The 1 percent wins again: The system’s so fixed that a global class war is only a dream

No, there won’t be a global campaign against global inequality. The wealthy have written the rules to guarantee it

Topics: Inequality, the rich, Class War, Bill Gates, Editor's Picks, Trade, Global economy, Greedy, Capitalism, ,

The 1 percent wins again: The system's so fixed that a global class war is only a dream Donald Trump, Mitt Romney, Lloyd Blankfein (Credit: lev radin via Shutterstock/Reuters/Steve Marcus/Jim Young/Salon)

The debate over inequality has gone global. According to Oxfam, the 85 richest people in the world own as much as the poorest 3.5 billion.

Is inequality not only a national but also a global problem? In an age of globalization, will cross-border alliances among members of the same classes — transnational investors and transnational workers — produce a post-national global politics, a global class war?

The idea that cross-national class allegiances will trump cross-class national allegiances has appealed to many on the radical left ever since Marx and Engels called on the workers of the world to unite. It didn’t happen in the 19th century, and it didn’t happen in the 20th century. A global class war won’t happen in the 21st or 22nd or 23rd centuries, either.

Let’s disentangle the knot of fallacies involved in the idea that globalization is sweeping away borders and producing global polarization among rich and poor.

To begin with, the divide between rich and poor at both local and global levels is nothing new in history. The Pharaohs of ancient Egypt and ancient Chinese emperors were vastly richer than their subjects — who, in turn, were sometimes much better off than barbarian pastoralists and primitive hunter-gatherers beyond their borders.

On paper, it may well be that today’s rich own far more than those of the past. And when it comes to access to amenities like good toilets and dentistry, Thomas Jefferson may have even been closer to his slaves than today’s rich are to today’s poor.

But today’s rich are far more constrained by laws and customs than the monarchs, aristocrats and merchant princes of the premodern past. Sir Walter Raleigh had far more freedom in dealing with his revenues from his Cornish tin monopoly than Bill Gates has with the disposition of his billions. And speaking of premodern Europe, Britain’s Cardinal Wolsey and France’s Cardinal Richelieu — to name only two chief ministers — enjoyed personal armies and retinues of servants in the hundreds and lavish lifestyles, even if they lacked indoor plumbing and cellphones.

What is more, purported measures of the global 1 percent that conflate different species of the rich in radically different societies — self-made entrepreneurs, bankers dependent on government bailouts, crony capitalists in autocratic regimes, and members of the political elite in petrostates — are not worth the press releases that tout them. Chinese Communist Party princelings, who owe their manufacturing-based wealth to family connections and corruption, have little or nothing in common with Saudi aristocrats — who in turn came by their wealth by methods different from those used by generals in some military dictatorships who are paid by dictators out of the loot derived from plundering the population. And the minority of the global rich who more or less earned their wealth — by founding a business that provides a good or service that people want to pay for — belong in a separate category altogether from aristocrats who inherited their wealth or kleptocrats who manipulated government connections.

In other words, “inequality” is not a single disease; it is a label for a variety of quite different maladies in different societies, some worse than others. From this it follows that different kinds of harmful inequality, in different countries, must be subject to different remedies. For example, if you want to combat inequality in China, you should want to abolish the monopoly of political power and much economic wealth by Communist Party officials, who use their control of government and of state-owned enterprises to illicitly enrich themselves and their offspring. In contrast, inequality in the U.S. is driven largely by policies like financial sector bailouts that socialize the costs while privatizing the risks of high-income individuals who work in the FIRE (Finance, Insurance and Real Estate) sector. An appropriate policy agenda for reducing U.S. inequality would bear little resemblance to the anti-inequality agenda in China.

When we turn from the global rich to the global poor, we find arguments that are equally confused. It is sometimes speculated that globalization is driving convergence of incomes among nations and creating a global labor pool whose members, at some point, might acquire Marxian “class consciousness” of their common interests.

Not so. To begin with, to the extent that it puts downward pressure on wages, globalization has this effect chiefly in the “traded sector” — the part of the national economy that is subject to foreign competition in global markets. The traded sector includes much manufacturing, agriculture, mining and energy and some high-end services. But it does not include goods and services that must be both produced and consumed within national borders — say, nursing care. (True, globalization-induced downsizing of well-paid manufacturing jobs might lower wages by flooding low-paid domestic service jobs with former factory workers now working as baristas or pool-cleaners, but this effect would be both limited and ephemeral.)

