Late Capitalism and Its Runaway Inequality Problem

One of the great unexamined questions of our times is why there is so much suffering, despair, misery and rage in the midst of unimaginable wealth. Naturally, pundits and politicians wish to avoid this question because an open public discussion of the widening wealth gap can impart critical insights into the nature and logic of […]

The post Late Capitalism and Its Runaway Inequality Problem first appeared on Dissident Voice.

One of the great unexamined questions of our times is why there is so much suffering, despair, misery and rage in the midst of unimaginable wealth. Naturally, pundits and politicians wish to avoid this question because an open public discussion of the widening wealth gap can impart critical insights into the nature and logic of the capitalist system they’ve worked so hard to hide from view. Cloaking the workings of the system is easier when it has not gone bust. During severe economic downturns, the pundits and the media narrative managers have a more difficult time keeping critical consciousness from entering public discussions.

A recent case in point is the Great Recession of 2008, to which the state responded to by bailing out the bankers and shifting trillions of dollars from the taxpayers to the financial oligarchs, while the millions of households facing foreclosures and economic ruin received meager support. As a consequence, the Occupy Wall Street movement emerged in 2010. The movement defied the narrative managers and introduced a critical perspective about the problem of runaway inequality into public consciousness.

Of course, narrative management is only the first line of defense to protect the status quo, and once rendered ineffective, the state swiftly moved to repress the movement. Under the Obama administration, Law Enforcement units nationwide coordinated efforts to remove and prevent protesters from occupying any public spaces. By then however the movement had popularized the slogan “We Are the 99%,” and helped paved the way for future challenges to the status quo. That came in the form of a mild social democratic electoral insurgency a la Bernie Sanders in 2016 and 2020. The neoliberal establishment united to quell the challenge and succeeded in preventing Bernie from winning higher office, while instead the actions of the establishment led to the victory of Donald Trump in 2016.

The year 2020 also saw a long-expected economic downturn starting in February that was followed by the Covid-19 pandemic and its associated business closures in March. This combination of the economic crisis and the pandemic crisis has exposed the system’s inequities far more effectively than anything in the recent past. Millions within our borders and beyond have borne witness to harsh realities of life, which include inadequate or lack of access to health care, differential or poor access to transportation, decent jobs, virtual educational opportunities, affordable housing, healthy food, not to mention flexiblized labor and persistent poverty, all of which are related to chronic disinvestment in vulnerable and marginalized communities. What’s more, people in the U.S. witnessed a scandalously dysfunctional political system unable to meet the fundamental needs of its citizens during dire circumstances.

More social movements will likely emerge in response to this monumental failure of an economic system and its governing class. We have already seen the massive anti-racist movement that emerged in 2020 in response to racist state police violence. While the Left has a historic responsibility in this moment, if it fails to mobilize the masses, organize the unorganized, engage in collective and disruptive social struggles to demand the necessary course corrections, it runs the risk of allowing the elite to return to a pre-Trump course, thus facilitating the development of future retrograde alternatives of right-wing variety that’ll prove to be even more repressive than Trumpism.

Of course, the problem with the media narrative management persists, for the prevailing discourse has centered around the virus itself, the social practices that can prevent its spread, and Trump’s criminal mismanagement of the pandemic. The modern political discourse, managed by the mainstream media, fails to acknowledge the structural or systemic factors and is instead well-suited to talking about issues in terms of personalities in a vacuum, or at best in terms of limited partisan politics. But below the surface and behind the personalities lurk political and economic systems that operate free from close examination. Without examining these systemic inequities, tens of millions will remain in precarious conditions and be wholly unprepared to face the inevitable coming crises beyond the present pandemic.

What we don’t hear is that wealth inequality is rooted in the very DNA of a modern capitalist system, that wealth inequality translates into political inequality, that insecurity is a fundamental feature of U.S. capitalism, that unless wealth creation and distribution is democratized and workers and communities empowered none of our social ills will go away and unnecessary mass suffering and resentment will only grow. This a topic rarely investigated. Even Bernie Sanders’ discussion lacked a clear and solid class analysis as to how and why capitalism since the mid-1970s has produced such obscene inequalities. Although runaway inequality is now the dominant trend in late capitalism, it largely remains a taboo subject in mainstream circles. The few bold enough to try to address these issues are labeled class reductionists while anyone fighting for economic justice gets accused of engaging in politics of class warfare. Left unacknowledged is that the runaway inequality problem is the outcome of a ceaseless class warfare waged by capital, the financial oligarchs, and the state they’ve captured. Stating this truism is simply beyond the range of permissible thought in the mainstream.

