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Marx on the income gap

Published Apr 4, 2007 10:58 PM

The growing polarization between rich and poor, between the capitalist class and the working class, was eloquently described by Karl Marx and Frederick Engels in the Communist Manifesto some 160 years ago. Perhaps no part of the Manifesto has received more ridicule and scorn from capitalist apologists and ruling class economists than the so-called “theory of increasing misery of the working class.”

And yet today, in the richest imperialist power on the planet, when the number of billionaires is greater than ever and corporate profits are at record highs, poverty is skyrocketing. On virtually every international social index—nutrition, infant mortality, health care, education, homelessness—the U.S. ranks at the bottom of the industrial world.

A new report on income inequality confirms the trend. Looking at recently released IRS data on incomes, the New York Times (March 29) reports that the gap between rich and poor grew significantly last year, with the top 1 percent—-those making more than $348,000 a year—-receiving their largest share of the national income since 1928. The top 10 percent, those making more than $100,000, also reached a level of income share not seen since before the Depression.

While total reported income in the United States increased almost 9 percent in 2005, the most recent year for which such data was available, the overall increase hides the fact that this is all attributable to the rich getting richer. For the bottom 90 percent, incomes dropped 0.6 percent.

Incredibly, the new data show that the richest 300,000 Americans—one-tenth of 1 percent of the population—devoured as much of the national pie as the bottom 150 million, or half the country! “Per person,” writes the Times, “the top group received 440 times as much as the average person in the bottom half earned, nearly doubling the gap from 1980.”

And these tax-based figures are no doubt understated, since the Internal Revenue Service estimates that it is able to accurately tax 99 percent of wage income but can capture only about 70 percent of business and investment income, most of which flows to upper-income individuals. Nor does this data take into account decades of cutbacks in benefits and government services that the rich just don’t have to worry about. No millionaire need complain when health care, child care, welfare or education spending gets cut.

And there is no end in sight to these trends, with the Bush administration promising tax cuts to millionaires that average over $150,000 a year.

In summary, the analysis cited by the Times shows that the richest 1 percent received 21.8 percent of all reported income in 2005, up from 19.8 percent in 2004, and more than double their share of income in 1980.

These trends all confirm the economic prognosis given by Marx and Engels almost two centuries ago, writing at a time when the capitalist system was young and developing, unlike today when it is senile and decrepit.

Yet news reports about the income gap, while exposing the injustice and hypocrisy of the system, do not focus attention on the real source of the problem. It is not the distribution of income per se. And the well-meaning efforts of liberals and social reformers to trim the excesses of the income gap, to tweak the tax policies of the capitalist government so that the rich get a little less and the poor get a little more, will not solve the crisis.

Marx showed that the real problem is the private ownership of the means of production. As long as the lifeblood of the economy, its vital resources, factories and technology are owned by a tiny group of individuals, as long as production is governed by the law of capital accumulation and not the needs of society as a whole, poverty, injustice and capitalist crisis will remain and ultimately grow.

Today, with the myriad problems of war, poverty and the environment, it is patently clear that the needs of society for peace and security are at odds with the private ownership of the means of production. Workers produce everything; the ruling class produces nothing. The only way society can move forward is to transfer the means of production from private ownership to the collective hands of all the workers and oppressed. It will take a revolution to do that, but that’s much more likely to happen than passing a camel through the eye of a needle.