Inequality and the Crisis of Capitalism and Democracy

Part I: Structural Problems of Extreme Inequality

The great challenge of our time is not a clash of civilizations, as many advocated since Samuel Huntington published The Clash of Civilizations. Nor is the world most important challenge the revival of the Cold War in the form of a renewed US-Russia confrontation or in the forms of the evils of unconventional war that the US calls “terrorism”, a generic term governments use to label any opponent terrorist. These issues are manufactured and symptomatic of capitalist countries engaged in an intense world competition for markets and raw materials. This is not very different from the world power structure during the Age of New Imperialism, 1870-1914. The great challenge of our time is social and geographic inequality that threatens not only the system of capitalism creating inequality, but the democratic political regime under which capitalism has thrived in the last one hundred years.

1. Is capitalism in deep crisis because of the deepening gap between the very rich and the rest of the population, or this how the system works and society has always been organized as a social pyramid? If capitalism is creating extreme inequality what does this entail for democracy that rests on a strong middle class and all institutions on which bourgeois society his built? Does the fact 1% of the richest people will own more wealth than the other 90% of the world’s population in 2016, and that 80% of the people on earth own just 5.5% of the wealth mean anything, or is it just numbers?

As long as capitalism is relatively stable and as long as the social structure operates fairly harmoniously under such a wide gap between the super rich and the rest of us, then the possibility of “social discontinuity” (systemic change in the social structure, and economic and political system) does not appear likely in this century. After all, throughout civilization in most societies wealth was always concentrated and social structures were always hierarchical with the elites whether secular or religious enjoying privileges. There were always elites determining society’s institutions and direction while the poor remained helpless and the small middle class tried to exert whatever influence possible at the grassroots level. Why must we be any more optimistic today that elites will disappear when that seems highly unlikely because other elites will replace them under another system?

2. Does the widening income gap evident especially in the US and Europe reveal a crisis in the parliamentary system of electoral politics, as people lose faith in representative government and turn either to radical left or radical far right-wing solutions? We have seen the rise of ultra right-wing political movements and parties throughout Europe and the emergence of the Tea Party as an appendage of the Republican Party in the US representing some of the most extreme policy positions. These range from anti-immigration and xenophobic agenda to advocacy for military solutions as the only way to solve foreign policy crises. These political parties have a voice in the democratic process because the conservative and centrist parties have moved very far to the right, representing essentially the rich in society rather than all citizens. As long as people equate elections with democracy and social justice, why would the political system suffer any more polarization as it did in the 1930s amid the Great Depression? In the absence of another 1930s-style Great Depression to precipitate sociopolitical polarization, the electoral system can withstand even more

income inequality and injustice, more civil unrest, and more shift of government toward police-state style solutions to such problems. After all, people do not believe there is an alternative to the existing political system any more than the economic.

3. Apologists of the status quo, from politicians to businesses from academics to the media would have citizens believe that the existing economic system is thriving and it will continue to thrive for eternity, a belief first introduced by the apostle of the capitalist manifesto Adam Smith, The Wealth of Nations (1776). In other words, it is as though capitalism transcends history and it has come to earth from the heavens. Therefore, there is no need to reform capitalism by changing policies and certainly no need to do away with it. If the system appears immersed in contradictions and anachronistic in terms of fulfilling its promise to society any more in Adam Smith’s 18th century Europe than in our 21st century world, it is only because critics and those not deriving optimal privileges are against the system not because there is something wrong with it.

Reformist critics argue that the declining middle class throughout the Western World in the last four decades is symptomatic of an ailing economic system that must be addressed through the political process. If this is not done, then democracy itself will give way to a more authoritarian political system. On the left side of the political spectrum, critics argue that the crisis of capitalism has already given way to a form of authoritarianism with a thin veil of democracy for mass consumption. Capitalism has shown definite signs of decline and it will ultimately fall. This will take a long time, just as Rome was in decline from the death of Marcus Aurelius to the sacking of Rome in the 5th century. Capitalism’s decline from within will come because it is serving an increasingly smaller segment of the population to the detriment of many losing faith in its promise. This means that it will take down with it all institutions, including the warped democratic political system as it will be evolving toward some authoritarian form, a contradiction in itself.

Scholars, journalists, politicians, business people and a segment of the public know that the world is experiencing a crisis of inequality. Despite the phenomenal Gross World Product (GWP) growth rising from $27 trillion in 1990 to $75 trillion in 2014, owing largely to the integration China and former Communist countries into the capitalist economy, income inequality actually grew during this period because capital remained concentrated in the hands of the top 10 percent. The inequality crisis is not just in Egypt, Nigeria, Kazakhstan and other developing nations under authoritarian corrupt regime, but in the US and Western democratic societies that go through the motions of promising equality but deliver downward social mobility for the college graduates.

With few notable exceptions among them Norway, many of the Western democracies deliver economic and social policies not much different from authoritarian countries that make no pretenses about a pluralistic society. This is not only in European Union countries undergoing austerity, but in the US as the world’s leading capitalist country where inequality is very evident. Although the US is an open society under a pluralistic system, it has been experiencing a crisis in its democratic institutions that has been going down the road of a quasi-police state ever since 9/11, considering there are glaring violations of the Constitution regarding civil rights, and of international law regarding human rights.

Things are not very different for the rest of the Western World where the rights of workers are disappearing and middle class is shrinking, while poverty is rising amid massive capital concentration. This is all justified in the name of markets that governments today equate with the “national interest”, thus redefining the social contract as understood by European thinkers of the Enlightenment as well as Thomas Jefferson and James Madison. The contradiction of democracy’s promise for equality and the downward socioeconomic mobility and rising income gap between the rich and the poor has been the subject of serious studies that ignore the populist propaganda in the media. However, such studies are hardly influential among mainstream politicians loyal to the new “market-centered” concept of the social contract that whatever is good for the rich is good for the nation – reminiscent of the 1920s thinking in America. (See Vicki L. Birchfield, “Income Inequality in Capitalist Democracies: The Interplay of Values and Institutions;” John Skinner, Capitalism, Socialism, Social Plutocracy: An American Crisis)

On the surface, the capitalist world economy certainly appears sound because of the fact that most people believe they have a stake in it. If they have no stake in it, they have hope for themselves and their children. Just below the surface there are very serious problems owing to a complex web of problems, most of them stemming from a political economy rooted in injustice and the source of oppression and exploitation that instead of lessening it is worsening based not just on income gaps between the rich and the “rest of society”, but on the quality of life in general for the “rest of society”. This does not mean that capitalism is coming to an end any time soon. Nevertheless, it manifests signs of structural weaknesses that will eventually undermine both capitalism and democracy from within. In other words, the real enemy that will bring down the social order is not “terrorism” or another enemy nation like Russia, but the decadent system.

Attitudes of the Rich toward the Poor and Working Poor

The study of poverty throughout history in different societies shows that this is man-made and it can be limited if not eliminated completely assuming there is the political will to do so. However, the hierarchical social structure, the political economy and the privileged socioeconomic and political elites are not interested in eliminating poverty any more than they are interested in social justice. It is politically acceptable as it is profitable for capitalists worldwide and the state that sustains state-supported capitalism to perpetuate the existing social and economic structure. The result is that this system is responsible for keeping half of the world’s population living on less than $2.50 per day, and more than 80% of the world’s population living in nations where income gaps are becoming wider.

These facts about living standards are contrary to what the apologists of capitalism are preaching about a better life under capitalism and democracy. Pressed on this issue by the realities of inequality becoming wider despite the phenomenal expansion of capital, one standard answer is that there is no alternative to the existing system, again implying the condition of social inequality has always existed so it must always exist. If within capitalism exists the illegal narcotics and human trade, and everything from guns and gasoline to cigarettes and counterfeit watches, does this make the “shadow economy” (black market) natural as well? Is it natural for the world’s largest banks,

from HSBC to Wells Fargo among many others to engage in money laundering for hundreds of billions of dollars for narco-traffickers among others moving capital around the world illegally? Because they are the back bone of capitalism, banks have fines imposed upon them and that is the extent of it, while the unemployed youth stealing from a small shop goes to prison for five years. We are indeed living a 21st century version of Victor Hugo’s Jean-Valjean hunted down for decades because of stealing a loaf of bread to feed a hungry child.

