Inequality and poverty – the latest UN report on UK poverty illustrates the need for the end of class society

The figures set out in the latest UN report on UK pauperisation, shocking enough in their own right, form the latest link in a chain of extremes which is the reality of global inequality, a tendency which has rocketed since the 2008 financial crash.

Submitted by Internationali… on November 29, 2018

Again and again, the latest events and research serve to confirm the startling accuracy of the Marxist perspective. In the widely circulated Manifesto of the Communist Party lines such as the following have lost none of their veracity;

“The modern labourer, on the contrary, instead of rising with the process of industry, sinks deeper and deeper below the conditions of existence of his own class. He becomes a pauper, and pauperism develops more rapidly than population and wealth. And here it becomes evident, that the bourgeoisie is unfit any longer to be the ruling class in society, and to impose its conditions of existence upon society as an over-riding law. It is unfit to rule because it is incompetent to assure an existence to its slave within his slavery, because it cannot help letting him sink into such a state, that it has to feed him, instead of being fed by him. Society can no longer live under this bourgeoisie, in other words, its existence is no longer compatible with society.”

There are good grounds for selecting the UK as a prime example of the shattering of delusions of national grandeur and shared identity based on geography on the harsh rocks of material reality, a country where all sorts of fantasies, chauvinism and racism were reinforced by the ongoing Brexit farce which at the time of writing has reached an impasse. The governing party of the former global superpower find the mirror held up by the UN report hard to contemplate. In a nation where feudal vestiges are more pronounced than many, where the aristocracy remain major landowners1 and the monstrous carbuncle of the wealth-flaunting monarchy2 as a permanent media presence distorts the outlook of many, a country which relatively recently headed an extensive Empire and pride in its World War Two victory continues to exert a distorted view of the UK as a top ranking nuclear power, holding a seat on the UN Security Council, the harsh reality of the UN report depicts a reality that the capitalist press prefers to downplay.

Only recently has the United Nations recognised the need to investigate the poverty of the advanced metropoles, an indication of the new reality brought on by the capitalist system. In his 24-page report compiled after research in nine UK cities, Philip Alston deals some devastating blows to the image of the UK.

“The UK is the world’s fifth largest economy, it contains many areas of immense wealth…The results? 14 million people, a fifth of the population, live in poverty. Four million of these are more than 50% below the poverty line, and 1.5 million are destitute, unable to afford basic essentials. The widely respected Institute for Fiscal Studies predicts a 7% rise in child poverty between 2015 and 2022, and various sources predict child poverty rates of as high as 40%. For almost one in every two children to be poor in twenty-first century Britain is not just a disgrace, but a social calamity and an economic disaster, all rolled into one…The government says work is the solution to poverty and points to record employment rates as evidence that the country is going in the right direction. But being in employment does not magically overcome poverty. In-work poverty is increasingly common and almost 60% of those in poverty in the UK are in families where someone works. There are 2.8 million people living in poverty in families where all adults work full time. Families with two parents working full time at the national minimum wage are still 11% short of the income needed to raise a child... Low wages, insecure jobs, and zero-hour contracts mean that even at record unemployment there are still 14 million people in poverty…The costs of austerity have fallen disproportionately upon the poor, women, racial and ethnic minorities, children, single parents, and people with disabilities.” 3

The figures set out in the latest UN report on UK pauperisation, shocking enough in their own right, form the latest link in a chain of extremes which is the reality of global inequality, a tendency which has rocketed since the 2008 financial crash and which, despite all fantasies about common national interest, reveal the reality of class division which remains the fundamental feature of society to this day, as it always will so long as capitalism remains.

Over a year ago we were informed that the world's eight richest people have the same wealth as the poorest 50%.4 This stunning concentration of power accelerated from only a year before when the figure was 62 richest holding that vast quantity of wealth, and that figure represented an enormous concentration from only a few years previously.5 The tendency is clear and already we can have a good idea where it will soon go. Earlier this year we were informed “The world’s richest 1% are on course to control as much as two-thirds of the world’s wealth by 2030, according to a shocking analysis that has led to a cross-party call for action.”6

This tendency, rising inequality, is true for virtually every region of the globe. For example7 ;

India and China – the bottom 50% got 12% of income growth whilst the top 1% got 27% between 1980 and 2016.

According to the 2018 World Inequality Report, the Middle East had the most grotesque concentration, with the top 10% obtaining (robbing?) 60% of national income.

In the USA the bottom 50% receive 13% of income and the top 1% take 21%.

