one-third of British families, as inequality increases and despair grows among the worst-off.

At the heart of this destitution is not primarily joblessness or old age, as was once the case, but debt. In a modern form of indenture, people are forced to borrow, not in order to live in luxury, but in order to simply keep going. The number of people taking out expensive ‘payday loans’ to get them through to the end of the month more than doubled in 2007-8. In 2005, members of an average household in the US owed 127 percent of their annual income in outstanding debt. A quarter of the ‘young elderly’ in the US, aged 65–69, have to work in order to get by.

This inequality extends of course to educational provision and the creation of and response to crime. The US now has ten times as many in prison as in 1940, and 70 percent of the two million prisoners are black: ‘their biggest mistake is not their crime, but having been born at the wrong time, to the wrong family, in the wrong place, in the wrong country’. The American dream remains an impossible fantasy for nearly everyone.

Apparently at least half of the US economy is devoted purely to ‘transactional purposes’, not designing or making beans but counting them. Dorling is aware that such nonsense as stocktaking and barcode scanning could be dispensed with ‘in a society where consumers and producers work much closer to (and more closely with) each other’. It will take more than that, but in socialism we could get rid not just of credit cards and tills but of the rich and poor too.

Paul Bennett

Editorial: Locked down under capitalism (2020)

Editorial from the May 2020 issue of the Socialist Standard

What would have been unthinkable a few months ago has now become reality. Most countries have been placed under lockdown, where the state has closed down large areas of the economy – shops, cinemas, pubs and restaurants in an effort to prevent the rapid spread of the coronavirus. Only food stores, supermarkets and pharmacies are allowed to remain open. Schools have been closed. The police have been given powers to enforce social distancing laws, whereby people are only allowed out for restricted activities, such as food shopping, exercise or attending medical appointments, and they can instruct people to go home and issue on-the-spot fines. For most workers, particularly those in the more developed capitalist states, this is unprecedented.

As the lockdown applies to everyone, then surely we are all in this together? Well, not quite. It is true that it can lead to mental health issues like loneliness and depression. There has been a recorded rise in domestic violence cases. Children being cooped up in the house and unable to play with their friends is not good for their emotional development.

However, like everything else in capitalism, having money can help you ride this crisis more comfortably. Wealthy capitalists can hop on to their yachts and head for luxury havens such as Palm Beach (Chuck Collins, ‘Let’s stop pretending billionaires are in the same boat as us during this pandemic’, Guardian, 24 April). They don’t have to worry about losing their jobs, about being furloughed or how they will pay the rent or mortgage. Even better-off workers can get by more easily by working from home and having more savings to draw on. Poorer workers, on the other hand, are more likely to have to travel to work and tend to live in higher-density housing which puts them more at risk. It is certainly more pleasant to self-isolate in a mansion with large grounds than in a high-rise council flat. Moreover, it is workers who are losing their jobs by the millions and seeing their incomes fall.

Although the lockdown has made it more difficult for workers to come together physically, there is evidence of the emergence of groups offering community and social services. George Monbiot has outlined many instances of these happening globally; students in Prague babysitting the children of health workers; volunteers in Belgrade organising online crisis counselling; in the UK and elsewhere, groups are picking up shopping and prescriptions for the elderly. As these groups are independent of the state and the private market sector, Monbiot refers to them as the ‘commons’ (‘Covid-19 has turned millions of us into good neighbours’, Guardian, 1 April).

What this reveals is what is most important in society. It is certainly not the wheeling and dealing of the venture capitalists, bankers and other ‘movers and shakers’ that we are supposed to look up to, but the useful jobs that doctors, nurses, delivery workers, public transport workers and postal workers do.

Perhaps this insight along with the emergence of the ‘commons’ may provide the seeds of an emerging socialist class consciousness?

Voice From The Back: A Class Divided Society (2011)

The Voice From The Back column from the April 2011 issue of the Socialist Standard

A Class Divided Society

When socialists describe capitalism as a class divided society some of capitalism’s supporters dispute this claim, but here is one dyed-in-the wool supporter of capitalism who seems to be agreeing with us. “Britain is dividing into ‘two nations’,” Iain Duncan Smith warns today, as he identifies a growing underclass for whom life is comparable to the Third World and who can expect to die in their fifties. … Speaking just days after publishing his Welfare Reform Bill with radical measures to drive people into work, he said: ‘In Britain today there are pockets that are peculiarly Third Worldish in terms of life expectancy, general expectations, disconnection for a group that is growing in number’” (Times, 19 February). Needless to say Smith’s determination to ‘drive people into work’ applies to the working class not the useless parasitical capitalists.