It is ironic that the poorest 40% of the world’s poor own less than 5% of the world’s wealth amounting to a total of $73 trillion. In other words, 40% of the world’s population has less money than the market cap than just ten US multinational corporations. The irony is that governments, the media and of course businesses, and consultants constantly remind the public that we need more of the same regardless of the potential explosive social, economic and political consequences that accompany gross inequality. In short, accept the political economy and social structure rooted in social injustice as you would faith in God you must not question and only obey. The faithful are rewarded in the afterlife if they remain obsequious to religion, and so it will be for the world’s poor if they just hold on to the hope of rewards to come, assuming they keep the faith and support of capitalism and its institutions. For skeptics refusing to accept capitalism that has the majority of the people in the world living on the margins, the answer is that it is the fault of the individual and not the system.

“America is full of slackers and deadbeats who won’t work!“ This was the title of a recently published article in the online business news program MarketWatch. Arguing that the real US unemployment rate is actually over 35% instead of 5.5%, the article blames not the capitalist system for generating unemployment and uneven development on the social and geographic scales, but 93 million people for not working. The article mentions that the contracting economic cycle that started in 2008 resulted in a sharp rise of structural unemployment. However, it blames the American people for their anti-work attitudes and not the absence of jobs in the market. This is not much different than the attitude of the apologists of capitalism in the 19th century when there was child labor, forced labor in the form of “workhouse or spike” and debtors’ prisons. Interestingly, bankers and governments of the EU in our time entertain the exact same attitudes about the southern European countries that have been under austerity from 2010 to the present as reflected in the MarketWatch article about US workers.

Blaming the college graduate who cannot find work in her field, the middle age man who is told he is too old to be competitive, the auto factory worker whose factory closed is typical of how media, businesses, and government, all integral part of the dominant culture, see the problem in the gap between the rich and the rest of society. This is not just in the US which is the Mecca of capitalism but around the world. Such attitudes have deep historical roots, though it is true that throughout the evolving history of capitalism the social fabric has evolve and conditions are better today than they were in the nascent phase of the market economy.

Life expectancy and the quality of life between rich and poor differed as much today as it did 300 years ago, as Fernand Braudel points out in his classic work Capitalism and Material Life 1400-1800. This separate demography for the rich is lost in the

scale of our averages. In the Beauvaisis in the middle of the seventeenth century over a third of the children died every twelve months; only 58% reached their fifteenth year; people died on average at the age of twenty.” Peasants reached old age in physical appearance and deterioration by the age of forty owing to lack of proper diet and the subsistence life. On average the rich lived at least ten years longer than the poor and would have lived a great deal longer if they did not engage in excesses. Baudel is correct that the relativism in the rich-poor gap not just at the beginning of the capitalist world economy in comparison with our epoch, but even today between the US and Nigeria, for example makes a big difference. In other words, not just the poverty line demarcation but actual material life, to quote Braudel, makes a difference in the poverty of a New Yorker vs. a peasant in Kenya or one in the Philippines. However, the same relativist argument does not hold true of the rich no matter where they live on earth, nor of the attitudes they entertain toward the poor.

Throughout history, the attitudes of rich people toward the poor were never characterized by a willingness to change the system that causes gross social inequality. Kindness and compassion toward the poor are sentiments rarely associated with the rich, but rather by a sense of aloofness at best, contempt at worst. Studies of attitudes of the rich toward the poor generally indicate a disdain of the former toward the latter, despite claims of living in a democracy that somehow entails “equality” when all around us there is nothing but inequality. Despite the obligatory rhetoric of political correctness in the age of mass politics and mass communication, the structure that sustains inequality remains. As long as officials, businesses, the media and private citizens say and write the politically correct thing, there is no need to change the root causes of social injustice in society. . (See Larry Bartels, Unequal Democracy: The Political Economy of the New Gilded Age).

The worldview of the rich is based on paternalistic attitudes and differs sharply from that of the rest of the population that has no privileges in society and its institutions, presumably based on equality for all. The attitudes of the rich toward the poor have historical roots in the early Industrial Revolution when the Protestant work ethic became an integral part of explaining why a few were blessed with wealth and the many, presumably unworthy sinners that God does not favor, were destined to a life of meager living. Although historically religion molded the attitudes of the masses toward the rich, in our modern era of mass communications secular ideologies have played a dominant role in manipulating public opinion.

The ideological justification for the rich appropriating wealth because the political economy promotes it is something we find concealed behind the rhetoric of individual competition. But how much competition was there at the time that Adam Smith was writing or even today, when the state has always been the pillar of support for businesses, and in all cases if such support is no longer the system will collapse. The myth of “free competition” is constantly contradicted by the role of the state in the marketplace.

To elevate themselves above the masses of the poor, the bourgeoisie attribute to themselves ambition and a keen sense of business savvy combined with a diligent work ethic. This is all in theory. Naturally, the classical liberal view that prevails across the world today is a Western construct that many in the Western and non-Western world have challenged. An integral part of the Western colonial legacy

passed on to Africa as well as other parts of the non-Western World, the classical liberal ideology and value system rooted in materialism and individualism is among the exports along with commodities and services. The ugly reality is that capitalism prevails by force, direct or indirect, subtle or obtrusive, at home and especially in distant lands where markets, raw materials and cheap labor are the goals of the imperialist. (see Chinweizu, The West and the Rest of Us).

The value system of individualism imbedded in the capitalist ethics is at the core of the Western Euro-centric world and diametrically opposed to collectivism of non-Western cultures. The same value system also clashes with Christian communitarian ethics within the Catholic Church reformers and especially with Liberation Theology coming mostly from Latin American intellectuals and politicians after the Cuban Revolution. The attempt to view Catholicism through the plight of the poor as Jesus Christ experienced according to the New Testament posed a frightening prospect for conservative and liberals alike because it entailed a challenge to the social structure and elites that the Church protected by distracting the masses with the promise of spiritual salvation. The last thing that the political and financial elites want is a segment of the institutional structure, in this case the church, projecting the image that communities can have a conscience and social responsibility, contrary to classical liberal ideology. Of course, it is not at all the case that communities lack conscience and social responsibility, but that the hegemonic cultural values of atomism prevail over any collectivist mode of thinking.

Desensitized toward the poor and their wretchedness, the rich are aloof of the masses in society in general. One reason for the aloofness is their belief that society belongs to them while the poor merely serve, at best, and take up space, at worst. These attitudes prevailed in 19th century England, as much as in early 20th century US, as they do today among the wealthy throughout the world. The policy that the rich have advocated toward the poor has always been one of government adopting punitive measures against the poor and to protect the rich against the poor whose socioeconomic condition could drive them to criminal activity. After all, the wealthy have always argued that the poor are the burdensome parasites of society and government must not raise taxes to sustain them in life.

This is a theme that a number of European and American novelists explored in the 19th and 20th century. It is also something we see in sociological studies that are more scientific from the classic work by Henry Mayhew London Labour and the London Poor, until contemporary studies based on extensive empirical research of the laboring poor from North America to China, from Brazil to India. While before the age of mass politics and democracy there was no need to go through the motions of democracy and equality, today with all the talk of freedom and equality one must pay lip service to social justice because it is the politically correct thing to do, while essentially engaging in practices not much different than robber barons of 19th century factories and coal mines.

