The 1% and the Rest of Us

A Political Economy of Dominant Ownership

Tim Di Muzio

• Publisher: Zed Books
• Year: 2015
• ISBN:
  9781783601455
• Edition: 1
• Topic: Economics
• Subtopic: Development Economics
• Index: Economics

While the Occupy movement faces many strategic and organizational challenges, one of its major accomplishments has been to draw global attention to the massive disparity of income, wealth and privilege held by 1% of the population in nations across the world. In The 1% and the Rest of Us, Tim Di Muzio explores what it means to be part of a socio-economic order presided over by the super-rich and their political servants. Incorporating provocative and original arguments about philanthropy, social wealth and the political role of the super-rich, Di Muzio reveals how the 1% are creating a world unto themselves in which the accumulation of ever more money is really a symbolic drive to control society and the natural environment.

INTRODUCTION: TOWARDS A GLOBAL POLITICAL ECONOMY OF THE 1%¹

Of all Classes, the wealthy are the most noticed and the least studied. (John Kenneth Galbraith 1977: 44)

The fact is that there is far more systematic information available on the poor, on farmers, workers … than on the men and women of the rich and the well-born, on those who make up the ‘upper strata’ – if not the ‘capitalist class’ – of our society. Yet now it ought to be apparent … that we must discover as much as we can about those who occupy the upper reaches of … society if we are to understand … the present as history. (Maurice Zeitlin 1974: 1112)

Study the rich and the powerful, not the poor and powerless … not nearly enough work is being done on those who hold the power and pull the strings. As their tactics become more subtle and their public pronouncements more guarded, the need for better spade-work becomes crucial … Let the poor study themselves. They already know what is wrong with their lives and if you truly want to help them, the best you can do is to give them a clearer idea of how their oppressors are working now and can be expected to work in the future. (Susan George 2010: 82)

One of the most interesting developments in the global political economy is our increasing awareness that a tiny minority of the world’s population is growing obscenely wealthy. Of course, the fact that there is a gap between the rich and poor is hardly new or surprising. But two things appear to be novel in the present conjuncture: the magnitude of wealth held by the few and the intensification of inequality. Under conditions of what Stephen Gill has called ‘disciplinary neoliberalism’ and the ‘new constitutionalism’ – laws that protect and advance the rule of capital – this minuscule class of humanity has accumulated so much pecuniary worth that it is virtually impossible for them to spend it all (Gill 2008; Gill and Cutler 2014). Moreover, this tiny class set above humanity keeps getting richer and richer, and, as a consequence, more and more powerful. Even regular champions of capitalist markets are starting to get worried given the mounting evidence:

For me the most convincing argument against the ongoing rise in economic inequality is that it is incompatible with true equality as citizens. If, as the ancient Athenians believed, participation in public life is a fundamental aspect of human self-realisation, huge inequalities cannot but destroy it. In a society dominated by wealth, money will buy power. Inequality cannot be eliminated. It is inevitable and to a degree even desirable. But, as the Greeks argued, there needs to be moderation in all things. We are not seeing moderate rises in inequality. We should take notice. (Wolf 2014a)²

At the same time as wealth is accruing upwards, the majority of the planet’s inhabitants experience varying degrees of austerity, precarity, indignity and exploitation in their daily lives. For many, life is little more than a permanent state of crisis and a daily struggle just to find shelter or put food and water on the table. Their material conditions of existence as well as their psychological well-being are severely affected by the deprivations and inequities they experience – particularly as images of opulent lifestyles become more widespread through international communications.

In the opening stages of the twenty-first century, the relationship between those at the top of the wealth hierarchy and everyone else has never been so stark. Indeed, both the magnitude and the concentration of wealth and income at the top are historically unprecedented. And if current patterns of production, consumption and accumulation continue, this massive canyon of disparity is likely to grow into an unbridgeable abyss. To provide just one example in this introduction, consider that Credit Suisse’s Research Institute estimates that the richest 10% of adults own 86% of all global wealth, with the top 1% accounting for 46% of it (Credit Suisse 2013: 22). This means that just over 400 million people out of a population of 7 billion own most of the world’s income-generating assets. Compare this with the bottom 3.2 billion people who own just 3% of all wealth between them.

This growing gap between the 1% and the rest of humanity was the central relationship to which the Occupy movement called our attention when they organised themselves to protest about the ruling 1% of the global economy under the banner ‘We are the 99%’. As in earlier struggles for social justice, fairness and equality, the movement experienced police brutality and violence and its considerable encampments in cities worldwide were destroyed or dispersed. In the corporate for-profit press, the movement was largely ridiculed and even vilified for lacking a clear and simple message or for refusing to state its particular demands. But however we might fault the Occupy movement or critique its strategies and tactics, it did manage to shine a spotlight on one of the most pressing problems in twenty-first-century political economy: the concentration of wealth and income among the global 1%. And yet, as reflected in the quotes that open this introduction, there has been no comprehensive political economy of this tiny class of wealth-holders we will call dominant owners. In this light, the main aim of this study is to provide a critical and historically informed account of the rise and social reproduction of the global 1% and what its existence might mean for the rest of us and the future of the global political economy. It is written with the profound and utterly defensible belief that society is a shared project, but one that has been directed so far at enriching the very few.

