Why Didn’t the Revolution Happen?: A Critical Assessment of Marx and Class Struggle

By K. Wilson

There has been a perceptible shift in how Marxists discuss the revolution in the past decades.  Marx insisted that a revolution in industrialized Europe was not just inevitable, but imminent.  The process of “proletarianization,” he wrote, had divided the world into workers who sell their labor and employers who own the means of production, all but eradicating other class distinctions.  This state of affairs would incubate “class consciousness” among European workers, a rational understanding that their interests as a class consisted of seizing the means of production – leading inexorably a socialist revolution.  Marxists in the early twentieth century matched this confidence that the world was on the cusp of revolution.  Lenin, writing in the immediate aftermath of Russia’s 1917 February revolution, proclaimed that “[t]his first stage of our revolution will certainly not be the last.”[1]

But as economic development progressed in western Europe and North America – the countries with advanced industrial economies seemingly ripest for revolution – the revolution simply didn’t occur.  Capitalism and bourgeois democracy remain the dominant economic and political modes in the industrialized west.  And although some socialist revolutions really did occur throughout the twentieth century, most took place in pre-industrial agrarian economies, and almost all of the resulting governments have since collapsed.

In the mid-twentieth century, thinkers associated with the Frankfurt School – most notably Herbert Marcuse – tried to explain the absence of revolution while maintaining a broadly Marxist framework.  Marcuse argued that mass media and consumerism had eliminated the proletariat’s political imagination, thereby sapping the West of its revolutionary potential; in lieu of positive revolutionary activity, he urged a purely negative “great refusal” to participate in consumerism.[2]

Most contemporary Marxist thought tacitly adopts Marcuse’s pessimism about an imminent revolution.  When Marxist literature mentions revolution at all – a rarity – it discusses revolution as a pipe dream, or a hazy and contingent possibility, or sometimes even a strategically unsound goal.  In a rather frank article from 2019, apropos of the 100th anniversary of the First Communist International, Jacobin editor Loren Balhorn wrote that “[a]t least for the time being, it would appear unwise to emulate the Comintern’s strategic perspectives” – that is, the pursuit of an international proletarian revolution – “for working class power.”[3]

For a Marxist, these answers are both unsatisfying and strategically unhelpful.  It is time to return to the very basic question that the events of the twentieth century raise: why didn’t the revolution happen?  The question is of vital strategic importance to contemporary socialism, but there are few attempts to formulate a square answer.

This essay focuses on one aspect of that question – the failure of class consciousness to take hold in western industrialized countries.  A close analysis of the economic and social changes in the industrialized west since Marx wrote reveals several interrelated reasons why class consciousness hasn’t developed.  The disruptive global events of the twentieth century, especially World War II and its aftermath, slowed the “proletarianization” of workers and created breathing room for the growth of a large, relatively prosperous middle class.  The middle class has since served as a buffer between the antagonistic interests of labor and capital.  Further, the transition of many advanced economies from manufacturing-based models to information-based models has blurred the hard line between capital and labor that Marx identified.  These conditions have given rise to a mode of politics on the left based on personal identity rather than class solidarity.  The essay concludes with some strategic observations based on these constraints.

Forces of Convergence

In Capital in the Twenty-First Century, French economist Thomas Piketty established a helpful framework for evaluating conditions that affect income and wealth inequality.  He distinguished between “forces of divergence,” which render society more unequal, and “forces of convergence,” which reduce inequalities.  After conducting an exhaustive analysis of these forces in the twentieth century, Piketty found that three forces of convergence impeded the growth of wealth and income gaps – contrary to Marx’s prediction.

First, Piketty noted that the populations of advanced countries grew dramatically since Marx wrote.  Population growth tends to diminish the importance of inherited wealth, since large family fortunes dilute when the family grows, so this trend reduced wealth inequality.  Second, Piketty observed that the total output of industrial economies grew much more quickly than Marx anticipated.  This reduced income inequality, as rapid economic growth provides more opportunities for people born in poverty to accumulate significant wealth.  Third, Piketty pointed out that the twentieth century was rife with major geopolitical events – World War I, the Great Depression, and World War II – all of which produced massive inflation in the developed world.  Although inflation can cause serious privations in the short term, over the long run, it reduces economic inequality.  This is because debts are measured in specific units of currency, so as currencies lose value, debts become easier to escape.

Due to this confluence of historical phenomena, the mid-twentieth century experienced an unprecedented reduction in economic inequality.  The geopolitical, social, and economic chaos resulting from two World Wars and a global financial crisis created breathing room for genuine upward economic mobility.[4]

The “Middle-Class” Buffer

The result of this upward mobility was the growth of a large and relatively prosperous middle class in most advanced economies, rather than the stark division of bourgeoisie and proletarian that Marx predicted.  The prominence of the middle class has significantly inhibited class consciousness.  Class consciousness, as Marx defined it, is an understanding of the world in terms of “relations . . . not [] between one individual and another, but between worker and capitalist, tenant and landlord, etc.”[5] 

The more stratified the economy becomes, the easier it is for workers to develop a rational understanding of their interests as a class – and a corresponding realization that their interests are antagonistic to the capitalists’.

But without a stark, binary division between workers and capitalists, these antagonisms become murky.  An upper-middle-class worker – say, a corporate middle-manager – is still a worker because she doesn’t own the assets the corporation uses to produce value.  But if she’s wealthier than her neighbors, has a cushy and reasonably fulfilling job, and enjoys a comfortable lifestyle, she has little reason to perceive her interests as hostile to her employer’s.