Even at the height of the industrial era, only a minority of workers in industrial countries labored in the traded sector. And as manufacturing and high-tech agriculture and resource extraction become more automated, they will employ fewer rather than more workers. Already eight out of 10 Americans work in the non-traded domestic service sector, where, although they might be exposed to immigrant competitors, they are not exposed to competition with workers in foreign nations. The same is true on a global scale: Most human beings, now and in the foreseeable future, will be laboring in regional or national labor markets, not competing with rivals in foreign nations in global labor markets. For most people on earth, wages and benefits will be determined by a variety of mostly local factors, including government labor regulations and benefit programs.

In short, it is simply not true that there is or likely ever will be a global labor market in which workers in similar professions but different nations, outside of the traded sector, will see their incomes converge as a result of global competition. While first-world workers in the automobile industry (a traded industry) may experience downward wage pressure, nothing is forcing the incomes of domestic-sector nurses in Denmark and nurses in Malaysia to converge. And in the future there will be far more nurses than autoworkers in the world.

Because globalization will never force global convergence of wages and working conditions for most workers in the world, the whole quasi-Marxian scenario in which workers in different nations begin to identify with each other as a result of common wages and working conditions collapses. Maybe autoworkers in Denmark might feel some sense of solidarity with autoworkers in Malaysia, but a sense of transnational solidarity leading to concerted action among nurses in Denmark and Malaysia seems unlikely in the extreme.

Allow me to drive one final nail in the coffin of the idea of global class consciousness and global class struggle. Even in liberal democracies, parties are never organized solely or even primarily along class lines — for obvious reasons. In a system of majority rule, if one party represented the 1 percent and the other represented the 99 percent, the 99 percent party would win every election and the country would have a one-party government forever.

This means that even parties identified with the interest of the rich have to campaign on issues that can mobilize a potential majority of non-rich voters. This is why the Republican Party in the U.S., the party more identified with the interests of the rich, spends so much time on issues like abortion and gay marriage, which are important to the party’s white Christian working-class voters though not to its upper-income donors. For their part, the Democratic rich, who tend to be fiscal conservatives, have to tolerate economic policies that please the Democratic base, including the minimum wage and levels of social insurance spending higher than many Democratic donors might prefer.

What is more, we know from the history of democracy that solidarity among members of the same economic class or even the same vocation is extremely weak, compared to ethnic and religious identity. Black Americans tend to vote as a bloc for Democrats, white Southerners as a bloc for Republicans. This makes no sense from the perspective of class politics, according to which rich blacks and whites should be in the same party, and working-class blacks and whites in another party. But it is not difficult to explain in terms of America’s legacy of white supremacy.

And in a society in which ethnic or religious categories are “social facts” it is a rational strategy for individuals to identify with their ethnic or religious relatives, rather than with a mere economic group.  After all, if you are born a Fleming in Belgium, divided as it is among Flemings and Walloons, you are much more likely to move up or down in the class system than you are to turn into a Walloon. And even if you declare that you consider yourself to be a non-ethnic Belgian, your fellow Belgians — Fleming and Walloon alike — may treat you as a Fleming, whether you like it or not. So it is by no means irrational for a Fleming to vote with other Flemings, regardless of class, rather than with other Belgians of the same class, regardless of ethnicity.

If a hypothetical global democracy resembled really-existing national global democracies, there is no reason to expect that economic class would trump ethnicity or religion any more than it does in democratic nation-states. In an imaginary global democratic state, there might well be parties along regional lines (North vs. South, East vs. West) or religious lines (Muslims vs. Hindus vs. Christians) or linguistic lines (Anglophones vs. Mandarin and Hindi and Arabic speakers). But why would one expect a global democracy to have a higher level of class-based politics than the national democracies with which we are familiar?

In making the case against the likelihood of global class struggle, I am not arguing from a position on the right. I am arguing from within the mainstream progressive-liberal tradition of Mazzini and Mill and Gladstone, Wilson and the two Roosevelts.

While the socialist left has fantasized for generations about global revolutions and global class wars, the liberal left, including most European social democrats and American progressives, has usually focused on piecemeal reform using the democratic nation-state as the main agency of progress. The global reform agenda of the liberal left begins with national self-determination — dividing premodern multinational dynastic empires into nation-states in which a degree of homogeneity provides a high degree of civic solidarity. These mostly new nation-states, in turn, need to be democratic and liberal and relatively egalitarian.

For progressives, unlike for Marxian and quasi-Marxian radicals, global progress takes place chiefly one nation-state at a time. This is true even in the European Union, where many social democrats inexplicably continue to favor “the European project,” even though the nation-state remains the source of almost all social protection, and even though European institutions have been captured by conservative, austerity-imposing agents of the economic elite.

For sound center-left reasons, then, I offer this advice to those hoping that a global labor market, by creating global class consciousness, will lead to a global movement against the global rich by the united workers of the world: Don’t hold your breath.

Michael Lind is the author of Land of Promise: An Economic History of the United States and co-founder of the New America Foundation.

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