A tiny group of the super rich have seized vast portions of new wealth created in the last 35 years, fuelling a big increase in inequality.
The World Inequality Report was published on Thursday by economist Thomas Piketty and others. It says that the richest 1 percent of the global population “captured” 27 percent of the extra wealth created in the whole world between 1980 and 2016.
The top 0.001 percent—just 75,000 people—grabbed 4 percent of all the new wealth created since 1980.
“The top 0.1 percent income group—about 7 million people—captured as much of the world’s growth since 1980 as the bottom half of the adult population,” the report says.
“Conversely, income growth has been sluggish or even nil for the population between the global bottom 50 percent and top 1 percent.”
The US has seen one of the biggest increases in inequality. The US’s richest 1 percent had 39 percent of the nation’s wealth in 2014—the latest year available—up from 22 percent in 1980.
The researchers noted that “most of that increase in inequality was due to the rise of the top 0.1 percent wealth owners”.
In Britain, the richest 1 percent control 22 percent of the country’s wealth, up from 15 percent in 1984.
The top 0.1 percent—around 50,000 people—have seen their share of the nation’s wealth double from 4.5 percent in 1984 to 9 percent in 2013.
And the growing divide is set to get worse. “The global top 1 percent income share could increase from nearly 20 percent today to more than 24 percent,” the report says. “In which case the global bottom 50 percent share could fall from 10 percent to less than 9 percent.”
The report’s authors say, “Economic inequality is widespread and to some extent inevitable.” Certainly that’s true under class societies, and particularly under capitalism. It is an engine for creating and accelerating a chasm between those at the top and the rest.
It wouldn’t be true under socialism where any meaningful inequality would be sharply reduced and then effectively eliminated.
The report calls for measures such as progressive tax regimes, more equal access to education and well-paid jobs, higher inheritance taxes and increased health spending.
These would be welcome, but are insufficient. The report admits that the rich are very good at finding ways to avoid and evade taxes, and that a tenth of global wealth is held in tax havens.
And to win such reforms will take a war on all the mantras of the last 40 years about the need to slash taxes, shrink the state and weaken trade unions.
The ruling class has greeted the prospect of Jeremy Corbyn as prime minister with a mix of fear, outrage and preparation for resistance. Imagine how they would react to a government that really started to address not just the rise in inequality but the driver of inequality in the first place—capitalism.
Large and growing inequality is another reason for revolution.