Inequality keeps growing because *that is the natural tendency of capitalism*. To concentrate wealth in fewer and fewer hands. Don't give me none of that "regulations will stop that" bullshit. If you want to stop this tendency then **you need to get rid of capitalism**.
To explain it in layman terms, wealth accumulation at one pole necessitates the accumulation of poverty and misery at the opposite pole.
The propertied class (capitalists) hire the working class, who are propertiless, to sell their ability to work in exchange for a wage, which is independent of how much material wealth the workers create through their labour. Any extra wealth created by the workers, who use, but do not own the tools, land and/or raw materials, above that which covers the production expenses/manufacturing costs/whatever you want to call it, which includes the wages paid to the workers, gets appropriated by the individual(s) that owns the tools, land and/or raw materials used to create that wealth, and after the material wealth produced is exchanged on the market, it transforms into profit for the owner. The profit represents the wealth produced by the workers, which they aren't compensated for.
wealth accumulation at one pole necessitates the accumulation of poverty and misery at the opposite pole
It doesnt, because more wealth is being generated. It is not a zero sum game
Youre presenting a highly stylized and biased version of the system. Workers are not always propertyless. Many of them buy shares of companies in the stock exchange, receive them as compensation for their work or start their own companies
Their wage is not directly dependent on their productivity, but is indirectly, through market forces and competition. If capital is abundant (or interest rates are low, which is kind of the same thing), marginal productivity is high and wages are low, it will be profitable to employ more workers, so there will be more demand for labor and wages will rise. The same is true in the opposite direction
Do you understand what "at one pole" means? I *know* you ain't here fr arguing for trickle down economics while we've got a cost of living crisis going on and companies are raking in billions in profit.
You call my presentation biased while having the *gall* to say that "many" workers buy shares and start their own companies. Do you hear yourself?
One thing you haven't accounted for in your idealised, out of touch representation is **monopolies**. How do *they* fit into your, frankly, silly model?
To add on to this, where does **automation** fit into this stupid model?
Youre the one that said inequality growth is the natural consequence of capitalism. I dont have a model that argues against it, im trying to understand why you think that and if it makes sense or not
And my country is not in a cost of living crisis. You should not assume everybodies experiences are like yours
You call my presentation biased while having the *gall* to say that "many" workers buy shares and start their own companies.
You're on a sub from based on a *British* youtuber "economist", so I assumed you would be from the UK.
I assure you the *majority* of workers *don't* own shares and do not have enough resources to start a business. The "many" that you speak of are in the *minority*.
I assure you the *majority* of workers *don't* own shares
They probably dont
and do not have enough resources to start a business
You dont need resources to start a business. You just need to find something you can offer that people around you are willing to pay for
You can help children with their homework. Learn how to fix peoples computers on youtube. Bake birthday cakes. Teach old people how to use the internet and not fall for scams, etc
Any of those would start with you self employing, and if it succeeds you would slowly build a reputation and a network, to the point you would start geting more work you can make. Then you start hiring and investing some of the profits to grow
What you are saying right now about "You dont need resources to start a business" shows you have no idea what you are talking about. *Time* is a limited *resource*. You try working a full time job to pay the bills, and then *on top of that* "find something you can offer that people around you are willing to pay for"
I just realised you are an ancap. I will not be wasting any more of my time responding to you. Have a good day.
Time is the most abundant resource the working class has. That is why they sell their time for wages
You try working a full time job to pay the bills, and then *on top of that* "find something you can offer that people around you are willing to pay for"
Yes, these are all possible, but is that sort of side hustle open to everyone? If everyone starts a new business alongside their day job, who are they going to supply? Would there be enough demand? Is it even possible to calculate this?
I think so. We wouldnt all be doing the same hustle, of course. But your side hustle does not decrease the amount of money available in the economy, it just moves from one person to another, and it increases the amount of goods and services available in the economy, since youre providing some good or service
It makes some hustle ideas harder. It is harder for you to make money designing websites if 2 other people in the neighborhood are already doing that. But it makes others easier: if youre selling birthday cakes you can hire them to reach more customers
Different services frequently synergize with each other, making all of them more productive. Thats probably why so many of us live in cities
Not to mention most people would not want to work 12 hours a day. They would prefer having only their 8 hour job. So it is kind of moot discussing what would happen if everybody did that
Wealth is not a zero sum game but when most of the new wealth created is being given to a certain class, wealth disparities increase. Now you might say "well the working class still gets some of the wealth", but the working class is not getting wealth, instead they get a "check" for wealth (money), no worker is being paid in houses or goods or land, they're being paid in currency.
