Richest 1% own 43% of global wealth, while billions have no wealth at all
December 6, 2020, also a review of Ashley Dawson, People’s Power
New research shows inequality remains stark, between rich and poor countries, and between households within countries
Michael Roberts is a UK-based Marxist economist. His most recent book is Engels 200: His Contribution to Political Economy.
by Michael Roberts
The top 1% of households globally own 43% of all personal wealth while the bottom 50% have only 1%. The 1% are all millionaires in net wealth (after debt) and there are 52m of them. Within this 1%, there are 175,000 ultra-wealthy people with over $50m in net wealth – that’s a minuscule number of people (less than 0.1%) owning 25% of the world’s wealth!
This information comes from the 2020 Credit Suisse Global Wealth report which has just been released. The report remains the most comprehensive and explanatory analysis of global wealth (not income) and of the inequality of personal wealth. Every year the CS global wealth report analyses the household wealth of 5.2 billion people across the globe. Household wealth is made up of the financial assets (stocks, bonds, cash, pension funds) and property (houses etc.) owned. And the report measures this, net of debt. The report’s authors are James Davies, Rodrigo Lluberas and Anthony Shorrocks. Professor Anthony Shorrocks was my university flatmate, where we both graduated in economics (although he has the much better mathematical skills!).
According to the 2020 report, total global household wealth rose by US$36.3 trillion during 2019. But the COVD-19 pandemic cut that 2019 increase by nearly half (US$17.5 trillion) between January and March 2020. However, because stock-markets and property prices then rebounded, thanks to government and central bank credit injections, the Credit Suisse researchers reckon that total household wealth was still slightly up by mid-2020 compared to the level at the end of last year, although wealth per adult was slightly down.
By mid-2020 global household wealth was US$1 trillion above the January level, a rise of 0.25%. As this is less than the rise in adult numbers over the same period, average global wealth fell by 0.4% to US$76,984. In comparison to what would have been expected before the COVID-19 outbreak, global wealth fell by US$7.2 trillion, or US$1,391 per adult worldwide.
The most adversely affected region was Latin America, where currency devaluations reinforced reductions in dollar GDPs, resulting in a 12.8% reduction in total wealth in dollar terms. The pandemic also eradicated the expected growth in North America and caused losses in every other region, except China and India. Among the major global economies, the United Kingdom has seen the biggest relative erosion of wealth.
Most shocking is the still huge inequality of household wealth globally. As shown by the wealth pyramid graphic below, inequality remains stark, both geographically between the ‘rich north’ and ‘poor south’; and between households within countries.
Global Wealth Pyramid at end of 2019
At the end of 2019, North America and Europe accounted for 55% of total global wealth, with only 17% of the world adult population. In contrast, the population share was three times larger than the wealth share in Latin America, four times the wealth share in India, and nearly ten times the wealth share in Africa.
Wealth differences within countries are even more pronounced. The top 1% of wealth holders in a country typically own 25%–40% of all wealth, and the top 10% usually account for 55%–75%. At the end of 2019, millionaires around the world – which number exactly 1% of the adult population – accounted for 43.4% of global net worth. In contrast, 54% of adults with wealth below US$10,000 (i.e. pretty much nothing) together mustered less than 2% of global wealth.
The researchers reckon that the worldwide impact on wealth distribution within countries has been remarkably small given the substantial pandemic-related GDP losses. Indeed, there is no firm evidence that the pandemic has systematically favored higher-wealth over lower-wealth groups or vice versa. In 2019, the number of millionaires worldwide soared to 51.9 million, but has changed very little overall during the first half of 2020.
At the apex of the wealth pyramid, the report estimates that at the start of this year there were 175,690 ultra-high net worth (UHNW) adults in the world with net worth exceeding US$50 million. The total number of UHNW adults rose by 16,760 (11%) in 2019, but 120 members were lost during the first half of 2020, leaving a net gain of 16,640 in UHNW membership since the start of 2019.
During the first half of 2020, the number of millionaires shrank by 56,000 overall, just 1% of the 5.7 million added in 2019. Membership has expanded in some countries and some have lost significant numbers. The United Kingdom (down 241,000), Brazil (down 116,000), Australia (down 83,000) and Canada (down 72,000) all shed more millionaires than the world as a whole.
It seems that wealth inequality declined within most countries during the early 2000s. The fall in inequality within countries was reinforced by a drop in “between-country” inequality, fueled by rapid rises in average wealth in emerging markets. The trend became mixed after the financial crisis of 2008, when financial assets grew speedily in response to quantitative easing and artificially low interest rates. These factors raised the share of the top 1% of wealth holders, but inequality continued to decline for those below the upper tail. Today, the bottom 90% accounts for 19% of global wealth, compared to 11% in the year 2000. In other words, there was a concentration of wealth towards the top 1% (and even more to 0.1%), but with some dispersion among the remaining 99%.
The researchers conclude that the small decline in wealth inequality in the world as a whole “reflects narrowing wealth differentials between countries as emerging economies, particularly China and India, have grown at above-average rates. This is the main reason why global wealth inequality fell in the early years of the century, and while it edged upward during 2007–16, we believe that global wealth inequality re-entered a downward phase after 2016.”
