The rich get richer (1992)

From the June 1992 issue of the Socialist Standard

One further aspect needs to be dealt with in this the last in our series of articles on the concentration of wealth ownership in Britain, and that is the question of what happens over time. Do the richer get richer?

From the point of view of economic theory, this is what you would expect to happen. Capitalism is based on the concentration into the hands of a tiny minority of the population of the ownership of the means of production. These function as capital for them in the sense of providing them with an unearned income. The source of this unearned income that accrues to capital is the labour of those who operate the means of production and actually produce wealth.

Ownership of capital, in other words, confers the right to appropriate a part of the new wealth that is being produced every day. Most of this new wealth—around 80 percent in fact—is used as means of consumption, by workers from their wages and salaries, by capitalists from their rent, interest and dividends, and by the state from the taxes it levies. The rest, under the spur of competition between capitalist firms to maximise profits, is accumulated as means of production, as further capital to yield an unearned income for their owners. This accumulation of capital out of profits produced by those who operate the means of production is what capitalism is all about. Capitalism is an economic system under which means of production are accumulated in the form of profit-yielding capital.

In concrete terms what this means is that the stock both of physical means of production (factories, machinery, plant, materials, etc) and of its monetary form, capital, grows over time. This is by no means a steady process—it is halted and even reversed from time to time, as in wars (when wealth is physically destroyed) and in slumps (when the same thing happens and when the value of the rest falls)—but the long term trend is upward. This must mean that in the long run those who own the means of production—the rich—get to own more means of production, more capital, i. e. get richer.

Changing estimates

So much for the theory, but is it confirmed by the facts? For all but the recent past the facts are not easy to come by. In Britain they nearly all come from the statistics about estates left in wills which the Inland Revenue has been collecting since death duties were introduced in 1894. Until 1960 it was left to individual academics to convert these into figures for the ownership of wealth by the living. They often used different methods, which meant that their estimates were not always comparable, but there was broad agreement that until the Second World War the top 1 percent owned about 60 percent and the top 10 percent about 90 percent of personal wealth, as a study quoted by the Royal Commission on the Distribution of Income and Wealth in its first report in 1975 showed (Table 1).

This slow long-term fall in the percentage shares of the top groups should not be equated with a fall in the amount of wealth they owned, but rather, as we shall see, with a slower rate of increase in their wealth than that of other groups.

From 1960 the Inland Revenue began producing its own yearly estimates. According to these, between 1960 and 1975 the share of the top 1 percent declined from 38 percent to 23 percent, that of the top 5 percent from 64 percent to 47 percent and that of the top 10 percent from 77 percent to 62 percent.

These figures were challenged by those who argued that they underestimated the concentration of wealth ownership. The critics correctly pointed out that the figures, being based on wealth declared to the Inland Revenue for death duty purposes, inevitably left out the wealth of the rich that was placed in discretionary trusts and other such devices or given to relatives before death precisely to avoid paying death duties. Defenders of capitalism, on the other hand, argued that the figures overestimated the degree of inequality as they did not take into account the wealth owned by the 60 percent or so of the population whose estates did not have to be declared to the Inland Revenue because they were too small. Individually the amounts were small but, in view of the millions of individuals involved, when added together made up a significant amount.

The Labour government that came into office in 1974 set up a Royal Commission, in the time honoured way, to bury its promises “to launch a fundamental attack on the principle of the hereditary transmission of great wealth, with its associated power and privilege” and “to bring about a fundamental and irreversible shift in the balance of power and wealth in favour of working people and their families”. (Did the Labour Party once really talk like this?). This recommended that both types of non-included wealth should be taken into account, and the Inland Revenue now produces each year adjusted figures which do this. This new series of statistics began in 1976 and in fact shows that the distribution of wealth has changed very little since then (Table 2).

So the change between 1975, when the top 10 percent were said to own 62 percent, and 1976, when they were said to own 50 percent, resulted purely from a change in the way the statistics were calculated. Calculated on the old basis the figure for the top 10 percent in 1989 would still be between 60 and 70 percent.

Statistical illusion

But this is not the only purely statistical factor that is involved in the figures. What the figures show are the percentage shares, and not the actual amounts of wealth, of the various categories. These shares are shares in a cake (the stock of wealth) which, as we saw, expands in the long run. This means that, for one group to maintain its share, it must get the same share of the new wealth that is being accumulated. Thus if, as is generally assumed, before the First World War the top 10 percent owned 90 percent of accumulated wealth, then, for them to maintain their share, 90 percent of the newly accumulating wealth would also have to go to them. That they were in fact able to more or less maintain this share until the Second World War (see Table 1) is a testimony to the poverty of the rest of the population whose incomes were so low that they had to spend most of it on items of immediate consumption.

If during this period the other 90 percent had between them been able to accumulate more than 10 percent of the newly accumulated wealth, then the share of the top 10 percent would have fallen, despite the fact that they were continuing to accumulate wealth and even to accumulate more of it in real (as opposed to percentage) terms than the rest of the population.

It was precisely this situation that did occur from the 1950s on. Regular and more or less steadily-rising real wages and salaries meant that the non-rich began to acquire more wealth in the form of household goods, cars and houses. When included in the figures this had the effect of reducing the share of the rich, but this is the only effect it has had and it is purely statistical.

Independently of what has happened to the non-rich, the rich have gone on accumulating wealth and so getting richer. The November 1991 issue of the official government publication Economic Trends contained a table which showed how the total amount of “marketable wealth”, broken down by category, had changed each year from 1976 to 1988, all in 1988 money so as to be comparable. The general trend was upward, though there was a fall in 1981 corresponding to the last recession; the total increased from £752 billion in 1976 to £1317 billion in 1988. Of this extra £565 billion, 13 percent went to the top 1 percent, 39 percent to the top 5 percent and a massive 58 percent to the top 10 percent (which explains why their share increased over the period from 50 percent to 53 per cent), while a meagre 4 percent went to be shared amongst the 22 million in the bottom 50 percent.

What is even more interesting than how the total amount was divided amongst the categories is how the average amounts of wealth held by each person in the categories changed (Table 3). As can be seen, despite a smaller percentage increase than the rest of the top 50 percent, the average holding of those in the top 1 percent increased by some £132,000, more than that of those in any of the other groups. So the gap between the amount of wealth held by the individual members of top 1 percent and that held by the rest of the population increased. There is no reason to suppose that these years were exceptional in this respect, except perhaps that in some earlier years the gap between the average holding of the top 1 percent and that of the top 5 percent may have narrowed.

So the conclusion can only be that the so-called decline of the rich this century is a statistical illusion. Their share has only fallen, and then only after the Second World War, because the non-rich came to acquire more wealth. But this acquisition of wealth by the non-rich made no difference whatsoever to the position of the rich. They continued to get richer in the sense of coming to own more wealth in real terms (the only meaningful sense of the word “richer”). But not only this their average holding of wealth increased more in real terms than that of the non-rich. Defenders of capitalism who say that the rich have not got richer are conveying misinformation.

Adam Buick

Correction: the first column of Table 2 in last month’s article should have read, as was clear from the context. Top 1%, Top 2%, Top 5%, etc and not Top 1%, 1-2%, 3-5%, etc.

The Roots of Capitalism (1941)

From the April 1941 issue of the Socialist Standard

Though Capitalism may change its form and give rise to social structures which differ in many respects, yet at rock bottom it remains the same. Its pillars are wage-labour and capital: these are the constants of Capitalism, which is based upon the exploitation of wage-labour.

With the establishment of Socialism this exploitation will cease. Man is to-day exploited by man, because the means of wealth production are owned by and operated for the profit of a relatively small section of the world’s population. The masses, without any ownership in the means of production, are obliged, in order to get a living, to work in factories, in mines, on railways, etc., so that the owners thereof can reap profits.

The Socialist knows that the ills from which the workers suffer, degrading poverty and the multitude of other evils that accompany it, are due to the present system of society, the roots of which are wage-labour and capital.

Cut Away the Roots

The Socialist, therefore, wishing to put an end to these evils, logically urges upon the workers the need to abolish Capitalism, roots and all, and replace it by a new social system, the basis of which is the common ownership of the means of life by all society.