Throughout the last century and a half, neoliberal institutions have exploited that strategic reality by using the middle class as a “buffer” for class antagonisms.  Howard Zinn’s leftist history textbook, A People’s History of the United States, is rife with enlightening examples of this strategy.  For instance, in his discussion of the Progressive era at the beginning of the twentieth century, Zinn notes that many states began to pass laws providing for compensation for injured workers and otherwise limiting abusive employment practices.  These laws improved conditions for the flood of working-class immigrants arriving from Europe and allowed just enough immigrants to prosper to form “a middle-class cushion for class conflict.”  Later, in the ‘60s and ‘70s, a wave of protests drew attention to the woeful inadequacy of urban schools attended predominantly by Black children.  Boston’s government developed an insidiously clever solution to this problem: rather than fixing the urban schools, it implemented a policy of “busing Black children to white schools, and whites to Black schools.”  The result, Zinn explains, was “an ingenious concession to protest.  It had the effect of pushing… whites and poor Blacks into competition for the miserable inadequate schools.”[6]

These examples illustrate how capital has – more or less consciously – allowed the middle class to thrive in order to pit it against the poor.  The tactic has been remarkably successful.  In America, nearly 90% of people consider themselves “middle-class,”[7] and politicians on the left and right obsessively appeal to middle-class anxieties when seeking election.  Obviously, the middle-class doesn’t actually encompass 90% of the population.  And even if it did, a person in the 95th percentile of income (the top of this purported “middle-class”) and a person in the 5th percentile (the bottom) probably don’t share many tangible interests.  But if both of those folks think of themselves as “middle-class,” they likely won’t perceive their interests as antagonistic.

This tactic works in part because it appeals to a basic human psychological tendency: the fear of relative deprivation.  A person is “relatively deprived” if she is less materially wealthy than her community.  Behavioral psychology shows that a relatively deprived person is likely to feel anger, envy, and resentment even if she is perfectly well-off from an “absolute” perspective.[8]  People’s sense of satisfaction depends on feeling materially better-off than other members of their community, or at least not feeling worse-off.  Due to the various economic strata in the industrialized west, most workers have people slightly worse-off to fear, and people slightly better-off to envy – which makes it easy to divide and conquer folks with similar interests.

The Eroding Distinction between Capital and Labor

Efforts to foment class consciousness in the twenty-first century are complicated by the fact that “capital” and “labor” are harder to pinpoint than when Marx wrote.  In Marx’s world, poor laborers survived by selling their labor and rich capitalists got rich by possessing the means of production.  There were few (if any) rich laborers or poor capitalists.

Not so in the America of today.  As of 2020, over half of Americans owned stock, and many of them – even those who earn relatively low wages – have a significant amount of stock.  Stockholders in the 50th to 90th percentile of income owned an average of $132,000 in stock, while those in the bottom half still owned a healthy $54,000 on average.[9]  A little under half of American adults own mutual funds,[10] while three quarters have a retirement account that rises or falls in value with the stock market.[11]

All of these assets are forms of capital because they represent either a direct (in the case of stock) or indirect (in the case of mutual funds and retirement accounts) ownership interest in the means of production.  Many Americans thus have a tangible interest in the success of corporations – which is why incumbent presidential administrations are much more likely to win reelection when the stock market is strong,[12] and why voters tend to conflate the success of the stock market with the health of the economy.  The notion that laborers and capitalists always have antithetical interests is a harder sell to Americans whose wealth depends on capitalists succeeding.  As it turns out, there are some poor capitalists.

There are also some rich laborers. Socialists often discuss professional athletes as laborers, even though many of them are astonishingly wealthy.  For instance, a Jacobin article celebrated NBA players as “highly-skilled workers” who are in a “position to build working-class solidarity across different groups of workers and extract concessions from management.”[13]

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But this example illustrates why the labor/capital distinction has become harder to draw in late capitalism.  In one sense, calling athletes “laborers” makes sense because they’re paid to train and play games, which is a form of labor.  But many professional athletes make a lot more money from endorsements and advertising than they do from playing.  Are those athletes really “laborers” when most of their income derives from their image, rather than any specific work they perform?  Is an athlete’s personal image really “labor” rather than “capital”?  More fundamentally, would rich professional athletes tangibly benefit from a socialist revolution?

Just as it’s difficult to isolate “labor,” it’s also sometimes hard to locate the means of production with any precision. In Marx’s world, the means of production were concrete: industrial machines that laborers operated to make products.  That’s still true in some industries, like manufacturing, but what about information-based industries?  Picture a software developer.  The “product” she makes is computer code.  What are the “means of production” for computer code?  The simplest answer is a computer, coupled with a programming language and a code editor.  But most software developers probably have their own computers, and most programming languages and code editors are open-source.  In that sense, software engineers own the “means of production” for the product they make – whereas an assembly-line worker doesn’t own the assembly line.  Yet software developers are undoubtedly “laborers” under a traditional Marxist analysis.

None of this undermines Marx’s basic point that labor and capital have antagonistic interests.  But the existence of the middle class, coupled with the transition of advanced economies from manufacturing-based to information-based industries, has made it more difficult to figure out who’s the capitalist and who’s the laborer.  That necessarily inhibits the development of class consciousness.

