Despite the rather feeble nit-picking effort of the Financial Times, French economist Thomas Piketty has done some tremendous work in proving what anyone with their eyes open and without hypocrisy or delusion already knows: capitalism in the form societies have been peddling it, is a rigged game. Essentially he a demonstrates by painstakingly trawling through the record books that capitalism naturally veers towards high levels of inequality. Real estate and stocks rise in value faster than the real world economy. This results in wealth accumulating in the hands of a small group of people while great swathes of population are left destitute.
The shift of wealth is not only down to mathematical constructs, but factors such as the hand in hand relationship of wealth and power. Wealth buys power in the form of friendly politicians and media. Political forces are shaped to hand over massive public enterprises to the private sector, are prepared to permit limitless tax avoidance, implement laws to perpetuate the runaway transfer and bail the rich out when the shit hits the fan. While the majority have seen welfare and security eroded, the wealthiest enjoy complete immunity to financial down turns and even criminal proceedings (e.g. HSBC handled billions for drug barons but no one went to jail).
Surprisingly for such a subject matter, Piketty’s book has been a big success, making it to the number one spot on many best-seller lists. Not surprisingly his book has also resulted in very split reviews. Amazon’s summary of reviews displays that familiar inverse bell curve distribution that most controversial subjects adhere to.
Ultimately such a division of opinions is also to be seen in many arenas and boils down to how we see the world and inequality. Those disagreeing with Piketty likely subscribe to notions like everyone has an equal chance in life; in general the world is wealthier than ever before; even poor have gadgets; and trickle down. This latter much maligned nonsense theory states that we need to keep enriching the rich in order for the rest of us to have access to the dribbles of fat dripping from the double chins of the masters of the universe.
Piketty has done incredible work and should rightly be commended. He has academically make a valid attempt to quantify and prove what honest people with their feet planted on the ground knew all along. We’re seeing a massive transfer of wealth from middle class to the richest 1%, while the poorest have the rug pulled out from underneath them altogether. It took two world wars to rectify the inequality of previous ages. We’ve now slid way back, undone the fantastic work of the post-war generation. How will we rectify the situation this time?
Will we see civil unrest, the masses taking to the streets in western countries? It is a miracle of subtle political balancing that this has not happened already in the wake of the financial crisis. The vast majority are worse off. If you think not, then have you really studied what your pension is now worth? If you have savings how much has been wiped out by low interest rates. If you’ve been forced into the stock market, unless you’ve been lucky or brave, then you’ve probably taken a hit there, or will when the next bubble bursts unannounced. But the hijacking by the rich of journalism, politics and law; coupled with 100s of mindless TV channels, social media and films of laughing babies keep people placated and off the streets.
As I wrote in an earlier post, I believe within the microcosm of the United Kingdom,
independence for Scotland has the potential to shake up the established order enough to wake people throughout the UK from their slumber and to demand the redistribution of wealth and security. Once people see that greater equality is not only possible but is a recipe for success, maybe the example of Scotland will trigger a domino effect.