Capturing the spirit of materialism, the lifelong preoccupation of amassing wealth as a cultural phenomenon, Jules Henry made the following argument in the mid-1960s amid the Vietnam War when both Japan and Western Europe had fully recovered from the effects of WWII and adapted the American cultural values of devoting one’s life to wealth accumulation as a way of life. “I am much concerned with our national

character in a culture increasingly feeling the effects of almost 150 years of lopsided preoccupation with amassing wealth and raising its standard of living…When we realize that the rest of the world has the same orientation, a study of what has happened to the American national character may give some insight in what to expect in other parts of the world …”Jules Henry, Culture Against Man.

While Jules Henry took the long view making broad sociological observations about the diffusion of American culture, it is only the hegemonic culture and values that have prevailed around the world, not America’s sub-cultures and values that reflect various minority groups from African-American to native-America, from ethnic minorities to religious ones. The only exception is the commercialization of sub-culture co-opted by the hegemonic culture and becoming an integral part of the mainstream. In other words, everything from music and mode of dress to dance and art that reflects the subculture becomes co-opted and part of the hegemonic culture once it is commercialized. Therefore, the hegemonic culture always has the greatest influence even if it not a reflection of the broader masses of a nation, presenting itself as all-inclusive of sub-cultures.

As Antonio Gramsci, (Prison Notebooks) argued, it is not the case of a national culture, but of the hegemonic culture under the social structure that determines the value system in society. The hegemonic culture and values in the US can be found just as easily in Paris and Rio de Janeiro, in Moscow and Mexico City where there are a few wealthy people enjoying the status of privileged elites and influencing society’s destiny. Cultural diffusion is largely in the domain of the hegemonic culture of core countries within the world capitalist system and not sub-cultures. Needless to say, a billionaire in New York, let us say Michael Bloomberg naturally enjoys not only economic influence in New York but throughout the US and much of the world. This is because Bloomberg molds public opinion by owning media outlets, whereas all of the workers and middle class people combined in New York do not have the influence of this one man who was also former mayor of the city.

In 2014, the world’s 80 richest people had more wealth than 3.5 billion people on the planet, reflecting the extreme socioeconomic inequality that capitalism has been perpetuating after centuries of promising to make everyone rich and not just a handful of people. According to the researchers compiling these statistics, by the end of 2015, the wealthiest one percent of the people will own more wealth than 99% of the world’s population. Amid such enormous wealth concentration, the problem for the wealthy, the governments whose policies account for accumulation of wealth, and the apologists of this political economy is to convince 99% of the world’s population that capitalism is the solution and poverty the fault of the individual lacking the “proper character traits and mental capacity”. Besides political ideology of classical Liberalism, neo-liberalism, conservatism, Libertarianism, and varieties of right wing and centrist and center-leftist ideologies, religion is also used to justify the political economy of inequality.

The extraordinary thing about the rich is their disdain for the poor is only matched by the admiration the poor entertain for the wealthy. According to a Pew Research survey, those with the greatest financial security are convinced that the poor have it easy because they receive government benefits without providing anything in return to society. Again, we see the theme of the poor as parasites because of the few crumbs

they collect in a debilitated welfare state, rather than the rich enjoying the benefits of a corporate welfare system. Furthermore, the wealthy insist that government cannot and must not do more to help the poor who are simply a burden on the budget, thus on the public debt. They do not mention that $2.5 trillion is currently held outside the US by corporations and individual refusing to repatriate the money because they are evading taxes. Nor do they mention the tax loopholes in off-shore accounts and illegal transactions that result in massive drain of income for the state.

Billionaire real estate investor Jeff Greene stated on CNBC that the press misquoted him about his disdain of the poor. "What I said was, 'the global equalization of wages and technology, which is growing at an exponential pace, has killed so many millions of jobs in America and other Western economies and it's going to kill them at an even faster pace going forward.' I said, 'we have our work cut out if we want to build a real economy, an inclusive economy that I grew up in, that I want to see for all Americans.'"

This attitude of contempt for the poor and the working poor is not just an American phenomenon, but a global one, reflecting the values of our civilization that sees nothing more in life as valuable than wealth accumulation at any cost to social justice. Do the super rich and the politicians who pursue policies maintaining a system of social injustice have any moral, social or political responsibility for those dying of poverty around the world because of capital accumulation and concentration? The answer is absolutely not because they blame the individual and not the system that maintains an unjust society. When we consider that there are millionaire and even billionaire politicians across the world, then it becomes even more understandable why the disdain toward the middle and lower classes.

In the “The World As I See It”, Albert Einstein writes: “I am absolutely convinced that no wealth in the world can help humanity forward, even in the most devoted worker in this cause…Money only appeals to selfishness and always tempts its owners irresistibly to abuse it. Can anyone imagine Moses, Jesus or Gandhi with the money-bags of Carnegie?” A product of the Age of Reason with profound confidence in the rationalist tradition, something his contemporary Sigmund Freud did not share, Einstein pointed out the obvious about the sickening affect of wealth in human beings, to say nothing of the misery it causes those who lack it because it is concentrated.

A child will die of hunger by the time it takes the average person to finish reading this sentence. If state-directed corporate welfare capitalism is to squeeze more out of labor and further erode middle-class living standards, it necessarily entails that poverty will increase and the rich-poor gap widen. This is in contrast to what the apologists of the non-existent “free market” economy are promising as they continue to espouse even greater wealth concentration despite one percent of the world’s richest people owing more than half of the world’s wealth.

One could argue that this is a reflection of the capitalist value system and more specifically the callous attitude of the rich toward the poor as a reflection of America’s culture just as F. Scott Fitzgerald describes in the Great Gatsby. However, values were not very different a century before F. Scott Fitzgerald when Alexis de Tocqueville was gathering material for his book about American society.

“As in the ages of equality no man is compelled to lend assistance to his fellow-men, and none has any right to expect much support from them, everyone is at once independent and powerless… His independence fells him with self-reliance and pride among his equals; his debility makes him feel from time to time his want for some outward assistance, which he cannot expect from any of them because they are impotent and unsympathizing.” (Alexis de Tocqueville, Democracy in America, II, 786)

Part III: Can Democracy Be Viable with a Wide Gap between Rich and Poor?

Inequality has been a permanent condition in society since the dawn of civilization. Those who try to justify inequality under democracy argue that it is a “fad” to espouse social justice, to defend the rights of the poor, of working people, and even the eroding middle class. In short, just as clothing fashion is a fad so is advocating for social justice because people are looking for a cause to soothe their psychological needs. This attitude is especially indicative on the part of governments that try to project an image that democracy as a political system works harmoniously with capitalism as an economic one, regardless of the level of social inequality.

Because of modern means of communication in the age of globalization, social justice has become popular with social networks around the world. Progressive individuals and groups identify problems at the grassroots level and propose solutions that would best serve their communities. This is not an issue of pop culture reflecting generational gaps but of grassroots sub-cultures challenging the hegemonic culture responsible for social injustice under the pretense of democracy and thriving capitalism. In other words, the grassroots voices against political and financial elites are universally recognized as the root problem in society around the world. To combat grassroots sub-cultures challenging the elites, governments and business launch public relations campaigns of mega scales showing the world an image that both democracy and capitalist economy are functioning great and no reformist or systemic change is needed.