A Politics of Personal Identity

These conditions have made it difficult for the American left to organize around class.  Instead, throughout modern American history, most leftist political movements have centered on identity – race, ethnicity, gender, gender orientation, sexuality, etc.  Of course, there have been some exceptions; Eugene Debs, the brief prominence of the Industrial Workers of the World in the ‘20s and ‘30s, and more recently, Bernie Sanders’s presidential campaign spring to mind.

But in terms of both numbers and influence, class-based leftist movements pale in comparison to identity-centric efforts like the civil rights movement, the women’s liberation movement, and the Black Lives Matter protests.  Because Americans don’t strongly perceive themselves in terms of class, it’s difficult to organize class-based leftist political activity.  This trend is especially stark in the twenty-first century.  By far the biggest left-leaning political movement in America in the past few decades is the Black Lives Matter protests against racially-motivated police violence.  The largest confluence of protests occurred in the summer of 2020 and involved around 20 million participants – making the protests one of the largest social movements in American history.[14]  Other contemporary rallying points for the left include abortion and LGBTQ rights, which are identity-centric issues.

To give credit where it’s due, identity politics has produced some remarkable results.  Although the Black Lives Matter protests haven’t achieved much tangible progress on police violence – police shootings per capita have actually increased since the protests began[15] – the movement galvanized a generation of Americans into leftist politics.  And thanks to relentless activism by the LGBTQ community, in the past twenty years, Americans’ views on gay rights underwent an astonishing reversal; in 2004, 60% of Americans opposed gay marriage, while in 2019, 61% favored it.[16]

It’s also worth noting that approaches to leftist politics that emphasize only class, to the exclusion of other predicates of oppression, alienate potential supporters and ignore the manifold forms of structural violence that afflict society.  For example, some socialists have tried to reframe police violence as a primarily class-based issue.  But while police are more likely to kill poor people, class explains a mere 28% of the disproportionately high rate of police violence against Black people.[17]  By the numbers, police violence is primarily a race issue.

For that reason, proponents of identity politics often accuse socialists of “class-reductionism.”[18] But while this is sometimes fair criticism, more often than not, the exact opposite is true – movements centered around one type of personal identity conceptualize every political struggle in terms of that identity, replacing “class-reductionism” with race- or gender- or sexuality- reductionism.  That tendency both inhibits class consciousness and causes a fundamental misunderstanding of key political issues, to the strategic detriment of the left.

The “school-to-prison pipeline” is a case in point.  The phrase refers to the tendency of some schools to apply harsh disciplinary policies and refer students who break the rules to law enforcement.  This is pervasive at low-income, predominantly Black and Latinx schools, and was the subject of one of the most widely-read leftist books this century – Michelle Alexander’s The New Jim Crow.  Following in Alexander’s footsteps, virtually every framing of the school-to-prison pipeline fixates on race-based disparities in school discipline and incarceration.  Google “school-to-prison pipeline,” and you’ll find that one of the first results defines it as “practices and policies that disproportionately place students of color into the criminal justice system.”[19]  Class doesn’t even get a mention.

But while there are doubtless real differences in the outcomes Black and white adolescents face in school and the justice system, the majority of those differences are attributable to class, not race.  According to one comprehensive study, about a third of the discipline gap between Black and white students cannot be explained by poverty, disciplinary histories, and school district characteristics.[20]  Obviously this indicates that a disturbing share of the gap in school discipline stems from pure racism, but don’t miss the forest for the trees: two-thirds of the gap is attributable to the material economic conditions of the students.  Another study found that although Black men are significantly more likely to face incarceration than their white counterparts, a majority of that disparity (between 54 and 85%, depending on the definition of “incarceration”) is attributable to class.[21]  In sum, most of the people who traverse the school-to-prison pipeline – and face subsequent terms of incarceration – do so because they’re poor, not because they’re Black.

The way we talk about these issues has strategic consequences.  A poor white person hearing about the school-to-prison pipeline might decide that the issue isn’t important to him because it’s unlikely to affect his kids – an incorrect conclusion founded on an inaccurate framing of the issue.  The school-to-prison pipeline is a class issue, but because leftist politics centers on personal identity, discourse on the school-to-prison pipeline doesn’t promote class consciousness.

Identity politics – or, more accurately, “identity-only politics” – also leaves oppressed groups vulnerable to divide-and-conquer tactics by the right, which further inhibit class consciousness.  The artificial tension between Black people, gay and lesbian people, and trans people is a good example of these tactics.  In the early 2010s, the National Organization for Marriage, an anti-gay advocacy group, circulated an astonishingly frank internal memo on how to use gay marriage as a wedge issue.  An excerpt reads:

The strategic goal of this project is to drive a wedge between gays and Blacks – two key Democratic constituencies.  Find, equip, energize, and connect African American spokespeople for marriage; develop a media campaign around their objections to gay marriage as a civil right; provoke the gay marriage base into responding by denouncing these spokesmen and women as bigots… Find attractive young Black Democrats to challenge white gay marriage advocates electorally.[22]

Later, when trans rights came to prominence in the cultural discourse, right-wing groups pivoted to manufacture another “wedge” between women plus gay and lesbian folks, on the one hand, and trans people on the other.  In 2017, Meg Kilgannon, the executive director of Concerned Parents and Education, spoke at a summit hosted by the Family Research Council – a Christian rightist, anti-LGBT organization.  Kilgannon laid out a strategy for opposing measures expanding trans rights in schools: portray trans rights as anti-feminist and anti-gay.  This would be effective, Kilgannon argued, because “the LGBT alliance is actually fragile and the trans activists need the gay rights movement to help legitimize them.”  But for many LGB activists, “gender identity on its own is just a bridge too far. If we separate the T from the alphabet soup we’ll have more success.”[23]

Wedge issues are an insidiously effective way to blunt the efficacy of identity-based leftist politics.  Promulgating wedge issues pits oppressed groups against one another, which inhibits the members of those groups from perceiving themselves as part of a single economic class with united interests.

