Hedge Fund Billionaire Warns of Rampant Wealth Inequity Causing 'Social Revolt'
World Socialist Website - November 8, 2019
"Everywhere workers who come into struggle to defend their wages and social conditions are met with the claim “there is no money.” One can only begin to imagine the economically and socially useful purposes to which this cash mountain could be directed were it taken out of the hands of the financial elites."
The comments by American hedge fund chief Ray Dalio, one of the richest men in the world with wealth at around $17 billion, that rising inequality is bringing the threat of violent social revolution, point to the driving forces of the upsurge in the class struggle in the US and internationally over the past year.
Strikes and demonstrations are now erupting around the world—from Chile, North Africa, the Middle East to Europe—as the working class, written off by all manner of pseudo-left tendencies as a revolutionary force, begins to find its feet and its voice after decades of suppression of the class struggle.
One of the most striking chants of the demonstrations in Chile, which erupted in response to an increase in charges on the Santiago metro, has been “This isn’t about 30 pesos, it’s about 30 years”—a sentiment no doubt shared by US auto workers and workers around the world as the decades-long driving down of living standards and social conditions becomes intolerable.
Speaking to a business conference in Greenwich, Connecticut this week, Dalio said social inequality was a national emergency. The world had “gone mad,” he said, and the current system was “broken” and had to be “reformed” otherwise there would be revolution “where we are all going to try to kill each other.”
Fellow hedge fund chief, Paul Tudor Jones, likewise one of the richest men in the world, also pointed to the rise and rise of social inequality.
“There’s $2 trillion of corporate profits. Fifty years ago, a trillion of that would have gone to employees ... it would have gone to communities. It would have gone to customers. Now it goes to, increasingly, the 1 percent,” he said.
He pointed out that in public companies, on the boards of which he and other attendees sat, there were six million workers who did not make a living wage. “Fifty years ago, 6.5 percent of corporate revenue went to shareholders. Today that number is 13 percent.”
Notwithstanding the painting of the past in rosy colours, Jones’ remarks directed attention to a decisive shift in the operations of the capitalist economy.
Fifty years ago, a significant portion of profits was directed into new investments, bringing about an increase of economic growth and jobs as well as rising real wages. But this was not because, as Dalio and Jones maintain, there was a different “business culture” at the time. Rather, such investments were undertaken in the search for increased profit—the same driving force of the capitalist economy today.
However in the past, because reinvestment of profits brought economic growth and rising living standards, the underlying social reality could be obscured. The notion was advanced that capital and the working class were not irreconcilably opposed social forces but were locked together in some kind of mutually beneficial partnership. In the words of President Kennedy, “a rising tide lifts all boats.”
But by the mid-1970s, the post-war boom, which had brought a steady profit rate and rising real wages, had well and truly come to an end as profit rates turned down.
This brought two responses: a ferocious and unending offensive against the working class from the beginning of the 1980s—the level of real wages in the US by some estimates has not risen since 1973—and a turn to the accumulation of profits, not through investments in the real economy where profit rates had fallen, but by means of parasitic financial speculation.
Starting under the Reagan administration, the stock market became a key arena for these operations. This required changes in the legal system, one of the most significant of which was the 1982 decision of the Securities and Exchange Commission—the agency responsible for the regulation of the stock market—to allow companies to buy back their own shares, thereby reducing the number of shares and causing their price to rise. Previously, such measures would have brought charges of stock manipulation. ...
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