Political economy and the elite

The literature of sociological theory is of course familiar with the concept of a ruling or dominant class. In the twentieth century, perhaps the most famous text is C. Wright Mills’ The Power Elite (2000 [originally published 1956]). Mills was concerned with the United States after World War II, and for him the power elite was the small minority of men who held key decision-making positions in the dominant institutions of American society. Mills argued that the interests of these men were largely interwoven and stemmed from their interchangeable positions in the military, the corporate sector and the state. These men make the most consequential decisions in society, and, while they are not always successful in achieving every one of their aims, they have, unlike the rest of society, the most significant institutions and resources at their disposal. Without owning these corporations and swaying politics, the power elite would not be wealthy. Indeed, Mills argued that personality, individual traits or meritorious ability can explain very little when it comes to accounting for the massive fortunes of private individuals and their families. He suggested that there were two major avenues to accruing wealth once corporations became the normal way of institutionalising capitalism. First, a ‘big jump’, meaning that an individual manages to obtain a position of strategic importance in the state, the military or a corporation. The second explanation for the accumulation of wealth is what he called ‘the accumulation of advantages’.³ Once one enters a strategic position and starts to accrue big money, more wealth, prestige and power typically follow due to the advantageous position one holds. But what of the rest of society?

Mills argued that the public is largely controlled or conditioned by the powerful – who also happen to shape the material and ideological culture through their control of mass media conglomerates. Thus, at the bottom of the social pyramid of wealth we find a politically fragmented and largely impotent mass of individuals and families largely caught up in the machinations of the powerful, but not omnipotent, few (ibid.: 9). Mills’ analysis is still insightful today and was one of the first sociological attempts to theorise the accumulation and concentration of wealth and power in the United States. At stake for Mills was the death of democracy at the hands of the power elite. The United States would keep its shell of democracy but, in reality, policy outcomes would be shaped by a rich and powerful oligarchy to advance their particular class interests. Now, there is mounting evidence that Mills may have been exactly right. Two recent academic studies found that policy outcomes in the United States largely reflected the preferences of affluent Americans while the preferences of poor and middle-income Americans were virtually ignored (Bartels 2008; Gilens 2005; Gilens and Page 2014). This suggests, as the Noble Prize laureate Joseph Stiglitz (2011) put it, that the US government is of the 1%, by the 1% and for the 1%.

Mills’ work inspired other scholars to study elite social forces from a sociological perspective (Domhoff 2006; Stanworth and Giddens 1974; Wedel 2009). In the field of political economy, studying the rich and powerful is typically the purview of critical scholars and a number of key concepts have been used to capture these agents and the institutions they own and/or control. For example, Stephen Gill (2008) uses the term ‘globalising elites’ while Kees van der Pijl (1998), Leslie Sklair (2001), William I. Robinson and Jerry Harris (2000) and William K. Carroll (2010) prefer to speak of a ‘transnational capitalist class’. Susan George (2010) has labelled them the ‘Davos class’ after the yearly elite summit held in Davos, Switzerland known as the World Economic Forum. For their part, orthodox Marxists use the all-too-familiar term ‘ruling class’ or, often in shorthand, the term ‘capital’ to represent those who control the means of production and who profit from exploiting workers all over the world. For Nitzan and Bichler (2009), the focus of attention is on ‘dominant capital’, by which they mean the leading firms by market capitalisation and the government organs that enable and facilitate their pecuniary accumulation through various legal, technical and often violent mechanisms – all associated with the sabotage of human potential in one way or another. These conceptualisations are certainly helpful and have yielded significant insights into the interests, strategies and tactics mobilised by the globally powerful. The aim of this study is to contribute to this critical literature by focusing more narrowly on the global 1% or what I call dominant owners. If dominant capital can be conceived of as the largest corporations by market capitalisation and certain government organs, then those who own and profit from these institutions can be called dominant owners. Throughout this book I use dominant owners, the 1% and high-net-worth individuals interchangeably.

