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Social Inequality Today

by Helmut Martens Monday, Jan. 04, 2016 at 1:08 PM

The neoliberal rollback has created growing instabilities. An advancing process of de-democratization and social re-feudalization is connected with the rise of the new "super-rich." Piketty warned of the growing inequality between rich and poor.


Diagnoses and Interpretations

By Helmut Martens

[This article published on January 20, 2015 is translated from the German on the Internet,]

The idea of overcoming social poverty was joined with the triad of work, progress and happiness in the welfare state democracies of the first postwar decades (Martens/ Peter/ Wolf 1984). This has changed completely in view of a neoliberal rollback that has continued for more than thirty years (Scholz and others 2006). At regular intervals, studies and analyses are presented that explain the extent of the increasing division between the poor and rich sectors of the population. This consciously forced social inequality intensifies economic crisis processes and undermines the political idea of a democratic idea of the free and equal. To what extent a crisis of social cohesion is bound with the “crisis of democracy” and the “crisis of the economy” will be discussed in this paper.


The Poverty- and Wealth Report of the German government presented in 2013 for the fourth time since 2001 was politically controversial in the assessment of the political data (BMAS 2013). Still the facts are clear. Whoever has less than 60% of middle need-weighted income is considered poor according to the European Union’s definition. In Germany, the corresponding 2012 monthly income for single persons was 869 Euros and 1826 Euros for families with two children. 14 to 16 percent of the population was regarded as poor. As to wealth distribution, the report shows the lower 50% of the population had 1% of the total wealth (in 1998 it was still 4%) while the top 10% had over 53% *45% in 1998).

Germany lies in the general trend in the advancing processes of social disintegration – following the US as trailblazer and with a top position within the EU. The intensely discussed studies of Thomas Piketty (2014) and Chrystia Freeland (2013) verify this. Piketty shows the gulf between poor and rich in the US was never as great as today since the worldwide economic crisis of 1929. The increased share of the top elite in the social wealth corresponds to the decline in the large majority. The original title of Freeland’s study is “Plutocrats. The Ascent and Rule of a New Global Money Elite and the Descent of Everyone Else.” The Forbes 2012 list of the richest persons included 1,226 billionaires [1]. Piketty also emphasizes the role of the economic elite for the US (the top 10%) in aggravating social inequality. Emmanuel Saez and Gabriel Zucman (2014) continue and develop his findings and intensify the diagnosis. According to them, the share of 0.01% of the top elite is responsible for the sharp rise of inequality in the US. Their thesis is: “Wealth inequality has grown very intensely at the most extreme top but not below the top 0.1%/” Their tables show an increase for the top 0.01% from 3% (1960) to 11% (2012) and for the top 0.1% to 0.01% from 6.5% to 10.5% in the same time period.

In her analysis, Chrystia Freeland says extreme inequality in the US first developed after the second industrial revolution. That was the “Gilded Age,” as described by Mark Twain and Charles Dudley Warner (2011) in the transition from the 19th to the 20th century. As we know, growing social instabilities arose at that time in the US and Europe (e.g. strikes and slums). They flowed into geopolitical adventure and ultimately the First World War. The reasons why the book by Twain and Warner has become “a history of today” are not clearly explored by Freeland. She speaks of a “second Gilded Age.” She mainly understands the current developments as further stages of development of the promise of capitalist development that she sees confirmed in the genesis of a new middle class in China for example. Piketty warns sharply of the emerging and growing inequality between rich and poor. He enters into pragmatic solutions as in progressive wealth taxes that are not a question of left and right but common sense. At the same time he says he chose “Capital” as part of the title of his book although he doesn’t understand himself as a Marxist.


The neoliberal rollback since the middle of the 1970s reacted to declining growth rates and growing structural unemployment in the advanced western states (Thatcherism, Reaganomics). For a long time up to the outbreak of the “new worldwide economic crisis,” this rollback was justified as a great promise of freedom in opposition to supposed welfare state dehumanization (Krugman 2009). Many persons of formerly command socialist countries set their hopes on a capitalism tamed by the welfare state that was already in retreat at that time and whose erosion was forced by the implosion of command socialism. To many politicians, the European debt crisis was reason enough to argue that we all “have lived above our means.” The perspective of a “market-conforming democracy” (Merkel) was a political explanation for the “surprising survival of neoliberalism” (Crouch 2011). This prompted the conservative Democrat Frank Schirrmacher to the questions “how falling prices in the middle of a market crisis could appear as a political vision” and “why there were repair efforts in states but not in markets.” His answer was: “Nearly all political and social elites confuse the theory that the market as a natural law knows better than humans.” The “core meltdown” of the financial markets triggered the political vision of a democracy obeying the market like Phoenix rising from the toxic ashes and didn’t cast doubt on the omniscient (Schirrmacher 2013).

We are not only confronted with post-democratic developments that intensify the real threat of continuing multiplier crisis developments so authoritarian solutions catch on. The advancing social division in poor and rich in the “Gilded Age” creates a reality in which the official showmanship can decreasingly hide the growing “misery of the world” (Bourdieu 1997). The current consolidation of wealth and influence is correctly described as “re-feudalization.” Following Jurgen Habermas, Sighard Neckel (2013) “doesn’t use this term as the return of a long past historical epoch but as a continuing self-contradiction that can suddenly change certain threshold values so social institutions lose their normative qualities that once characterized them as historically new” (Neckel 2010). He explains this development as a re-feudalization of values in the achievement society (for legitimating high salaries), as a re-feudalization of the economic organizations (through establishment of a privileged estate, the manager class), as a re-feudalization of the social structure (through return of the distance between the elite and the precariat) and as a re-feudalization or dismantling of the welfare state (in which public welfare is re-privatized as donations and gifts).

More or less silently we are moving today to accepting already implemented re-feudalization processes as foregone conclusions and the growing speechlessness of the new precariat as an inescapable moment. We are living in a “democracy of the higher paid.” In an essay where he develops the reasons for a way “from market freedom to economic democracy,” the philosopher Tilo Wesche (2014) says very rightly that the political idea of a democratic society of the free and equal is undermined given the recent “concentration of property and political power.”


The neoliberal rollback has created growing instabilities. An advancing process of de-democratization and implementation of social re-feudalization processes is connected with the rise of the new “super-rich.” The analyses of Neckel and Freeland can be understood as confirmation of Jacques Ranciere’s thesis that “the struggle between rich and poor is not the social reality with which politics must reckon. Rather it is identical with its organization. Democratic politics exists when there is a share of the uninvolved, a part of party of the poor” (Ranciere 2002). However one could also conclude with these reflections on wealth and poverty that the development of global capitalism reveals its contradictory form described by Marx and other philosophers in which something new is constantly proclaimed that ultimately only leads to the old conditions. [2]


1 A longer version of this article is available at the author’s website


In 2014 this number in the Forbes list of the richest persons rose to 1,645 (after 423 in 1996 und 946 in 2006) with most (492) in den USA followed by China (152), Russia (111) und Germany 85 (see Wikipedia). Other lists of the rich show higher numbers. The Swiss USB Bank for 2014 has 2,325 billionaires (Manager-Magazin-online, 28.10. 2014).

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