The pandemic could pave the way for a more unequal society
The year 2021 arrived with new hopes. We are aiming to recover from the pandemic-inflicted 2020. We are set to revive the economy back to “normal.” But will our society in the coming days be less unequal than before? Ominously, the first signs indicate the coming of a more unequal society. Our contemporary society is structured in such a way that capitalists come out on top in every instance at the expenses of the working-class population.
Capitalism as a system is based on private ownership of property, free market, and minimal government. As such, everyone is on his own; in a market, transactions take place without much external regulations following the logic of supply and demand. In this process, three fundamental features are noticeable. First, people primarily produce not to consume but to sell at market. Secondly, motive of production is profit-making and hence, production does not directly meet our needs evading market transactions. Thirdly, human labour becomes a commodity.
For labour to become a commodity, one precondition is must. A segment of the population must not have access to means of production, who then are forced to sell labour to the owners of the means of production in exchange of money. In selling labour, a worker loses the control of how the labour will be used as well as the end product. The capitalist, being the owner of raw materials and tools, and by the virtue of paying for the labour, gets the end product, which is then sold in the market for more than the initial investments.
In a capitalist society, most of the exchange or distribution of products occur through markets -- everyone trades goods, contracts, and services to generate profit. However, profit could only be made through reducing the share of the labourer. While everything stays constant, labour generates surplus value and profit. Therefore, rate of profit can only be increased if workers are deprived. This is either done by increasing the working hour at factories/workplaces or through improving the technology that increases the production rate, and hence reduce workers’ share as she/he sold labour for a fixed amount.
Because of this unfair distribution of profit, the disparity among capitalists and the working-class gets bigger. According to recent estimates, eight people own as much wealth as 50% of the total global population. In the US, the richest 1% own 34% of the wealth and the proportion is even more skewed in favour of the richest 10% who own 74% of the wealth.
Once this capitalist system is set in place, the capital owners by the logic of inheritance continue to be at the side of profit-makers, while the labourers inherit the ability and condition to sell labour. This is clear from the fact that during the pandemic, billionaires across the world have amassed unprecedented amounts of wealth and the working-class remain in uncertainty, income reduction, joblessness, and misery.
Even in the RMG sector of Bangladesh, the larger factories are getting bigger, while many smaller factories cease to exist as BGMEA reports suggest. In October 2020, one of the larger RMG companies expressed interest to buy factories through advertisements in national dailies. The company wanted to increase their production capacity and the pandemic offered them a suitable opportunity.
Due to the pandemic, while the smaller factories are in dire need of cash, big conglomerates have gotten an opportunity to further monopolize their existence. This tendency is also reflected by the fact: In 2019-2020 of the $1.932 billion export income, 63% was contributed by 26.31% of the RMG companies. While the rest could contribute only 37%.
In capitalistic reasoning, the illusion of progress diverts our attention to aggregating indicators such as the GDP and its growth, but reduction of inequality does not coincide. Elitist views of redistribution through a trickle-down process is never achieved.
In the book Capital in the 21st Century, Thomas Piketty argued, in a free-market capitalistic economy, inequality rises faster than growth because the rich have become reliant more on asset wealth income than salaries; therefore, old forms of redistribution such as income and/or corporation tax do not ensure fair redistribution.
If we want to escape this form of impending inequality, what measures could we apply? We must implement Universal Basic Income (UBI) and progressive tax. One may argue, the provision of something like the UBI will make people lazy; contrarily, I think, once the basic income is guaranteed, people will be open to try new livelihood options and become entrepreneurs. This will work better than the trickle-down approach towards development that guides public investments only into the formal sectors and benefits the capitalists.
To fund the UBI, we can rely on a progressive income tax and taxes on inherited wealth. As such, Thomas Piketty theoretically proved, it is possible to set up an egalitarian economy if we can set both income tax and inheritance tax around 60% to 70% for the rich. We can try to tax capitalism out of existence. To apply this radical approach, we will need efforts at the global scale.
This is not to say that agendas to ensure quality of education, health care, basic necessities, etc do not matter. However, ironically, the conventional approaches only produce healthy and capable workers who are then used as labour in the capitalist system as an agent for profit-making.
This is not all: We must let go of the ideology of meritocracy -- the belief that economic success and failure in today’s world is solely based on individual talent, industry, and entrepreneurship. The rich are neither the chosen ones nor the most talented segment of the population. Rather, they are the inheritors and beneficiaries of capitalism’s structural injustice.
Mohammad Tareq Hasan is an anthropologist, and teaches at the University of Dhaka.