The Mexican government recently paid SONY Corporation $20 million to make sure that in the next James Bond film there are pictures of modern buildings and a harmonious modern society. Never mind the narco-trafficking, the endemic urban and rural poverty, civil unrest, assassinations of dissidents, systemic corruption at all levels of government and private sector, and extreme inequality. As long as the image projected to the world is a positive one that is all that matters. After all, the assumption is that people believe in images by authority (dominant culture), just as they believe capitalism works for all people because TV game programs (Who Wants to be a Millionaire) make people instantly rich. The expensive PR campaign undertaken by Mexico is nothing in comparison with ceaseless US PR campaigns at home and abroad. that has a widening rich-poor gap and weakening democracy but insists on exporting its institutions, or rather a mythical image of them, to the rest of the world, while dismissing criticism as a “fad” that will pass like clothing fashion. (The Center for Media and Democracy’s PR Watch; Joe Soss, Remaking America: Democracy and Public Policy in an Age of Inequality)

The US political system is based on an 18th century Constitution and a two-party system with which the majority citizens identify and accept as the “norm”. Alexis de Tocqueville believed that the American system combined democracy and capitalism that captured the imagination of the majority in the 19th century. Of course, such a system included slavery, excluded Native Americans from the mainstream, did not permit women to vote, marginalized non-Western European ethnic groups, and had anti-union policies for workers trying to secure rights in trade unions. Apologists of the system would argue that freedom of speech, religion, and cultural expression are at the core of American democracy that is a model for the world. These are all values of a middle class society, with 18th century northwest European urban intellectual and commercial roots.

This is the ideological environment from which the US emerged as an independent nation on behalf of commercial, banking, and agricultural elites represented in the Republic, with the theoretical language in the Constitution and Bill of Rights of extending rights to all men. In reality, what do these and many more freedoms added in the last two hundred years mean to anyone on the margins of or outside of the institutional mainstream? What does American freedom mean to a working mother in rural Alabama? What is the meaning of such “American freedoms” to a coal miner who knows of the American Dream but who will never realize it. What exactly can the poor do with bourgeois freedom and promises of dreams that never materialize? Freedom is a nebulous concept unless one is incarcerated, and the overwhelming majority of those who are belong to minority groups and the poor largely. This is largely because the state has chosen the punitive policy route to deal with the growing socioeconomic gap. (Loïc Wacquant, Punishing the Poor: The Neoliberal Government of Social Insecurity)

Freedom is precious thing but it does not have the same meaning for a billionaire as it does for a janitor. French satirical newspaper Charlie Hebdo received a great deal of support from those believing in “freedom”, just as has WikiLeaks founder Julian Assange and former NSA computer worker Edward Snowden. In every single case, these were issues primarily preoccupying the middle class around the world, as I seriously doubt farm workers in rural Philippines, Guatemala and Ghana had as much interest as a middle class professional in London, New York, or Tokyo. Freedom is not some abstract ideal in life, but a commodity subject to the income status of the individual.

The “commoditized self” is reflected in how companies advertise products and services, projecting the message that their products and services will lead to a better, fuller and truer self. The commoditized self is subject to and reflects socioeconomic status, as it did during the European Age of Aristocracy (1688-1830). Just as an 18th century French aristocrat enjoyed more freedom than a member of the Third Estate, so does a 21st century billionaire enjoy a great deal more freedom in a democracy than a coal miner dying each day to feed himself and his family. Considering the poor have little freedom in comparison to the rich and a commoditized self of less value, they turn to religion and try to find freedom and a higher truth through faith in God. If this world is cruel, unjust, unequal for the masses, the spiritual world offers equality for all and eternal contentment. Democracy allows and even encourages religious worship as we see by the official positions of governments toward religion as much in the US as in developing nations, and values it just as much as it does the media as a

tool of engendering mass conformity. (J. M. Barbalet, Citizenship: Rights, Struggle, and Class Inequality)

Without freedom of the press there cannot possibly be a functioning democracy. However, what if the mainstream media is under corporate control, news is really a sanitized version of government and business propaganda and the only issues raised are those intended to induce conformity of the masses to the system? Can this still be called democracy? Can the working poor eat freedom to kill hunger pains, use it for clothing, housing, to secure clean water, food, and medications? What relevance do Western bourgeois freedoms have for the working and non-working poor of the world, when in fact they are a privilege reserved for those that have already secured the rest of life’s material comforts? If freedom from poverty is a human right and if observance of human rights is a core value in a democracy, then most of the world’s democracies, among them the US, are violating human rights and cannot be called democracies. (see Harri Englund, Prisoners of Freedom: Human Rights and the African Poor); Thomas Pogge, Freedom from Poverty As a Human Right: Who Owes What to the Very Poor?)

Popular sovereignty is one of the fundamental values of democracy, so is personal and community development, and social justice. To what degree does a country labeling itself “democracy” uphold these values not just in theory but in practice, beyond the hollow myth of someday achieving the dream of riches under capitalism? Can a country with very high income inequality maintain democratic institutions and a viable social fabric, or is it merely a façade for a crypto-authoritarian state projecting itself as “democracy” to its citizens and to the world? As some scholars have argued, the poverty of people necessarily means the poverty of democracy. The issue is that the social contract under democracy cannot possibly be fulfilled in a society socioeconomically polarized with even greater prospects for downward socioeconomic mobility. Even for Brazil, one of the fast-growing BRICS members, inequality has persisted as has the continued absence of social justice despite the remarkable GDP growth that markets stress as proof of success. (F. Fukuyama, et al., eds. Poverty, Inequality, and Democracy; Marcos Mendes, Inequality, Democracy, and Growth in Brazil).

There are varieties of modern democracies from the most progressive Norwegian model that consistently earns the highest praise for its commitment to human rights and social justice to Nigeria that is mired in endemic official corruption and has been plagued by internal conflicts from the Biafra uprising (1967 to 1970) to varieties of rebel groups in the last half century all the way up to the present rebel Muslim group Boko Haram. Any country that has elections can call itself a democracy, no matter how unrepresentative the system of the people and how it violates civil rights and human rights, and no matter the level of socioeconomic inequality with a high percentage of the population marginalized from the institutional mainstream.

India is the world’s largest democracy. Despite having one-third (400 million) of the world’s poorest population that has been rising since 1980 along with the poor population of sub-Sahara Africa, the Indian economy in GDP growth terms has been doing fairly well in the last three decades. Apologists of Indian democracy, such as it is, could argue that it has elections as though the electoral process is the alpha and the omega of democracy. This means that no other criteria is considered, such as the

quality of life for the broad masses of India’s 400 million poor, a number larger than the entire US population.

Once we begin to examine the meaning of democracy in India we discover that the constitution is written to do erase the caste system of the past and build a casteless society. We see no evidence that what is written in the Constitution has become reality since independence. Combining the complex caste system with massive endemic corruption and a plutocratic clientist or crony capitalism provides a better picture of what “democracy” means. (India ranks 85th among 175 nations in the corruption scale) linked to the public sector, with politicians buying votes with everything from cash to heroin.

According to former Chief Election Commissioner Shahabuddin Yaqoob Quraishi: “We [Election Commission] do not know the nature of this [80 per cent] funding. Is it coming from the mafias? Is it related to drugs or crimes? No one has any idea. We do not know if it is corporate funding…Why the EC asks to stop these collections from corporate groups is because you [political parties] get beholden to this. If you take money from corporate groups, you will end up giving them contracts … so it is not just fund collection. It is about their [political parties] nexus with corporate groups and it is very serious, while everybody knows about this. It is crony capitalism led by corporates which is running the country. They get their bureaucrats … their ministers appointed”. The Hindu, (22 December 2014)

The electoral system that India equates with democracy not only lacks transparency, but it hardly addresses the welfare of its citizens, focused only on capital concentration for those making campaign contributions and perhaps bribes and hoping in this manner to raise GDP levels regardless of the income distribution issue. This is because India and other governments under the capitalist system view poverty and income inequality not as a systemic problem that the political economy generates but as a “technical” matter requiring “technical” solutions. If social inequality as inherent in capitalism is never identified as the core problem of uneven income distribution owing to the process of legalized state-sanctioned appropriation, then the problem will never be solved, whether in India or any other nation. India’s “democratic” institutional structure is rooted in its traditional past and heavy British colonial influences. Regardless of the lofty democratic theory, in practice the system favors males to the detriment of women, favors the urban wealthy to the detriment of urban and rural poor, favors foreign corporations over the welfare of its own citizens working for such corporations to the detriment of their own health - the Bhopal gas tragedy 1984, gas leak incident remains the world’s worst industrial disaster indicative of corporate hegemony over the state.