A World of Inequality

There is a widespread illusion that we live in more equitable times than previous generations, but recent statistics from the World Bank give the lie to that notion. “A sharp rise in food prices since June has pushed 44 million people in developing countries into extreme poverty – having to live on less than $1.25 a day – according to a report by the World Bank” (New York Times, 15 February).

Class Division in India

A visit to an Indian city such as Calcutta would convince the visitor that it is a country of extreme poverty and qualifies as what the press call a “third world country”. You can see homeless families seeking out an existence living on the streets but that is only part of the story. “In a wedding estimated to have cost Kanwar Singh Tanwar, the groom’s father and a member of Parliament, £15 million, about 30,000 guests ate 100 different dishes and the couple’s main gift was a seven seater helicopter” (Times, 4 March). For a tiny minority of Indians a life of undreamt affluence is the norm in this “third world” country.

Hard Times – For Some

We are told ever day by the mass media that we are living in hard times and that we must be prepared to tighten our belts. Longer working lives, lower pensions and the threat of growing unemployment are the prospects for the working class. This period of “economic reality” does not affect the owning class of course. “Carlos Slim gets even richer as he beats Bill Gates to the top of the 2011 Forbes billionaires list. Carlos Slim, the world’s wealthiest man, saw his fortune jump $20.5bn last year as he beat a record 1,209 rival billionaires, including Bill Gates, Warren Buffett and British resident Lakshmi Mittal, to the top of the Forbes global rich list” (Daily Telegraph, 10 March). In case you imagine that this only applies to Mexican, American or Indian billionaires Forbes informs us that the Duke of Westminster managed to increase his stack to $13 billion last year.

Land of the Free?

American politicians are fond of boasting about the “land of the free” and contrasting the freedoms of people in the USA with that of other countries, but recent developments in the state senate in Ohio seem more dictatorial than democratic. “Ohio joined Wisconsin on Wednesday in advancing a plan to restrict public sector unions, posing a new threat to U.S. labor union power in one of the most politically and economically important states. The Republican-controlled Ohio state senate approved a proposal to curb the collective bargaining rights of public employees and forbid government workers from going on strike” (Reuters, 2 March).

The Ganja of the People

Away back in the 19th Century Karl Marx once stated “Religion is the opium of the people”, but how do you respond to this 21st Century news item? “The sale of marijuana has been banned by authorities in Nepal during a popular Hindu festival at which holy men traditionally smoke the drug. About 500,000 people and thousands of holy men travelled to the Pashupatinath temple in Katmandu for the festival, which marks the end of winter. … Police stopped people from dealing but did not prevent the holy men from smoking the drug” (Times, 4 March). Perhaps the Christian holy men should take a leaf out of the Hindu’s book, it might help their falling church attendance figures. “Truck on Jesus man”, may become part of the new holy orders as a way to fill those empty collection plates.

Inequality: same old story (2020)

From the April 2020 issue of the Socialist Standard

When incoming left-wing Labour MP Zarah Sultana condemned the record of the Labour government in the Blair years, Tony’s representatives on Earth swung into action, reciting the litany of his good works: record investment in the NHS, minimum wage, Sure Start, Human Rights Act, Freedom of Information Act (the one he regrets), etc. What they forgot to mention was that in large measure politics is where it is now due to his regime’s greatest failing: its inability to increase the share of the national wealth for the poorest sections of society.

The Parliamentary report, Income inequality in the UK: Briefing Paper Number 7484, 20 May 2019, lays the picture out clearly. The Gini coefficient is a measure of overall inequality in a society. As the report notes, ‘this summarises inequality in a single number which takes values between 0 and 100%. A higher value indicates greater inequality’. The trend line in the table in the summary is clear, in as much as the Thatcher years saw a significant increase in inequality, which the Blair/Brown years stabilised, albeit with a gentle increase during the first Labour term. (There is some scope for the effects of benefits and redistribution not being adequately accounted for in this measure, but as the report notes, this is at most likely to flatten the trend out, rather than alter its overall directions).