Of course, practitioners of identity politics are not to blame for this unfortunate reality.  Most of those folks are sincere advocates for marginalized groups who simply use the most effective political strategies they can muster – and sometimes achieve real progress in their communities.  But while leftist politics in America remains centered on personal identity, class consciousness is unlikely to develop.

Conclusion

This analysis of class consciousness in modern America gives rise to several strategic observations.  First and foremost, the delicate balance of factors that has allowed the middle class to remain viable for almost a century may be deteriorating.  Although factors of convergence have supported the existence of the middle class for the past century or so, those trends seem to be reversing.  Near the end of Capital in the Twenty-First Century, Piketty suggests that population and economic growth are slowing, inflation is slowly declining, and economic inequality is on the rise in the western world.  If the forces of convergence turn into forces of divergence, the classes will slowly stratify, and a degree of class consciousness will probably develop on its own.  Socialists should exploit this reality by advancing a class-centric analysis directed at members of the middle class suddenly cast into poverty by these economic trends.

By the same token, leftist generally should recognize that, given the competing substrata of the economy and the multifarious forms of oppression, neither class nor personal identity furnishes a comprehensive answer to all social ills.  As discussed, class alone doesn’t provide a satisfactory explanation of police violence, and race alone doesn’t provide a satisfactory explanation of the school-to-prison pipeline.  Instead, we should take an empirical approach to confronting specific problems.

Relatedly, leftists should spot wedge issues – which thrive in the areas where two oppressed groups believe their interests are in tension – and avoid schismatic arguments.  Instead, leftist analysis should begin with the tangible interests that most oppressed people share.  For instance, it is routine to point out that Black women face significant and unfair disparities in pay; women tend to be paid less than men and Black people tend to be paid less than white people, meaning that Black women face compound inequities in their salaries.   But discussing pay disparity in terms of identity pits these groups against each other, implying that Black women have different interests from white women and Black men.  A better way to frame the issue is to focus on an enemy common to all of those groups – employers, which have overly broad discretion to set their employees’ salaries – and the common problem that results, namely, that workers as a whole are paid too little and unfairly.

By framing issues in terms that take into account both identity and class, socialists can take advantage of rising economic inequality to promote class consciousness.  And then, perhaps, we can prove that the revolution was merely deferred – not denied.

Sources

[1] Vladimir Lenin, “Letters from Afar: The First Letter,” Pravda, March 21, 2017, https://www.marxists.org/archive/lenin/works/1917/lfafar/first.htm.

[2] Herbert Marcuse, One-Dimensional Man (New York: Routledge Classics, 2007), 21-51, available at https://www.cs.vu.nl/~eliens/download/marcuse-one-dimensional-man.pdf.

[3] Loren Balhorn, “The World Revolution that Wasn’t,” Jacobin, March 2, 2019, https://jacobin.com/2019/03/comintern-lenin-german-revolution-ussr-revolution.

[4] Thomas Piketty, Capital in the Twenty-First Century (Cambridge: Bellknap Press, 2014), 13-15, 20-27, 69-85, 99-109, 377-393.

[5] Karl Marx, The Poverty of Philosophy (Paris, 1847), available at https://www.marxists.org/archive/marx/works/1847/poverty-philosophy/index.htm.

[6] Howard Zinn, A People’s History of the United States (New York: HarperCollins, 1999), 349, 467.

[7] Jeffrey Wenger and Melanie Zaber, “Most Americans Consider Themselves Middle-Class.  But Are They?”, Rand Corporation Blog, May 14, 2021, https://www.rand.org/blog/2021/05/most-americans-consider-themselves-middle-class-but.html.

[8] Heather J. Smith and Yueh J. Juo, “Relative Deprivation: How Subjective Experiences of Inequality Influence Social Behavior and Health,” Policy Insights from Social and Personality Psychology 1, no. 1 (October 1, 2014), https://journals.sagepub.com/doi/full/10.1177/2372732214550165.

[9] “What Percent of Americans Own Stocks?”, FinancialSamurai, 2021, https://www.financialsamurai.com/what-percent-of-americans-own-stocks/.

[10] “Share of Households Owning Mutual Funds in the United States from 1980 to 2019,” Statistica, November 9, 2020, https://www.statista.com/statistics/246224/mutual-funds-owned-by-american-households/.

[11] Alicia Adamczyk, “25% of Americans Have No Retirement Savings,” CNBC, May 24, 2019, https://www.cnbc.com/2019/05/24/25-percent-of-us-adults-have-no-retirement-savings-fed-finds.html.

[12] Paul Vigna, “The Stock Market Is a Strong Election Day Predictor,” The Wall Street Journal, September 7, 2020, https://www.wsj.com/articles/the-stock-market-is-a-strong-election-day-predictor-11599490800.

[13] Barry Eidlin, “Last Week’s Pro Athletes Strikes Could Become Much Bigger Than Sports,” Jacobin, August 30, 2020, https://www.jacobinmag.com/2020/08/sports-strikes-kenosha-racial-justice.