I do not approach this study unsympathetically or unaware of the significant methodological challenges involved in providing an enlightened historical and theoretical account of the global 1%. The major challenge, as Braudel recognised long ago in his study of capitalism and civilisation, is that the rich and powerful prefer to operate in the shadows. For example, Mitt Romney, the wealthy former Republican candidate for the presidency of the United States, refused to release any more than the last two years of his tax returns for public scrutiny. Of course, there was much speculation as to what his previous filings might show, but the point here is rather straightforward: secrecy is the handmaiden of capitalism and the global rich. So while the privacy of the 1% is a methodological limitation, it is also very much a part of the story: dominant owners need this privacy to operate. However, in spite of this limitation, there is sufficient information available to warrant a global political economy of dominant ownership.

The main contribution to the field of political economy is threefold. First, I source, assess and synthesise new quantitative and qualitative data that allows us to identify dominant owners and how they hold their wealth. Second, this book aims to contextualise our present moment of growing inequality, crisis and social struggle by situating the 1% in their historical context. The third contribution to the literature is that I bring to bear the new theory of capital as power to this study (Di Muzio 2014; Nitzan and Bichler 2009). In Chapter 2, I explain this critical approach to studying the global political economy in more detail and introduce the key concepts used by this emergent school of critical political economy. Here, I will merely mention that the ‘capital as power’ framework theorises capitalism as a mode of power rather than adopting the far narrower view taken by most Marxists that capitalism should be conceptualised as a mode of production. Production is, of course, important; but, as we will see, the concepts of ownership, power and differential capitalisation are far more significant for our investigation of dominant ownership. With this in mind, and before introducing the main arguments and content of this study, I would like to briefly highlight what this book is not and what is at stake in my analysis.

First, while many individuals will be mentioned, this book is not about individuals per se. As we will come to find, the massive chasm between the 1% and the rest of global society is not an individual problem but a political and structural problem of the highest order. If we fail to address this fact and focus on a few greedy and morally reprehensible individual actions, we will fail to truly understand ‘the present as history’ and how we might be able to challenge the prevailing social relations of power. These relations are unnecessary, unjustifiable and, in the final analysis, pathological. In other words, this book is about a global class dynamic and the social structure that has emerged over the last three centuries. Although they may stretch deeper back into human history, the current class dynamics of the global political economy have their roots in the violent creation of exclusive private property and its legal sanctification, European colonialism, the transatlantic slave trade, the discovery and use of fossil fuel energy and a never-ending class war over the generation and distribution of surplus wealth. In this sense, the accumulation of capital can very much be conceptualised as a permanent war.

Second, this study is not about vilifying wealth per se, nor is it motivated by envy. This study is primarily about critically exploring why so few have so much and why so many have so little. Is it a law of history, as Braudel suggested in his three-volume study of capitalism and civilisation, that ‘the rich always be so few’ (Braudel 1983: 466, emphasis original)? What could possibly justify the current distribution of income, wealth and ultimately life chances? How did it come to pass that the entire endeavour and primary goal in life of a small minority of humanity is to increase their differential wealth and power while the vast majority of humans are more concerned with a decent livelihood or eking out an existence? I call this deep-rooted yet compulsive behaviour pathological accumulation, not simply because it is habitual to the 1% and their army of political and financial helpers but because this addiction for wealth and power is destroying the planet for future generations.⁴ Hervé Kempf expressed it best:

the planet’s ecological situation is worsening … And that disaster derives from a system piloted by a dominant social stratum that today has no drive other than greed, no ideal other than conservatism, and no dream other than technology. This predatory oligarchy is the main agent of the global crisis – directly by the decisions it makes. Those decisions aim to maintain the order that has been established to favor the objective of material growth, which is the only method, according to the oligarchy, to make the subordinate classes accept the injustice of the social situation. But material growth intensifies environmental degradation (Kempf 2008: xvii).

So one of the fundamental contradictions the social justice movement will have to confront is the pathological drive to accumulate money and power held by the few versus the logic of livelihood, well-being and human security held by the many.

This brings us to what is at stake in this work. As I see it, there are at least three things. First, if current trends continue, the tiny percentage of humanity that owns the majority of the world’s wealth will continue to get wealthier at the expense of everyone else. The ethical dilemma here is that dominant owners do not, and indeed cannot, spend all of the income they accumulate. Instead, they continue to invest their money in more income-generating assets with the intention of making themselves even wealthier. So while the majority of the planet’s inhabitants are subject to precarious or insecure conditions of existence – many of them easily addressed if the finance were forthcoming – a small fraction of humanity is accumulating vast fortunes not for the sake of well-being and livelihood but, as we shall discuss in detail in Chapter 2, for the symbolic accumulation of power and social status. For example, consider that the Organisation for Economic Co-operation and Development estimates that to achieve the Millennium Development Goals (MDGs) by 2015 it would cost US$120 billion (Stijns et al. 2012: 12). For many of us that might sound like a lot of money – and it is. But as a percentage of the US$200.5 trillion held by 8.4% of the global population it represents only 0.06% of their total wealth. Put another way, if we asked the 393 million people who own 83.3% of global wealt...