An Obscenely Unequal World

By the end of 2019, total global wealth stood at $399.2 trillion in USD, but just a mere 0.1% of the global population, totaling 175,000 ultra-wealthy people, owned 25% of global wealth. Together with another 52 million millionaires, making up the top 1%, they owned 43.3% of all personal wealth. Meanwhile billions of people who make up the bottom half of humanity have no personal wealth at all with a pitiful share of just 1% of the global wealth, with the bottom 90% holding only 19%. Furthermore, the share of North America and Europe of this wealth in 2019 was 55%, despite those regions comprising just 17% of the global population. That leaves the ‘poor south,’ where 83% of all people reside, with only 45% of total global wealth.

Of course, inequalities persist within states too and not just at a global level and among nations and regions. To highlight this fact, some analysts prefer the terms ‘global north’ and ‘global south’ to ‘rich north’ and ‘poor south.’

Runaway Inequality in Pre-Pandemic U.S.

Between the years 1975 and 2018 an astounding, but still conservatively estimated, $47 trillion shifted upwards from the working people in the bottom 90 percentile to the top 1%. Had levels of inequality remained as they were in the preceding three decades (1945-1975), working people would have had an additional $2.5 trillion added to their share of respective income, just in 2018! Considered on a more acute level, the combined income of a household of two full-time workers in 2018 is barely more than what a single worker would have earned had inequalities remained at the 1975 level. By 2020, this financial strip-mining of the bottom 90% had exceeded $50 trillion, or the equivalent of paying every working person in the bottom 90% an additional $13,728 annually. This is a country in which the median male worker had to work 33 weeks in 1985 to pay for healthcare, housing, transportation and family educational expenses and 53 weeks by 2018. Imagine how much more financially secure and less vulnerable the working people in this country would have been in facing the pandemic in the absence of this organized theft.

The U.S. is perhaps the richest society ever in history, yet you wouldn’t know this living in the middle or lower classes. Millions of ordinary people are saddled with immense unjust debts, earn wages that are stuck at the level of the1970s real purchasing power, have to deal with poor social services, and struggle to make ends meet. Unknown to a modern advanced society, the U.S. has been suffering from “deaths of despair” caused by opioids, alcoholism, depression, and suicides taking the lives of tens of thousands of white middle-aged working people and causing consecutive declines in their life expectancy. Personal debt exceeds $14 trillion. Some 87 million people lacked adequate healthcare coverage before the pandemic hit. 62% of personal bankruptcies have been linked to illness. 40% of the people could not afford $400 in emergency cash, again before the pandemic and the economic depression of 2020. Half of all workers lived paycheck to paycheck. Student debt went from zero in 1960 to $1.7 trillion by 2020. On average, U.S. citizens die holding $62,000 worth of debt.1

The runaway inequality problem has generated pre-existing social and economic vulnerabilities/conditions that have exacerbated the impact of the pandemic independent of the Trump regime’s incompetence, negligence and mismanagement. We are in effect dealing with and ought to approach the present crises as involving multimorbidities beyond the virus itself. This truism too is simply beyond the range of permissible thought in the mainstream.

Post-Pandemic U.S.

The year 2020 proved to be quite revelatory, exposing the enormous costs associated with these social fractures, inequalities and forms of structural violence as the Covid-19 pandemic and capitalist logic combined to further exacerbate inequalities and cause suffering.

Let’s consider the period between March and November of 2020 in the U.S. During these several months the 650 U.S. billionaires grew their wealth by $1 trillion and now own nearly $4 trillion in total, or 3.5% of the estimated $112 trillion of all privately held household wealth in the U.S. The top 1% owned $34.23 trillion (30.5%) of this wealth, the top 10% owned $77.32 trillion (69.04%), while the bottom half of the population owned just $2.08 trillion (1.86%). Therefore, just 650 people, the billionaires, owned twice as much as the bottom 165 million people combined. The obscene level of concentration of wealth held by just a few individuals during this same period is also telling. Jeff Bezos added $70 billion to his wealth (a 61.4% increase), making his wealth stand at $182.4 billion by November. Elon Musk’s wealth surged by a whopping 413% to a total of $126.2 billion. Mark Zuckerberg saw 85.9% growth in his wealth reaching a total of $101.7 billion. Bill Gates increased his net worth by 21.8% to a total sum of $98 billion. And Warren Buffett’s worth reached $88.3 billion, a 30.8% increase during the same period.

