In 2011 388 of the world’s richest people owned as much wealth as the poorest half of mankind combined: by 2015, Oxfam claimed this wealth was concentrated in the hands of just 62! Though inequality appears to have increased everywhere, commentators claim it is literally off the charts in the United States of America. According to the International Labour Organisation’s 2013 World of Work report, the US stood at 48 on the Gini coefficient (0 signifies perfect equality in incomes across all households and 100 that one rich household gets all the income of the entire country), while the 25 other developed countries in the study were between 20 and 35 on the Gini.
Rising global inequality is a root cause of much of the social disassociation that has led to Brexit and the election of Donald Trump in the USA, and some believe that the causes of this equality can be largely found internally in the general decline of progressive movements, inclusive of the influence of trade unionism, and externally in the absence of proper governance mechanisms to deal with enhanced globalization.
These thoughts came to mind as I attempted to gauge the direction of Guyana’s trade unionism as I sat and contemplated the various presentations being made at the 4th Triennial Congress of the Guyana Trades Union Congress a couple of weeks ago. So far as the internal dynamics of inequality are concerned, Sam Pizzigati’s The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900-1970 provides an insight (reviewed at http://www.ips-dc.org/review_the_rich_ dont_always_win/).
He argued that it is not the first time that some citizens of the USA have been able to grab a disproportionate share of its wealth. He claimed that in the absence of adequate government regulation of the economy, appropriate taxation and workers’ rights, in the early 1900s the rich ruled unchecked. As a result, by 1910, the wealthiest 2% of Americans owned as much as 60% of the nation’s wealth and the poorest 65% only 5%. Thus, by 1928, the top 1% in the United States of America earned 23.9% of the national income and this contributed in no small measure to the ‘great depression’ of 1929. In 2007, the top 1% controlled nearly an identical 23.5% and this led to the ‘great recession!’
It took the New Deal of President Franklin D. Roosevelt, which marked a progressive shift in governance e.g., millions of working people being able to join the trade union of their choice and a 91% top federal tax rate on income exceeding $100,000, to gradually put a brake on the plutocracy. This progressive movement was so able to influence government policy that by 1944, the rich were paying four times more of their income in taxes than their counterparts had paid in 1914, and this policy change is largely responsible for the rise of the vaunted American middle class that is now under threat from similar forces.
Since the 1980s, the neo-liberal economic model, which gives a premium to market relations, has been triumphant in the context of an enhanced globalization and the weakening of progressive politics epitomized by the decline of trade unionism. One study shows ‘that the drop in the share of workers under collective bargaining contracts is the mirror image of the rise of incomes of the top 10 percent’ (http://www.epi.org/publication/charting-wage-stagnation/).
In the three decades following World War II, hourly compensation of the vast majority of US workers rose by 91%, roughly in line with productivity growth of 97%. But a 2015 study by the Economic Policy Institute argued that from 1973 to 2013, hourly compensation of a typical worker rose just 9% while productivity increased 74% (Ibid).
Many factors are said to contribute to this growing inequality, but three are considered most important. Firstly, there is the capacity of business leaders to garner for themselves a disproportionate part of the national income. In 1965 CEOs at the 350 largest public U.S. firms earned 20 times more than the typical worker, but in 2013, they were making 300 times more. Secondly, there has been a severe decline in the federal minimum wage, which influences other wages and had kept pace with productivity for 30 years before 1968. Had this trend continued in 2014, the minimum wage would have been over US$18 instead of about US$7.50.
Thirdly, collective bargaining raises wages for organized and unorganized workers by forcing employers to attempt to reflect the prevailing wage standards. The decline in collective bargaining can explain from one-fourth to one-third of the growth of wage inequality between 1973 and 2007. ‘This erosion of collective bargaining occurred despite large numbers of workers indicating they would prefer collective bargaining if they had a choice. But the political power of those with the most income, wealth, and power prevented the adoption of laws to modernize our labor–management system and enable workers to pursue collective bargaining’ (Ibid).
Other factors, such as excessive unemployment, global integration, the erosion of labour standards, worker education quality, etc., have contributed to inequality, but this is largely among the workforce itself, and it has been argued that these income inequalities might better be explained by the education quality of the work force, etc. Trade unions have traditionally been involved in efforts to improve the educational quality and organisation of the workforce and this should continue to be part of their mandate.
But even the study that made this point conceded that the existence of a modern welfare state reduces inequalities and ‘To the extent that industrial relations institutions continue to support and reproduce the welfare state, they reduce inequality indirectly though this channel’ (Ibid). Though possible internally, it is precisely these welfare-type enhancing activities – appropriate business governance and regulations, adequate taxes, income policies, labour rights etc. – that elude us today as we seek to deal with globalization.
While the economic benefits of global capitalism are not in dispute here, it should be noted that in its national and international personifications, whether as simple companies or value chains, capitalism is a system of private accumulation and consumption and not equitable distribution. As we have seen above in the case of the USA, the latter is the work of politics and the politics of international society is not as yet sufficiently developed to counter global capitalism.
In our times, if there is somewhere that modern politicians, particularly in small poor countries, should turn their attention, it is to consider the kind of national and international governance construct that is needed to counter this growing power of global capitalism to accumulate and concentrate wealth in the hands of the few. Because of the strategic position of the workers in the process of production and their varied national and international linkages (culminating in the ILO), their trade unions must be an important part of any construct to properly manage globalization. Governments will do well to support their growth and development as one pillar in the effort to establish a truly equitable international society.