It will be seen at once that in Socialist society man could not exploit man, because no single person or group of persons would own the instruments for wealth production. The ownership of all these things would be vested in all society.

Of course, with the abolition of private property, capital and wage-labour will disappear. Production will proceed, not to satisfy the profit-making lust of capital, but to satisfy the wants of man.

With Socialism, man will enter upon a new life. No longer exploited by his fellow, no longer grubbing to make ends meet, he will be free. As never before, he will harness nature to satisfy man’s wants. Thanks to the high stage of efficiency industrial technique has now reached, plenty will be assured to all.

When Socialists advocate the abolition of private property, capital and wage-labour, up goes the cry: “Would you deprive of ownership those people who have laboured so hard to build up their businesses?”

This is Capitalism

The question itself is an anachronism today. In the early days of Capitalism, when the Capitalists, the “captains of industry,” worked side by side with the men they employed, there might have been some truth in the statement that owners of industry worked hard to build up their businesses. But that was long ago.

Capitalism to-day is not the Capitalism of the small trader. Present-day Capitalism is large-scale industry, growing ever larger. In growing it becomes more and more impersonal: the worker-owner of yore is replaced by the absentee shareholder and by the bureaucracy of the State.

The first point, then, that the Socialist makes in answer to the above question is that it ignores present-day realities.

Secondly, not Socialism but Capitalism is the great expropriator. Capital has already deprived of ownership the vast majority of the population. Even in his day, in 1848, Marx was able to answer this self-same question by showing that for the masses private property had been destroyed. Since Marx’s day, the tendency has continued; capital becomes concentrated into fewer hands. Periodically we are able to see this closely: when small businessmen are driven out of business by big trusts. How many small capitalists have such firms as Woolworth’s reduced to the ranks of the working-class ?

Referring back to the question, it is worth while thinking for a moment how businesses are built up. Certainly big businesses are not usually built up by the labours of the capitalists. To put but one point of view, one worked out by Josiah Wedgwood in “The Economics of Inheritance,” the capitalist class of to-day inherits a very large portion of its wealth. Wedgwood writes: “The relative proportions of the total property in 1912 acquired by ‘saving’ and inheritance are 34 per cent. and 66 per cent. respectively, or, in round figures, one-third and two-thirds” (p. 138, Pelican Edition).

Big businesses are, of course, built up by the exploitation of workers. Proofs of this can be seen all around us. Who would say, for example, that the shareholders (the owners) of the railways have built them up and make them work ? Long ago, Engels pointed out that the capitalist class has ceased to contribute by its labour to production. Frequently the capitalist never visits the works in which his capital is invested. No longer does the capitalist even figure as a supervisor—his place has been taken by “well-paid” managers—members of the working-class. The role the capitalist plays today is of a parasitical character. He appropriates the profits produced by the exploitation of wage-labour.

Whilst on this point, it is worth while referring to an article which appeared in the Sunday Dispatch (December 22nd, 1940), entitled “400 Scots run Giant Ranch and They’ve Never Seen It.”

The article gave a picure of capitalism true in many respects. It dealt with the origin and growth of the great Matador Ranch in Texas.

It is worthy of note how the Matador company started. To quote from the Sunday Dispatch : —

“Matador started simply; there were big profits in the ranch business, and the five Scots entered the market as a gamble. . . . .The five had one thing in common. They had never seen a ranch, wouldn’t have recognised a steer if they saw one, and knew precisely nothing about cattle. They did not even go over to see their piece of prairie.”

It is obvious from the above that the five capitalists mentioned above could not supervise the ranch, nor did they build up the business by their labours—the prairie was too far off and they knew nothing about ranching.

This example is typical of present-day capitalism. Fortunes come to the capitalists, not because they are intelligent or hardworking, but simply because they own, and because masses of people, without any means of life, are driven to work to provide profits for the owners.

To return to the Matador Ranch, it is interesting to see what the Sunday Dispatch journalist tells us of the people who actually do the work and make the concern go—the cowboys. Says the writer: “They are not a bit like Cecil B. De Mille paints them.” We can believe that; they have hard work to do, and, in return, receive “30s. a week and keep.”

The objection to the Socialist demand for the abolition of private property, wage-labour and capital is not, therefore, a serious one. As we have seen, the question reveals a point of view typical of capitalist society in the days of small-scale industry. As with the passing of time, small-scale industry counts less and less, the struggle becomes one between a capitalist-class who do nothing towards production, and a working-class who do all the work and run industry from top to bottom.

Clifford Allen

Diary of a Capitalist (1979)

The Diary of a Capitalist column from the March 1979 issue of the Socialist Standard

Sunday

Lord and Lady Brownlow were telling me the other day of their family financial arrangements. Their four-year-old son, Peregrine, has just inherited £3 million. As they said, he will remain “a very normal little boy”.

Someone must have eavesdropped, because now the Daily Express columnist Jean Rook (29.11.78) has seized the chance to make a cheap sneer. How can any four-year-old with £3 million be “normal”, she says. She has missed the point entirely. He is a very normal little boy by capitalist standards. What’s so special about three millionnn? Nobody said anything about him being normal from a working-class point of view.

Journalists pretend to forget that the two classes in our society are completely different. What is normal for us in the capitalist class is not, of course, normal for the rest of the population. For example, you wouldn’t find a capitalist making a cheap sneer. An expensive one, possibly.

Monday

At the club this morning we all agreed what a splendid letter dear old John Wakeham, the Conservative MP, wrote to the Daily Telegraph the other day (15.11.78). He said, in a fine peroration. “Conservatives put their country first, their party second and themselves last.” Absolutely true, we told each other, if by Conservatives you mean the upper-class people who really run the party. Some of us at the club were Labour supporters, and we all accepted it was true of Labourites and Tories alike among the ruling class How different from the workers! Someone made an impromptu speech attacking these greedy union- members, always selfishly trying to grab more devalued money—the “Gadarene rush” as one industrialist called it recently. We all enjoyed the implication that these people perpetually worried about their wages and salaries are simply swine. We had a few rounds of drinks to toast our own self-sacrifice, and the noble unselfishness of all the moneyed people like us. heroically putting their country first and themselves last. We all tried not laugh.

Tuesday

Had a few people to dinner myself this evening. Among the trimmings were half a dozen edible dormice at £39 each (from a farmer near Stockport, Sunday People, 24.12.78). a few jars of caviar at £104 a pound (Observer, 24.12.78) and a small bottle of Hungarian Tokay wine probably dating from the 1680s. which I got recently at Sotheby's for £1300 (Daily Telegraph, 14.12.78). There isn’t much eating or drinking in any of them, but it’s these little things that show your guests you have made an effort.

Wednesday

The poor old Shah of Persia! So the Iranian capitalist class has decided to ditch him. 1 warned him last winter what might happen. I was staying on Kish Island, in the Persian Gulf, where (as the Daily Telegraph put it, 11.11.78) "a complex of villas, casinos, and a luxury hotel has been built and where bevies of imported French girls act as 'maids’. Further lavish development is planned.” It is only for the upper class —"the very rich of the Gulf area, influential Persians, and the aristocracy.” Others need not apply. "Strict security screening makes certain that only the favoured are allowed into the exclusive holiday club with its £800 membership fee. a compulsory £8000 credit card and villas at rentals running into thousands." The idea is an obvious money-spinner, given the number of people around with pots of money to spend on enjoying themselves, and the Pahlavi Foundation, the Shah’s family trust, apparently provided most of the finance for setting up this paradise of extravagant pleasure for the well-heeled (Observer, 7.1.79). "The Shah and his family have spent several winter holidays at a Royal residence on the island but not at the club where the French 'maids’ sunbathe topless" (Daily Telegraph, 11.11.78).

