Capitalism and Inequality. Was Marx Right After All?

Karl Marx's prediction was that capitalism would lead to the numbers of wealthy property-owners (the bourgeoisie) becoming smaller and smaller, while everyone else sank into an immiserated proletariat, which would eventually revolt to overthrow its masters and introduce a new socialist order. During the century after his death, his analysis was invalidated by two factors that he failed to predict: Where it was successful, capitalist industrialisation created vast new intermediary classes ranging from skilled workers like electricians to middle class professional managers, clerks and engineers. These may not have owned much capital, but they were well paid and certainly did not identify with ordinary unskilled workers. The second factor was that whether because of the needs of war, fear of revolution, feelings of national solidarity, or Christian charity, the capitalists acquiesced (albeit unwillingly) in state programmes to redistribute wealth and ameliorate property through systems of social welfare. 

Today, however, a situation is developing in the West that is much closer to Marx's predictions, though he could not predict the specific reasons. As he saw (and as Francis Fukuyama in his End of History completely failed to see) technological change is itself a revolutionary force, which by transforming the means of production also transforms society and politics. Computerisation and automation have deprived huge sections of the working classes of secure and well-paid jobs, driving them down into the ranks of a poorly-paid and insecure "precariat". Not only is this process bound to intensify still further, but it is beginning to do the same to increasing swathes of the middle class professions. Meanwhile, this new proletariat is also coming under greater and greater competition from migrants from the impoverished and violent areas of Africa and the Middle East. 

And all of this is before genetic engineering really kicks in. Today in the USA as in the 1990s in Russia, we see the death rate of the working classes increasing for the first time in more than a century, while the rich live longer and longer. If we reach a situation where the rich live healthily to 120 while the mass of the population dies at 60, then not just democracy but human society and indeed humanity itself will be in mortal danger. 

Meanwhile, deindustrialisation and financialisation have not only concentrated more and more wealth in fewer and fewer hands, but produced a truly international capitalist class which feels no attachment to or sympathy for the poor of its countries of origin. When its members do still have charitable feelings, like Bill Gates and Warren Buffet, their charity is more likely to be spent on helping the poor of Africa than those of the USA. Where they support social institutions like football clubs, then like Roman Abramovich, they are likely to be glamorous Western ones rather than those of their countries of origin. With conscription abolished and the threat of revolution removed (for the moment) neither the capitalists nor the state have any strong reason to look after the poor. 

Will this radical new inequality eventually lead to a revolution of the Left or - more likely - the radical nationalist right, led by members of the ruined middle classes? Or will governments have the will, and the ability to defy the capitalist elite, which will allow them in time to introduce radical programmes of redistribution and limits on automation? On this may depend the future of modern civilisation.

Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.