Inequality, Class and Economics
by Eric Schutz
320 pages / 978-1-58367-941-8 / $27
Reviewed by Sean Ledwith for Counterfire
You’ve never had it so bad seems to be the message of Sunak’s Tory government. The media have labelled this era as the cost-of-living crisis; the cost of capitalism would be a more accurate term. The fiscal plan of the PM and his Chancellor announced in the wake of the implosion of Trussonomics is expected to trigger the biggest drop in living standards for seventy years. Even the Treasury acknowledges that the majority of households will be left worse off. The working class, unsurprisingly, will be hardest hit, after already having been pauperised by thirteen years of Tory rule.
Wages in the public sector are predicted to stagnate for most of this decade, coming on top of about twenty years of falling pay in real terms. The universal energy-price cap is due to be lifted this spring, leaving large swathes of the population to face thousands of pounds being added to their bills. Ordinary people’s attempts to endure this onslaught on their quality of life is taking increasingly drastic forms. A report last year indicated 31% have reduced the number of showers or baths taken; 60% avoid turning on the heating; 33% have reduced use of cookers and ovens; and 24% only heat part of their home. Horrifying stories of people dying directly due to economic privation are become depressingly common.
Wealth of the elite
A telling aspect of this economic shock therapy is not just who its victims are, but who are its architects and beneficiaries. Sunak and his wife, Akshata Murthy, were last year the latest additions to the Sunday Times’ Rich List, with a combined wealth of over £700 million; a paltry sum which puts them in the 222nd spot out of 250! The PM became the first frontbench British politician to appear in this disgusting annual glorification of greed. The Sunak millionaires own four UK properties including a Grade 2 listed manor house in North Yorkshire and a five-bedroom residence worth over £7 million in South Kensington, the wealthiest district in the country. Murthy, of course, was exposed last year for her non-dom tax swindle which kept millions of pounds out the hands of the HMRC. The Rich List recorded 177 billionaires in the UK, up by six from last year, with a combined wealth of £653 billion. The monopolistic nature of capitalism brilliantly identified by Marx in the nineteenth century is confirmed by the fact that this sum represented the wealth of the top one thousand just five years ago.
In terms of his education as well, Sunak is typical of a well-worn path taken by the British elite over many generations. He was filmed as part of BBC documentary in 2001, where he blithely noted: ‘I have friends who are aristocrats, I have friends who are upper class, I have friends who are working class. Well not working class, but I mix and match.’ Sunak at the time was attending Winchester College, one of the most exclusive private schools in the country, which currently charges about £45K per year. He inevitably went on to Oxford University and then Stanford in the US for the finishing touches to his immersive education in neoliberal dogma. When he stepped into Number 10 last year, he became the 44th out of 57 British Prime Ministers to have attended Oxford or Cambridge Universities. Only eleven out of that 57 did not receive a private education.
The persistent chasm in capitalist societies between those who have to consider whether they can afford to take a bath and those who have to consider which house to have a bath in is the subject of Eric Schutz’s book. He notes that recent catastrophes this decade have highlighted even more what is at stake:
‘Post-pandemic, it is now clearer than ever that the traditional foundations of working people’s economic security have been thoroughly undermined, and working people know it. A multi-faceted crisis of historic dimensions is thus developing, as this deterioration of the institutional underpinnings of the economy is aggravated by an increasingly threatening disaster of longer-term ecological decline …’ (p.224).
Neoliberal orthodoxies
Schutz is an American academic and most of his empirical evidence draws on social and economic trends from that country. However, as the UK was the other capitalist state which spearheaded the neoliberal counter-revolution of the 1980s, much of his analysis is equally applicable to our situation. Not coincidentally, the two countries were among the hardest hit by Covid, due largely to the fact they were governed at the time by two spectacularly inept right-wing buffoons, both committed to unreconstructed versions of free-market economics. Schutz underlines that the calamity only served to accelerate the economic polarisation that has been underway in capitalism since its inception. He cites compelling data on how the US is sliding ever deeper into a spiral of inequality and injustice; a trend that has been exacerbated by a catastrophe that supposedly united humanity against the common threat of the virus:
‘The economic inequalities are astonishing. The net worth of the 650 billionaires now in the United States increased by $1 trillion (from $3 to $4 trillion) during the nine months of the Covid-19 pandemic from March to December 2020 … US poverty rose by the largest rate in a single year since it began to be tracked sixty years ago, from 9.3% in June 2020 to 11.7% in November’ (p.11).
As an academic economist writing from a left-wing perspective, the author is alert to how his own discipline has been complicit in the manufacturing of an ideological consensus that legitimates this gross iniquity. For bourgeois economists, any consideration of factors such as class, power or exploitation are to be firmly kept out of the parameters of discussion. An historical perspective on the evolution of capitalism is also off limits in such circles, as it would inevitably raise awkward questions about how the system is rooted in centuries of conquest, genocide and slavery.