When I stayed there I had several talks with the King of Kings, as he is (or was) known to his friends. I told him that despotism, with its censorship, its vast armed forces, and its secret police (such as the Shah’s Savak), and all the expense of jails for political prisoners, was very expensive. In Britain, I said, the ruling class was firmly in power. and our system was much cheaper. I tried to persuade him to allow freedom of speech, political association, and so on. I pointed out that under our system only the very rich could run mass newspapers and magazines, or own TV and radio companies; and with the state radio and TV also pouring out pro-capitalist propaganda continuously, the people of Britain have so far been persuaded into almost total support of capitalism. The political parties that come to the top in our system (I said) all advocate various models of capitalism, whether mainly private enterprise, mainly State-controlled, or something between the two. So capitalism is safe whichever party is in power; no expenditure is usually necessary on secret police, military tribunals, expensive political jails, or a censorship apparatus; and you can boast of your democratic freedoms, which is very useful in drumming up support for the State, both in peacetime and (even more) in wartime.

The Shah, however, said it wouldn’t work at present in Iran. Practically everyone in Britain can read, and so is subject to written propaganda: not so, yet, in Iran. Nor are TV sets as common there as here. When universal education and hire purchase have put this right, said the Shah, he would think about it.

And now it’s too late! Perhaps I'll drop a line to the Ayatollah Khomeini, the new "strong man", giving him due warning. Despotism seems more stable than democracy; really, the opposite is true.

Thursday

Have made an agreement for the first day of the shooting next season. I’ve got some nice pheasant and partridge moors for £3500 for an eight-gun syndicate, including myself. Last year the first-day bag of these moors was 700 birds. It’s getting a bit on the expensive side—in lots of places a couple of good days after the pheasants will cost you well over £500 per gun (Daily Telegraph, 11.12.78). Last season I got up a little party and we took a 10,000-acre estate pheasants and partridges for £20,000.

I like imagining I'm knocking over some of these damned strikers or picketers when I’m after the game. Each pheasant I kill, I say to myself—that’s another of these idle trouble-makers accounted for! Shooting’s too good for some of them.

Friday

A lot of unnecessary fuss in Denmark. The Danish Minister of Education. Mrs. Ritt Bjerregard. went to Paris for a Unesco conference, and her expenses for a thirteen-day stay were £5,700 (Daily Telegraph, 23.12.78). The Danish PM told her to pay part herself, and when she refused, sacked her.

A storm in a teacup. £5700 is nothing out of the ordinary—I've spent much more than that in two weeks in Paris! If this Mrs. Bjerregard is a member of the capitalist class, she could easily pay it herself; if not. she shouldn't have enjoyed herself on that scale.

The truth is. the Minister seems to have been enjoying herself as if she were rich, when she wasn’t.

Saturday

Though democracy has many advantages for the ruling class in advanced Western societies, it is not without its drawbacks. Sometimes I wonder if the rival political parties don’t go too far in their battles to secure the fruits of office. There’s no denying that some awkward facts do leak out occasionally.

Mr. Callaghan and most of his ministers have committed themselves to the thesis that the working class causes inflation through pay-increases, which is their defence when they are criticized over the continuing rise in prices. Of course we in the ruling class know that this claim is nonsensical, but it is good propaganda and makes for exciting newspaper stories against the greedy proles. But in their haste to discredit Callaghan's lot and grab place and power for themselves, some Tories have been prepared to show up Callaghan's naive errors, even at the expense of abandoning a first class anti-worker argument. The Daily Telegraph published a middle-page article recently (15.11.78) in which the author pointed out that rising wages cannot push up the price of goods unless the Government validates increased prices by printing more money . . . That this is clearly true is suggested by the fact that many firms have been unable to recoup rising labour costs by increased prices: for if prices could always be raised by as much as costs rose, no firm need ever lose money.” A week later (22.11.78) another middle-page article recalled the real reason why Governments of all kinds have continuously and deliberately inflated the currency for the last forty years: "Keynes persuaded a whole generation that by expanding the money supply and generating mild inflation, thereby reducing real wages, it would be possible to circumvent union opposition to necessary wage-reductions.”

Now we all know that these are the facts of the case. The Telegraph writers have exposed Callaghan—either he has been deliberately doing one thing and saying another (whatever you call that kind of behaviour), or he is painfully ignorant of elementary economics. But supposing the workers get to know of this? Most trade union leaders who appear on the TV hasten to register their agreement with Callaghan’s claptrap. self-evidently fallacious though it is, and grovellingly apologize for their members who have gone on strike hoping to regain the standard of living they thought they had agreed to work for a year ago, is it wise to abandon such a splendid weapon, which the newspapers continually use to pillory the workers?

When Mrs. Thatcher gets to Number Ten she may probably want to use the same argument, blaming the unions for the inevitable results of the state’s Keynesian economics: I hope she won’t find the ground has been cut from under her feet.

Alwyn Edgar

Rear View: So far, so good (2019)

The Rear View Column from the September 2019 issue of the Socialist Standard

So far, so good

Faiza Shaheen in an article titled The Rich Are Getting Richer, And It’s Not Just Their Business – It’s All Of Ours (huffingtonpost.co.uk, 6 August) informs us ‘. . . the top 0.1% enjoy pre-tax incomes in excess of £650,000 a year. And guess what? The increasingly rich elite are increasingly turning their back on the rest of us – moving into spatially more concentrated areas in London and the south east.’ She adds, ‘. . . more than three quarters of us are stressed about money. Household debt is at record highs and work simply no longer pays, with 70% of children in poverty living in a household where an adult works . . .’. She also notes that most of their stolen wealth is inherited – ‘. . .the supposedly self-made nouveau riche like Donald Trump got a $400 million leg-up for his businesses’ and the ‘ 7th Duke of Westminster, for example, is worth at least £8 billion, largely because his ancestors acquired loads of valuable land in London’ – and concludes ‘when the economy is only working for a small percentage of the richest and this in turn is concentrating power and influence skewing our media, politics and inevitably negatively shaping how we feel about each other, the 99% must do more than demand a greater share of the pie – we need to change the recipe’.

So near yet so far

Faiza Shaheen is a director for Centre for Labour & Social Studies, which has the promising acronym CLASS. She notes that in the UK the 1 percent is concentrated in London and south east. Here, and worldwide, capitalism shows one of its hallmarks, class division. Poverty is found alongside plenty, the well-heeled alongside the homeless. ‘More than 6,000 homes in Kent are empty. Action on Empty Homes has revealed a total of 6,172 residential properties have no one living in them. And yet 4,723 people are either living in temporary accommodation or sleeping rough in the county’ (kentonline.co.uk, 7 August). These empty homes are worth an estimated £1.8bn. And here another hallmark can be seen: production is for profit not need. Houses are built by workers to be sold on the market and those with holes in the pockets need not apply. Shaheen’s recipe for change is nothing new. Indeed, she and Action on Empty Homes are reading the same reformist cookbook. CLASS – a ‘think tank dedicated to championing policy so that the political agenda works for everyday people’ and AEH’s campaigning issues, such as ‘Council Tax can now be doubled on homes left two years empty. We campaigned against discounts for empty homes and support councils implementing new premiums’ – is thoroughly reformist.

Reform or Revolution

Nearly 150 years ago, Engels stated that there is no possibility of a rational approach to housing within capitalism. ‘As long as the capitalist mode of production continues to exist, it is folly to hope for an isolated solution of the housing question or of any other social question affecting the fate of the workers. The solution lies in the abolition of the capitalist mode of production and the appropriation of all the means of life and labour by the working class itself’ (The Housing Question, 1872). ‘A social transformation and a legislative reform do not differ according to their duration but according to their content.’ A revolution is the work of a class which has gained political power in order to transform society to suit its interests; a reform is carried out only within the framework of the social system created by the previous revolution. Hence reforms cannot end capitalism; they can modify it to some extent, but they leave its basis untouched. To establish socialism, a revolution – a complete transformation of private property into social property – is necessary. ‘That is why people who pronounce themselves in favour of the method of legislative reform in place of and in contradistinction to the conquest of political power and social revolution, do not really choose a more tranquil, calmer and slower road to the same goal, but a different goal. Instead of taking a stand for the establishment of a new society they take a stand for surface modifications of the old society.’

