The Neoliberal Defence Of Inequality And Its Fallacies
Durjoy Chakraborty
Ever since Karl Marx1 pointed out that inequality was a necessary feature of the capitalist system, and the incessant process of accumulation of capital creates greater inequality through concentration of the means of production in the hands of a few big capitalists, the bourgeois establishment has over the years tried to invoke various arguments to justify rampant inequality. The neoliberal regime in particular has attempted to defend inequality on the basis of “enterprise”. Tracing its origins to the works of Joseph Schumpeter2, this argument postulates that people with greater ‘skill’ and better ‘ideas’ are able to differentiate themselves from other people by being creative and innovative; hence they reap the benefits in the form of more income. In other words, some people are wealthy because they possess some abstract attribute which distinguishes them from ordinary people and entitle them to higher rewards. In contemporary society, the wealth of billionaires like Bill Gates and Jeff Bezos are explained by referring to them as geniuses who were able to conceive and execute ideas before anyone else. Likewise, the wealth of others like oil magnates are attributed to luck and initiative.
Marxist criticism of this kind of argument has been mainly limited to the role of workers in production. It is the workers who create value through their labour. The surplus is appropriated by the capitalists in the name of profit. It is this profit accumulated through the exploitation of the workers that capitalists attribute to their own skills and ideas. The process of production could be continued without capitalists through collective ownership of the production units. While that is true, this argument remains vulnerable to attacks from the neoliberal ideology. For example, it could be pointed out that the likes of Gates and Bezos came from ordinary middle-class families and their subsequent fortunes are the result of their brilliance and hard work which people from similar backgrounds did not possess. Thus they were able to become wealthier than the earlier capitalists, the chemical and steel magnates. Indeed this fits in with Schumpeter’s theory of “creative “destruction”, wherein entrepreneurs are able to surge ahead of the incumbent capitalists through their innovations and initiatives, thus re-establishing the status quo. Further, they are deemed to have contributed to the welfare of mankind by virtue of their innovations, so it is advocated that all such entrepreneurs should be compensated adequately to incentivize further innovation.
This neoliberal defense of inequality can be countered in a number of ways. Three critiques of this argument will be listed here. First, the definition of “skill” and “hard work”, not to mention “passion” and “dedication” needs to be called into question; specifically, their meanings as advocated by the neoliberal regime. To say that only big capitalists have skill or dedication cannot be further from the truth. It does blatant injustice to the millions of people engaged in rank and files of corporate jobs, various public servants and the majority of people working in the informal sector. Take the handicraft industry for example. Indian handicrafts are famous to this day for their sheer beauty and quality all over the world. However, handicrafts have been relegated to insignificance in the contemporary economy; they are mere “exotic” products which one can find at times in small fairs. Instead, the market has been dominated by multinationals companies which have robbed the livelihood of many. Unlike the neoliberal assumption that workers displaced in one sector can quickly find work in another, the reality of an inadequate free and inclusive education system implies that displaced workers who are specialised in a particular craft cannot acquire the skills to work in another specialised industry. The superior “skills” of these people are not sufficient to help them avoid poverty and unemployment.
Similarly, there are legions of people who perform backbreaking work with little pay on a daily basis. Examples include poor peasants and construction workers. Many of them work long hours irrespective of extreme temperatures and hazardous work conditions. The reason they perform such work is that they are forced to do so. They are usually members of what Marx called the “reserve army of labour” who have been displaced from their livelihoods through de-industrialisation3 by the MNCs as explained earlier. With no other sources of income, they are bound to opt for whatever work they can find to earn the minimum amount required to keep their families alive. Their very poverty allows their employers to make them work on unfavourable terms. Often they happen to be irregular workers who remain unemployed for long periods of time. The “hard work” of capitalists, who can afford luxurious offices and mansions don’t even begin to measure up to that of these workers.
Dedication is no sole virtue of capitalists either. As the recent SARS-2 pandemic has proved, it is the workers who are bearing the brunt of indispensable activities like healthcare and food distribution at the risk of infection while capitalists have taken a complete backseat. Many social workers, like the Cuban health workers4, are willingly going out of their way to extend help to victims of the crisis. At the same time, Governments in developed countries across the world are busy extending minimum support to jobless migrants and workers and maximum assistance to the capitalists by extending liquidity to boost the confidence or “animal spirits”5 of investors. That capitalists are dedicated to their work and the welfare of society is a myth which has quite clearly been busted by this crisis. As the number of positive cases continues to spiral upwards, the existing medical infrastructure is being stretched to its limit. Instead of doling out the required expenditure to expand sanitation and treatment facilities various Governments like that of the UK are asking “volunteers” to step up to the rescue, without adequate training or safety assurance. The Indian Government followed suit by calling out people to bang thalis and utensils while making a negligible investment in medical facilities. As Michal Kalecki6 pointed out, expenditure on public welfare goes against the capitalist principle of preventing full employment, and most Governments today, being the lackeys of big capitalists, are following suit. The threat to capitalists’ profits has never been more severe and is being fully reflected in the policy sphere.
