By Tomáš Tengely-Evans
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Why the world is unequal

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Issue 2706
Inequality is about more than just rich and poor countries
Capitalism has created a world of inequality

The coronavirus pandemic has laid bare the grotesque inequalities between rich and poor countries. Those inequalities are the result of centuries of a capitalist society that benefits only the rich.

At the beginning of the coronavirus crisis the US had 120,000 ventilators and Britain 8,000.

That’s still far too few. But compare it to Africa. Across the whole continent there were just 2,000 working machines serving hundreds of millions of people across 41 countries, according to the World Health Organisation (WHO).

Only five of them are in the Democratic Republic of Congo, a country of almost 90 million people where 72 percent live below £1.50 a day.

This inequality is rooted in a legacy of plunder by Western powers, in how capitalism developed and how it continues to do over the Global South.

Capitalism—a system that sees bosses exploit workers to maximise profits—perpetuates inequality. 

This isn’t just about rich and poor countries. Inequality exists in both the Global North and the Global South. Alongside immense poverty in Africa, for example, its 20 billionaires are now “worth” £60.2 billion—up from £56.73 billion a year ago.

European imperialism and colonialism turned the clock back on society in Africa. Through the slave trade, the early capitalists gained the money that would finance Britain’s industrial growth and exploitation of workers.

The treasures captured ­outside Europe by undisguised looting, enslavement, and murder, floated back to the mother-country and were there turned into capital

Karl Marx

This violent process saw more than 12 million people forcibly taken from West Africa to North America and the Caribbean between 1600 and 1850. By this time, the population of West and Central Africa was 25 million—half of what it would have been if there had been no slave trade.

The slave trade destroyed African societies and subordinated African development to the needs of European powers.

Trade and technological innovation stagnated as local economies became geared towards the slave market.

Writing in 1867, Karl Marx described how European powers plundered the world.

“The colonies secured a market for the budding manufactures, and, through the monopoly of the market, an increased accumulation,” he said.

“The treasures captured ­outside Europe by undisguised looting, enslavement, and murder, floated back to the mother-country and were there turned into capital.”

In India “the monopolies of salt, opium, betel and other commodities, were inexhaustible mines of wealth”. The colonisers “fixed the price and plundered at will” and “great fortunes sprang up like mushrooms in a day”.

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The imperialist powers developed industries that they wanted to get their hands on, and smashed those that posed a threat to their own.

Either through direct rule, puppet rulers or financial might, European powers subordinated weaker countries. Their brutality also spurred resistance, and sometimes solidarity from ordinary people living in the imperialist powers.

After the Second World War, national liberation movements and economic decline forced Europe to abandon its colonies.

The new ruling classes of the former colonies tried to build up their economies. But they had been set back and couldn’t make up the gap easily.

And which country developed was shaped by the imperialist priorities of the big powers, the US and Stalinist Russia, during the Cold War.

South Korea and Taiwan are talked up as success stories of capitalism making poor countries rich.

In fact, the US handed  $13 billion of military and economic aid to South Korea and $5.6 billion to Taiwan between 1946 and 1978. In comparison, the whole of Africa received only $6.89 billion in the same period.

That’s because the South Korean and Taiwanese dictatorships were important proxies in the Cold War.

At the same time the US helped put down democratically-elected African governments in the name of “anti-Communism”.

Today, neoliberalism and free market reforms further drive inequality.

In the 1970s and 80s crisis hit the world economy. Some African ruling classes began turning to free market policies in the hope of attracting investment to get them out of crisis.

Unlike what’s taught in ­mainstream economics, profits aren’t “made” by billionaire owners or chief executives

In Zimbabwe, for instance, the former freedom fighter Robert Mugabe signed up to the Economic Structural Adjustment Programme in 1991.

The state slashed public spending, privatised companies, scrapped food subsidies and opened up the economy to multinationals.

The International Monetary Fund and World Bank imposed free market reforms in many other countries. They did make a minority rich—but the vast majority of workers and the poor remained locked into poverty and debt.

Today, rather than being plundered, large parts of the Global South are ignored by capital. The majority of foreign investments flow between the US, Europe and China

This can all seem like a simple case of rich countries getting rich off the back of poor countries. But most people who live in those rich countries are victims of inequality and exploitation too.

Unlike what’s taught in ­mainstream economics, profits aren’t “made” by billionaire owners or chief executives.

It’s workers’ labour that creates value. And bosses exploit workers to get their hands on profit. “Exploitation” isn’t a moral term to describe ­bullying bosses or bad working conditions—although these are symptoms of it.

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While workers sell their labour power—their ability to work—they don’t get paid back the full value of what they create in wages. This gap is what Marx called “surplus value” and it lays the basis for capitalist profit.

So working for poverty wages in horrific sweatshop conditions doesn’t necessarily mean that workers in the Global South are more exploited. Workers in North America and Europe can produce more surplus value.

Bosses don’t just keep this surplus value to fund lavish lifestyles. Competition between capitalist states and firms forces them to plough it back into investment.

Bosses invest in their own companies, but also look to where they can gain the highest return. This means capital flows from one company to another, one sector to another, one part of the world to another.

This is still largely within the “developed” countries.

Where profits flow is an indication of where capitalists think the centres of surplus value production are. So Northern capital is not just parasitic on profits created in the South.

Global inequalities have led some to conclude that ­workers in the North benefit from a “super exploitation” of the South. Of course on average workers in Africa and Asia are paid less than workers in Europe and have fewer rights.

That should be a spur to global solidarity and common struggle because no workers benefit from this set up.

One version of the argument goes that profits made in the South fund higher wages and cheap products.

Neither in India, nor in England is it possible to build an independent socialist society. Both of them will have to enter as parts into a higher whole

Leon Trotsky

It’s true that corporations selling branded clothing, for example, have greater leverage over smaller suppliers and can grab a bigger slice of surplus value. Bosses in the South respond by squeezing their workers more.

While value does flow to the North, it’s capitalists—not workers—who benefit.

They invest it to fund the further exploitation of workers in order to maximise profits. And they can use cheaper goods to justify paying workers in Europe and the US less.

Sectors such as branded clothing don’t paint a general picture of capitalism.

Where value is added in the supply chain isn’t always clear cut. So an iPad is shipped from Foxconn, a Taiwanese company based in China, but has parts from the US and other South East Asian countries.

This means value has been added by workers in North and South.  Another example is how many Southern bosses rely on high value-added machinery from the North in their factories.

Writing in 1931, the Russian revolutionary Leon Trotsky acknowledged the very different conditions of workers in the North and South. But he argued that their interests lay in a struggle against the system that exploits them both.

 “Neither in India, nor in England is it possible to build an independent socialist society,” he said. “Both of them will have to enter as parts into a higher whole. Upon this and only upon this rests the unshakable foundation of Marxist internationalism.”

Today the global working class is the majority. Our interests lie in a fight in North and South against the system that produces exploitation, oppression and grotesque inequalities.

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