It is the detail, though, of this inequality that is significant. If we take a look at the comparative income distribution, we can see how the poorest sections of society fared worst. The chart on page 13 of the report looks at the gap between middle and lowest income groups (BHC = Before Housing Costs, AHC = After Housing Costs). So, although the rate of change slowed down, after the hammering of the Thatcher years, the Blair years still saw the lowest income group falling further behind middle income groups (and much further behind the very richest in society). This is despite the redistributive effects of welfare reforms in the period.

The report suggests the bigger divergence on the AHC ratio is due to the effect of home ownership and rises in the housing market values. So, the effect of the housing market was to aggravate relative poverty still further.

The other market involved was the labour market, as the Labour government began to invest in public services such as the NHS, staff, particularly skilled staff, began to push their wages up. The labour market does not register the importance of jobs, or social fairness, it merely looks at how difficult it would be to replace a given worker.

This is important: in an economy based on buying and selling using widespread division of labour, it becomes impossible to know the value of any given person’s contribution to the final product. The actual value of goods can only be found when they are sold. The assumption is that employers will not use labour unless they have to, so everyone’s contribution is equally essential to the production of the final product. Employers will pay whatever it takes to maintain and reproduce the willingness of a particular type of worker (possessing a particular type of skill) to do the work required.

Put another way, a Richard Branson or an Elon Musk could not have their millions and billions without office cleaners, receptionists and the whole other myriad so-called unskilled clerical and manual jobs undertaken in the economy. As an example, if you needed a life-saving operation, you’d want the world’s finest surgeon, but not at the price of being dragged by your hair to the theatre by the world’s worst hospital porter, to find that it had been disinfected by the world’s worst hospital cleaner.

The modern method of production sees an increasingly collective approach to generating wealth, but it is one in which the outputs are very unequally distributed. The work that is called unskilled actually requires very definite skill and aptitude to perform, but lacks formal qualifications and many people are available to perform that work, hence making it easy to replace staff and thus hold their wages down.

The people at the very bottom of society saw the Thatcher years make them poorer, and the Blair years do little to address it, the perception became clear that ‘They are all the same’ and that Labour cared more about the elite than it did about them, especially as the very rich could be seen to be getting very richer, and the middle income groups were gently drawing away.

The radical right-wing message that it was foreigners, who mostly came to work in the unskilled labour market, holding down their incomes, became a siren song that fuelled both a rise in the BNP vote during the Blair/Brown years, and also which in turn fuelled the Brexit coalition.

The Johnson government is pandering to this perception by their newly announced immigration policy. This policy is set to restrict immigration for low-paid jobs, setting a minimum income for incoming workers. Although, there has been talk about exempting particular industries that need labour, such as seasonal pickers.

The reality is that this policy is not about reducing overall migration, but reducing the legal rights of migrant workers, and opening the door to specifically use migrant labour that can be dismissed easily and sent away without any claim to those redistributive benefits that the Tories are set to try and hold down.

Although it goes unsaid in most quarters, the lack of improvement in the lives of many people coupled with the failure of a Labour government to make significant changes to their lives, underpins most of what is happening in politics today, even the rejection of the Corbyn Labour party, in the light of people’s refusal to believe it would mean a significant change.

The Blair years’ motto ‘Education, education, education’ was based on the premise that the way out of poverty is to get training/education/skills and get a higher paid job. But someone has to do the ‘unskilled’ work, it will never go away, and the wages system will always weigh against the people doing that kind of work. This disproportionately affects women, who tend to bear the brunt of child rearing, and so cannot develop the skills and experience to hold onto the higher-paid jobs.

The only way to improve the lot of the poorest in society is to lay claim to the wealth we collectively produce, and ensure that that wealth is put to our collective use as well.

Pik Smeet

Top to Bottom (2019)

Book Review from the October 2019 issue of the Socialist Standard

Richard Wilkinson and Kate Pickett: The Inner Level. Penguin £9.99.

A decade ago the authors wrote The Spirit Level (discussed in the Socialist Standard for June 2009 and December 2010). There they showed how countries with higher levels of inequality also had more problems such as shorter life expectancy, more obese people and less social mobility. In this new book they extend their analysis to mental and psychological issues (see their website www.equalitytrust.org.uk for more information).