One could easily argue that conditions in most countries, including many developed ones are not very different, although there may be differences in modalities of how money changes hands from the rich to politicians who are then indebted to award contracts and conduct policy favoring the privileged socioeconomic elites. In other words, crony capitalism and “clientist” politics so characteristic of non-Western countries retards democracy and contributes to economic inequality, but so does the legalized system of capital appropriation in the G-7 nations.

Despite its record as corrupt and extremely hierarchical society, India is part of the fast-growing BRICS countries with great prospects. It has less economic inequality than the US where capital is far more concentrated and downward social mobility a reality since the early 1980s. As a capitalist “democracy”, India has one of the largest middle class expansion rates in the world whereas the US has suffered contraction of its middle class and has worst prospects in this century than India for upward social mobility. Do these statistics make India a more promising democracy than the US, although in both countries the ruling political parties serve the same elites that are responsible for perpetuating inequality in society?

Not very different from India, Mexico, Chile and Turkey are democracies where capitalism has thrived in the post-World War II. However, these countries are the top three in the world with the greatest income inequality, followed by the US occupying the number four spot and Israel rounding out the top five. Interestingly enough the top ten countries with the least income inequality are all Scandinavian and East-Central European – former Communist countries. At the current rate of income inequality in many countries calling themselves “democracies” the income gap will widen and the so-called democracies will become less democratic. Because the capitalist system and its beneficiaries do not permit better income distribution to benefit the middle and working class, democratic governments have been dealing with the contradictions of growing inequality by adopting stricter laws and police methods toward the lower classes. (Claudio A. Holzner, Poverty of Democracy: The Institutional Roots of Political Participation in Mexico; Kayhan Delibas, The Rise of Political Islam in Turkey: Urban Poverty, Grassroots Activism and Islamic Fundamentalism).

The world economy is in cyclical structural cycles of expansion and contraction. There is no doubt that in the next contracting cycle the number of people in the world who will languish in abject poverty will rise, while the middle class throughout the Western World will continue to shrink as it has been in the past 30 years. The chronically malnourished (currently just under one billion) will increase while the real value of labor decrease and middle class living standards will lower throughout Western nations, with few exceptions, among them Canada and Australia. The United Nations working with various private and non-governmental organizations to reduce world poverty keeps promising the world that the goal is zero poverty within a few years. Yet, the reality of the existing political economy continues to disprove the UN and apologists of capitalism that ask people to keep their faith in a system that perpetuates inequality and exacerbates social injustice.

When the issue of poverty is raised, educated people who should know better rationalize it by utilizing the Malthusian argument. There are too many people and too few resources, therefore there will always be poor people in the world. Very few have argued that there are not sufficient resources to bail out capitalism to the tune of several trillion dollars paid by labor and the middle classes to strengthen a system that causes and maintains poverty on a world scale in the last recessionary cycle that started in 2008.

There is absolutely no problem transferring massive wealth through taxation, wage policy, and subsidy programs from the middle and lower classes to the wealthiest because this is the neoliberal dogma that maintains the privileged financial elites, and the dogma that the IMF, World Bank and OECD preach. Unless poverty eradication is

somehow linked to a massive foreign investment and trade program that would further appropriate resources and concentrate them, no government, UN transnational or other agency is willing to support. Anti-poverty programs have become a pretext to further exploit the areas where the poor are concentrated.

Feeding a starving child that faces death every five seconds is not nearly as urgent for the state as buttressing finance capitalism, because the value system on which capitalism is predicated rests on creating the wretched of the earth, to borrow Franz Fanon's book title, so that capital accumulation can continue to thrive. The value system and institutional structure in modern society is such that it has shaped the mind not just of the rich, but of the middle class, workers, and even the poor to worship wealth accumulation no matter the human cost. The modern hero is the billionaire that the rest of society must worship like serfs worshipped saints in the Middle Ages. And if the billionaire is a philanthropist who has given back some of the wealth she/he had appropriated through a system that promotes capital concentration, then that billionaires becomes a superhero and held as the model world citizen, rather than robber baron that she/he truly is.

Besides internal forces of inequality as we have seen only from a synoptic perspective, there are also external forces. The colonial power determined class formation and institutional structures in countries that became colonies, semi-colonies, or spheres of influence. For example, Nigeria was a colony and its division of labor and social inequality was molded during the age of colonialism. Even after colonial rule, the legacy of colonial institutions remained as multinational corporations dealt directly with the national government beholden to foreign capital and foreign governments for military aid. Having an elected government of indigenous individuals was fairly meaningless when foreign capital and governments retained a preeminently influential role in determining the unequal social structure.

External dependence or the phenomenon of dependent capitalism that has its roots in colonialism is also a major factor in geographic and social stratification and inequality. Europe, the US and Japan exploited the labor, markets, and raw materials of non-Western countries, helping to develop a comprador (dependent) capitalist class as an intermediary, along with a dependent political system through various means from intimidation and coercion to bribery. The core countries in the advanced capitalist countries, north Europe, US, Japan, Canada and Australia have been responsible for the geographic and social inequality beyond their own borders. (I. Wallerstein, Africa and the Modern World)

The integration of the non-Western countries into the core economies through loans, trade, and investment determines the division of labor in the latter. Because self-sufficiency in an integrated world economy is implausible as national capitalism, the world division of labor is the outcome of a world capitalist system. Uneven terms of trade and uneven labor values between the advanced capitalist countries and the developing ones account for low living standards and polarized socioeconomic conditions in the latter.

External dependence naturally keeps a political regime beholden to the patron country or countries under a patron-client integration model NAFTA is a good example of this. The German-dominated EU is also evolving into patron-client integration model

intent on the more thorough exploitation of cheap labor in the periphery nations with massive capital transfers to the core, using public debt as a catalyst. Inequality in Mexico has a lot to do with Mexico’s relationship with the US just as inequality in the southern and Eastern EU members has a lot to do with their relationship with Germany and northwest Europe. (Paul Collier, The Bottom Billion: Why the Poorest Countries are Failing and What Can Be Done About It).

Comprador politics and economics is not merely a question of economic and political dependency as we see in the case of hegemonic US over Latin America (1898-present), or northwest Europe (mainly Germany) over Southern and Eastern Europe, but it is also a question of national sovereignty and external forces causing internal inequalities. The issue of national sovereignty and extreme social inequalities was at the root of Arab uprisings. Of course, the US and northwest Europe reintegrated those economies into the international market system once the dust settled, thus nothing changed with regard to extreme inequality in those countries. The global division between strong national sovereign countries limited to the G-20 and within those the G-7, on the one hand, and the weak comprador nations as represented by the bottom 180 nations poses a major question of whether democracy can exist in societies whose destiny rests in the hands of the Great Powers. (Andre Gunder Frank, Lumpenbourgeoisie: Lumpendevelopment)

Can there be less socioeconomic polarization in countries with a weak national capitalist class and strong comprador bourgeoisie, with weak national state structures that yield to the rich nations and to powerful multinational corporations that also enjoy the backing of the IMF, World Bank, OECD and World Trade Organization. It is true that economic development and social harmony essential to political stability cannot take place where social injustice thrives on a chronic basis in a world where people have access to means of communication and know there is a better way. The signs we have so far from the Arab Spring uprisings, the European grassroots movements and other popular protests from Russia to Chile is that the global model of concentrated capitalism that divides the world geographically and politically results in uneven development and lack of stability. Can democracy be viable under socioeconomic polarization that breeds social unrest and political instability?