Socialism or Barbarism

We have a choice, but, to quote Rosa Luxemburg, ‘without the conscious will and action of the majority of the proletariat, there can be no socialism.’ We need to seize the bakery and create our own recipes for the cookshops of the future socialist world of production for use and allocation according to self-defined need.

The Aristocrats (1972)

From the August 1972 issue of the Socialist Standard

Catch 22 had nothing on this — a confidence trick in which the victims not only feel sorry for the trickster but honoured to be his victims. Regularly each year hundreds of thousands of people who live in slums and semis and high rise flats pay up to shuffle their admiring way through the halls, staircases, galleries and gardens of what have been immortalised as the Stately Homes of England. From behind silken ropes they gaze at art treasures and old furniture, a bed where somebody slept sometime on their way to somewhere. From the hand of a real live lord they may buy a brochure, pay an actual marchioness for their tea. Often, they are overwhelmed by it all, uneasy at their intrusion in this vastly foreign world, embarrassed because they are viewing some splinters of yesterday.

Only in recent times have the aristocrats of Britain become troubled by self-doubt. Now it is not uncommon for some of them to speak as if they are a persecuted minority who might at any time expect to take their last journey on the tumbrel. Yet if the story of their decline proves anything, it can only be their enormous capacity to adapt. For example, the Labour Party once were perfectly clear, that they would abolish the House of Lords. In the end, when they had power, they did nothing to affect the existing hereditary titles and even added a few of their own.

Originally the aristocrats’ position was due to their extensive ownership of land (which they took or were given) simply because it was the dominant means of wealth production; the large estates of feudal England are comparable to a large ownership in ICI or Shell today. Anything they might be able to grab was often supplemented by kingly rewards for military help, for "peace” keeping or for any other participation in the high rank gangsterdom of feudal England. Some land and titles went to court favourites or to the descendants of royal bastards — the Dukes of St. Albans, Richmond, Buccleuch for example.

A high time for the acquisition of land at give-away prices was during the dissolution of the monastries. The lush Montague estate at Beaulieu, Hampshire, was founded when Thomas Wriothesley (pronounced, like many aristocratic names, quite differently from its spelling) bought what was left of Beaulieu Abbey from Henry VIII in 1538. It was through such expropriation that an enormous unearned income could be enjoyed by a small group of interrelated families.

The Industrial Revolution changed the dominant means of production and gave the aristocrats one of their earliest lessons in survival. Some estates were able to exploit deposits of valuable minerals; the Home lands in Scotland, for example, yielded rich coal royalties. Others prospered from the laying down of railways and others leased off parts on to which the towns expanded.

In some ways the 19th century was something of an aristocratic high noon. Reflecting the almighty standing of British capitalism at the time, they specialised in the spectacular. The core of the aristocracy was made up of about three hundred landed families some of them — the Northumberlands, the Devonshires, the Bridgewaters — owning hundreds of thousands of acres. They had built their own private railway stations, they diverted rivers. At Kedleston the Curzons moved an entire village half a mile. Their income was mountainous :

  No trade can flourish that for every pound does not pour a shilling into the treasury of a Grosvenor or a Bentinck, a Russell or a Stanley, a Neville or a Gower. (The Great Governing Families of England — Sanford and Townsend. 1865.)

As a sample of their political influence, about 150 seats in the House of Commons were to all intents and purposes in the gift of peers. The Reform Acts signalled the beginning of the end of this cosy, corrupt, powerful, magic circle; the Duke of Buckingham knew what he was about, when he symbolically resisted the 1832 Bill by bringing ashore a cannon from his yacht.

Towards the end of the century the great estates were affected by an agricultural slump; in the nine years after 1877 the price of wheat was almost halved. Under this kind of pressure the estates began to crumble away and the slide has never been arrested. Between 1873 and 1967 the land holdings of titled aristocrats in England and Wales have declined by an average of 76 per cent. Among the richer ones who survived were those who owned valuable urban land — the Dukes of Portland, Westminster, Cadogan for example. The war of 1914/18 took its toll of aristocratic lives, killing twenty peers and 49 direct heirs to titles, so that the noble houses of the land could ignore the immeasurably greater suffering of the working class and convince themselves, as always, that they were making a uniquely tragic sacrifice for humanity. After the war, in the deepening slump which hung over capitalism like a black cloud, what was left of many estates could barely finance their own repairs and maintenance. Between 1918 and 1922 land was being sold off at about 700,000 acres a year. At the present rate of change of ownership another century might see the end of the old style estate.

  But the aristocrats will not go down without a fight: English peers have demonstrated time and again in the past hundred years that they are strong, tough people, who start life with enormous natural advantages, and are well able to compete effectively in diverse human activities from show business to ceramics. (More Equal Than Others — Lord Montague.)

The ruthless custom of primogeniture, in which a family’s wealth is inherited by the eldest son, helps to keep aristocratic fortunes and estates intact. Over the past twenty-odd years the price of land has at least kept pace with the rate of inflation and if the land can be sold for building there is practically no limit to the increase in price. Death duties, which are said to be so destructive to aristocratic fortunes, can be avoided fairly easily by anyone rich enough to employ knowledgeable solicitors and accountants. The £6m. estate of the last Duke of Marlborough, who died a few months ago, was kept intact on his death because he had taken the precaution of making it over to his heir, the ageing playboy who was then the Marquess of Blandford, more than the necessary seven years before. The interests of the Salisburys are held by Gascoine Holdings, a nominee company whose shares are in trustees’ hands. The effect of this arrangement is that the estates are unlikely to be hard hit by duties as a result of the death of the last Marquess of Salisbury in February. There are still some massive estates in existence; the Duke of Northumberland owns 80,000 acres, the Duke of Devonshire 72,000, the Duke of Beaufort 52,000, which is not bad as a level of impoverishment.

Much of the emotional driving force behind the will to survive comes from the aristocratic mystique — the article of faith that they are possessed of some exclusive quality which, inbred through generations, justifies their superiority. Blue blood is thicker not only than water but than any other colour. In fact only two families — the Berkeleys and the Ardens — can be traced with any certainty to before the Norman Conquest. The Berkeleys still live at Berkeley Castle, on the Severn Estuary, where Edward II was done to death by a couple of blue blooded noblemen who, exercising an imagination not unusual in their kind, forced a red hot spit into his anus.

These sort of deeds notwithstanding, the true aristocrat is convinced that it is purer to come into their position by descent from such brutes than by the modern counterpart — the successful exploitation of the working class under an industrial capitalist system. That is why more modern times, with the wholesale ennoblement of businessmen, has been so depressing for the guardians of aristocratic traditions. Perhaps the low point in their morale was the Maundy Gregory scandal, when Lloyd George sold nearly a hundred peerages for about £3m. into Liberal Party funds.

Scandals like that make it even more difficult for the aristocrats to sustain the deception that their high social standing involves an obligation to serve their underlings, instead of the other way round. One example of this alleged service to us is the exercise of their right to appoint vicars to the churches on their land, although here again they collide with cruel capitalist reality because some landowning firms also have the same right, among them Smiths Potato Crisps and Cornish Manure. Cruel reality also says that among the vicar-appointing aristocrats, who should be stern upholders of the sanctity of Christian marriage, there is a higher than average divorce rate.

How fares a businessman who achieves a lifelong ambition when he makes it into the top bit of the Honours List? One such family is that of the Devonports; the present Lord is only the second to hold the title. The family name is Kearley and the first Lord Devonport was once senior partner in the firm Kearley and Tonge, which originally prospered out of things like pickles and jam. He went into politics, spent five years as Parliamentary Secretary at the Board of Trade and was made a Baron in 1910. His son, the present Lord Devonport, went to Eton and now, an old man, lives in serene comfort at Peasmarsh Place in Sussex. At home in the lush countryside, playing host to the local hunt, he is the very picture of an English lord, descendent of an ancient aristocratic line. Yet it all started only sixty years ago and one wonders how kindly he remembers that he owes it to pickles and jam.