The main claim is that problems with a social gradient (those which are more common as you go down the social hierarchy, e.g. in terms of income) are more severe in more unequal societies. Thus the incidence of schizophrenia per head of population is higher in countries that exhibit greater inequality (almost three times as high in Brazil as in France, for instance). The more unequal US states have higher levels of depression. Generally, a greater degree of inequality can result in more social anxiety, which may itself be responsible for more problem gambling and risky alcohol consumption. Higher inequality can also make people more narcissistic, with an exaggeratedly positive view of themselves, which may again be related to social anxiety. More unequal countries show more bullying by children, fewer visits to art galleries and museums, and less civic participation (belonging to clubs of various kinds).

Inequality, then, is a bad thing, but it has not been a permanent feature of society: ‘throughout most of our specifically human prehistory, we lived in extraordinarily egalitarian hunting and gathering societies, in which food was shared and goods were passed between people’. Hunter-gatherers had no dominance hierarchy, and there were social constraints on alpha-male tendencies. It was the rise of agriculture that was probably responsible for the development of inequality. The social hierarchy which exists today is not the result of natural differences in people’s abilities; rather, any such differences are a product of this hierarchy since, for instance, the number of years spent in poverty can affect a child’s intellectual development.

As in The Spirit Level, Wilkinson and Pickett argue for a more egalitarian social system, or at least one where the degree of inequality roughly corresponds to that in the currently less unequal countries, where the incomes of the richest fifth are ‘only’ about four times higher than those of the poorest fifth. They argue that co-operatives and employee-owned companies can contribute to this and to the aim of a more environmentally sustainable society, with the challenge being ‘to improve well-being without growth’. There would be an end to consumerism, which is itself driven by status insecurity, and to wasteful consumption. The demands of work would be reduced, with greater leisure and so better health, both mental and physical.

The book is very informative about the extent and consequences of inequality, but achieving all that the authors envisage in a society still based on employment and production for profit would be a real pipedream.

Paul Bennett

Unequal society (2009)

Book Review from the June 2009 issue of the Socialist Standard

The Spirit Level: Why more equal societies almost always do better. Richard Wilkinson and Kate Pickett. Allen Lane, 2009.

The main theme of this book, as summarised in its subtitle, is that people living in less unequal societies almost always do better than those living in more unequal societies. This unsurprising theme is spelled out in the nine chapters in the middle part of the book dealing with the costs of inequality in various areas of life and society: community life and social relations; mental health and drug use; physical health and life expectancy; obesity; educational performance; teenage births; violence; imprisonment and punishment; and social mobility.

The first part of the book—titled Material Success, Social Failure—is an uncontroversial, even anodyne commentary on where we are now. Material success is a privilege of the minority: “the least well-off people even in the richest countries sometimes find themselves without enough money for food.”

Socialists are more likely to be interested in what the authors have to say in Part 3, A Better Society. Wilkinson and Pickett present themselves as good people with good ideas writing of the “need to create more equal societies able to meet our real social needs.” I particularly like the cartoon they reproduce of a rich, portly father explaining to his small son, “It goes in cycles, Junior. Sometimes the rich get richer and the poor get poorer. Sometimes the rich get richer and the poor stay the same.”

But the authors are really not as radical as they pretend. They like the charitable, friendly society, mutual, credit-union side of capitalism more then the openly profit-seeking side. They want a nice capitalism, not a nasty one. So when it comes to “what can be done?” they list reforms like “plug loopholes in the tax system, limit ‘business expenses’, increase top tax rates, and even legislate to limit maximum pay in a company to some multiple of the average or lowest paid.”

Stan Parker

What about pension rights? (1992)

From the May 1992 issue of the Socialist Standard

Last month we looked at figures provided by the Inland Revenue and concluded that although the distribution of all forms of wealth was unequal enough—the top 1 percent own 18 percent, the top 10 percent own 53 percent while the bottom 50 percent own a mere 6 percent—the distribution of capital, as forms of wealth yielding an unearned income, was even more unequal. The top 1.5 percent of wealth-owners with £200,000 or more owned 36 percent while the bottom 65 percent owned virtually none.

Others have used a different set of figures to reach a different conclusion: those for the ownership of shares traded on the London Stock Exchange which show that only about 17 percent are now owned by private individuals (see graph). The rest are owned by commercial and financial institutions of one kind or another, in particular by insurance companies, pension funds, unit trusts and investment trusts or “institutional investors” as they are collectively known as. Since a large part of the funds of these institutions comes from small investors, the claim is made that these figures mean that the capitalist class now own only 17 percent of capital in Britain and even that the remaining 83 percent is owned by the working class.