[14] Larry Buchanan, Quoctrung Bui, and Jugal Patel, “Black Lives Matter May Be the Largest Movement in U.S. History,” New York Timesx, July 3, 2020, https://www.nytimes.com/interactive/2020/07/03/us/george-floyd-protests-crowd-size.html.

[15] “National Trends,” Mapping Police Violence, last modified September 30, 2022, https://mappingpoliceviolence.org/nationaltrends.

[16] “Attitudes on Same-Sex Marriage,” Pew Research Center, May 14, 2019, https://www.pewresearch.org/religion/fact-sheet/changing-attitudes-on-gay-marriage/.

[17] 3P Staff, “Class and Racial Inequalities in Police Killings,” People’s Policy Project, June 23, 2020, https://www.peoplespolicyproject.org/project/class-and-racial-inequalities-in-police-killings/.

[18] Tatiana Cozzarelli, “Class Reductionism Is Real, and It’s Coming from the Jacobin Wing of the DSA,” LeftVoice, June 16, 2020, https://www.leftvoice.org/class-reductionism-is-real-and-its-coming-from-the-jacobin-wing-of-the-dsa/.

[19] “Who is Most Affected by the School to Prison Pipeline?”, American University School of Education Blog, February 24, 2021, https://soeonline.american.edu/blog/school-to-prison-pipeline/.

[20] Maithreyi Gopalan and Ashlyn Nelson, “Understanding the Racial Discipline Gap in Schools,” American Educational Research Association Vol. 5, No. 2 (April 23, 2019), https://journals.sagepub.com/doi/full/10.1177/2332858419844613.

[21] Nathaniel Lewis, “Mass Incarceration,” People’s Policy Project, 2018, https://www.peoplespolicyproject.org/wp-content/uploads/2018/01/MassIncarcerationSummary.pdf.

[22] Brett LoGiurato, “Read The Leaked Anti-Gay Marriage Memo Whose Authors Wanted To ‘Drive A Wedge Between Gays And Blacks’”, Business Insider, May 27, 2012, https://www.businessinsider.com/nom-gay-marriage-memos-drive-a-wedge-between-gays-and-Blacks-2012-3.

[23] Hélène Barthélemy, “Christian Right Tips to Fight Transgender Rights: Separate the T from the LGB,” Southern Poverty Law Center, October 23, 2017, https://www.splcenter.org/hatewatch/2017/10/23/christian-right-tips-fight-transgender-rights-separate-t-lgb.

On Income and Wealth Inequality in Capitalism's Neoliberal Stage

By Prabhat Patnaik

The fact that income and wealth inequalities have increased quite dramatically under the neo-liberal regime is beyond dispute. The empirical work by Piketty’s team bears out the increase in income inequality. They use income tax data to infer about the share of the top 1 per cent of the population of a country in its national income. One may raise objections to this method of estimation, but the conclusions are so overwhelming that one can scarcely quarrel with them. In India’s case for instance Piketty and Chancel find that the top 1 per cent which accounted for just 6 per cent of national income in 1982 increased its share to over 22 per cent in 2013 and a similar figure in 2014, the latest year for which they have estimates. In fact the share in 2013 was the highest it has ever been since income tax was introduced in India in 1922.

Piketty’s theoretical explanation for such increases in income inequality however is totally untenable, as it is based on the presumption that a capitalist economy always operates at full employment, which is not only empirically false but also logically flawed, for in such a case the system would lack any disciplining device without which production cannot occur under it. One does not have to go far however to find a proper theoretical explanation for the increase in income inequality: the removal of all constraints on technological-cum-structural change under a neo-liberal economy increases the rate of growth of labour productivity to a level where, notwithstanding whatever increase occurs in GDP growth, the rate of growth of employment falls compared to earlier and also falls below the natural rate of growth of the work-force, so that the relative size of the labour reserves in the work-force increases; this keeps the real wage rate tied to a subsistence level even as the rise in labour productivity growth increases the share of surplus in total output, and hence the level of income inequality. Piketty’s findings about an increase in personal income inequality are rooted in this increase in class income inequality that neo-liberalism entails (see also Economic Notes in People’s Democracy December 8).

Likewise there has been a dramatic increase in wealth inequality under neo-liberalism at least in the countries of the global south. Between 2000 and 2021, according to Credit Suisse data, wealth inequality increased even in the United States; but this increase was less pronounced than the increase in countries like India and Brazil. True, wealth inequality estimates are always somewhat dicey, since they are influenced by stock market fluctuations. In a period of stock market boom not only does the estimate of total wealth gets artificially inflated even when there has been no change in the physical stock of assets; but, since the rich are much more active in the stock market, their share in wealth also goes up, showing an increase in wealth inequality which gets reversed in a period of stock market collapse. Even so however when India shows an increase in the share of the top 1 per cent in total wealth from around 32 per cent in 2000 to 40.6 per cent in 2021, and when Brazil shows an increase from around 43 per cent in 2000 to 49.3 per cent in 2021, this increase cannot be explained by any evanescent accrual of capital gains to the top 1 per cent of the population. There are clearly more fundamental factors at work.