It is ironic that many of the more established (and therefore perhaps more confident?) nobles are prepared to exploit their position so freely. The opening of stately homes to the public is now an accepted part of the season, part of the evidence of noble poverty, but it is conducted with varying degrees of vulgarity. At Blenheim Palace the late Duke of Marlborough was always ready to turn away paying customers if he suspected them of vandalism. A rather different attitude is possible in the case of the Duke of Bedford, whose ancient home at Woburn Abbey has shops, cafes, an amusement park, an outdoor zoo — and a pub called the Flying Duchess. Bedford is now helping a petrol station chain in a "free gift" scheme. Pull in at one of their stations and you can pick up a brochure with a picture of the Duke and the Duchess, obligingly dressed in Regency costume and wigs, admiring one of the glasses which, although they are given the brand name Woburn, are available to any plebeian who buys enough petrol. Lord Bedford is in earnest:

  We are in a competitive business and like any other commercial undertaking half the battle is publicity . . .  I have been accused of being undignified. That is quite true, I am. If you take your dignity to a pawnbroker he won’t give you much for it. (Silver Plated Spoon.)

Although he is not yet quite on his way to the pawnshop, Bedford does work hard at his business affairs. (The strain of posing for that dreadful photograph!) There are other aristocrats who are actually employed, although usually in some trendy job, like Lord Lichfield who is a photographer or the Marquess of Hertford who is a public relations man. This goes to make good copy for the colour supplements and to convince workers who drag their way thought the day on a production line that they are witnessing the end of a gracious age in which, while every man knew his place, there was a place for every man. And shouldn’t that man on the line just feel guilty about it?

In fact any decline in the standing of the aristocracy is at most a change in the personnel of the privileged class. Death duties and other taxation are not a confiscation of wealth but only a shifting of it from one section of the ruling class to another. Parcelling up and selling an estate does not make it common property; it is a social adjustment within capitalism, not a social revolution to abolish the system. When it is done the majority of people remain impoverished workers, entitled at most to gape at a portion of their masters’ possessions, once they have paid to do so.

Anyone who doubts that, whether they are titled or not, there is still a privileged class, need only consider the facts. There are many figures which might be examined but just one of these — the Annual Abstract of Statistics 1971—shows that there are only 20,000 people in this country owning net wealth of over £200,000. On the other hand there are nearly 6 million owning between £1,000 and £3,000 and nearly 5 million owning up to £1,000. That is the issue on which the working class must concentrate, because it says everything about their poverty and suppression.

The possessions of the aristocrats — their houses, their furniture, their art treasures — show what dedication and craftsmanship the people of the world are capable of. When these abilities can be used to enrich the lives of us all, instead of those of a privileged few, the world will be a gracious place indeed, one great stately home where we are all owners.

Ivan

How To Get Rich. (1930)

From the January 1930 issue of the Socialist Standard

Ex-Sergeant Goddard was recently defendant in an action brought by the Crown for the recovery of money which he was believed to have received as bribes. The amount was about £12,000 and everyone knew that he could not have saved £12,000 out of his pay. One of the newspaper gossip writers remarked that an “ordinary honest man” would take a lifetime to save so much money. - He would indeed if by “ordinary honest man" were meant the average worker. According to the Ministry of Labour, the weekly earnings of manual workers numbering over five million and spread over all the principal industries, averaged about 50/- per head in 1924. (See Ministry of Labour Gazette, July, 1927.)

The Capitalist class live out of the difference between the value of the goods produced by the workers and the amount paid to the latter as wages and salaries. The Capitalists are able to do this because they own and control the means of production and distribution and can, in consequence, compel the workers to accept employment on these terms—the alternative being unemployment. It is interesting to consider how these fortunate property-owners came to be in the privileged position which they occupy and to consider what hope members of the working-class have of climbing up beside them.

To save £l2,000 in a working life of 40 years would necessitate the putting away of more than the British worker’s total weekly earnings even after allowing for the accumulation of interest. We can, therefore, safely assume that people do not get rich by saving, if all they have to save out of is the wage of a worker. We are nevertheless always being reminded that this or that millionaire started life as a paper boy or a boot-black, and is a “self-made man,” the implication being that wealth is normally the result of the individual’s hard work and ability. Mr. Josiah Wedgwood, B.Sc. (Econ.) has now given us the results of a special inquiry which he undertook in order to find out exactly where the rich get their money.

The results of the Inquiry are set out at length in “The Economics of Inheritance.” (George Routledge & Sons. 1929. Price 12s. 6d.)

It is impossible in brief space even to summarise the elaborate material on which Mr. Wedgwood bases his conclusions. It is, however, interesting to notice that in a review the “Economist” (23rd November) recognises it as “an important book” and has no criticism to offer of the method by which the conclusions are arrived at, nor of the conclusions.

Mr. Wedgwood’s first important conclusion is that

  The proportion of the total property before the War derived from inheritance may be put at round about three-fifths. (See p. 120). 

In other words, our propertied class in 1912 derived less than half their accumulated wealth from savings out of their annual incomes. They were rich mainly because their fathers were rich.

Mr. Wedgwood made a separate inquiry into the sources of the wealth of a considerable number of wealthy people who died recently, basing his examination on documents filed in the Probate Registry at Somerset House. He found that

   Of the Men in the upper and middle Classes at the present day, about one-third owe their fortunes almost entirely to inheritance, . . . another third to a combination of ability and luck with a considerable inheritance of wealth and business opportunity, and the remaining third largely to their own activities.—(P. 163.)

Mr. Wedgwood points out that “many in the third category, though receiving little or no actual property by inheritance or gift, had received a superior education or relatively expensive training.” (P. 164.)

We see, therefore, that the way to get rich is to choose your parents wisely, failing which your chance is small. It is still possible to climb but possible only for the very few who are very lucky.

Lastly, Mr. Wedgwood tells us what are our chances of getting our foot on the ladder.

  The figures . . . suggest that not one in a thousand of the sons of working men (or wage-earners) ever accumulate as much as £10,000 (P. 157), and perhaps 1 in 100 leave £1,000 and over. (Footnote to P. 157.)

We would add a note of warning to any reader who fancies himself as a likely starter for the £10,000 stakes. Ex-Sergeant Goddard, who was paid by the propertied few to protect their property against the propertyless many, thought he saw a way of proving that Capitalism never keeps a good man down. But he committed the unforgivable crime of being found out and is now serving a sentence of 18 months’ hard labour.

The moral of all this is that if you are born into the ranks of the Capitalist class you have an excellent chance of living well and dying with more wealth than your father before you; if you are born a worker you will live hard and die as poor as you began—unless you join with us to get Socialism.

Edgar Hardcastle

Points for Propagandists: Whose Savings? (1930)

From the May 1930 issue of the Socialist Standard

Whose Savings?

At frequent intervals we are reminded by capitalist apologists of the sums of money owned by workers and deposited in Savings Banks and similar institutions. The amounts themselves, although large in the aggregate, represent only a small fraction of the amounts owned by the capitalist minority of the population, and those who accept the figures have never attempted to show that the savings in question really do belong to members of the working class. Now comes Mr. T. S. Ashton, Reader in Currency and Finance at Manchester University, and shows that, in the main, they do not. The information was given by him in a paper which he read on Wednesday, January 15th, to the Manchester Statistical Society, reported in the Manchester Guardian on the following day (January 16th, 1930). Mr. Ashton agreed that the majority of the Post Office Savings Bank and Trustee Savings Bank accounts are held by workers, but he then showed that the total deposits, on. the other hand, are largely concentrated in a few accounts held by non-workers. In 1919 four Trustee Savings Banks analysed their accounts with the following results : At Kirkcaldy, 60 per cent. of the depositors had deposits averaging less than £10 per head, and all their deposits together amounted to less than one twentieth part of the total deposits; 82 per cent. of the depositors held together only a little over a quarter of the total deposits.

At Paisley, 10,000 depositors owned together only 3 per cent. of the deposits (£32,000), while 700 large depositors held £764,000, including holding of stock.

Mr. Ashton stated that the position with regard to Post Office Savings Banks is similar to that of the Trustee Savings Banks, and there has been no essential change since 1919. The Manchester Guardian accepts Mr. Ashton’s conclusions.

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Labour Government Waiting For "Prosperity." 