How has this come about? One reason for the expansion of the wealth of the top layer is that in response to the 2008 financial crash, banks have been reticent to lend to the less well-off and governments have imposed austerity programmes, yet stock markets have been fuelled by easy low interest borrowing. For example, the US recently broke a record in stock market history; the longest bullrun (time without a 20% or greater downturn). Since March 9, 2009, the S&P 500 has risen by 323%, Nasdaq has risen 611% and the Dow Jones is up around 300%. This translates into a massive (18 trillion dollar) financial bonanza for the upper strata, as now only the richest 10% of Americans own 84% of all stocks. Add to that Trump's tax cuts for the high earners. Since the tax cuts passed, companies have been using buybacks to return record amounts of cash to shareholders.

Another significant piece in the jigsaw puzzle of how the hell did we get to this extreme situation is to be found in the capacity of the giant multinationals to avoid paying tax. According to Gabriel Zucman, of the University of California in Berkley, official figures drastically underestimate global wealth. He says the multinationals transfer nearly half of their profits to tax havens.8 Acting within the law, huge US companies report more profits in Ireland, one of the main destinations for tax evasion in the world, than in China, Japan, Germany, France and Mexico combined. And Zucman goes on to say that the illegal aspects of tax evasion are significant, even if we have no exact figures. No wonder in the USA where 40 million live in poverty, the income of the top 1% has doubled in the last 30 years whilst wages have stagnated, the minimum wage being a measly $7.25 an hour. And workers have no access to tax havens.

This colossal inequality is literally killing people. Back in the Disunited Kingdom, we hear of a £265m payday for the Bet365 founder Denise Coates.

“It was founded only 18 years ago in a Portakabin in Stoke. But with a claimed 35 million customers it’s now the world’s largest online gambling company. Revenues in 2017-18 hit £2.7bn. Mouths gaped open last week at Companies House filings indicating £265m remuneration for its chief executive Denise Coates over that period. That’s multiples of the pay of bosses of global digital companies such as Apple or eBay. Indeed, it’s just about the largest corporate pay packet on the planet.”9

Meanwhile "Life expectancy in some parts of the UK has plummeted, according to official figures… Residents in former mining towns and isolated rural areas saw the biggest fall… Danny Dorling, professor of human geography at the University of Oxford, said influenza, obesity, alcohol and smoking could largely be ruled out as contributory factors.

The fall in life expectancy in several geographical areas of England is most likely a result of the effects of public service cuts and austerity,” he said. “Many other possibilities can be ruled out. Rates of smoking and drinking alcohol have fallen in recent years so that cannot be blamed. Between 2009 and very late 2017 there has been no serious influenza outbreak.”10

A grotesque, deadly tragedy. Either the working class allows this trajectory to ruin to play out, we get the spiral of pauperisation, global warming, the drive to war as capitalism inevitably does what it must, or we fight back. But not simply asking for, even demanding, a fairer share, higher wages, more services, better housing and the like, even if all these and many more issues will be elements of the working class response. We have to recognise that without challenging capitalism, without abolishing the class system and the society based on that division, we will be plunged into the abyss, an ever worsening scenario edging towards utter destruction as the cycle of crisis and imperialist confrontation plays out. For those of us who reach this understanding ahead of the majority, our work is ahead of us; the working class cannot resolve its issues within capitalism, the fight for socialism is the only solution and that means class struggle and a political organisation built on the perspective of a break with the mirage of reforming this system which has nothing but worse in store.

26 November 2018

  • 1More than a third of Britain’s land is still in the hands of a tiny group of aristocrats, according to the most extensive ownership survey in nearly 140 years. In a shock to those who believed the landed gentry were a dying breed, blue-blooded owners still control vast swathes of the country within their inherited estates. A group of 36,000 individuals – only 0.6 per cent of the population – own 50 per cent of rural land.
  • 2Brand Finance, a business valuation consultancy, calculated the royal family was worth £67.5bn in its report. It made the calculation by tallying up not just concrete assets but also the less easily quantifiable impact of their brand.
  • 4The world’s eight richest billionaires control the same wealth between them as the poorest half of the globe’s population, according to a charity warning of an ever-increasing and dangerous concentration of wealth. In a report published to coincide with the start of the week-long World Economic Forum in Davos, Switzerland, Oxfam said it was “beyond grotesque” that a handful of rich men headed by the Microsoft founder Bill Gates are worth $426bn (£350bn), equivalent to the wealth of 3.6 billion people.
  • 5The wealth of the richest 62 people has risen by 44 per cent since 2010, while the wealth of the poorest 3.5 billion fell 41 per cent, Oxfam said in a report released ahead of the World Economic Forum's annual meeting in Davos, Switzerland.
  • 6"Since 2008, the wealth of the richest 1% has been growing at an average of 6% a year – much faster than the 3% growth in wealth of the remaining 99% of the world’s population. Should that continue, the top 1% would hold wealth equating to $305tn (£216.5tn) – up from $140tn today. Analysts suggest wealth has become concentrated at the top because of recent income inequality, higher rates of saving among the wealthy, and the accumulation of assets. The wealthy also invested a large amount of equity in businesses, stocks and other financial assets, which have handed them disproportionate benefits."