Considering that the answer to this question has been provided by governments turning increasingly to everything from massive propaganda to massive surveillance of their own citizens, from denying due process to violating human rights, the conclusion is that democracy suffers because the political and financial elites fear it and view it as an obstacle to sustaining their privileged roles in society. Ironically, the French nobility had similar views just before the outbreak of the bourgeois-led French Revolution in 1789. We may not be on the eve of a revolution in the early 21st century, but conformity to a system that promises dreams of a better life under capitalism and democracy but deliver them only to an increasingly smaller percentage of the people has an expiration date.

Part IV: Solutions to the Income Inequality and Declining Democracy

There is no shortage of possible solutions for rising income inequality and declining democracy in our time. Nor is there a shortage of people who dogmatically claim they have “The Answer” as though it is a miracle cure for bad breath. There is no Shangri

La, (mythical Himalayan utopia) or any kind of utopia except in Plato’s Republic and Thomas More’s Utopia, any more than there is a possibility for an egalitarian society because more than likely there will always be elites.

Human beings will probably never achieve the ideal of equality on this earth as religions conceive of it in spiritual terms. This does not mean that the struggle for social justice and equality must yield to unchecked greed, power and privileges by the elites, official and private sector corruption that is parasitic to the economy, institutional decadence at the expense of democracy, and tyranny by the few so they retain their privileged status. Solutions depend on one’s ideological perspective and for the purposes of simplicity I have divided them into three categories below, though there are many nuances within these listed.

1) The Neo-liberal Solution:

The ideological roots of this solution can be traced to Adam Smith at the end of the 18th century during the nascent phase of the Industrial Revolution in England. Continue with the neo-liberal policies and allow the market to determine the social structure, no matter the level of inequality and damage to the social fabric. Do not change the political economy regardless of the growing inequality it creates and how much it undermines democracy because change would only come at the expense of productivity efficiency, competition, innovation, and investment.

If preserving the status quo is of the utmost importance, proposing greater equality and more democracy is to advocate Socialism, a system that failed in the 29th century in the Soviet bloc, China and other Communist states. Besides, no matter what the UN, World Bank and numerous organizations and social scientists contend, inequality studies are vastly exaggerated and their goal is to undermine the vitality of capitalism. Inequality is a distraction from the “real issue of freedom”, that is to say, freedom to maintain the existing social order, to buy political influence through campaign contributions, to maximize profit and minimize costs, including pay workers whatever the employer wants not what government legislates in order to lessen inequality. (James Pierson, The Inequality Hoax)

Income redistribution from the rich to the middle classes is an anathema to neoliberal apologists of income inequality. However, they have no problem with the fiscal system as a mechanism for income redistribution from lower and middle class to the rich and to sustain corporate welfare capitalism. Apologists of the status quo oppose tax increases for higher-income groups, while advocating low wages, slashing social programs, retirement benefits, and social programs ranging from school lunches to Medicare. The only way to deal with inequality is for each individual to improve his/her own condition through education/training, not through public spending for such programs. Besides, there is always philanthropy by individuals, private organizations, and businesses generous enough to give of their own free will. (Jamie Peck, Constructions of Neoliberal Reason)

2) The Reformist or Keynesian Solution:

The ideological roots of this solution go back to the 19th century social democratic solutions opposed to monetarist orthodoxy that merely concentrate wealth and

increase inequality. A policy mix of political economy based on Keynesian economics (1930s New Deal) would be a good start to undo the damage that neo-liberalism has caused around the world in the last four decades. Raise income taxes on the wealthy, provide more support for education, training, and research and development, and offer incentives to business to hire and offer above minimum wage, and raise the minimum wage law. Close tax loopholes and crack down on offshore accounts hiding trillions from their respective governments.

Strengthening the working class is the only way to strengthen the weakening middle class and this means nationalizing the educational system that reflects socioeconomic polarization, with the rich going to best schools, and the rest having to suffer through mediocre ones. The Keynesian school of thought recognizes that capitalism left to its own devices will self-destruct and take down with it democracy. The only way to save democracy and the “market economy” from predatory capitalism is for the state must interfere to rationalize it and protect the middle class and workers who are powerless against the financial elites. (Duane Swank, Global Capital, Political Institutions, and Policy Change in Developed Welfare States; Danny Dorling, Inequality and the 1%).

3) The Socialist Solution: The ideological roots of Socialism are European, predating Marx and Engels, but gaining enormous intellectual momentum after the European revolutions of 1848 that contributed to raising working class consciousness and contributing to representative democracy throughout the continent. There are varieties of Socialism and there is fundamental agreement on the goals, though not on the modalities of what remains largely a utopian solution as far as many people are concerned. In the absence of systemic change of the political system that would overhaul everything from fiscal policy to labor, education and health policy, inequality under democratic regimes will continue to become worse because of capital concentration.

How likely is systemic change, how does social discontinuity come about, and even if it takes place does this mean trading one set of existing elites for another, as was during the French Revolution that ousted the nobility to replace it with the bourgeoisie. Does democracy in fact work if the state has to force equality top-down on a segment of the population that simply does not believe in it and wants to live in a hierarchical society? If democracy is to survive and be viable, then finance capitalism, which is by nature parasitic – concentrating and siphoning off wealth instead of creating it and distributing it more equitably – cannot be the hegemonic force behind the state that drives policy at all levels. (Jeremy Reiman and Paul Leighton, The Rich Get Richer and The Poor Get Prison: Ideology, Class, and Criminal Justice)

If “democratic governments” see the root causes of inequality and poverty in terms of a technical fix for natural and manmade problems, then the solution is really technocratic than political. Here is what the World Bank as well as many democratic governments like India regard as causes of extreme inequality.

1) Natural disasters; drought, flooding, etc.2) Agricultural cycles and global supply-demand fluctuations;3) Environmental degradation and derivative costs;4) Lack of technology and the right technology to address problems;

5) Lack of education or more targeted education, then the solution is to address these problems through technical means.6) Lack of the proper infrastructure for optimal resource7) Lack of or poor strategic economic planning for sustainable growth8) Inadequate investment incentives9) Failure to decentralize production geographically10) Failure to diversify the economy11) Failure to achieve social cohesion owing to the social fabric breaking down and exacerbating socioeconomic inequality

The World Bank, OECD, African Development Bank, Agency for International Development, UN agencies, and other national and international organizations see the income inequality problem from the same technical perspective as neoliberal apologists of the political economy, proposing technical solutions that only exacerbate the problem for future generations. I want to emphasize that the problem is not the lack of studies on income inequality, not the cliché “sustainable development” fits all solution as though this elements will magically end growing inequality. I walked into the World Bank bookstore the other day and there were many books dealing with poverty and inequality, in addition to quarterly pamphlets and online material the Bank has available. The problem is that neoliberal “reform solutions” are the cause of income inequality as history has proved from the 1950s to the present. To have more “neoliberal solutions” from the culprits of inequality and poverty is absurd. (Catherine Weaver, Hypocrisy Trap: The World Bank and the Poverty of Reform)

Besides structural problems in the political economy, without a doubt, wars have always been a cause of widespread misery and poverty on the losing party, and often on the “winners”, while a few profiteer in the process. Excessive military spending has brought down civilizations from Athens in 5th century B.C. to the Roman Empire in 5th century A.D. and the British Empire in the early 20th century. From the dawn of civilization when city-states in Mesopotamia and Greece waged war to secure trade routes, to loot, to gain prestige and glory, while maintaining a hierarchical social order. In modern history from the Commercial Revolution (16th century) onwards, wars were waged for market share, raw materials from energy to strategic minerals, all contributing to the economic and political strength of the socioeconomic elites.