We have asked when the Labour Government intend to provide the benefits which it promised to give to the workers in the shape of social reforms. Mr. Snowden, Chancellor of the Exchequer, has answered the question.

He gave a wireless broadcast on April 15th and his address was reported in the Daily Telegraph on the following day. He said :—

  I have held all my life that the happiness of the people can be vastly improved by great schemes of social reform and national reconstruction. I believe that the distribution of the national wealth calls for reform. I believe also that these vital improvements are only possible out of revived and prosperous industry from which our national revenue is derived. (Italics ours.)

But the only respect in which industry, as a whole, is unprosperous is in respect of the poverty of the workers—both employed and unemployed.

The employing class collectively have never been other than prosperous, and the workers have never been other than poor.

All, then, that Mr. Snowden offers is a promise to help the workers at some time unspecified when they are prosperous and will not need help.

We would add that capitalism, whether left to its own devices or aided by the Labour Government, will never bring about that result.

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Marx versus Maxton.

Mr. Maxton, Chairman of the I.L.P., is pleased on occasion to describe himself as a Marxist in spite of his transparent ignorance of Marxian theories.

The disservice he does to Socialist propaganda is well illustrated by a statement made by him in debate with the Hon. Oliver Stanley, M.P. In this debate, reported in the Daily Herald on 27th February, 1930, Mr. Maxton made the assertion that “the manual workers produced the real wealth, and it was produced in no other way.”

Although his attention was drawn to this in a letter which the Herald published a few days later, Mr. Maxton did not question the accuracy of the report.

His statement was seized upon by the daily press and use was made of it to ridicule Marx. The Daily Express in particular published a letter from a correspondent denouncing Mr. Maxton’s statement as an “absurd Marxian doctrine” (the Daily Express, 5th March). A letter to the Daily Express pointing out that Marx quite clearly rejects the view attributed to him was not published, but a day or two later the Daily Express inserted another letter repeating the untruth.

Marx deals with the question in Capital, Vol.I., Chapter IV., section 3 (“Purchase and Sale of Labour Power "). He wrote:—

  I use the term labour power or capacity for labour to denote the aggregate of those bodily and mental capabilities existing in a human being, which he exercises whenever he produces a use-value of any kind. (Capital: Allen & Unwin Edition, page 154.)

It is a pity that Mr. Maxton cannot give his errors some other label.

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Is Parliament Too Slow?

It is often urged that Parliament as a machine is too unwieldy and slow. This criticism is usually based upon the disappointing results of legislation when judged from the standpoint of some or other group of electors. The critics forget that the failure of those who control the parliamentary machine to do something for the workers is not evidence of defective machinery, but of lack of intention. Even if the machine is at present defective, those who control it can always alter it if the electors want it altered.

General Seeley has, however, recently disclosed how speedy Parliament can be when those who control it really want it to be speedy.

General Seeley was Secretary of State for War in 1912, and in view of the anticipated war with Germany, Sir John French and Sir Henry Wilson wanted an increase in the Secret Service Fund and the passing of a more stringent Official Secrets' Act. They wanted the Bill passed through all its stages in one sitting. The Speaker of the House of Commons (Mr. Lowther) and the Clerk of the House said it was "contrary to every Parliamentary precedent and to every principle of sound government.'' Nevertheless, it was done and the Bill was introduced, put through its second reading and its Committee stage, and given the Royal assent, all within 24 hours (having previously passed the Lords). Two or three M.P.'s, who tried to speak on the Bill were pulled down by their coat tails.

General Seeley's disclosures are made in his book of reminiscences, "Adventure" (Published by Heinemann’s, 21/-).

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Bombs Are Cheap. 

The Labour Party and the Air Force.

A debate took place in the House of Lords on April 9th on the use, of the Air Force for "police" work in the outlying parts of the Empire.

"Police" work is a polite way of describing the forcible suppression of native races who resent British rule.

In the debate military and naval authorities raised objections to the use of the Royal Air Force for this purpose. The Earl of Cavan and Viscount Plumer raised the amusing objection that bombing from the air "hurts guilty and innocent alike" and "leaves bitterness behind" (Daily Telegraph, 10th April). It has remained for these military men to discover that high explosive shells fired many miles away are cute enough to select the "guilty" victims and leave the "innocent" untouched.

The Labour Party's Minister for Air, Lord Thomson, defended his policy.

  As an airman he ridiculed the naval and military arguments on the inhumanity of air warfare. He could not see the inhumanity of a bomb as compared with a shell. The question for him was efficiency and cheapness, and if the bomb satisfied that test he was for the bomb. (Daily Telegraph, April 10.)

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The Benefits of Capitalist Civilisation.

Mr. H. J. Greenwall, special correspondent of the Daily Express in Morocco, has been writing up the benefits which the French occupation has brought to the poor, untutored Moors. The work of the French is based, he says, upon "what Great Britain had accomplished in other climes (Daily Express, 10th April, 1930).

The French have abolished slavery. "Before the French conquest of Morocco the slave trade flourished, and in some parts of this country there were what might be literally termed slave studs, where slaves were bred by the pashas of the cities for sale. Since the French established a protectorate here there have been no public slave markets. Slaves may be freed on their own request."

Now that the bad old days of slavery have been abolished by the chivalrous French capitalist, the Moors have entered into a new and better world, not only the men, but also the children.

  Labour, of course, is very cheap, and the exploitation of child labour in some industries takes one’s breath away. I visited a carpet factory here. . . . the first thing that struck me was the number of tiny children, from eight to twelve years of age, working in the factory, sitting in front of the looms. They are paid per knot, and their baby fingers make knots in the twinkling of an eye.

The fathers were so unappreciative of capitalist civilisation that they resisted the French troops. It is to be hoped that the children will some day appreciate the value of being kept out of mischief from the age of eight, and saved from slavery in order to sit at a loom in a factory.

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Wealth and Directive Ability.

The Daily Express correspondent in New York tells an interesting story about the relationship between the wealth and the alleged superior grains of the capitalist class. (See Daily Express, 18th March, 1930.)

Mrs. Ida A. Flagler is the widow of the late Mr. Henry M. Flagler. He left his money to her, but she had the misfortune to become insane and was sent to a mental home in 1898. She then had property worth £200,000. This property has in the meantime grown in value to the enormous sum of £3,219,000 and her income alone is £l25,000 a year.

As the Daily Express correspondent cannot in this case attribute the increase to its owner's "directive ability" he calls it a "natural growth." When we find nature-given material transforming itself by “natural growth” into food, clothing, houses, ships, motor-cars, etc., without the expenditure of mental and physical energies by the workers who at present carry on industry, we shall be prepared to share the Daily Express correspondent's belief in the miraculous power of money to multiply itself. Until then, we shall continue to believe, in accordance with the facts of everyday experience, that the wealth of the rich is produced by the brains and brawn of the working class.

Edgar Hardcastle

Rear View: Learning from the past (2017)

The Rear View Column from the December 2017 issue of the Socialist Standard

Learning from the past 

This year is the 200th anniversary of the birth of Marcus Thrane, an early pioneer of working class organisation in Norway. He along with other workers established the Drammen Labour Union in 1848. The union’s call for universal suffrage (granted to men in 1889, women in 1913), better schooling, reduced prices for certain commodities, as well as agricultural subsidies, and the extension of mandatory military service to those with property, were met with a dismissive response from the king. One of the motions at the national conference of 1851 was for revolution. Thrane perhaps fearing the wrath of the ruling class, lobbied against this decision and the motion was not, in the end, carried. The historian Tore Pryser, however, sees Thrane in favour of revolution but not before all other avenues were tried first. The Socialist Party is opposed to reformism but not necessarily individual reforms which may be of benefit to our class. Here are just two of many examples as to why we have been encouraging workers for over a century to take the revolutionary road rather than innumerable well-trodden reformist blind alleys: ‘women will have to wait 217 years before they earn as much as men and are equally represented in the workplace, research finds as gender pay gap worsens’ (dailymail.co.uk, 2 November) and ‘the number of children living in poverty will soar to a record 5.2 million over the next five years’ (theguardian.com, 2 November).