Whatever may be the significance of the decline of the private Stock Exchange investor—what it means is that the person of the capitalist has become even more redundant, not only to organising production but now also to the specifically capitalist function of finance, making it clear that what we are up against is an impersonal system—it does not alter the figures for the distribution of capital given in last month's article.

Just because the rich no longer invest directly on the Stock Exchange to the extent that they used to does not mean that they don't do so indirectly. They too have bank accounts. They too have insurance policies (Maxwell was reportedly insured for £20 million). They too resort to investment trusts. According to the Inland Revenue figures, those with £100,000 or more (not enough at the lower end, it is true, to be a real capitalist but still only 7 percent of the population) own not only 85 percent of company shares (not just the 17 percent mentioned above but also of those held via unit trusts and investment trusts), but also 47 percent of bank accounts and 47 percent of insurance policies as well as 81 percent of other financial assets (mainly government and local authority bonds) (see Table 1).

Money invested in insurance policies, personal pensions, unit trusts, banks and building societies is taken into account in the Inland Revenue statistics—and they show that those with £100,000 or more own 61 percent of all capital. The one exception is the money in pensions funds, but would this alter the figures and who does it belong to anyway?

The Inland Revenue in fact publishes three sets of figures for the distribution of wealth. The first covers the distribution of "marketable wealth”. The second adds in occupational pension rights. The third adds in both occupational and state pension rights. The results of these additions, for what they are worth, for 1989 are given in Table 2.

Non-existent billions

The third set of figures—that incorporating state pension rights—is completely worthless. The government actuary has estimated the total value of state pension rights in 1988 to be £573 billion (Economic Trends, November 1991). As anybody who works or has worked acquires state pension rights this amount is assumed to be evenly divided amongst the adult population. So half, or £286.5 billion, is attributed to the bottom 50 percent. This is three times the total “marketable wealth” owned by this category and an average of £13.000 a person, so, by this simple device, increasing their average holding from £4000 to £17,000! Since only 1 percent of the total, or £5.73 billion, is added to the total wealth held by the top 1 percent, the overall effect is to considerably reduce the degree of inequality in the figures for the distribution of wealth. The share of the top 1 percent falls to 11 percent and that of the top 10 percent to 38 percent while that of the bottom 50 percent rises to 17 percent.

But this exercise is quite fraudulent. This figure of £573 billion—equal to more than a third of “marketable wealth”, which is wealth that really exists and is recorded in the first set of figures in Table 1—is purely fictitious. It has no real existence. There are no real assets “owned by the working class” and invested on the Stock Exchange that correspond to it. The figure is obtained by converting the flow of income represented by present and future state pensions into a notional lump sum. This is legitimate for some accounting purposes, but what is not legitimate is to go on to assume that this sum actually exists and to attribute it to individuals, in the event mostly workers, as part of their wealth.

State pensions in Britain are paid out of taxation. They are what the National Accounts statisticians call a “transfer payment”; someone else’s income is taxed and then transferred to state pensioners as their income. As taxes ultimately fall only on property incomes there are real capital assets somewhere which, through the exploitation of productive labour, yield the income out of which state pensions are paid. But these assets belong not to workers with state pension rights but to the rich property-owners on whom the taxes to pay the pensions fall.

The absurdity of converting a transfer payment into a notional capital sum and counting this as part of the wealth of the recipient can be seen when other transfer payments are given the same treatment. Income Support, for instance. It, too, could be converted into “wealth" and used to show that the poor are not really poor at all. In fact, since in many instances Income Support is higher than the basic state pension and since, being paid to people below pension age, it is payable over a longer period, the “wealth” which would be attributed to many on Income Support would be much greater than the extra £13,000 state pensioners are supposed to possess. Because attributing wealth of, say, £20,000 to someone on Income Support would be dismissed as absurd, the government's statisticians have not dared to do this calculation. They’d be laughed to scorn, as they should be for doing the same thing with state pensions.

