Broadly speaking, an observer of the economy can see a number of social and economic levels based not only on how much money people have, but also on how they earn a living. This book has so far looked at the economics of the richest households, whose members may work and often earn huge executive salaries by running large companies.
Article continues after ad
Yet these families’ household incomes consist primarily of investment income – dividends on stocks, rents on residential or commercial properties, interest income from large cash deposits, and capital gains from corporate share buybacks.
This is the critical difference between the rich or the owning class and the rest of us. Most of us earn our money by working, but for the rich, this is only sometimes the case. The ability to not only have a huge income, but to earn a huge income from assets your family already owns is an economically existential difference.
This ownership of the productive economy and the social and political power that comes with it is what defines the ruling class, and it goes back centuries to the emergence of capitalism in the enclosure movement.
It is important to recall the numbers on stock ownership: the richest one percent of households own 40 percent of traded corporate stocks, while the top 10 percent own 84 percent. This ownership position in the productive economy and the social and political power that results from it defines the ruling class, and it stretches back centuries to the advent of capitalism in the enclosure movement.
Economist Douglas Dowd recalls the origins of capitalism in “the exploitation of workers whose farmland was commodified by the enclosure movement. Those who had worked the land, free but far from rich, were driven from their land… and turned into desperate and powerless workers.” The land became private property, its new owners the ruling class.
Below the elite are various economic strata that are often grouped together into a vague “middle class.” Historically, left-wing analysts have referred to the rest of society as the “working class,” which has the advantage of suggesting something important—most families pay their bills through work and earn an hourly wage or annual salary in exchange for their labor.
The nature of the work varies widely, but from the experienced software programmer to the sewer maintenance worker, people work for an employer to earn a living.
However, many people – especially those who don’t want anyone to focus on the enormous wealth and power of the rich – prefer to blur this simple distinction. While conservative supporters of capitalism and “free market” like to claim they are opponents of vague “elites,” those elites usually turn out to be a diverse range of non-conservative middle-class people, such as college professors and media personalities. If they aren’t conservative, they might even include a real billionaire, like George Soros or Tom Steyer.
A century later, PC operating system monopolist Bill Gates said, “Of course I have as much power as the President.”
These voices also like to claim that the greatest class difference is between blue-collar and white-collar labor, roughly between manual labor and intellectual labor. And indeed, there is a dramatic difference between the daily work of a worker crunching a spreadsheet in an air-conditioned office and a worker struggling to remove a hideous “fatberg” of congealed material in a sewer beneath our feet, or climbing to dizzying heights on cell towers that are taller than skyscrapers and barely protected.
But despite all the major differences, blue-collar and white-collar workers have one thing in common: the threat of being fired. Anyone who works for one of the giant corporations that dominate most sectors of the economy can be laid off in the event of a recession or other layoffs, no matter how important their work is or how well they are paid for it.
The exact details of class definition are still a matter of vague debate, but essentially anyone who belongs to the working or white-collar class, however you define it, is at the mercy of the boss and the company’s quarterly earnings per share targets.
That’s why class is a useful concept. As researcher Katie Quan put it: “Not thinking in terms of class is unfortunate because, regardless of our ideological beliefs, class analysis offers us a way of looking at the world that reveals power relations. It makes clear who has the power.”
Class shouldn’t be so controversial – capitalists talk about it all the time. When early railroad monopolist Cornelius Vanderbilt was told that one of his plans to destroy competitors was illegal, he memorably said, “What do I care about the law? Have I not the power?”
A century later, PC operating system monopolist Bill Gates said, “Of course I have as much power as the President.”
______________________________
Rule the universe by Rob Larson is available from Haymarket Books.