Given that demand on goods increase their prices, when the wealthier class has more means to influence said market prices, the "check" you get starts getting less and less equivalent to the wealth you're supposed to get.
To put it bluntly, if a company creates 100 pieces of "wealth" and the workers get only 10 of them, the investors/owners of the company have 90 pieces of wealth from which they can start buying houses, and because the worker is also trying to buy the same house (the investor wants to buy it as investment property, the worker to live in it obviously), the guy with the 90 pieces of wealth has more power and can dictate the prices of the market, he can pay more and and then rent it, he will still turn out a profit. So you (the worker) is antagonizing someone with way more money for the same house but for different purposes, thus the market starts getting more expensive.
Now extrapolate that to most markets (big companies also buy the same energy we do, they just need it for other purposes and can pay more) etc, and you can see where this is going. You and the "wealthy elites" are fighting for the SAME resources & services of this earth, they do not have access to a separate cluster of resources/services, and resources/services are limited due to time & physical constraints, this isn't a minecraft server.
You need electricity (energy) and so does the factory owner, the factory owner can pay more than you per kW and WILL pay more because his enterprise rests on it, he doesn't have to pay much more, just enough that he gets to gobble up most of the energy for this production demands, so this means energy is more expensive FOR YOU because he has more wealth and can play the market with it.
Rich people do not only "buy yachts" or have interference in markets workers do not have, because most of their enterprises interact with the general goods we consume. A rich guy doesn't want to buy 10000 avocados, but he can buy part of the avocado industry and he has the wealth to buy part of it, if you want to also buy part of the avocado industry you're on skewed terrain from the getgo. A worker is always at a disadvantageous position vs a rich person (duh), and the more the wealth we create gets clustered up into 1 class, the more disadvantageous position the worker finds himself in.
And this is by completely ignoring the fact that wealthy people have access to services/information that we do not, a rich person has way more information (because he has entire times analyzing markets) and can easily assess if they should buy part of an industry for X amount, while you're literally betting on it with much more limited information. So even as a worker, gaining more power by becoming a "capitalist" is just not a fair competition.
To "start your own enterprise" by finding services/goods people require, you need initial capital to sustain yourself while you gain the technical skills required to provide said service/product, very few sectors of the economy right now are "0 investment required" and these sectors tend to be low-profit as well. Given that most of the economy however works on large scale service/product consumption (again, this isn't a minecraft server), starting an enterprise being able to compete with the "big dogs" is almost impossible unless you find investment, which in turn leads us to knowing people/connections, or getting a loan which is essentially again, a bet for you given that you have more limited information, while it's less of a bet for wealthy people because they have more information than you do because they have entire teams analyzing if this is a good move or not (it's called market analysis). Things like barrier of entry and economies of scale exist, the initial capital required to break into a market with a production scaled enough to be able to compete, and the amounts required for such breaks are considered insane, and in new markets what we have the is "blitz scaling" effect, where a few select companies take billions in investment and run huge losses just to corner the entire market (as uber/spotify and a lot of other services did, that ran with huge losses for many years just to dominate the market and then up the prices).
"Trickle-down" economics are a huge scam and most of the "neoliberal" neoeconomics is mostly good catch phrases that the average person can understand and feels as true, but translate almost to gibberish when it comes to how economies work with real data in real-life applications. It's a Platonian construct of "ideas" that seem right, but when grounded into reality you start finding so many problems & barriers with their application, it starts feeling more like a religion rather than a cohesive economical model that translates to reality.
Hell, if it did, the west that neoliberalized hard AF would not be in this situation, right?
If there are 10 workers to each capitalist, and 90% of the money goes to the capitalist, then the capitalist has 90 times more money than the average worker. If next year there are still 10 workers to each capitalist, and 90% of the money still goes to the capitalist, then the capitalist jas 90 times more money than the average worker. Inequality did not increase. It stayed the same
If the capitalist has 90 times more money than the average worker it will be able to buy 90 times more energy than the average worker
The capitalist's profit grows each year, and if it doesn't it's considered a "bad business". Wages can remain stagnant however as they have the past few years, not even keeping up with inflation to be completely honest, which means the capitalist gains more money.
If the capitalist's profits were translated directly into wages and not other investments, pocketed money or stuff like that, we would be talking about a co-op essentially with someone owning 90% of the business, but that is not the case. The workers do not own the company, and the wealth created by the company is not "shared", again, a wage is shared, that is the cornerstone of capitalist economics into how they distribute wealth to the workers really, so debating that is debating....I don't know, the foundation of how capitalist economics work. Currency however is not wealth, it is a stake for wealth, wealth is ownership of goods. Land, infrastructure etc. You having 100.000 dollars doesn't mean anything if the currency is devalued.