But what about occupational pensions, those paid by employers? Most occupational pensions are not transfer payments since they are paid out of a fund that really does exist and which really is invested, among other places, on the Stock Exchange. The government actuary estimated the value of occupational pension rights in 1988 to be £441.6 billion, or on average £21,800 for each of the 20 million people in occupational pension schemes (Economic Trends, November 1991). But the total value of all pension funds is only £330 billion. It is the inclusion of civil service pensions, which are transfer payments, that is the main explanation for this discrepancy. So these must be taken out before we can even begin to take the figures seriously.

Once this has been done, there still remains £330 billions worth of real capital. Who does it belongs to? Legally it is the property of the trustees of the pension fund, who are required by law to manage it in the best financial interests of the scheme's existing and future pensioners. But this is not the whole story.

Employers are not obliged to set up a pension scheme for their employees, so those that do can be assumed to have done so in what they perceive to be their own best interest; in other words, with a view to enhancing their profits and profitability. Such factors as winning the loyalty of white collar staff, attracting and keeping skilled labour, and having a generally contented, and so more productive, workforce enter into the calculation.

If an employer wants to set up a pension scheme the law lays down that the money to pay present and future pensions must be kept quite separate from the rest of the firm's capital. Otherwise of course the temptation would be there for the employers, when they needed more capital or when they get into financial difficulties, to raid the money in the pension scheme. In most schemes the trustees are employer representatives wearing another hat and, although few go as far as the late great Robert Maxwell, they sail as close to the wind as they can. The law permits up to 5 percent of a pension fund to be invested in the employer's business. Employers can also quite legally appropriate a part of any surplus in their pension scheme:

  Companies throughout the country are wondering if they can. or should, follow Lucas by siphoning cash from their own pension funds.
 The group, based in Birmingham, has swelled its coffers by £150m. using a new rule giving companies access to what has been an untouchable source. The money came at a useful time for Lucas, whose automotive arm has been hard hit by the recession: it reduces the ratio of shareholders’ funds to company debt from 39 to 16 per cent.
 Attempted raids on the pension fund are a favourite tactic by finance directors looking to shore up balance sheets and are usually the catalyst for heart-rending schemes in which pensioners, having given the company the best years of their lives, feel distraught. insecure and betrayed . . .
 The freeing of the Lucas pension fund surplus results from a change to tax legislation governing occupational—that is, funds linked to employers’—pension schemes. (Independent, 26 November 1991).

There have also been cases where firms have been taken over by rivals hoping to get their hands on the surplus in their pension fund.

So, who do pension funds belong to? As can be seen, a strong case can be made for saying that they belong to the employers who set them up. The existence of the scheme benefits them; they have the final say in how the scheme is run and what benefits it provides; they pay most of the money into the scheme and, as the Lucas case shows, they can get some of it back when there is a surplus. On this view, the funds belong to the employers but are kept, by a legal device, in a fund separate from the rest of the capital of the business.

That there are serious difficulties in saying that pension funds are owned by the workers who receive or are due to receive payments from them is in part recognised by the Inland Revenue itself which excludes them from the figures it issues for the amount and distribution of “marketable wealth”. Their grounds for doing so are that, although in their view the capital in pension funds can be attributed to individuals and then counted as part of their wealth in the same way that they do for state pensions, these individuals don't exercise full ownership rights over it— they can't sell it or bequeath it to their inheritors; in short, they can't “market” it. To get round this the Inland Revenue has invented the strange concept of “non-marketable wealth” as wealth owned by individuals but over which they cannot exercise the basic right of ownership, namely, to sell it!

Workers have a more sensible conception of what occupational pensions are, seeing them, not as part of their “wealth”, but as deferred wages paid by their former employers.

Adam Buick

Next month: Do the rich get richer?

The rich are still there (1992)

Illustration by Peter Rigg.

From the April 1992 issue of the Socialist Standard

Capitalism is a class-divided society in which a minority own and control the means of production while the majority are forced by economic necessity to work for a wage or a salary in order to live.

Whatever may have been the case at an earlier stage of capitalism, nowadays ownership of the means of production does not take the form of personal possession, management and appropriation of profit, but that of a legal right to draw an unearned income derived from their operation. The most obvious case of this are stocks and shares.

But since any income is a claim on wealth and since wealth can only be produced by humans working on materials that originally came from nature, all forms of unearned income are ultimately derived from the operation of the means of production and so represent a stake in their ownership even if no direct link can be established with a particular factory or mine or railway or whatever. Interest-bearing bank or building society accounts, and government bonds and National Savings, are, like stocks and shares, property rights over the means of production.