The neoclassical model of rational choice and entrepreneurism which dominates economic discussions among the elite is wedded to a political agenda founded on implicitly reinforcing their control of the system. Schutz makes a case that much of what passes for ‘Economics’ might just as well be rebranded as ‘bourgeois ideology’ for the sake of accuracy:
‘The upshot is that in providing what capitalists need from economists, the latter have more often than not failed to satisfactorily explain, indeed have frequently obfuscated, often intentionally, the harsher realities of the class system that constitutes the market economy’ (p.59).
Conventional economics is also blind to the insidious networks of inherited affluence, and prefers to propagate the rags to riches cliché of capitalist mythology, in which figures such as Alan Sugar and Richard Branson are eulogised for supposedly rising to the boardroom from humble market stalls. Schutz punctures this nonsense by pointing out that 65% of the Forbes 400 of top US executives ‘received significant help’ to get onto the corporate ladder; help ranging from a few hundred-thousand dollars to having an upper-class background (p.271). The ideological window dressing pushed by programmes such as ‘The Apprentice’ and ‘Dragons’ Den’ hides a rotten reality dominated by nepotism and cronyism.
A global plutocracy
Schutz neatly identifies three major developments over the last few years which have converged to produce the current neoliberal phase of capitalism that has become hegemonic across the globe. Firstly, technological innovations such as digitalisation, communications and robotics have transformed the means of production. Secondly, the collapse of the Stalinist model in Eastern Europe shattered (in the minds of many), the notion that there was a credible alternative to capitalism. The third development, ironically, is the crisis of the neoliberal system itself, triggered by the 2008 crash. The author persuasively argues that rather than discrediting the status quo, the economic meltdown of that period actually rebooted neoliberalism as governments were forced to inject gargantuan sums into the economy to prevent the entire financial network from going down.
The fact that the global plutocracy survived this massive jolt, according to Schutz, has not prompted outbreaks of humility or remorse on its part. On the contrary, they have been encouraged to become even more brazen in their rapacious appetite for profit. Politicians like Obama and Cameron, who liked to foster illusions in a benign and inclusive form of capitalism, have been swept aside by blowhards like Trump and Johnson who make no apologies for glorifying excess:
‘The upshot is a ‘One Percent’ that today has been nearly usurped by the ‘0.1 Percent’ and what appears to be a powerful corollary movement seeking entrenchment as a kleptocratic oligarchy in government’ (p.22).
In the US, of course, economic inequality is notoriously often manifested through the prism of racism. The Black Lives Matter campaign, which spectacularly took off in the first year of the pandemic, brought many American cities to a standstill as resistance to decades of oppression united black and white protestors on a massive scale on the streets. Apart from the brutal killing of George Floyd at the hands of the Minneapolis police, the disproportionate effect of the pandemic on the black population became horrifyingly apparent. The racialised trajectory of US capitalism has locked the majority of black Americans into a system of discrimination that not just exposes them to injustice in the present but also has deleterious ramifications for future citizens from this community:
‘The case of African Americans today is critical, and also illustrative. Obviously, racial discrimation has greatly diminished Blacks’ opportunities in labor markets and consequently their economic wellbeing at each point in the long history of the US of discrimation against Blacks, it has also diminished their ability to pass on endowments of wealth that later generations would require for pursuing their own human capital investment’ (p.71).
The BLM campaign was predictably demonised by the right in the US as an existential threat to the social order. Similarly, the revived left in that country, as witnessed in the presidential runs of Bernie Sanders and the rise of the progressive ‘Squad’ in Congress, has provoked the fury of broadcasters such as Fox News. Schutz has a useful analysis of how the monopolistic trends of capitalism explain a lot of this hysterical coverage. In the US, he observes, six companies alone control a staggering 90% of all media output, the same percentage that fifty companies controlled in the 1980s (p.158). This explains how a regressive figure like Trump can obtain blanket coverage for his poisonous rhetoric threatening to send America back to a pre-New Deal dystopia.
Fighting back
The author identifies five policy positions which are essentially ignored by most of the US media: trade unions are legitimate vehicles of workers’ rights; welfare provision is the mark of a civilised society; the rich should be taxed more; federal takeover (nationalisation in British terms) is the best way to manage infrastructure; and employees are usually those best equipped to run their own workplaces (p.161). You would have a long wait watching the UK news to hear these notions as well. Similarly, our media frequently copies a US playbook when it comes to undermining politicians of the left, such as Sanders and Corbyn, who have the temerity to question the priorities of the neoliberal order:
‘Particularly useful distracting ideas in this regard, at least judging by the frequency with which they are brought up, are the need for military vigilance in a world calling for democratisation and freedom from terror and chaos, and the role of immigrants and subcultures in domestic crime and other issues’ (p.162).
Like similar centre-left analyses of our current political predicament, Shutz is very good at laying bare the disparities and depravities of the system, but less convincing when it comes to solutions. He claims that although the idea of socialism has become visible in the US, ‘it does seem clear that the thing itself is not even remotely on the agenda for the majority of US citizens’ (p.251). Recent polling, particularly among young Americans, suggests Schutz’s pessimism here could be seriously misplaced.
Read the review at Counterfire
Inequality, Class, and Economics by Eric Schutz.
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