One such fundamental factor is the rise in income inequality itself that is rooted in the rise in the share of economic surplus in output. If we leave aside the accrual of transitory capital gains, any rise in wealth occurs through savings. This may at first sight appear odd: it may be thought that the rise in wealth would occur only through investment in physical assets; but saving may occur, and hence a rise in wealth, even when there is no investment in a country during a particular period, if it lends these savings abroad, that is, increase its wealth in the form of claims on another country. When the share of the rich in national income rises, since the rich save a higher proportion of the income accruing to them than the poor, their share in the total savings of the country rises even faster. This means that the share of the rich at the margin in the increase in a country’s wealth rises compared to what it had originally been, which means that their share in a country’s total wealth increases. A rise in income inequality in other words ipso facto entails a rise in wealth inequality.

A second factor works in the same direction, and that is what Marx had called “centralisation of capital”. Because of technological-cum-structural change, business shifts over time from small capital to big capital. This happens because new processes and products become available over time which require a growing minimum size of capital for their introduction and which therefore can only be introduced by big capital and not small capital, leading over time to a shift of business from the latter to the former. This shift has exactly the same effect as the rise in the share of economic surplus in total output discussed above: with the shift of business there is also a shift in the distribution of profits from small to big capital (that is, if small capital at all remains in business and is not totally eliminated in which case its entire profits are captured by big capital); since the proportion of savings out of profits is higher for big capital than for small capital, this raises the share of savings in output and also the share of the top 1 per cent within total savings and hence at the margin in total wealth. Wealth concentration therefore is simply implicit in the process of centralisation of capital.

So far we have been talking of changes in wealth concentration at the margin through changes in the distribution of savings. It may be asked: what if investment falls short of savings at the base level of capacity utilisation so that there is a realisation problem? But if there is a realisation problem, i.e., if there is insufficient demand when output is produced at the base level of capacity utilisation, then the realised savings will be lower than the savings that would have been generated from output at the base level of capacity utilisation; but its distribution across classes, i.e., between petty producers and the big capitalists, or between small capitalistsand big capitalists, will remain the same as if all of it was being realised. The tendency towards wealth concentration therefore would remain unaffected by whether or not there is a realisation problem.

A third factor works towards making wealth distribution more unequal, in addition to the two we have mentioned till now. And that is what Marx had called primitive accumulation of capital, which covers not only cases where land is acquired from peasants gratis or at throwaway prices by big capital, but also cases where any land acquired at the then prevailing market price increases in value when industrial units are set up on them or townships are built upon them. This case of an increase in the price of land may at first sight be thought of as being identical with capital gains made on the stock market; but there is a basic difference: while stock market booms may collapse reversing the capital gains, land prices have generally only an upward movement. The acquisition of land even in such cases therefore has to be seen as primitive accumulation, since the peasants are paid a price way below the now-prevailing market price of land (that enters into the calculation of wealth).

The numerous ways that public resources are transferred gratis into the pockets of big capitalists are these days an important source of primitive accumulation of capital. This is done in the name of providing incentives for promoting growth, which is supposed to benefit everyone. But quite apart from such open ways of effecting increasing wealth inequality, big capital also engages in various forms of skulduggery for this purpose. There are instances of communal riots being engineered so as to evict people from their land that is then acquired at a throwaway price by big capital not necessarily directly but at some remove.

All these ways of deliberately effecting an increase in wealth inequality get a fillip in the period of neo-liberalism. All objections to them are brushed aside by the neo-liberal apotheosis of private expropriation as benefitting everyone, while simultaneously vilifying public enterprise.

Prabhat Patnaik is an Indian political economist and political commentator. His books include Accumulation and Stability Under Capitalism (1997), The Value of Money (2009), and Re-envisioning Socialism (2011).

Thomas Piketty and Karl Marx: Two Totally Different Visions of Capital

By Eric Toussaint

Republished from CADTM (Committee for the Abolition of Illegitimate Debt).

In his book Capital in the Twenty-First Century,(1) Thomas Piketty has gathered his data meticulously and provided a useful analysis of the unequal distribution of wealth and income, yet some of his definitions are somewhat confusing and even questionable. Consider, for instance, his definition of capital: “In all civilisations, capital has served two great economic functions: on the one hand to provide dwellings (that is to say, to produce “housing services,” the value of which is measured in terms of the rental value of the dwellings: this is the value of well-being of having a roof over one’s head as opposed to being outside); and, on the other hand, as a factor of production for producing other goods and services.” He continues: “Historically, the early forms of capitalistic accumulation seem to concern tools (from flint, etc.), agricultural infrastructure (fences, irrigation, draining, etc.), and rudimentary dwellings, before evolving into more sophisticated forms, such as industrial and professional capital and increasingly elaborate dwellings.(2) Piketty proposes a scenario that suggests capital has been present from the origins of humanity and that revenue from a savings account held by a limited-income retired person is the same as revenue derived from capital.

Capital according to Thomas Piketty

This major confusion is present in the heart of his analysis he develops in Capital in the Twenty-First Century. For Piketty, an apartment worth €80,000 or €2,000 on a savings account(3) may be defined as capital, in the same way as a factory or commercial premises worth €125 million. The ordinary citizen who owns an apartment, has some reserves in a savings account and a life insurance policy worth, say, €10,000 will readily agree with Piketty’s definition, which corresponds with those found in standard economic textbooks and repeated by their bank manager. However, they are wrong, because capital in our capitalist society is much more complex than these simple definitions. Capital is a social relationship that enables a minority (the richest 1%), to get richer by exploiting the labour of others (see below).

Yet when Piketty talks of a progressive tax on capital, he makes no distinction between the kind of “wealth” represented by a €1,000 savings account and the fortune of a Jeff Bezos, a Bill Gates or an Elon Musk.