So, in modern capitalism, minority ownership of the means of production is not going to be a case of the minority personally possessing as their exclusive private property all land, factories and other workplaces, but of them having a disproportionate share of legal titles conferring the right to draw an unearned, or property, income from the operation of the means of production as a whole. What the statistics can be expected to show is not 1.2 or 5 percent owning 100 percent of unearned income yielding rights, but a range from those having little or no stake in the ownership of the means of production, through those having modest stakes of varying sizes, to those at the top end with stakes large enough to provide an income sufficient to free them from the necessity of going out and working for a wage or salary.

What the statistics show
So what are the statistics and what do they show? Ever since Sir William Harcourt introduced death duties in the budget of 1894, the Inland Revenue has possessed the raw data for working out the distribution of property and property rights in Britain. Once you know how much, and what type of wealth, people leave in their wills it is possible to estimate what and how much those who are alive own:

   Briefly, the Inland Revenue collects information about the value of estates and. by applying factors based on inverse mortality tables, derives estimates of the wealth of the living . . . A number of adjustments have to be made in the course of deriving these estimates: some asset valuations have to be converted to values which are more appropriate to the wealth of the living; as no information is available on holdings of some jointly-owned property which would pass on death to the surviving joint owner, this data has to be imputed using limited data available from other sources; similarly, imputations are required for property held in some trusts and for the holdings of the smallest estates which do not require a grant of representation when passing on death. (Economic Trends. November 1991).

The results of these calculations are published each year in the annual Inland Revenue Statistics. The latest edition, that for 1991, came out in January. The provisional figures for the year 1989 are given in Table 1.

This is the source of the figure quoted in the press at the time of the top 1 percent owning 18 per cent and the top 10 percent owning 53 percent of all “marketable wealth". The figures also reveal (see Table 2) how lacking in wealth are the vast majority of the population: 83.7 percent own wealth worth less than £50,000. while 52.7 percent own less than £15,000 and 31.8 per cent less than £5000.

But revealing as these figures are, they are not those we are looking for since "marketable wealth” is precisely what the term suggests: wealth of any kind owned by an individual and which they could dispose of for cash. To measure the unequal stake people have in the ownership of the means of production what is relevant is not all wealth but only those forms that confer the right to pocket an unearned income. The ownership of means of consumption such as houses, cars and household goods needs therefore to be excluded. These in fact form a fairly high proportion of marketable wealth.

Distribution of capital
Unfortunately the figures quoted above are not broken down by type of asset, but the raw Inland Revenue data after application of the mortality tables are. The figure for this—called "identified personal wealth”—is somewhat less than the final adjusted figures as it excludes in particular any wealth owned by adults whose wealth holding is too small to have to be declared to the tax authorities (this applies in fact to 65 percent of adults) and also the wealth held in the trusts which are a favourite tax-avoiding device employed by the rich. In 1989 identified personal wealth amounted to only 65 percent of total marketable wealth.

What these figures show is that 46 percent of personal wealth takes the form of residential buildings and 8 percent of household goods, cars and other personal possessions, making a total of 54 percent. It is the distribution of the remaining 46 percent—consisting of stocks and shares, bank and building society accounts, insurance policies, government bonds and other financial assets, and land and non-residential buildings—that interests us since, as assets yielding an unearned financial income, they are forms of wealth that confer a stake in the ownership of the means of production. They are capital in the sense of wealth that is invested to obtain an unearned income, whether profits, dividends, interest or ground-rent.

What the figures for the ownership of such capital show can be seen from Tables 3 and 4.

As stated, these figures do not include wealth that does not have to declared to the tax authorities on death. Of this excluded wealth, all of that held in trusts by and for the rich will be capital and, if included, would increase the share held by the 674,000 individuals who make up the top 1.5 percent of capital-holders. The "wealth” of those who would leave ‘‘the smallest estates”, on the other hand, can be reasonably assumed to be in the form of household goods, personal possessions and perhaps a car rather than as capital except for paltry amounts in a bank, building society or the Post Office. Since 65 percent of adults, or over 28 million out of a total adult population of 44 million, fall into this category of “smallest estates", we can safely say that two- thirds of adults have virtually no stake in the ownership of the means of production.