Back to the future 

The Socialist Party is an organisation founded on scientific methodology and as such must constantly re-examine its principles and practices. Our Declaration of Principles is no exception yet has stood the test of time. One principle states in part that ‘ the emancipation of the working class will involve the emancipation of all mankind, without distinction of race or sex.’  Such a statement may seem reserved for a Star Trek future, yet we should remember that capitalism as a system of society with its glaring inequalities, war and want alongside wanton wealth has not always been with us. Socialists argue, however, that it has long outlived its usefulness and scientific research shows that we lived very differently in the past. ‘The Ju/’hoansi people of the Kalahari have always been fiercely egalitarian. They hate inequality or showing off, and shun formal leadership institutions. It’s what made them part of the most successful, sustainable civilisation in human history’ (theguardian.com, 29 October).

Stuck in the present 

Judging by Donald Trump Junior’s recent tweet – I’m going to take half of Chloe’s candy tonight & give it to some kid who sat at home. It’s never to [sic] early to teach her about socialism – he probably thinks Bushmen support the two recent US presidents with that name and primitive communism is found in North Korea. Another member of the 1 percent, who unlike Trump climbed the greasy pole rather than inherited her wealth, tweeted the following reply: ‘fill her bucket with old candy left by her great-grandfather, then explain that she has more because she’s smarter than all the other kids’. This exchange was reported by harpersbazar.com (1 November), who perhaps ought to be thanked for not providing any definition of socialism. We are happy to oblige: a system of society based upon the common ownership and democratic control of the means and instruments for producing and distributing wealth by and in the interest of the whole community.

Reinventing the past 

The mendacious mass media says that China is socialist or communist, yet capitalist hallmarks, such as class society, commodity production, profit motive, exploitation of wage labour, markets, etc., exist there as they do worldwide. Further evidence is supplied by a recent article titled ‘Always Stay Professional’. Inside China’s Booming Butler Schools, Nothing But the Best Will Do’ (time.com, 1 November). Here we learn that some of China’s 1,590,000 millionaires wish to live the life of Riley Downtown Abbey style! ‘Students pay 50,000 rmb ($7,500) for a six-week course on food presentation, how to iron shirts the proper way, and maintaining serene decorum at all times…. Students learn how to choose fine wine but also good Chinese liquor, teach tai chi, perform a tea ceremony and caddy on the golf course. For many, it’s another world.’ Indeed. ‘…15-hour days and endless drilling. How to clean a toilet, iron a tablecloth, use tape-measures and plastic blocks to get table placings perfectly aligned. It’s a regimen of burns, blisters and bottomless cups of coffee’. The Ju/’hoansi people work only 15 hours a week.

The Rich Stay Rich (2018)

From the July 2018 issue of the Socialist Standard

Part Two

Part three of our series on ‘philanthrocapitalism’

If ‘self-made billionaires’ tend to be ‘more willing to give their money away than those who inherit their fortunes’ as Bishop and Green contend then, seemingly, the prospect of philanthrocapitalism making a larger impact on society depends to some extent on a relative increase in the proportion of wealthy individuals who allegedly made their wealth in this way. In other words, on the degree to which individuals are able to become upwardly ‘socially mobile’. On current trends, however, this seems unlikely. If anything, what seems more likely is that the significance of inherited wealth is going to grow in relative terms.

What helps to sustain the myth of ‘self-made men’ is precisely the belief that we live in a socially mobile society in which inheritance plays only a negligible role. This discounting of the importance of inheritance is a characteristic feature of conservative sociological analysis and its barely concealed aim of wanting to justify the existence of gross inequalities. Such inequalities will tend to be more tolerated insofar as it is assumed they reflect the workings of a meritocratic principle. The rich are rich because of hard work, runs the argument. That’s quite true, of course, except that it omits to mention that it is other people’s hard work that made them rich.

In a sense, then, the argument about the role of inheritance in perpetuating gross inequalities is a distraction. Whether the capitalists inherited their wealth or ‘made’ it, that wealth overwhelmingly derives from that portion of the labour performed by working people that is effectively unpaid or unreciprocated. The only virtue in drawing attention to the significance of inheritance in modern capitalism is that it helps to clarify this point and make it all the more obvious.

How significant a role does inherited wealth play in modern capitalism, then? This is a difficult question to answer. Partly this is because what is called ‘inheritance’ is not simply what it is often imagined to be asLisa Keister and Stephanie Moller explain in their article, ‘Wealth Inequality in the United States’:

  ‘We know very little about how wealth is actually inherited because data on inheritance is virtually nonexistent. Indeed, Menchik & Jianakoplos (1998) estimated that between the 1970s and 1990s, as little as 20% and as much as 80% of total wealth may have been inherited. Those who study inheritance typically refer to three forms of inheritance: inheritance at the death of a parent or other benefactor, inter-vivos transfers of money and other assets, and transfers of cultural capital (Miller & McNamee 1998:3) While we typically think of inheritance as occurring at the death of the benefactor, Kurz (1984) estimated that inter-vivos transfers account for nearly 90% of intergenerational wealth transfers’ (Annual Review of Sociology, August 2000, Vol 26: 63-81).

Study after study has confirmed that, far from ‘social mobility’ in America (and elsewhere) increasing, it is on the wane (and, along with it, faith in the ‘American dream’). This seems to have gone hand in hand with the steadily widening gap between rich and poor. If you are born poor today you are more likely to remain poor than was the case with your parents or grandparents but the corollary of that is that, if you are born rich, your offspring are more likely to remain rich, too. Meaning that the role of inheritance is likely to loom ever larger as an explanation for the extremely skewed distribution of income and wealth. Consequently, if it is true that the ‘self-made’ super-rich give more to charity than those who inherit their wealth, this would seem to imply that a relative long-term decline in charitable donations from the super-rich is in prospect.

According to Thomas Piketty, author of the best seller, Capital in the Twenty-First Century (2013), the recent growth in inequality augurs a return to the ‘patrimonial capitalism’ of the Gilded Age and the dynastic wealth of a rentier economy.In America, for example, the share of total wealth owned by the top 0.1 percent increased from 7 percent in late 1970 to 22 percent in 2012. This is approaching levels of inequality to be found in the era of the Robber Barons.

What is driving this process, argues Piketty, is the simple fact that the rate of return on capital has been consistently exceeding the rate of economic growth over the past few decades, meaning the super-rich have been appropriating a steadily growing slice of the economic pie. A kind of positive feedback loop is at work which ensures that, to those who have, shall more be given, simply by virtue of the fact that they have the capital to invest which the rest of us don’t. If you are securing a rate of return that exceeds the rate at which the economy is growing, then, logically, that can only mean you are accumulating wealth at the expense of others who lack capital. Inequalities in the distribution of wealth and income will thus grow. That, in turn, acts to slow down or impede social mobility and thus boost the significance of inheritance. The recipients of this inherited wealth not only benefit directly but indirectly too by capitalising on all advantages that great wealth bestows upon them in terms of social capital, having connections with the right people and so on.

The problem is, as Piketty suggests, that while some of the super-rich might claim to have earned their wealth by the sweat of their brows, plainly the same could not really be said of their offspring inheriting this wealth. The corollary of reduced upward mobility is obviously reduced downward mobility – meaning an increased capacity for the super-rich to hang on to their huge fortunes and thus to pass them on to their heirs.

Inheritance is thus the cuckoo in the nest of capitalist ideological legitimation. With the rich getting increasingly richer at the expense of the rest, more and more discrediting the myth of upward social and intergenerational mobility, it is going to be increasingly difficult to justify their huge fortunes in the face of these stubborn realities. The disconnect between ‘merit’ and ‘reward’, which were never closely linked to begin with, will become ever more apparent.

This is where the ideological significance of philanthrocapitalism comes into the picture. It represents an attempt to shore up a failing mechanism of ideological legitimation by projecting an image of the philanthrocapitalist as a generous benefactor and of capitalism itself, as a system that can be philanthropic, working for the good of mankind  (http://philanthrocapitalism.net/about/faq/). It is the application of a fresh lick of paint on a crumbling façade that barely conceals the stark structural reality of capitalist exploitation.