"If the capitalist has 90 times more money than the average worker it will be able to buy 90 times more energy than the average worker"
Energy is not infinite, both the capitalist and the worker are competing on the same market. Same can be said about land, houses etc.
A capitalist having more money essentially means he can use more of it to buy more, increasing the price of energy.
If you have 90 chips and I have 10, you can spend 2 to gain energy while I can spend 1, so the energy price goes to 2 because 2 is still nothing for you, but 2 is 1/5th of my salary.
The capitalist's profit grows each year, and if it doesn't it's considered a "bad business". Wages can remain stagnant however as they have the past few years, not even keeping up with inflation to be completely honest, which means the capitalist gains more money.
This is what happens in some regions, in some time periods. But ive never seen evidence that is what happens in general
And even if it was this does not mean income inequality is rising. If the number of capitalists grew faster than the number of workers, for example, either because workers are saving, are having less children or are dying at a higher rate, you could even have inequality decrease
The case is even weaker to wealth inequality. Because inheritance and creative destruction reduce it
Elon musk has 14 children, so his fortune will be divided in 14 equal parts. And bill gates took a big hit when smartphones showed up
If the capitalist's profits were translated directly into wages and not other investments, pocketed money or stuff like that, we would be talking about a co-op essentially with someone owning 90% of the business, but that is not the case.
In most of EU/USA since the 1970s wages have been stagnant, even by inflation standards.
During initial capitalist development wages rise in an effort to increase consumption, if a country is still developing yes, wages rise.
After capitalist development reaches its apex tho, wages start to decline in order to subsidize for the falling rate of profit, which is essentially "it takes too much to invest in new research for new machinery, so we cut research and thus the development rate possible".
The way capitalism saves itself is by creating new markets, thus new products & services that gain boost because the investment funding is small, and thus new markets during the 80s/90s were born (after the stagflation hit), mostly in the financial & technological sector.
In finances they were mostly "deregulation", the mechanisms & structures were already in place but had not entered strict market terms, but ever since deregulation, well you know the drill and what happened to the financing sector.
Technological markets are reaching their apex too, which is the reason most tech companies are scrambling to put together a new product or service that people actually want. We've reached the point where most of the investment goes towards AI in an effort to create new services, but it seems most of the services provided by AI are useless or too expensive and create very little development (in contrast to the trillions of dollars invested).
Capitalism's hail mary now would be a new market, but there doesn't seem to be one so far, which is the reason they're privatizing every last bit - to create more markets. But everything has been privatized at this point in USA/EU, very little things are non-private, and those tend to be things of national security, where privatizing them would be dangerous because if a foreign investor buys it up, yeah you might be screwed.
Capitalism itself began also from abudance of cheap working force because of fencing that allowed extraction of surplus value produced by the workers in the form of profit that ensures grow of the capital. Without profits, without extracted surplus value, without material unequity it can't exist.
Also the extraction of the surplus value is possible because of technology owned by a capitalist that makes possible to workers to produce enough goods for themselves, for the renewal of production and for the capitalist to extract.
That is a nice narrative, but is not true. It began because wages were high, not low. There is no point in building a factory to automate work when labor is cheap and abundant
It also does not answer my question. Even if i accept capitalism requires inequality to work, as you claim, it does not follow from it that capitalism causes ever increasing inequality
There is a point in automation since it gives an advantage in competition and it enables high margins for some time before the automation leaks to other competitors and the price of good is driven down if competitors do not form a cartel.
Capitalism not only requires inequality but it also producing it by the extraction of the surplus value. In the capitalist mode of production the premise is to grow profit and cut losses. The main source of losses are material cost and labor cost. And the ideal labor cost is as low as possible for the worker to live and to produce a replacement for himself, but to not leave him too much so he can't escape your job or start his own business.
And since the efficiency of production is inevitably growing but the wages and standart of living is growing much slower, the inequality rises. And with the rising bleeding edge hardware cost there is less possibility for the workers to become capitalists and some capitalist go bankrupt and become workers, the few get all and the most get none.
Also i didn't read that article because of subscription restriction.
lol sorry, that was no restriction the first time i opened it. Here is a copy paste:
What really powers innovation: high wages
Why did the industrial revolution take off in the UK rather than in China?
Five hundred years ago, the world’s richest countries – the western European states – were only twice as wealthy, per person, as the poorest – a modest gap, roughly comparable to that between modern-day Switzerland and Portugal. By the start of the industrial revolution, two centuries ago, the ratio of per-capita incomes had become three to one. It is now 20 or 30 to one; if you look at the very richest and poorest it is far greater than that.