The conclusion from these figures is that the richest 1.5 percent—those with wealth of all sorts, not just capital, of £200,000 or more—own at least 36 percent of capital and of the different types of capital. 67 percent of shares and 62 percent of land. When the next richest category of those who own wealth of all kinds between £100,000 and £200,000 is added, it emerges that the top 6.7 percent own 61 percent of personally-owned capital, 85 percent of shares and 81 percent of land.

So the official Inland Revenue figures amply confirm the socialist analysis that capitalism is a class-divided society in which the vast majority own so little capital that they are forced by economic necessity to work for a wage or a salary for the benefit of the tiny minority who own so much capital that they could live off the unearned income.

Adam Buick

Next month: What about pension funds?

Voice From The Back: The Profit Motive (2014)

The  Voice From The Back column from the June 2014 issue of the Socialist Standard

The Profit Motive
The insanity of capitalism with its profits before people motivation is everywhere apparent. Millions spent on armaments while people die from lack of basic medical treatment, immense wealth accumulated by a tiny minority of parasites while millions die from lack of clean water and food, but the following news item probably sums up the madness best. ‘In a wide-ranging interview with the India-based Economic Times, Cargill CEO David MacLennan talks about how the globe-spanning agribusiness giant managed to turn the 2008 economic crisis into a “record year of profits” a remarkable performance, given that that year’s food-price spikes pushed 115 million people into hunger, as the UN’s Food and Agriculture Organization estimated’ (Mother Jones, 2 April).


The Rich Get Richer
In last month’s Socialist Standard we dealt with the French economist Thomas Piketty’s book Capital in the Twenty-First Century and its many short-comings, but its publication and the many reviews it has produced in the mass media has thrown up some interesting aspects of modern capitalism. Here for instances is the journalist Philip Collins in his review of the book. ‘Between 1977 and 2007 the richest 1 per cent of Americans took an astonishing 60 per cent of the growth in national income. Sixty per cent. The wealth of the richest 85 people in the world is greater than that of the 3.5 billion people who make up the bottom half of the world’s population’ (Times, 2 May). Such statistics must give even the staunchest defenders of capitalism cause for concern.


Not For The Likes Of Us
Professor Karol Sikora a former director of cancer services at Hammersmith Hospital and ex-chief of the World Health Organisation has expressed his views about treatment of the disease. ‘One of Britain’s top cancer doctors has called for expensive cancer drugs to be rationed for the frail elderly in favour of being given to younger patients’ (Sunday Times, 4 May). What the doctor really means of course is the elderly and poor patients being untreated. There would be a public outcry if he meant millionaires or even members of the royal family being denied the best possible treatment. As some of the treatments cost £50,000 per year it is obviously not for the likes of us workers.


Growing Old Disgracefully
After a lifetime of hard work many thousands of workers because of ill-health and ageing find themselves reduced to living in a so-called Care Home. ‘The Care Quality Commission, which carries out inspections of homes, this week confirmed that in the past three years warnings were issued to 1,200 homes, of which 158 were forced to close. …….. A request to 150 councils revealed officials examined a total of 16,405 cases in the past 12 months, up from 13,880 in the previous year. The number of elderly residents who claim they were abused by care home staff also rose last year to 30,785, or 600 a week’ (Daily Express, 4 May). All sorts of proposals are put forward to deal with the situation but the reality is that the Care Homes are under-staffed and under-funded and are unlikely to be improved inside capitalism.


The Gap Widens
The legal dispute over a divorce settlement between Silvio Berlusconi and his second wife shows the enormous gap between the millions who are trying to survive on $2 a day and the obscene wealth of the owning class. ‘Her demand for a one-off payment of 540 million euros (£440 million) caused talks to break down. Berlusconi, who is worth an estimated 6.5 billion euros, is said to be willing to offer her 200 million euros’ (Times, 10 May).


Some Consolation
At one time Britain was the wealthiest and most powerful nation in the world but these days are long gone. There is one economic category though where Britain still leads the world. ‘The number of billionaires living in the UK has risen to more than 100 for the first time, according to the 2014 Sunday Times Rich List. There are now 104 billionaires based in the UK with a combined wealth of more than £301bn, the list says. That means the UK has more billionaires per head of population than any other country’ (BBC News, 11 May). This must be a wonderful boost to Britain’s unemployed and homeless!