If you were thinking the great “income inequality” crusade was a veiled effort to bring back Marxism, you’re dead wrong. It’s not veiled at all.
The Left’s academic brigades are giddy with delight that a modified version of Marxist theory is gaining purchase among Western politicians, who of course are themselves very happy to embrace a philosophy that serves as the gateway to unlimited power. Marx never really went away, because he never stopped being useful to authoritarians of every stripe, most definitely including the American variety, who prefer wearing very thick velvet gloves over their mailed fists.
James Pethokoukis at National Review has a mini-review of French economist Thomas Piketty’s “Capital in the Twenty-First Century,” which refurbishes Marxist theory for the new millennium:
Piketty thinks the German progenitor of Communism basically got it right. It’s only that his essential insight — private capital accumulation inevitably leads to the concentration of wealth into ever-fewer hands — took a hiatus during the middle part of the last century thanks to depression and war hurting the fortunes of the well-to-do. But now Marxism’s fundamental truth is reasserting itself with a vengeance, a reality borne out in both Piketty’s own meticulously gathered data and in business pages replete with stories of skyrocketing wealth for the 0.001 percent and decades of flat wages for everyone else.
And it’s only going to get worse, Piketty concludes. Sure, the productive and innovative capacity of market capitalism will generate enough income growth for the masses to prevent revolution. He concedes Marx got that bit of apocalypticism wrong. But an “endless inegalitarian spiral” will create such wealth bifurcation that “the meritocratic values on which democratic societies are based” will be undermined. The political process will be hopelessly captured by a tiny elite of rent seekers and trust-fund kids. America (and then the other advanced economies) will become what Occupy Wall Street types and Elizabeth Warren think it already is.
In essence, the idea is that technological advances increase the income generated by ownership of capital (boo, hiss!) far beyond the rate of economic growth, which means the people who earn their income from labor get left in the dust. Throw in an overcompensated class of cruel managerial overseers to keep the workers in line, and the dystopian image of capitalism’s future is complete. Sure, in a few hundred centuries the Morlocks will start eating the Eloi, but meanwhile it sucks to be a Morlock.
What, pray tell, can stave off this dire future of income inequality? You get three guesses before I’ll let Pethokoukis give you the answer, and the first two don’t count.
“Will the world of 2050 or 2100,” Piketty asks, “be owned by traders, top managers, and the superrich, or will it belong to the oil producing countries or the Bank of China?” Actually, the answer doesn’t much matter. Whatever the exact makeup of this global plutocracy, democratic capitalism will be replaced by something more like Putin’s or Xi’s cronyist authoritarianism — unless populist progressive forces can implement a global wealth tax ASAP. And if that can’t happen right away, 80 percent top income-tax rates would be a solid first step.
Yes, unless we let fat-cat global politicians loot us like so many burst pinatas, there could be income inequality all over the place. It’s far better to have a tiny super-rich kleptocratic political elite control the majority of human wealth, instead of the people who make investments, take risks, and earn it. You can see why greedy politicians love this stuff. An 80 percent top tax rate – with, of course, copious exceptions for politically connected friends? The emperors of old didn’t have such power over their people!
Pethokoukis wisely encourages us all to take up the battle for economic freedom. “The soft Marxism in Capital, if unchallenged, will spread among the clerisy and reshape the political economic landscape on which all future policy battles will be waged,” he warns.
I’d say soft Marxism is already pretty well spread. The “income inequality” crusade is as naked a grab for collectivist power as we’ve ever seen, invoking no authority except the elite’s finely tuned sense of “fairness.” Of course, no matter how much power they are given, “fairness” will never be achieved. They offer no endgame, no exit strategy – no point at which their power could be relinquished, and the forcibly leveled people of their total States could be permitted to resume owning the honest profits of their capital and labor.