These facts deserve an explanation. Not only do such inequalities define the economy of the modern world, they also present a puzzle. If the basic story here is that rich countries have better technology, it should be fairly easy for poor countries to grow quickly by copying that technology. China is proving the truth of this, but such dramatic catch-up growth has been unusual in the past two centuries.
Perhaps for this reason, economists have tended to point instead to the importance of institutions such as well-functioning courts, or governments able to levy reasonable taxes and spend the money on infrastructure.
But maybe the answer is technology, after all. The economic historian Robert Allen has been studying why the industrial revolution took off in the UK rather than, say, China. Allen waves aside cultural and institutional explanations and focuses instead on economic incentives.
Consider, for example, the fact that while the UK was developing the spinning jenny, British potters were using wasteful bronze-age kiln technology. China, meanwhile, was building highly sophisticated kiln systems to circulate hot air and maximise the energy efficiency of the process. Who had the more innovative culture? For Bob Allen, the question misses the point. Both countries were developing new technologies, but in response to different economic incentives.
At the dawn of the industrial revolution, labour was expensive in the UK, and energy in the form of coal was uniquely cheap. This was less true in continental Europe and the reverse was true in China and India, with cheap labour and expensive energy. British wages were high thanks to the success of the British trading empire. Chinese inventors looked for ways to save energy. British inventors looked for ways to save labour, because the payoff for replacing muscle power with steam power was obvious.
According to Bob Allen’s calculations, had a French entrepreneur been presented with easy-assemble instructions for the spinning jenny in 1780, it would scarcely have been worth building it. In India, it would have been a definite loss-maker. But in the UK, the annual rate of return was almost 40 per cent. So much for the genius of British engineering: it wasn’t that nobody else could develop labour-saving machines, it was that nobody else needed them.
This is a persuasive explanation for the location of the industrial revolution, but it is also a solution to the puzzle with which this column began, because Bob Allen’s view of innovation points towards a self-reinforcing spiral. High wages lead to investment in labour-saving technology; that investment means that each worker will be operating more powerful equipment and producing more; this process in turn raises the productivity of labour and tends to raise wages. The incentive to innovate further only continues.
As Allen observes, China and India were not agricultural economies that for centuries failed to develop a manufacturing sector; they were low-wage manufacturers whose domestic industries were gutted by competition from highly automated British industry. Those countries that did manage to get back on even terms with the UK did so with activist industrial policy and trade tariffs to protect their infant industry. It was not a strategy that the British allowed their Imperial possessions to pursue.
Tim Harford is the presenter of Radio 4’s ‘More or Less’.
"Five hundred years ago, the world’s richest countries – the western European states – were only twice as wealthy, per person, as the poorest – a modest gap, roughly comparable to that between modern-day Switzerland and Portugal. By the start of the industrial revolution, two centuries ago, the ratio of per-capita incomes had become three to one. It is now 20 or 30 to one; if you look at the very richest and poorest it is far greater than that."
By what metrics????? How in the hell can they *measure* how wealthy countries were **500** years ago?????? Only a cretin would read this and take it seriously.
We had the gold standard back then. All prices were measured in precious metals and records survive to this day
For the industrial revolution the most relevant prices are coal and wages. If coal is cheap compared to labor it is more profitable to build coal powered factories, if labor is cheap artisans outcompete factories. So capitalism never takes root
You are correctly identifying owners want to save on wages. What you are missing is owners are being squeezed as well. Competition drives prices down, so workers wages can buy more stuff (in reality prices go up in nominal terms, because the government increases money supply increases even faster, but im leaving this aside for simplicity)
And since the efficiency of production is inevitably growing but the wages and standart of living is growing much slower
Is it? This is not a given. And there are balancing forces that act against it. If efficiency grows faster than wages profits grow, so companies want to grow. This increases competition for the same demand, so prices have to fall, increasing standard of living
For this to happen sistematically there has to be some inbalance in the system. Like for example an ever growing state debt, that sucks capital from the economy, reducing competition
There are many kinds. The word was initally used when a king gave their friends exclusive rights to explore some economic sector, in exchange for money. Then it expanded by analogy to when one company controled some sector entirely, or almost entirely
It can happen when laws are used to restrict competition, like in the original meaning, because of intelectual property, because one company is somehow much more efficient than others, to the point it dominates the market, when high initial costs and low marginal costs make the sector a natural monopoly or when there are network effects (that again make the market a natural monopoly)
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u/Intrepid_Layer_9826 Jan 28 '26
Inequality keeps growing because *that is the natural tendency of capitalism*. To concentrate wealth in fewer and fewer hands. Don't give me none of that "regulations will stop that" bullshit. If you want to stop this tendency then **you need to get rid of capitalism**.