Even if the goal of war was to benefit the rulers of the country, the tangible benefits accrued to the socioeconomic elites at the expense of the broader population. It is simply hollow propaganda that any modern nation-state under capitalism launches wars for ideological considerations linked to altruism and not profit for the socioeconomic elites, just as it is raw propaganda that military spending helps the civilian economy on a sustainable basis. The end result of chronic excessive defense spending is greater inequality and decline of the civilian economy. (Paul Kennedy, The Rise and Fall of the Great Powers; D. Acemoglu, James Robinson, Why Nations Fail: The Origins of Power, Prosperity, and Poverty)

Defense allocations in 2011 stood at $1.2 trillion. This was money benefiting mostly defense contractors and consultants, devoted for parasitic and corrupt enterprises that does not produce new wealth for society, contributes to income inequality and degradation of democracy because militarism reorients people toward authoritarian ideological perspective. The combination of the defense budgets and the corporate

welfare capitalist system are impediments to productivity and a more equitable share of wealth for the middle and working classes.

Besides defense spending, corporate welfare siphons off enormous resources and simply transfers income from the bottom income groups to the top. For example, the US Export-Import Bank provides huge export subsidies for the largest US corporations. The same holds true for EU subsidies of European multinationals, although the US and EU have been blaming each other for subsidies. The EU has often demanded that the World Trade Organization (WTO) impose punitive fines on the US for granting multi-billion-dollar tax breaks to Microsoft, General Electric, Boeing, and others that hardly need subsidies. The corporate welfare system and defense spending are inexorably linked to the political economy of uneven development and social inequality. (T. M. Kostigen, The Big Handout: How Government Subsidies and Corporate Welfare Corrupt the World We Live In and Wreak Havoc on Our Food Bills)

Philanthropy anti-Poverty Programs

Will global poverty end if the 1000 richest people and the next one million richest donate all their wealth? Of course not! Charity has never been the solution to the problem of unequal distribution of wealth and labor values. Neoliberals argue that philanthropy is the solution to poverty, while social democrats maintain anti-poverty programs help decrease inequality and provide needed assistance for the lower strata of society. In a recent announcement, the world's richest people (a few dozen billionaires) tentatively agreed to give away to the charities of their choice half of their wealth, which amounts to $3.5 trillion, or just over one-quarter of the EU's GDP. Thirty people own 6% of the world's wealth. Meanwhile, 80% of the world's population share 20% of the world's wealth, making billionaire charity a godsend gift to the wretched of the earth. About 1000 people on the planet, according to Forbes, own roughly 10% of the world's GDP, while one billion people do not have access to drinking water largely because a handful of multinational corporations, in which the billionaire philanthropists own most of the stock, own water rights around the world and charge exorbitant utility rates for water that IMF and World Bank insist must be under private ownership. (Tim Di Muzio, The 1% and the Rest of Us.)

About two billion people are victims of chronic malnutrition and lack of medicine, largely because multinational corporations, in which billionaire philanthropists own most of the stock, do not make it affordable for people to eat and have medicine. Water, food, health, education and affordable housing are among the problems that billionaire philanthropists want to address. The political economy, which made the same philanthropists billionaires, created the aforementioned problems in the first place. Exploitation of the public by a handful of fraudulent investors determined to continue manipulating markets, shield their wealth in tax heavens, so they can amass greater wealth is indeed a Constitutional right under free speech protection, as far as neoliberals are concerned.

While charity is fine to meet emergency needs, it hardly solves the chronic problem of closing the rich-poor gap. Then there are the governments and international organizations involved in the endeavor of aid that historical has been used as bait for trade and investment. Although aid is indeed necessary for emergency cases, aid

donors have always used it as bait for trade and investment and not to solve the rich-poor gap that actually widens regardless of aid. There are also the programs of the World Bank and United Nations intended to deal with the poor. These are actually programs intended to result in commercial benefits for large corporations. For example, introducing agrichemicals, seeds, and machinery to convert subsistence agriculture into commercial agriculture does not alter the social structure in India or Africa. On the contrary, it simply integrates more of the segment that was on the periphery of the monetary economy into the world system, forces out the small farmers and results in greater income inequality because of commercialization of the sector.

Specific country programs to end poverty and close the rich-poor gap have not worked either. Let us take Lyndon Johnson’s “Great Society” period of 1964 to 1968 also known as the “War on Poverty”. That program essentially locked in a segment of the population, mostly minorities, into chronic lower working class to poverty status rather than providing opportunities for upward social mobility. Not that the ghettos in London and Paris as a result of similar programs are much better than those of Chicago and Los Angeles. As much in the US as in UK and France, not only has the rich-poor gap widened since the Thatcher-Reagan decade, but the rich-middle class has also widened since government programs were introduced to close the poverty gap in the 1960s.

The key reason for the welfare experiment failure was government policy intended to maintain the social structure intact and continue with policies that strengthen the rich even more, while providing a social safety net for the rest of the population so that they would continue to support what was presented as “democratic” society. In short, the anti-poverty policies were in fact a means to preserve the system that causes poverty and widens the gap between the rich and the rest of the population. These pretences were dropped first by US and UK in the 1980s when neoliberal policies triumphed and then around the world because welfare corporate capitalism began to replace the social welfare state.

In existence for about five hundred years, the evolving capitalist economic system in different forms causes social and geographical poverty and inequality on a global scale. As the core of the capitalist world-economy shifts from the US to East Asia in the course of the 21st century, there will be increased socioeconomic inequality in the West and relative rising affluence in underdeveloped countries. The irony of mostly Western billionaires donating in large measure to non-Western areas is that in the 21st century the West will most definitely experience the same Third World conditions. Nor is the solution "made in America" (Germany, France, UK, etc.) because at the core of cyclical crises of capitalism is not to make each country more competitive--lower wages and higher quality products--as the apologists of the system insist and Obama argued recently. At the core of the system rests the assumption that capital chases the highest profits wherever it can secure them with the help of the state. Inequality is as much a local and national problem as it is a global one. (Michael Chossudovsky, The Globalization of Poverty and the New World Order)

Socioeconomic inequality and poverty is caused and can only be solved by political economy not by charity, a handful of wealthy people who steal legally and illegally for decades and then decide to give some of their wealth to atone for their greed, or

expedient diplomacy by a government(s) wishing to promote trade with the aid recipient. Inequality and poverty cannot be eradicated by private organizations with the support of the UN and World Bank whose goal is the more thorough commercial exploitation of natural resources, labor and markets where poor people live. If indeed inequality and poverty are imbedded in the structure of the political economy, the only solution is structural.

Band aid solutions for Inequality

Most of the programs introduced to combat extreme inequality and to sustain democracy have been band-aid solutions. The proof of failure rests is in the inequality statistics. More for public relations purposes to show the world that there is a commitment to democracy and social justice, band-aid economic solutions have always had the goal of preserving the political, economic, and social status quo. We continue to see such band-aid solutions until the present. Greece is the latest example because it has captured world headlines in the last five years owing to its inability to service the public debt and the reality of its technical bankruptcy causing ripple effects in the euro zone. Austerity policies combined with neoliberal ones de-capitalized Greece, as capital transferred out by the billions from both the public and private sectors from 2010 until the present.

Once the credit dries up and domestic and foreign capital have fled, IMF loan conditionality entails securing new loans to finance servicing existing debt. The result for Greece has been GDP reduction to the tune of 25% annually or $70 billion annually from 2010 to the present for a total of $350 billion. This resulted in gross uneven income distribution and social inequality, not just for this generation but for the next one as well. On 19 March 2015, the instruments of austerity and neo-liberalism came along and offered $2 billion euro for the “humanitarian crisis” that austerity and neo-liberal policies created in the first place.

In making the announcement for the humanitarian aid that amounts to 1.2% of Greece’s annual GDP, EU Commission President Jean-Claude Juncker stated that the money will actually go to help some of the hard-hit companies and targeted groups. First, monetarist and neoliberal policies causes the banking crisis, second the middle class and workers are asked to pay for it, third comes another dose of austerity, and finally, adding salt to injury come the band-aid solution for the poverty holocaust to demonstrate that there are systemic mechanisms to address worst case inequality scenarios.