Similar patterns held regarding the ownership of corporate equities and mutual fund shares. The media pundits who cover business news often talk about the ups and downs of the stock market as if it reflects the general economic conditions of ordinary workers, however here is a datum or two that should suffice to disabuse the reader of this mistaken impression: (1) the bottom 50% in the U.S. own just $0.16 trillion in stocks while the top 1% own $14.04 trillion, and (2) the top 10% own more than 88% of all corporate equities and mutual fund shares. Such assets comprised about 41% of their overall wealth in the 2nd quarter of 2020. Consequently, the rise in the stock market during the pandemic – fueled by the Fed injecting trillions of dollars into the financial markets and slashing interest rates – massively benefited the top 10% and helped further widen the obscene wealth gap.

Tax policies have also contributed to the runaway inequality in the U.S. To give just two examples: The recently deceased Casino magnet, Sheldon Adelson, whose net worth was at least $34 billion, received $560 million in tax breaks from the Trump Tax Cuts and Jobs Act of 2017, and Charles Koch, with a net worth of $113 billion, received a $1.4 billion tax break.

The data introduced above paints a statistical portrait of a functioning oligarchy or plutocracy, not a democracy nor a functioning republic.

The Other America

In 2020, 8 million people slipped into poverty between May and November when the initial aid to mitigate the pandemic suffering and the effects of business closures ran its course without renewal by the governing class. A survey of U.S. households released by the US Census Bureau on Dec. 2, 2020 showed that 31% of households had difficulty paying for the usual household expenses; 35.3% worried that an “eviction or foreclosure in the next two months is either very likely or somewhat likely”; 12.7% say “there was either sometimes or often not enough to eat in the last 7 days”; and 31% of adults expected “someone in their household to have a loss in employment income in the next 4 weeks.” All this in a year in which from mid-March to mid-October more than 84 million claims were filed for unemployment compensation – that’s more than half the civilian labor force – indicating devastating conditions for the working people.

These sobering statistics exist without even considering the deaths and direct suffering caused by Covid-19 itself. As of January 29, 2021, there were 25.8 million cases of coronavirus reported in the U.S. with the number of deaths standing at 434,783. These numbers are so astronomical that people likely struggle to conceptualize suffering on this scale. To help visualize this insurmountable loss, consider the following. There were on average 1.7 deaths per minute from Covid-19 in the month of Dec. 2020 alone. The nation’s life expectancy at birth is expected to drop by a year for the first time since WWII from 78.8 to 77.7. Each person who has died from Covid-19 was on average deprived of about 13 years of life amounting to more than 5.65 million years of life lost in total (given the number of deaths as of this writing). Already more than 3.1 million people have lost a close relative. And these deaths are not evenly distributed, for 1 in 800 blacks have died compared to 1 in 1325 whites.

This Other America reveals the U.S. as a failed state, one that is negligent of the health needs of millions of people during a deadly pandemic, unable or unwilling to address the basic needs of tens of millions of its working people, and valuing their labor for its role in creating wealth, but not their lives.

But it’s one thing to describe what has been happening and entirely another to consider whether there exists a cure for this runaway inequality problem. What is certain is that neoliberal capitalism has produced this runaway inequality. A return to the pre-neoliberal post-war period that ended in late 1970s, and not to the pre-Trump period that gave us Trump, can certainly ameliorate the inequality problem somewhat. Yet, if we could pull ourselves above the noise and confusion of the moment, we may be able to see that the former period, sometimes referred to as the ‘golden era of U.S. capitalism,’ may have been a special historical period that could only be replicated with sustained organizing from below. Furthermore, bear in mind that a return to the pre-neoliberal period still poses two serious problems. (1) Leaving capital with all its powers and resources intact only guarantees that it will find ways to rollback whatever gains we are able to make, as it in fact has done since the late 1970s. (2) Capitalism’s very existence depends on an endless process of the accumulation of capital. This imperative of ceaseless expansion places the system on a collision course with a finite planet and is at the root of the ecological crises today. Put differently, the critical Left ought to push the state to adopt policies to alleviate unnecessary suffering and struggle on the longer-term project to go beyond capitalism. A regimented capitalism could offer the Left the space and a limited time period to focus intensely on democratizing wealth creation, redistributing power, and reconstructing society from below in order to avoid sliding into oblivion.

  1. The Debt Collective, Can’t Pay Won’t Pay: The Case for Economic Disobedience and Debt Abolition, Haymarket Books, (Chicago Illinois), 2020. The data in this paragraph came from the Forward, Introduction, and Ch. 1 of the e-book version.
The post Late Capitalism and Its Runaway Inequality Problem first appeared on Dissident Voice.
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