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The immiseration of the working class – Marx was right!

by Michael Roberts Friday, Nov. 16, 2007 at 11:18 AM

Just a couple of weeks ago, America's government tax collectors, the Internal Revenue Service, issued a new report. The IRS found that the richest 1% of Americans earned a record 21.2% of all income in 2005, up from 19% the year before. At the same time, the bottom 50% earned just 12.8% of all income in 2005, down from 13.4%. This was a record. IRS data only go back to 1986, but other academic research suggests that the last time wealthy Americans had such a high percentage of the national income was in the 1920s. And there's more. The IRS data show that the incomes of people right in the middle of all the income brackets (where half earn less and half earn more) fell 2% between 2000 and 2005 when adjusted for inflation, to ,881. At the same time, the income level for the top 1% grew 3% to 4,657, or over ten times as much! This shows that capitalism is not only a breeder of economic crisis, war and waste, but is also a system of grotesque exploitation and injustice. When Marx wrote Das Kapital around 150 years ago, he argued that "pauperism (poverty) forms the condition of capitalist production and of the capitalist development of wealth... in proportion as capital accumulates, the situation of the worker, be his payment high or low, must grow worse".

In other words, capitalism breeds inequality of income earned and wealth owned between the very rich capitalists and the mass of working people. And capitalism can only function by driving workers to the limit in hours of work, in bad conditions and often in near slave labour.

In Das Kapital, using the studies of the factory inspectors, Marx described in awful detail the terrible conditions that children, women and men worked under in the factories, mines, shops and offices of 19th century Britain. This ‘immiseration' or impoverishment of working people applied to every aspect of their lives under capitalism: long hours in awful ‘dark satanic' mills, followed by bad housing, poor health and education at home. Inequality of wealth and income were just the figures - the reality of the poverty under capitalism was much more.

In 21st century Britain and America, for many, nothing has changed. Immigrants now come from Eastern Europe or Asia and not from the farms and countryside (or Ireland) as they did 150 years ago. But they are subject to the same inhuman conditions whether they are cockle pickers in Morecambe Bay dying in a flash tide or Polish builders being swindled by unscrupulous employment agencies as in Ken Loach's latest film "It's a free world" (sic).

And of course, the dark satanic mills of 19th century Britain have now moved to China and India, where thousands upon thousands of farmers from the countryside are housed in ‘hostels' and forced to work morning, noon and night for pittance wages to make goods that are exported cheap to America and Europe.

At the same time, as the US Inland Revenue announced the huge inequalities of income in America, it was revealed that one big company in the US had ordered an ‘investigation' into claims that one of its suppliers in India had forced its women workers to stay at the factory so long that one woman had died at the gates because she was refused time off to visit a doctor after feeling ill and another pregnant worker had been forced to have her baby in the factory because she was not given time off (the baby died at birth).

And yet the economists of capitalism have continued to argue that Marx was wrong and that the working-class has not got progressively impoverished. On the contrary, they have improved their lot under capitalism. Paul Samuelson, the doyen of American capitalist economists, who wrote the standard textbook that all budding economists must read, claimed that Marx was so obviously wrong that all his ideas and theories must collapse accordingly.

Marx never argued that immiseration meant an absolute fall in income for the majority. He did say that booms would be followed by slumps when a large number of workers would lose their jobs and be thrown on the scrap heap and their incomes would fall sharply. And the fear of that happening would often make workers do what the capitalists wanted. But much of the time, and for most workers, wages would rise.

As Marx put it: "If the owner of labour power works today, tomorrow he must be able to repeat the same process in the same conditions as regards health and strength. His means of subsistence must therefore be sufficient to maintain him in his normal state as a working individual. His natural needs, such as food, clothing, fuel and housing vary according to the climate and other physical peculiarities of his country. On the other hand, the number and extent of his so-called necessary requirements, as also the manner in which they are satisfied, are themselves products of history... In contrast, therefore, with other commodities, the determination of the value of labour power contains a historical and moral element."

In other words, the man and the woman of the home must work to make ends meet. To do so, they may need a car to get to work or enough money to pay for expensive daily bus and train services. They will need to pay rent or a hefty mortgage, high power and fuel costs, clothes for the kids, very expensive child or nursery care and so on. All this must be built into a ‘subsistence wage' or workers cannot work. And these necessary requirements are rising all the time. So must wages to match them.

The true test of freedom and choice would be if most working families had a sizeable part of their income that was ‘discretionary', i.e. available to spend on what they liked. And they did not work too long for their incomes, so they had time to be with their children, keep fit, educate themselves or just rest. Anybody who cannot do that is impoverished - and this immiseration applies to most workers.

Some capitalist economists admit that Marx did not suggest that workers wages must fall under capitalism, but only that relatively to capitalist incomes, their incomes would fall. But, the economists argued, that proved Marx was wrong. Inequality had not increased under capitalism.

In this column in the past, I have brought to your attentions a whole range of studies that show inequality of income has increased in the last 50 years and inequalities in the Western capitalist countries are just as great as they were when Marx wrote Das Kapital, if not greater.

And inequalities of income in the so-called developing capitalist countries of Asia, Africa and Latin America are truly huge - much larger than in the advanced capitalist economies. Even China, that once could claim some degree of equality (an equality of poverty) under Mao and the Stalinist regime of the 1960s to 1980s, now has figures for inequality that match some of the worst in the world. The development of capitalism in the 1980s and 1990s has made sure of that.

But it is not just inequality of income earned under capitalism that is so shocking. Even more decisive and shocking is the inequality of wealth and ownership. Under capitalism, he or she who owns has control and has real power.

Most of us only own a few things like a house or a car. We don't own businesses, certainly not large ones. Or land, certainly not haciendas or plantations. And we don't have much savings, certainly not millions in stocks and shares or ‘hedge funds'. But a very small part of the world's population does - they are the captains of capitalism.

Last year, the United Nations commissioned research to find out how unequal the world was. The results were truly staggering. The richest 1% of adults in the world own 40% of the planet's wealth according to the study. Europe, the US and some Asia Pacific nations accounted for most of the extremely wealthy. More than one-third live in the US, while Japan accounts for 27%, the UK for 6% and France for 5%.

The global study - from the World Institute for Development Economics Research of the United Nations - was the first to chart wealth distribution in every country as opposed to just income. It included all the most significant components of household wealth, including financial assets and debts, land, buildings and other tangible property. Together these total 5 trillion globally.

The report found the richest 10% of adults accounted for 85% of this world total of assets. Half the world's adult population, however, owned barely 1% of global wealth!

As Duncan Green of Oxfam put it, "these levels of inequality are grotesque. It is impossible to justify such vast wealth when 800 million people go to bed hungry every night. The good news is that redistribution would only have to be relatively small. Such are the vast assets of the rich that giving up a small part of their wealth could transform the lives of millions." Some hope... under capitalism!
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