The global rising inequality has been responsible for sociopolitical instability from Nigeria and Yemen where radical Islamist groups are engaged in guerrilla war to the Middle East and Philippines. Rise in income inequality will continue to have social and political implications and cause instability and further weaken the world political climate and economy as the UN has warned to the shrugs of the richest nations responsible for the crisis of capitalism. There have been calls by both governments and non-profit organizations that poverty will inevitably rise rather than drop. From the inner cities of the US to sub-Sahara Africa, inequality is rising amid governments' sole focus on the health of the market controlled by those at the top of the socioeconomic ladder.

To circumvent the criticism that they are violating the social contract of public accountability, democratic governments have been using the strategy of co-optation and piecemeal approach to social justice. To divert attention from the systemic inequality, governments have embraced social and cultural issues, while categorically rejecting the inequality issue as core to the political economy. The cultural and social issues include using the issues of racism, sexism, gay bias, environmental degradation, ethnic and religious hatred. Committed to providing women, minorities, gay people, and environmentalists with “equality of opportunity” access, the institutional structure has made these part of the political correctness arena, thus silencing critics about inequality in society.

As long as a small percentage of non-whites, women, gay people, people of all faiths and environmentalists have a stake in capitalism, then why does the larger issue of inequality need to be addressed? If Obama can become US president, how can there possibly be a problem of inequality, racism and social justice in America? OK, so there are the intermittent shootings of block youth, the reality of blacks as the majority populating prisons, suffering higher unemployment and lower income as a whole. But at least there is equality of opportunity! If a Muslim Arab can be a European bank executive, how there be systematic discrimination at the workplace against Muslim workers and vast income inequality in every country from Greece to the UK? In other words, class transcends religion, race, ethnicity, gender, etc, so there is no need to focus on inequality of the entire society. As long as a democratic society demonstrates tolerance for gay people, minorities, women, and even those Green Peace environmentalists causing trouble for Shell Oil, well then what else can a democracy do?

While gender, ethnic, racial and religious prejudice and discrimination are integral parts of social inequality, breaking them apart from the class structure category is an attempt to de-legitimize the more universal issue of systemic inequality and break the solidarity of all oppressed groups by vying them against each other. Women’s issues are only about women as though the millionaire woman in Manhattan is in the same category as the cleaning woman in Detroit; as though the African-American insurance executive is in the same category as the unemployed teen in Manila; as though the Hispanic female owner of her own bottling franchise company is in the same category as her white maid.

These are very old distractions of bourgeois politicians and apologists of the political economy. However, they became pronounced after the Civil Rights and women’s movement of the 1960s and co-optation has worked well in the last half century. If progress had been made on these issue of minority rights one could argue that perhaps it was well worth it. But the record speaks for itself on the socioeconomic status of the vast majority of minorities.

Social Discontinuity

Social discontinuity is not around the corner as some would like to believe any more than revolution that would overthrow capitalism. Even when it is unfolding with society showing strains in all institutions, the vast majority of the population will not notice that anything unusual is taking place. When social discontinuity was unfolding during the transition from the Fall of Rome to the Medieval World, from the feudal-

manorial mode of production to commercial agriculture and long-distance trade people simply went about their lives as though society was “normal”. The transition from the capitalist world economy to a new mode of production will evolve gradually and over the course of many decades if not centuries.

Social discontinuity on a world scale will not come as a result of a single national uprising, a spectacular revolutionary uprising, and it will not come because reform movements that attempt to rationalize capitalist democracy have failed. The entire world system would have to collapse from the core outward to the periphery for social discontinuity to take place. Because of the system’s interdependence and close integration as a global one, it will collapse altogether, rather than national capitalism falling in one country while another thrives under the market economy. The glaring absence of social justice, the wide gap between rich and poor will invariably precipitate political instability as we have seen in the last fifty years. Besides internal conflict and political instability, capitalism in its pursuit of more markets will mean more regional conflicts, more instability and greater tensions between countries.

If there is a rise in inequality and less social justice despite the promise of democracy, why then does capitalism survive and thrive not just in authoritarian societies but in open ones where pluralism exists? Mechanisms of social control part of which is indoctrination and distraction are among the answers and explain in part why social discontinuity will take a long time to evolve. Clearly, religion redirecting peoples’ focus from the material world to the spiritual has always been the most powerful and enduring mechanism of social conformity. However, in modern society secular ideology along with religion is the basis for mass indoctrination as expressed endlessly not just through the mainstream media, but all institutions from educational to social clubs.

Focusing on foreign conflicts, potential enemies, and domestic violence against societal harmony are among the ways of the state engendering conformity. As long as there are larger enemies and the culture of fear thrives, people become convinced that the inequality and lack of social justice may not be as significant. Therefore, nationalism as a secular religion and at the core of the hegemonic culture has always helped to keep people docile and resist calls of critics for social progress.

Clearly, one would have to blind not to see that in the last five centuries capitalism has perpetuated the hegemony of the privileged elites enjoying dominant influence in every sector of society, from the political arena to the judicial system to at the expense of the rest of society. Capitalism has at its core the value system of greed feeds on the base human proclivities. This is learned behavior, conditioned by the hegemonic culture that keeps capitalism alive. We learn to worship the culture of materialism, to believe there is nothing else more important in life than devoting one’s life to working and shopping and to self-aggrandizement and atomism at the expense of the community. In paying tribute to his fellow human beings that work and create, that helped to shape his character and life, Albert Einstein was correct that we are indeed social animals, as Aristotle had observed centuries ago, as everyone of us recognizes stepping outside our home, no matter what the dominant culture teaches and how alienating the new technology is trying to make human beings.

As social animals, we are part of a collective totality. We are not sitting on some

mountaintop all alone hunting and gathering in the manner of our ancestors 15,000 years ago. We have a social responsibility and that cannot be anything short of a collective response through policy to change the injustice of society. In the age of no places left to exploit in the same manner as in 19th century Africa, capitalism has turned inward focusing as much on exploiting labor in the core regions of the West as in the periphery of Asia, Latin America and Africa. Frank Fanon’s Wretched of the Earth dealing with French colonial rule in Algeria and the broader issue of Western colonial and neo-colonial exploitation of non-Western countries continues to have relevance in the early 21st century as the world has become socioeconomically and geographically polarized although we are no longer living in the age of colonization. As difficult and as radical as Fanon’s solution may sound about grassroots action, the concept of “redemptive violence” may not be as far off as we believe to correct the injustices of social, political, and economic inequality.

With the inevitability of periodic short recessionary cycles, and perhaps one or more very deep and long recessions in the 21st century, how likely is it that the economic and political structure will be able to be sustainable and the road to social discontinuity averted? If the state were to withdraw its massive support from the private sector the capitalist system would begin to collapse and we would be well on our way toward social discontinuity.

Social discontinuity will eventually take place, just as it did when the feudal/material system gave way to capitalism. While we are not near the collapse of capitalism and democracy in the early 21st century, I would not be as confident if the transition of social discontinuity accelerates toward the end of the century. The revolutions of the 20th century that took place in underdeveloped and dependent countries exploited by the West and/or Japan – Russia, China, Vietnam, and Cuba – were social but also national expressions against foreign exploitation and assertions of national sovereignty and determining their future without foreign hegemony. All of them had weak state structures with a weak national bourgeoisie and a strong foreign capital, military and political influence. In short, the social revolutions were combined with nationalism as catalyst for popular mobilization that transcended class.

As the developed countries – G-7 – are becoming increasingly socioeconomically polarized, and “Third World” phenomena manifest themselves in the “First World”, the signs of social discontinuity are present as much in the US and UK as they are in developing nations. For those in the bottom of the socioeconomic scale in advanced capitalist countries, health, education, housing, the criminal justice system, and quality of life in general is not much different than it is for those in countries trying to develop their economies. Not just the polarization widening, but the state becoming increasingly authoritarian and institutions increasingly marginalizing the masses will create the new dynamics for social discontinuity.