I hear many progressives say that they don’t care about people becoming rich, that they should try to get what they can, but that we should reduce inequality so that stuff like this doesn’t happen. What I find utterly missing is the means of making sure this doesn’t happen. Seems that inequality emerges out of institutions being designed in a particular way, how we design property rights, how large enterprises are, how rich people are, power dynamics, among other things. Within enterprises, people like Bezos employ people, and those people create a particular amount of value. If they create more value than they are paid, then a surplus is created. If they didn’t create a surplus, there would be no point in employing them. Does that surplus go back to the workers, or does it get funneled up to people like Bezos? If it gets funneled to Bezos, which it clearly does, what do the particular progressives I mentioned propose? I can see the logical difference between a person that makes some money selling stuff that they largely produce with their hands. However, once a person’s wealth is dependent on taking the wealth that others create, a debate needs to happen as to who is entitled to that wealth. Ownership is an unavoidable part of the conversation. Maybe worker cooperatives make sense, for this reason among others, to address this. If a person invests in the financial markets and that thing increases in value, they didn’t do anything to earn that wealth. Some could argue that profits are the return for risk, but I don’t buy it. I take a risk every time I eat at Taco Bell. I don’t think Taco Bell should send me some money to reward that risk, and in regards to the largest financial interests, we have effectively socialized their risk any damn way. If a person invests in some property, and that property appreciates in value, it might be because of investments in that property, but a good portion of the time it is locational value. They bought property, there is economic development surrounding the property and the property is appreciating in value because of that. So, who should benefit from appreciating property values? The community whose collective development led to the appreciating property values, or the property owner, and using what logic that isn’t almost entirely ideological. Mainstream economics even talks about the fact that enterprises and individuals can gain value and increase their profits simply because of their size. That is why mainstream economists tend to hate monopolistic power, often as much (at least in theory) as the state “distorting” markets. That is why we used to have anti-trust legislation. Then there is financialization. When Reagan took office, less than 10% of domestic profits accrued to the financial sector. That number had grown about four fold by the onset of the crash in 2008. What is finance’s product? Debt. So as finance has grown, so has private and public indebtedness (private debt is much larger than public debt) and a larger share of capital accumulation was centered on people paying money to creditors. My overall point is that a good portion of the wealth that goes to people like Bezos is the result of how big he already is, his ability to monopolize the wealth others create, and investments in financial and property markets that have nothing to do with the wealth they themselves create. Bezos doesn’t create the wealth accruing to him with his own hands, that would be impossible. He does so because of particular institutions that dominate our economy, how they are designed, and the ways in which we design things like property rights, the increasing use of the FIRE sector as a means of capital accumulation and how little we pay attention to lessening the massive power differential between capital and labor. It is also a fact that a good portion of profits made now emerge from capitalists being able to create costs, which they then externalize onto others, the environment, future generations or the public sector.
I don’t see, in the modern economy, with globalization and financialization, how this can be tackled without radically changing the system. I think that middle of the road social democrats have some decent policies to address this, but they aren’t enough, at least in my opinion. For example, I am reading a great book called Fossil Capital, and it goes into how the labor movement in the early 19th century, its demands and militancy, as well as government policies (like the factory laws) that aimed at strengthening labor and addressing things like child labor, led to an explosion in automation. The higher the wages, the more it makes economic sense to invest in machines. The Obama administration’s report on automation and AI even noted that if current trends continue on, that the strife between those that own the machines and those that don’t (and only own their labor) will intensify. They offered some solutions that are okay, but not anything that addresses ownership. That is assumed away. Well, that all is the case now, and it isn’t something that is just an issue here. China has invested more in automation than we have. And capital is far more mobile now, so if we raise wages domestically without any other structural changes, that would incentivize both automation and outsourcing, to say nothing of asking capitalists to pay for non-market environmental and social costs that other countries don’t make capitalists pay for.