25.11.2020

The relationship between rich and poor has radically changed

One hundred and twenty years ago, in New York, one of the most famous economic works of the turn of the XIX and XX centuries – “Theory of the idle class” by Thornstein Veblen. In it, the author showed the history of the formation of the upper layers of modern society and tried to justify (generally quite successfully) their economic unnecessaryness.

The ideas of the author, most of whose life fell on the so-called The gilded century of maximum conspicuous consumption by the American elite and extremely high levels of property inequality are widespread. Veblen did not live to see the trend that he denounced turned more than half a century into a movement towards greater property equality: he passed away just a couple of months before the stock market crisis, which launched the Great Depression, remaining in history a denouncer of idleness, identified with luxury .

Meanwhile, over the next century, the global economy has changed radically. Veblen described the history of extractive and industrial societies – and correctly assessed their features: today in the peripheral countries from Equatorial Africa to the oil emirates of the Persian Gulf, from Latin America to Russia, the conspicuous consumption of the upper strata of society most closely resembles the picture of Europe of the 19th century and America of the beginning of the 20th century centuries. However, I’m not going to convict anyone now – it will be about something else entirely.

Over the years, the composition of wealth has become completely different. Among the 30 companies included in the Dow Jones index, today there is not one of those that were presented in it a hundred years ago. 8 of the 10 most expensive corporations in the world are high-tech companies created not so much by labor as by the ingenuity and knowledge of their founders. Of the 20 richest people in America, only 3 to some extent took advantage of the entrepreneurial success of their parents, while 17 earned their fortunes from scratch. And as the economy changes, the old phenomenon of inequality and poverty is being revived – however, now it takes on much more disturbing forms than in that “past” life.

In the world of industrial capitalism, poverty was quite functional. The poor were needed so that entrepreneurs could hire them in factories and produce goods. As the economy grew, the welfare of the former poor should increase, as otherwise there would be a crisis of demand. So the famous middle class and welfare society of the 1960s appeared. However, technological progress breaks the previous order. At first, the post-industrial revolution sharply reduced the number of industrial workers. Then the demand for highly skilled labor led to a rapid increase in the incomes of the educated population and a decrease in the real wages of those with only an ordinary school. All this seemed permissible as long as the service sector was ready to absorb an almost infinite number of workers.

Then the changes came here: employment became clearly redundant (in the USA they responded with the creation of millions of meaningless jobs – for example, in many states it is impossible to refuel a car without the help of a “specially trained” person; chronically high unemployment has been established in Europe). Migration was added to all this: under its influence, competition in the labor market intensified even more. Inequality returned to levels at the end of the 19th century, and maintaining it within an acceptable framework has become a concern for governments.

In 1910, the US budget was 2.2% of GDP, the UK – 8.2%, France – about 10.5%. At the end of 2019, these indicators reached 20.8%, 39.3% and 55.6%. At the same time, most of the expenses (48.4%, 50.5% and 57.4%, respectively) are spent on financing social programs. Over the past twenty years, the growth of allocations for these purposes in developed countries has exceeded 50%, but the problem of poverty is not being solved so well, and calls for the redistribution of wealth are becoming more active: either B. Sanders will demand that there are no billionaires in America, then in Germany will begin to erect monuments to Lenin.

What is worth noting in this case is a noticeable decrease in the level of that prestigious consumption of the highest class, about which Veblen wrote. W. Buffett, whose fortune is estimated at $ 70.5 billion, lives in provincial Omaha in a house of 600 square meters. meters, which he bought for $ 31.5 thousand in 1958. Against this backdrop, B. Gates is roaming around in his 6,000-meter mansion near Seattle, but the main item of his expenses are not yachts and planes, but contributions to the Melinda and Bill Gates Foundation, which fights against malaria and other infectious diseases (total amount of personal donations to it amounted to $ 39 billion).

More than 92% of Americans, members of the 1% of citizens with the highest incomes, work, and do not live on a percentage of capital or real estate income (the average age of termination of employment in this group today is … 74 years). In other words, idleness and luxury look less and less the privilege of the wealthy classes, who spend less than 1% of their income on current consumption, and this, I repeat again, applies to most developed countries.

What is happening dramatically changes the social agenda. Whereas earlier the traditional left fought for the interests of the working people who were exploited by the bourgeois, now the emphasis has shifted strongly towards any poor and unhappy – including those who have never sought to work. Now more and more people are talking not about fair pay for work, but about the problems of unconditional basic income. At the same time, I would note that society as a whole is ready for this new division: in the USA, according to the results of 2018, 44% of the adult population did not pay any federal taxes, while all sorts of benefits were a significant source of income for more than 21% of adult citizens. In other words, at the beginning of the 21st century, previous ideas are turned upside down: the idle class, which everyone was looking for in the elites before, moves down. Now he is not booming, rather, he is in poverty – but this does not become less idle.

The problem is compounded by two more circumstances. On the one hand, the emergence of a significant part of society, the activities of which the rest of the society is not yet very needed (and in the future will not be needed at all), generates enormous social exclusion. The mass protests of the lower classes today emphasize a simple truth: the loyalty of these people cannot be bought for money. They need a demand that is difficult to ensure in modern conditions.

Society ceases to be purely economic, and simply rich will not be able to pay off the poor. On the other hand, throughout the previous history the “idle” class generated certain meanings and values, including those that subsequently led to humanization and development of society, while the new idle class does not create such values. As a result, society is compelled (due to the well-established notions of equality and the right to political participation) to more actively take into account the requirements of the new idle class, no matter how absurd they are at times – and the result of this movement can only be gradual degradation.

I have no recipe for getting out of this situation, however several circumstances seem pretty obvious. In the 19th century, society developed in a way that gave enormous power to the “upper” idle class, which was fraught with a social explosion: as a result, this trend was broken by social democracy of the twentieth century. In the 21st century, society swung in the opposite direction, allowing itself to be controlled by the “lower” idle class – and it is still completely unclear who, when and how will stop this roll. In the 19th century, the “upper” idle class really united people without whom society could do without (which the Bolsheviks tried to realize), but they made up a small minority of the population; in the 21st century the “lower” idle class is ten times more numerous, and even the thought of getting rid of it is impossible.

His requirements are quite understandable and justified from the point of view of humanism, but the whole question is to what extent they are fair (in other words, in the new conditions the ideas of equality and justice, which were considered almost synonymous from the time of Christ, begin to “diverge” further and further further apart). All this testifies to the fact that mankind is facing one of the most difficult challenges in its history – probably more complex than the one that it once faced at the turn of the 19th – 20th centuries.

Twenty years ago, I described these contradictions in my book, “A Shattered Civilization,” and therefore my current reasoning is purely secondary. But, no matter how much anyone would like to believe in quickly overcoming the problems that arise, too much says that we are at the very beginning of the painful process of understanding the new social reality …

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