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Friday, August 22 2014 @ 12:54 AM CDT

Capitalism and Inequality

News ArchiveIf there is a common belief in the right, it is the love of inequality. On the authoritarian right, this is expressed in racism, hierarchy and leader worship. On the so-called "libertarian" (i.e. free market capitalist) right, racism is usually eschewed in favour of class (wealth) inequality along with hierarchy and leader worship (i.e. the cult of the business person).

Capitalism and Inequality

If there is a common belief in the right, it is the love of inequality. On the authoritarian right, this is expressed in racism, hierarchy and leader worship. On the so-called "libertarian" (i.e. free market capitalist) right, racism is usually eschewed in favour of class (wealth) inequality along with hierarchy and leader worship (i.e. the cult of the business person).

Anarchists, like other socialists, have long pointed out that wealth inequality and a class system in which a few own the means of life makes a mockery of freedom for the many who are reduced to little more than picking masters. When faced with this obvious objection, the free market right have tended to reply in two ways. First, they argue that capitalist societies tend to be more egalitarian than "caste" societies (like Stalinist regimes) and, second, that market based systems have more social mobility, i.e. people are more likely to improve their position over a short period of time and rise in the social ladder (for some strange reason they fail to mention that upward mobility automatically implies downward mobility too!). These two "facts," it is claimed, show that we need not worry about social inequality.

The first argument in defence of capitalist inequality is not found that much these days, for an obvious reason: it was rubbish. Popularised by Milton Friedman in his book "Capitalism and Freedom," like most of his ideas it has proven to be without basis. He suggested that the more free market a society was, the more equal it was. He pointed to the example of the USA and compared it to Soviet Russia. He conveniently forgot to mention the role of such "New Deal" policies as high levels of taxation and social spending in producing that equality. Ironically, these policies were the very things Friedman spent most of his time fighting against and by the 1970s and 1980s his ideas went mainstream and were applied by politicians like Reagan and Thatcher. Inequality exploded to record levels (and way beyond Soviet levels), as it did when free market ideology was imposed on Eastern Europe in the 1990s.

In effect, Friedman (as usual) refuted his own claims and provided his critics right by having his ideas applied in practice! Needless to say, the right still hold this old fraud in high esteem.

As for the second argument, the claim that free market regimes have higher social mobility, that is just as baseless. In fact, numerous studies have shown that the opposite is the case. Researchers at the London School of Economics, on behalf of the educational charity the Sutton Trust, are the latest in a long line to show that the more free market a country, the worse is its levels of social mobility. In a report published at the end of April, they have found that Britain has one of the worst records for social mobility in the developed world, beaten only by the USA out of eight European and North American countries. Norway was the best followed by Denmark, Sweden, Finland, Germany and Canada.

This means that children born to poor families in Britain are less likely to fulfil their full potential than in other countries and are less likely to break free of their backgrounds than in the past. In other words, we find it harder to earn more money and get better jobs than our parents. Moreover, not only is social mobility in Britain much lower than in other advanced countries, it is actually declining and has fallen markedly over time!

The findings were based on studies of two groups of children, one set born in the 1950s and the other in the 1970s. In the UK, while 17 per cent of the former made it from the bottom quarter income group to the top, only 11 per cent of the latter did so. Mobility in the Nordic countries was twice that of the UK. While only the US did worse than the UK in social mobility, this may not last as the divide between rich and poor in Britain was getting deeper while in the US the situation was static. Needless to say, the findings demolished the idea that America was a "land of opportunity." In reality, the upper reaches of US society had been cut off to most of the worse off since the 1960s (i.e. before Friedman's ideas were started to be applied).

Rather than produce a "classless" society of opportunity for all, the rise of free market capitalism has resulted in an increasingly unequal and rigid society. Growing income inequality has seen the rich got richer while the poor struggle to break the cycle of poverty. So after 25 years of Thatcherite and neo-Thatcherite governments, social mobility has fallen while social inequality has risen (so much for the "classless" society). All of which is yet another nail in the coffin of neo-liberalism and its lies.

For other articles by Anarcho, visit: http://anarchism.ws/writers/anarcho.html

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