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Wealth Gap Could Provoke Social Explosion

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By Etienne Strebel

The rich are getting richer and the poor are getting poorer – and even in Switzerland this could have dangerous consequences, says sociology professor Ueli Mäder.

Mäder, who teaches at Basel University and last year published a study entitled “How the Rich Think and Live”, tells swissinfo.ch that there could be a social explosion unless things change.

Low wages need to be raised and the social insurance system modernised to help make society fairer again, he says.

Mäder has been studying the issues surrounding wealth and poverty for years. swissinfo.ch spoke to him on the sidelines of the conference Poverty and the International Economic Law System, recently held in Basel.

swissinfo.ch: The gap between rich and poor is getting even wider. Why?

Ueli Mäder: Until the 1960s and 70s most people in our part of Europe were able to materially improve their standard of living. But with the slumps of the 70s and 80s things started to change.

I see one reason for this in the fall of the Berlin Wall [in 1989] and the breaking down of the opposition between East and West. Actually that was good news. Unfortunately one consequence was that capital became almost all powerful.

swissinfo.ch: So what changed specifically?

U.M.: The 50s and 60s were a time of political liberalism, which regarded capital and labour as of equal value. But Anglo-Saxon market liberalism brought in a different understanding: since then capital has been accorded much greater importance than labour.

There has never before been a society which has produced so many rich people as ours has. And the saying “For he that hath, to him shall be given” is true in very practical terms for us – via inheritance.

Of the SFr40 billion or so that will be inherited this year, more than half will go to people who are already multi-millionaires – and that just hones the mechanism.

swissinfo.ch: And the achievement-oriented and dog-eats-dog society – doesn’t that play an important role too?

U.M.: Of course. Individual success is measured strongly in terms of money. You have to get your own way, even if you do so at the expense of other people – “The winner takes it all.”

swissinfo.ch: What is new is that poverty is hitting the middle classes more and more …

U.M.: I am very curious to see how the middle class will behave. That’s where you have the greatest job mobility. It’s this mobility which has made it possible for people to increase their income in more than 90 per cent of cases.

There is also a lot of disappointment when someone with a specialist training finds the job market suddenly no longer needs their skills. Such people are particularly easily seduced by fundamentalist or authoritarian movements. We saw this in France in the 1990s, when many middle-class people who felt side-lined voted for the right-wing extremist [Jean-Marie] Le Pen.

Many of those who are angry and indignant applaud populist movements. They look for some kind of security in these rather authoritarian ideas with their stress on law and order. And that means they support a policy that goes against their own interests.

swissinfo.ch: How much wider can the gap grow?

U.M.: Ten years ago we thought it couldn’t get any bigger. Five per cent of individual taxpayers had as much taxable net income as all the rest put together. Last year, in our study “How the Rich Think and Live” we showed that less than three per cent of the population owns more than the remaining 97 per cent. And now the Credit Suisse Global Wealth Study has revealed an even more extreme proportion.

It is quite possible that in the next two or three years the explosive pressure in society could build up even more and even drive people into the streets who are far from being left-wing sympathisers. Increasing numbers of comfortably-off people are saying that if things go on as they are, it will be dangerous for everyone. Something must happen that will help make society fairer again.

swissinfo.ch: How do you imagine that happening?

U.M.: First of all low wages need to be raised and the social insurance system modernised. It has got out of step with changes in the way people live.

If you simply reduce the “working poor” to individuals who have a job and are employed for at least four and a half days a week, that plays down the impact of poverty. It means the [Federal] Statistics Office can say there are fewer than 150,000 poor people in Switzerland.

But these people have children, other people in their households, which more than doubles the figure. And single mothers often don’t have jobs which employ them for 90 per cent of the time, so they are not included in the statistics as working poor. This is just hiding your head in the sand. After all, things go well for society when they are going well for everyone.

At the moment Swiss banks are hoarding more than SFr4000 billion ($4445 billion). That is about six times as much as the entire gross domestic product, in other words the entire wealth generated in the space of a year.

There’s more than enough money about. But there’s a lack of political will about taxing

swissinfo.ch: Do you believe the world is able to change in the direction you would like?

U.M.: Sometimes I actually wonder why I am still so hopeful. At the moment it is most likely that social differences are likely to get worse.
But I also think it is possible that we are capable of introducing corrections. Human beings are capable of learning. And many people are getting involved in new social movements. I can’t say whether that will do the job. But I simply don’t see any alternative to trying it.

Etienne Strebel in Basel, swissinfo.ch
(Translated from German by Julia Slater)

SwissInfo

SwissInfo

swissinfo is an enterprise of the Swiss Broadcasting Corporation (SBC). Its role is to inform Swiss living abroad about events in their homeland and to raise awareness of Switzerland in other countries. swissinfo achieves this through its nine-language internet news and information platform.

One thought on “Wealth Gap Could Provoke Social Explosion

  • Avatar
    November 8, 2011 at 6:05 pm
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    Most of the capital to which you refer is “ficticious capital” so labeled correctly by Karl Marx due to the fact it has no real vaue or surplus value. It is not in the form of loans to viable enterprises, large or small whose labour creates REAL (surplus) value in the form of MEANS of PRODUCTION I.E. REAL capital and profit to service the loan. .

    In Marx’ time “ficticious capital” consisted primarily of debts incurred by governments and/or landed gentry to finance wars , high living and/or other expense of living beyond their means. At that time such amounts might amount to 10 or at most 15% of a country’s GDP. Such amounts while aggravating the periodic capitalist crises wheh these occured were not enough on their own to bring down a national economy and as the crisis(bust)passed another boom could be expected.

    However today while governments practice much the same antics in living beyond their means, they have gone far beyond the 15% envisioned by Marx; together with Central and other bankers, these elites, using Teasury Bills, swaps, derivatives loans (with no collateral) this “ficticious capital” sometimes referred to as “junk cash” in sum total equals 10 times the GDP of the WHOLE WORLD!

    Now the Bankers are attempting to off load these debts onto the workers and entrepreneurs who produce ALL the REAL value including ALL capital in a manner that in however much they succeed means a severe worsening of poverty of the ordinary (99%). That is evident in Europe where Greek, Spanish, Italian, Portugese workers directly face the prospect of 20-30 years abject poverty to pay for the eccesses of the 1% and the promises and past deficits of the Liberal lap dogs that do the front line swindling; indirectly German, French, slovakian, Finnish and others will be conned if possible into paying off valueless junk cash debts of others through higher taxes.

    Of course this scene will REDUCE the availibility of capital to produce what the elite need to pay it off, probably to the point where it is impossible; I.e. how to pay off your debt when the rate of interest accrual exceeds income??

    So today the problem of REAL capital vs Labour is not the main issue; these two whether or not the split is equitable are the source of ALL value old and new. the REAL problem is how to rid society of the parasitical “ficticious capital” and those create it and then fraudulently pass it off as having “value” which it can NEVER have.

    Can a capitalist society self clean and be rid of this type or will that be left for progressives who offerv an alternative to the Capitalist Epoch??

    Reply

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