And since the targets of this compulsive force stand accused of committing no crimes – they’re not frauds, cheats, or thieves – precedents are set that allow the power of the Ruling Class to expand exponentially. Thanks to Marxist analysis, they can now hold any honest person “guilty” of the “crime” of inequality, devising whatever punishment they see fit. That’s a lot more fun for politicians than giving their subjects the right to formal charges, jury trials, and the presumption of innocence. Marxism changes the polarity of law and order to the presumption of guilt. You have to prove you “deserve” whatever the State permits you to keep.
There’s never a shortage of people at the low end of the income bracket to receive the promises of socialism, imbibing bitter envy and sweet promises of benefits to be financed by the plundered wealth of their “oppressors.” It’s important to reach out to them and remind them of how hollow these promises are. Perhaps a good place to start would be pointing out that command economies might begin with a lot of big promises about enforcing equality, but they end with an even greater concentration of wealth in the hands of an elite that’s harder to join than the top income bracket of a free economy. You will search the world in vain for a command economy run by selfless people who live modest lifestyles, swearing vows of poverty while they carefully spend every precious nickel plucked from the hands of their society’s workers and investors.
Winston Churchill quipped that democracy was the worst form of government, except for all the others that have been tried. Free-market capitalism is likewise far superior to every ideology that claims the wisdom to “fix” its deficiencies. Even if we could somehow conjure a command economy completely free of corruption and greed – a benevolent dictatorship run by a super-intelligent computer, perhaps? – the problem for the Little Guy is that efforts to allocate wealth by force inevitably diminish the overall wealth of society. One of the first casualties is the sort of lower- and middle-income upward mobility that most of the population desires. That sort of mobility requires opportunity, which flows from the wise investment of capital. In the new Marxist critique, the private owners of capital are savaged for investing it too well, and generating too much profit. Are we really supposed to embrace the alternative of socialist or communist governments investing capital poorly, to create a less prosperous but more egalitarian environment?
One reason command economies do a lousy job of allocating capital is that they’re rather… dense. They lack the distributed brilliance of free markets, in which millions of brainstorms compete for the attention of customers and investors. Politically-controlled capital lacks adequate feedback mechanisms for its failures; it doesn’t admit its mistakes, doesn’t learn from them, and often refuses to stop making them. Political connections are a horribly inefficient system for distributing investments. Even our hypothetical selfless computer overlord would be hard-pressed to swiftly accumulate and process the amount of economic data handled by the wild, decentralized intelligence of the free market. (If a self-aware computer with that level of intelligence comes into existence, humans might not have a choice about whether or not it gets to be their benevolent dictator.)
But of course, in the real world, no such selfless, brilliant, tireless leadership exists. Beat “income inequality” down with an 80 percent tax on the rich, and you’re just putting fresh billions in the hands of the usual collection of drunken sailors, crazed ideologues, and kleptocrats. Give them outright ownership of capital, and they’re guaranteed to use it less wisely than free-market capitalists who accept risk and responsibility in the pursuit of profit. Take a look at the grim condition of most publicly-owned property – what no one owns, no one cares for. The same is true of industrial capital.
And these big, compulsive attempts to address “inequality” end up corrupting the people they’re supposed to benefit. Income redistribution is a toxin for the recipients, too. The nation’s precious human capital degrades when people spend their lives on the dole, or when even the working middle class grows accustomed to lollipops paid for by other people. Does the human race really need yet another agonizing lesson in what happens to a society when its human capital atrophies in this manner?
If high technology creating highly profitable capital causes a massive income imbalance against the income from labor, then the healthiest way to solve the problem is to encourage more Little Guys to become investors and stakeholders. We were making progress toward such an investment society in the previous decade; it’s not hard to envision policies that would kickstart the process. Instead of forcibly redistributing wealth, or allowing corrupt politicians to take control of the means of production, make it beneficial to include more investment opportunities as part of compensation packages. This would have the added benefit of decisively souring the middle class on parasitic government, whose policies tend to mess up their investment plans.
And that, of course, is one of the big reasons why Marxism 2.0 will never be interpreted by ambitious leftist politicians as a clarion call for the ownership society. They’re not interested in “solutions” that fail to make them richer and more powerful.