The same confusion is to be found in his analysis of income: Piketty considers that the income from renting out an €80,000 apartment is a capital gain of the same kind as the income Mark Zuckerberg, the boss of Facebook, derives from his empire.

As far as wages are concerned, Piketty considers that all income declared as wages is wages, whether this means the €3 million salary package of the CEO of a banking group (an amount that is in fact revenue from capital and not a wage or salary(4)) or the €30,000 salary of a bank employee.

Capital according to Karl Marx

We should question the meaning Piketty gives to words like “capital” and define revenue from capital and revenue from labour differently. Piketty presents capital as something that exists in all civilisations and that has necessarily always existed. In this he is in tune with the political economy of the 18th and early 19th century, as found in the writings of Adam Smith in particular, before Karl Marx threw light on what Capital (and wages) really are and developed his critique of the political economy of his time.

Karl Marx has ironical comments on contemporary writers who, like Piketty does, considered the first silex tools to be the original form of capital or just capital: “By a wonderful feat of logical acumen, Colonel Torrens has discovered, in this stone of the savage the origin of capital. “In the first stone which he [the savage] flings at the wild animal he pursues, in the first stick that he seizes to strike down the fruit which hangs above his reach, we see the appropriation of one article for the purpose of aiding in the acquisition of another, and thus discover the origin of capital.” (R. Torrens: “An Essay on the Production of Wealth” &c., pp. 70-71.)»(5)

In his Capital, he states: “We know that the means of production and subsistence, while they remain the property of the immediate producer, are not capital. They become capital only under circumstances in which they serve at the same time as means of exploitation and subjection of the labourer.”(6) Marx explains that an artisan who owns his/her own tools and works for her/himself does not own capital and does not receive a wage. During the centuries that preceded the victory of the capitalist class over the old order, the overwhelming majority of producers worked for themselves, both in towns and in the country. Artisans organised into corporations and peasant families made up the majority of producers, who owned their tools of production, and in the countryside the majority of peasant families owned land, and in addition could make use of communal lands to feed their livestock or glean firewood. Between the end of the 15th century and the end of the 18th century in Western Europe, the developing capitalist class needed the support of the State to dispossess this mass of producers of their tools and/or their land(7) and force them to submit to becoming wage-workers in order to survive. The capitalist class needed to take organised action in order to impoverish and dispossess the working classes and thus force them to accept being wage-workers. That process did not take place all by itself. Karl Marx analyzes the methods that enabled the primitive accumulation of capital in a detailed and rigorous way. In Volume One of Capital, he reviews all the methods used to dispossess producers of the means of production, and thus of their means of subsistence.(8)

Marx draws an anecdote from a book by Edward Gibbon Wakefield (20 March 1796–16 May 1862) to illustrate the idea: “Mr. Peel, he moans, took with him from England to Swan River, West Australia, means of subsistence and of production to the amount of £50,000. Mr. Peel had the foresight to bring with him, besides, 300 persons of the working class, men, women, and children. Once arrived at his destination, ’Mr. Peel was left without a servant to make his bed or fetch him water from the river.’”(9) Marx comments ironically: “Unhappy Mr. Peel who provided for everything except the export of English modes of production to Swan River!” This is because in Australia at the time there was a profusion of land available and the workers were able to find a patch of land on which to set themselves up. Marx, through his comment regarding this fiasco experienced by the capitalist Peel, wants to show that as long as producers have access to the means of subsistence–in this case land—, they are not forced to submit to serving a capitalist.(10)

Marx concludes

So long, therefore, as the labourer can accumulate for himself–and this he can do so long as he remains possessor of his means of production–capitalist accumulation and the capitalistic mode of production are impossible. The class of wage labourers, essential to these, is wanting.“(…)”the expropriation of the mass of the people from the soil forms the basis of the capitalist mode of production.

He adds:

the capitalist mode of production and accumulation, and therefore capitalist private property, have for their fundamental condition the annihilation of self-earned private property; in other words, the expropriation of the labourer.

Karl Marx writes:

property in money, means of subsistence, machines, and other means of production, does not as yet stamp a man as a capitalist if there be wanting the correlative–the wage-worker, the other man who is compelled to sell himself of his own free will.

We should also point out that Marx, in the same section of Capital dedicated to primitive accumulation, vehemently denounced the extermination or forcible subjugation of the indigenous peoples of North America and the other regions that fell victim to colonial domination and the primitive accumulation of capital:

The discovery of gold and silver in America, the extirpation, enslavement and entombment in mines of the aboriginal population, the beginning of the conquest and looting of the East Indies, the turning of Africa into a warren for the commercial hunting of black-skins, signalized the rosy dawn of the era of capitalist production.