Exploitation and charity

While philanthrocapitalism focuses on what the rich give to the poor it would be far more to the point to focus on what the poor give to the rich. According to Barbara Ehrenreich the appropriate response to such giving ought to be one of ‘shame’:

  ‘shame at our own dependency, in this case, on the underpaid labor of others. When someone works for less pay than she can live on — when, for example, she goes hungry so that you can eat more cheaply and conveniently — then she has made a great sacrifice for you, she has made you a gift of some part of her abilities, her health, and her life. The “working poor,” as they are approvingly termed, are in fact the major philanthropists of our society. They neglect their own children so that the children of others will be cared for; they live in substandard housing so that other homes will be shiny and perfect’ (Nickel and Dimed: On (Not) Getting by in America, 2001).

However, the problem with Ehrenreich’s way of framing the whole question is that it is seriously misleading. She is focussing only on the lowest paid members of the working class, those who are ‘underpaid’. The presumption seems to be that were they not ‘underpaid’ but paid at the going rate they would have no cause for grievance. Her perspective is the suppressed view of a ruling class which she faithfully echoes in talking of ‘our’ dependency on the ‘underpaid labour’ of others. She ignores completely the unpaid labour that workers in general contribute towards the accumulation of capital even when they are not ‘underpaid’. Her sympathy for the ‘working poor’ is the sentiment of a guilt-ridden liberal trying to eradicate the more unpalatable aspects of contemporary capitalism and to soften some of its rough edges.

What makes the working class – not just Ehrenreich’s ‘working poor’ – ‘the major philanthropists of our society’ is the brute fact of surplus value, the value which our class creates over and above what it receives by way of a wage. As Friedrich Engels put it: ‘It is infamous, this charity of a Christian capitalist! As though they rendered the workers a service in first sucking out their very life-blood and then placing themselves before the world as mighty benefactors of humanity when they give back to the plundered victims the hundredth part of what belongs to them!’ (The Condition of the Working Class in England, 1845).

But even if we look at philanthropy in its more conventional sense as the voluntary donation of money and effort to others, it is quite misleading to portray this as the prerogative of the rich alone. Workers likewise give handsomely in this sense.

Indeed, according to one survey, individuals with incomes below $25,000 gave away around 4.2 percent of their income while those on an income of $150,000 or more gave away around 2.7 percent. Research carried out by Dacher Keltner revealed that ‘lower class people just show more empathy, more prosocial behavior, more compassion, no matter how you look at it’ (LINK.)

Robin Cox

(Next month, concluding article: No Such Thing As A Free Gift)

Donald Trump: bog standard capitalist (2018)

From the December 2018 issue of the Socialist Standard

US politics has reached the stage where the plutocrats of either party have ceased to pretend to any real principled difference but are instead using allegations of criminality and corruption against each other. This is a sound tactic, since there is no clean way to the top of US politics: it takes money, and the smiling acceptance of the people with money to get to the top. The vast scale of any campaign means there will be reporting, recording and donating errors somewhere.

The New York Times (2 October) has joined in this game of mud flinging, with a deep investigation into Donald Trump’s business and tax affairs. Journalists David Barstow, Susanne Craig and Russ Buettner have dug through thousands of public documents relating to Donald Trump’s father’s business empire, to see how they relate to the President’s current wealth.

Donald Trump has come to power as a representative of the naked rule of wealth: he has filled his cabinet and other appointees with the wealthy and the sons and daughters of the privately wealthy. He does so without the usual hypocrisy of appointing those who have served their time in lucrative public service.

Much of the New York Times’s revelations were hardly surprising. It was widely known that Donald Trump’s father, Fred, was a wealthy landowner who possessed many rented properties in New York. It was widely known that his father was a shrewd and ruthless business operator. The reporters note that Fred Trump managed to receive large amounts of Federal loans as part of New Deal home building schemes. The article suggests he received as much as $26 million of cheap loans from the government. He also knew how to work the Democrat Party machine that controls much of politics in New York state and city, and backed up his business empire with a team of legal and financial professionals to protect his interests.

What the report showed, though, in detail, was just what a typical capitalist Donald Trump really is.

Inherited

Much of the report concentrated on debunking Trump’s claim that he started his business with a $1 million loan from his father, that he repaid (with interest). It is interesting to see that people could take this with any sort of face value of making him a ‘self-made’ billionaire. $1 million in the 1970s was a very considerable sum (and for most people still is). What the New York Times revealed was that Fred Trump actually siphoned millions of dollars into his son’s businesses, including refloating them when they ran into financial difficulty. One incident the reporters relay involves Trump Snr. sending a flunky to one of his son’s casinos to buy $3.5 million of gambling chips, and then placing no bets.

Fred Trump actually started his financial management early, apparently appointing Donald a director of one of his firms when he was still a toddler, accruing a salary worth hundreds of thousands of dollars. This continued throughout Fred’s life, as Donald, and the other Trump children, were appointed directors of firms which then received transfers from other parts of the Trump empire. The usual approach was to transfer properties with a low estimate value, before selling them off at a huge market value many times greater. The New York Times identified 295 such income streams. They estimated a total transfer of $413 million (in current prices) from father to son, much of it bypassing gift and inheritance tax rules.

A particularly naked scheme saw the establishment of a shell firm, called ‘All County Building and Supply Maintenance’ through which Fred Trump channelled the procurement for his managed apartment. The shell company inflated the prices of the goods bought, effectively allowing Fred Trump to channel money to his children (the nominal owners of the firm) in the form of corporate profits. A side benefit was that under New York’s rent regulations, this could be passed off as a legitimate cost of business increase, which allowed Fred Trump to raise his rents.

These were just the tangible benefits. Fred Trump had friendly bankers, and a reputation which could only mean that doors would open for his son that would be closed to almost anyone else. Donald Trump’s business was underwritten by his father, so people could lend and invest in his ventures with an understanding they would be very unlikely to lose their shirts. In the end, it was all backed up by the tangible assets of owning large chunks of land in central New York.

Typical

In this sense, then, Donald Trump is a very typical capitalist. He begins with a stockpile of accumulated wealth, his primary accumulation, which is usually received through inheritance, windfall, or through expropriation. The capitalists tend to be shy about this primary accumulation, since it belies their ideological claim that their wealth stems from their hard work, business acumen or risk-taking. In Donald Trump’s case, this primary accumulation is both his inheritance and his father’s capacity for raking in Federal subsidies.

This also shows that far from the fearless capitalist making his money away from, or despite, the activity of the state, in fact the process of creating capital is intimately tied up with state power and control. The Trump Empire depended on being able to get favourable consent from the city authorities. The army of lawyers were needed to use state mechanisms to enforce and protect the interests of the firm. Any regulation, such as rent controls, just became another lever to be manipulated in the single minded pursuit of gain for the family. Donald Trump’s presence in the White House is just a continuation of the practice to the world stage.

Any very wealthy person will engage in tax management and structure their inheritance effectively. What the New York Times’s investigation into the Trump empire shows, much like the Panama papers, is how trying to regulate the financial affairs of the wealthy is like trying to strangle porridge. The wealth of capitalists does not rest in mere things, but in the claim to things, and the power to exercise that claim. Such claims are entirely ethereal, existing only in the material practices of the lawyers and law enforcers who respond to them.

Donald Trump’s team have responded to the report by pointing out that all their activities were carried out under the advice of reputable tax managers and lawyers, and were all within the regulations at the time. They do not maintain that those practices were right, or good or noble, only that they were legal. As ever, it is one law for the poor, and as many laws for the rich as they want to buy.

Barstow, Craig and Buettner estimate that had Donald Trump simply invested the money he made from his father, he would have nearly £2 billion in wealth. It’s clear that Donald Trump is not a self-made man, his wealth comes to him not because he is ‘a very stable genius’, but because he has a powerful claim on other people’s work. As a bog standard capitalist, it is plain that he is not necessary to producing or adding to the wealth of the world. Though perhaps, by forcing his opponents to reveal this truth about capital, he may have done one worthwhile thing with his life.

Pik Smeet