The second critique involves the definition of good “ideas”. The criterion for comparing different ideas is important. Let there be two ideas, one for introducing a new product in the economy and the other for providing education free of cost for all members of society. If the comparison is conducted on the basis of social impact, the latter will obviously be the better idea. With sufficient education and research facilities, society will gain the potential to introduce better products at a faster rate. On the other hand, a new product may not benefit every member of society. For example, a new model of a sports car may be of interest to the ultra-rich, but it is definitely not going to improve general public welfare. Especially in high population density countries like India, the lack of decent transport facilities is a significant problem. With frequent accidents, overcrowding and rampant sexual harassment in, the dire need for better public transport facilities is a serious issue which hasn’t been properly addressed yet. It is a shame that migrant workers are being forced to trudge long distances to their villages, tired and hungry from metro cities across India when the Government should have taken responsibility by arranging adequate transportation for the cause.
This means that the criterion used by the neoliberal regime is that of profitability. And Marx had already detailed how the competition would force capitalists to innovate in search of higher profits. Indeed it is the exploitative production and social relations which forms the cornerstone of the drive to innovate. With better methods of production, capitalists are able to increases the reserve army and thereby lower wages by reducing bargaining strength. And new products cannot benefit the economy unless they are distributed on a non-profit basis. Since real wages have been stagnant on average, better products, which involve higher costs of production owing to R&D cannot be afforded by the average worker. Indeed the latest innovative products in the market are smartphones and related electronic gadgets, which are geared towards satisfying the desire of the bourgeoisie. This capitalist incarnation of research deprives it of its supposed utility.
Experience suggests that “ideas” of capitalists have been directed mainly at establishing and reinforcing the exploitative relations which unfairly create and sustain inequality. The global financial crisis of a decade ago was the result of “brilliant minds” creating vague and opaque financial instruments whose purpose was to hide the true worth of collateral assets, aimed at ripping off unsuspecting customers. Similarly, the Panama Papers fiasco revealed how the bourgeoisie maintains a whole army of accountants, lawyers and specialists to forgo their tax obligations while the common man has to bear the brunt of the tax burden. Similarly, the Cambridge Analytica scandal showed how “entrepreneurs” like Mark Zuckerberg sold their services to parties whose aim was to model confidential data of thousands of individuals to manipulate them to political ends. Bill Gates’s Microsoft bought up several competitors, accumulating their assets and knowledge7. The list goes on. One thing is clear: ideas do not magically earn capitalists greater wealth. That occurs through the suppression of the rights of the workers. Any “idea” which poses a threat to capitalism, like universal free education, is not entertained, and often openly threatened through brute force, as seen in the struggle of the students of JNU against the university administration8.
The third point involves the class implications of the generation of skills and ideas. Inequality itself creates a vicious cycle where those in the backward sections of society are unable to acquire necessary knowledge and training, often due to lack of proper educational institutes as a result of low Government expenditure on inclusive education. The example of the sanitation workers of JNU is a case in point9. Their wage payments of at least the last three months have been withheld. Since they are usually the sole bread earners of their families, their children are unable to obtain proper nutrition for a healthy body and mind. On the brink of starvation, they are brought up in an environment hardly conducive to proper facilitation of the intellect. Meanwhile, children of the rich are able to attend the best educational institutions and have a solid background for networking opportunities in search of jobs, in many cases being able to take over lucrative family businesses. They are bound to have a broader scope for generating ideas and learning skills. The neoliberal argument that better ideas entitle a person to higher profits does not add up in the real world in the real world where the majority of people do not have access to the same platform of quality education and a guaranteed minimum income, and hence these ideas tend to be generated exclusively by the bourgeoisie for its own benefit, like enforcing exploitative relations instead of initiating pollution control or free universal healthcare, which are high priorities for many people.
Some tend to blame inequality on luck. While it is true that luck determines which social class a person is born in, luck in no way describes the exploitative relations which the bourgeoisie use to their advantage against the rest of society.
It is important to note that skill, ideas and hard work are important for the progress of society. However, within the fetters of contemporary capitalism, they are but excuses invented by the bourgeoisie to justify their greater wealth earned at the expense of workers. The fortunes of Gates and Bezos were made as they engaged in the capitalist mode of production, with assistance from various investors and management experts. They reaped the benefits because their ideas were in the best interests of the capitalists. Microsoft paved the way for increasing mechanisation of the workplace and Amazon helped capitalists displace small-scale producers and obtain monopolies in foreign markets. Thus the neoliberal defence of inequality is a shallow one as it ignores the realities of the functioning of capitalism in contemporary society, which suggests that it is indeed the exploitative social relations of capitalism that explain growing inequality and thus the need to push for a more equal society.
References
- Marx, Karl, Capital
- Schumpeter, Joseph, Capitalism, Socialism and Democracy
- Patnaik, Utsa and Prabhat Patnaik, A Theory of Imperialism
- Haiphong, Danny, https://mronline.org/2020/04/02/china-and-cubas-medical-internationalism-is-a-shining-example-of-global-solidarity/
- Keynes, John Maynard, The General Theory of Employment, Interest and Money
- Kalecki, Michal, Selected Essays on the Dynamics of the Capitalist Economy
- Mankiw, Gregory, Principles of Economics
- Seth, Akshat, https://studentstruggle.in/a-movement-to-save-a-university-and-public-education/
- JNUSU statement, Ensure Regular Salary and Safety of all workers in JNU, 29th March, 2020
Durjoy Chakraborty is a first year Masters’ student at the Centre for Economic Studies and Planning (CESP), Jawaharlal Nehru University (JNU), New Delhi.
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