Consequences of Thomas Piketty’s definition of capital

To return to Piketty, the definition of capital he gives introduces complete confusion. Let’s look at his definition again:“In all civilisations, capital has served two great economic functions: on the one hand to provide dwellings (…) and, on the other hand, as a factor of production for producing other goods and services.”So, for Piketty, Capital has existed in all civilisations; he goes all the way back to prehistory when he writes:“Historically, the early forms of capitalistic accumulation(11)seem to concern tools (from flint, etc.) (…) and rudimentary dwellings, before evolving into more sophisticated forms, such as industrial and professional capital and increasingly elaborate dwellings.“For Piketty, a prehistoric flint tool, a cave, and a computer assembly plant are all capital. If we believe him, “capitalistic” [sic] accumulation goes back as far as the first assembly of a few pieces of flint that had been chipped and shaped. That definition throws no light on the historic specificity of capital, its genesis, how it is reproduced and accumulated, to which class it belongs, or the social and property relations to which it corresponds. The list of examples of capital Thomas Piketty gives resembles a supermarket catalogue; in a way it’s an inventory like the one in Jacques Prévert’s poem”Inventory“… with only the raccoons missing.(12)

Speaking of capitalist accumulation today, Piketty limits the discussion almost exclusively to the role of inheritance and fiscal policies that are favourable to capitalists; but in reality these factors, though they play a tangible role in transmitting and strengthening capital, are not what create it. Historically, for the capital held by the capitalist to begin a process of enormous accumulation, it was necessary to forcibly dispossess producers of their tools and their means of subsistence and exploit their labour power. The accumulation of capital as it continues today requires the continuing exploitation of working people and of Nature. Capital plays no useful role for society; on the contrary, continuing the accumulation of capital and the activities that generate it is literally deadly. Piketty’s failure to acknowledge that leads him to make a statement such as this:

If capital plays a useful role in the production process it is natural that it earns a return.(13)

Piketty’s confusion is undoubtedly the result of his fundamental convictions:

I am not interested in denouncing inequalities or capitalism as such (…) social inequalities are not a problem in themselves if they may be justified, that is to say for the common good. (…)(14)

My critique of Piketty’s definitions in no way minimises the interest of the monumental portrait his research has drawn of the wealth and income inequalities that have developed over the last two centuries. And, putting aside undeniable fundamental disagreements regarding the notion of capital, it is important, if anti-neoliberal fiscal reform is to be achieved, that we endeavour to bring together a broad spectrum of movements and individuals ranging from Thomas Piketty to movements of the anticapitalist Left. And if it is also possible to come together to demand cancellation of the public debts held by the European Central Bank (for a total amount of over 2,500 billion euros), it must be done. I do not regret having co-signed the call for the cancellation of sovereign debts held by the ECB(15) in February 2021 along with Thomas Piketty. But like the other members of the CADTM who signed that text, I consider that more must be done–beginning, for example, with levying a large Covid tax on wealthy individuals and major corporations. The CADTM feels that cancellation of public debts must be accompanied by a series of anticapitalist measures, and it is not certain that Thomas Piketty would support all of them.

Thanks to Anne-Sophie Bouvy, Christine Pagnoulle, Brigitte Ponet, Claude Quémar and Patrick Saurin for their readings.

Translated by Snake Arbusto

Footnotes

1. Thomas Piketty, Capital in the Twenty-first Century, trans. Arthur Goldhammer, Cambridge (MA): Harvard University Press, 2013

2. Thomas Piketty, Capital in the Twenty-first Century, p. 337.

3. Note that according to Piketty, the amounts held in France in savings accounts, check-book accounts, etc. account for only 5% of (private) assets! p. .

4. It’s very convenient for capitalists to include the very high revenues of a corporation’s executives, which also include dividends and stock options, in calculating total payroll.

5. Source: Note 9 to Capital, Book One: The process of production of capital. Part VII, Part III: The Production of absolute surplus-value, Chapter 7: The Labour-Process and the Process of Producing Surplus-Value, available on the Internet: www.marxists.org. Also available in audiobook form, see next note. In the German original and the French translation, Marx jokingly adds a note of wild etymology, suggesting that stock as a reference to capital derives from the German word for stick.

6. Karl Marx, Capital–Book One: The process of production of capital. Part VIII: Primitive accumulation. Chapter Thirty-Three: The Modern Theory of Colonisation. The text from which the excerpts quoted in this article is available on the Internet: www.marxists.org ; it is available in audiobook form at www.marxists.org

7. Confiscation of land by capitalists began in England in the 15th century with what is known as the “Enclosure Movement,” which consisted in ending the traditional right of use of the land and the commons via the Enclosure Acts and turning them over as private property to wealthy aristocrats and bourgeois. Read Chapter 27 of Volume 1 of Marx’s Capital: Expropriation of the Agricultural Population From the Land: www.marxists.org, available as audio – www.archive.org

8. The section of Capital in which Marx details the various sources of primitive accumulation of capital is Book One: The Process of Production of Capital –Part VIII: Primitive Accumulation (First English edition of 1887, translated: Samuel Moore and Edward Aveling, edited by Frederick Engels). There is an audiobook version of Part Eight (see link in earlier note).

9. E. G. Wakefield: England and America, vol. Il, p. 33. Cited by Karl Marx.

10. Writing of the specific situation of North American and Australia in the early 19th century, Marx explains that the possibility for colonists from Europe to become owners of land or begin working for themselves enables “The wage-worker of to-day [to become] to-morrow an independent peasant, or artisan, working for himself.” In North America, Australia and other regions colonised by Europe, the situation gradually changed over the course of the 19th century and the early 20th century, and the great mass of independent producers whose ancestors had emigrated from Europe were also dispossessed of their means of production.

11. Author’s bold.

12. Excerpt from the poem ”Inventaire“ (”Inventory”) by Jacques Prévert (published 1946):
    “A stone
    two houses
    three ruins
    four gravediggers
    a garden
    flowers
    a raccoon (…)” coonytanuki.tumblr.com

13. Thomas Piketty, Capital in the Twenty-first Century, p. 674

14. Idem, p. 62

15. See the French version : www.cadtm.org The French version has been published by Le Monde, La Libre Belgique and RTBF