In short, what the report shows is billions of people have no wealth at all after debts and that the distribution of global personal wealth can be described as a few Gulliver giants looking down on the mass of Lilliputians.
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“The struggle for energy transition is thus a fight for public and collective control of energy resources, and for democratic control of the state power that shapes the development of such resources. It is, in sum, a struggle for energy democracy.”
Posted on August 9, 2020
Not just renewable energy, but global system change! A call to arms for a transformative approach to energy and a new society.
Ashley Dawson
PEOPLE’S POWER: Reclaiming the Energy Commons
OR Books, 2020
reviewed by Martin Empson
In the aftermath of the Russian Revolution Lenin said that Communism would be “Soviet power plus the electrification of the whole country.” Lenin outlined how industrial development wasn’t possible without electrification, but the primary emphasis on Soviet power arose from his view of Communism as being a society were Soviets, workers’ councils based on mass participatory democracy, would control and run the means of production.
I was reminded of Lenin’s quote on several occasions while reading Ashley Dawson’s latest book People’s Power. Dawson argues that, given the great environmental crises we face, in particular climate change, the “great task” of our time is to end the fossil fuel infrastructure at the heart of capitalist society. But, he shows, it is not enough to do this simply through a transition to renewable energy. This will be insufficient “to avert climate chaos.”
“Unless we dismantle and replace a capitalist system based on extreme extraction, inexorable growth, mounting inequalities, militarism and colonialism, our headlong rush toward extinction will continue. We need not just decarbonization, but global system change.”
A little later he continues:
“The struggle for energy transition is thus a fight for public and collective control of energy resources, and for democratic control of the state power that shapes the development of such resources. It is, in sum, a struggle for energy democracy.”
No wonder I found myself reaching for that Lenin quote.
Dawson, who is based in the US, takes a highly critical look at the existing US energy system. It is a chaotic mix of power companies and suppliers, a highly unsuitable electrical grid and a system trapped by the logic of capitalist accumulation around fossil fuels. It is also a energy system that has been at the heart of both transformation vision and class struggle. Dawson shows how different visions of energy supply were present at the birth of the US electrical era. One were the system was organised for public good, the other for corporate greed. Dawson explains how in 1926 Gifford Pinchot argued for the transformation of the Pennsylvanian electrical grid. Pinchot said about the transition to electricity from stream power:
“It behooves us not to let it break upon us unawares, not to permit generations of needless bitter conflict to follow it, but to think out the problems it will create, and to take measures in advance to avoid the long train of struggle and disturbance which followed the last great change in industrial power.”
It would be easy to chastise someone like Pinchot for naivety in the face of capitalist industrial power, but his vision remains important to us, not least as around 1.1 billion people do not have access to electricity today. With the need to offer everyone in the world equitable access to energy, at the same time as making sure that we aren’t tipped into runaway climate change, this remains the central question for Dawson. How can we supply energy safely, cheaply and sustainably for all?
“How might the coming energy transition contribute to new relations of production and exchange that are based on solidarity rather than exploitation? If past energy transition have tended to intensify the power of elites, can the current energy transition help spark a broader shift toward more egalitarian and democratic social relations?”
Much of the book points out the barriers.
- The power and immense wealth of the energy corporations.
- The centrality of fossil fuel to capitalism.
- The way that politicians and capitalist states have used their close links to coal, oil and gas companies to prevent the introduction of renewables or energy reduction measures.
- Many of the these examples are from the United States, but their are parallels for all of us living in the Global North.
- Even “liberal” politicians like Obama have used their positions to encourage the development of new sources of fossil fuels like shale gas.
In contrast Dawson highlights the mass, collective struggles that have fought to provide energy to those that lacked it, and to move towards renewable energy over fossil fuels. I was, I’ll admit, initially disappointed by Dawson’s focus on German movements that have (successfully) collectively fought to setup local renewable cooperatives and the like, by-passing big national corporations.
I was worried that Dawson was heading down a path of arguing that we could build sustainable spaces within the existing capitalist system. But actually Dawson’s approach is more nuanced. He shows how these sort of community campaigns can make real change, transforming the national political agenda, and putting the corporations on the back foot, even though the capitalists do fight back and seek to regain their position by supply Green energy. At root, what is needed, Dawson explains is real democracy, control and management from below.
“Do legal paradigms already exist to help community-based organizations… escape from the clutches of fossil capital and adopt solar power on a mass basis? What are the limits … and what juridical innovations might address these limits? These questions all relate to much broader struggles to establish new, revolutionary forms of popular sovereignty to defend and extend the commons, but they have a particular import for the fight for energy democracy. The struggle for a rapid and just energy transition is at the core of broader struggles…. The question of the energy commons is therefore fundamental to the fight for a collective future.”
Of course such arguments fly completely in the face of capitalist logic. Ultimately this means that winning such gains on the scale required means a challenge to the capitalist system, and in particular the state. Unfortunately I think that Dawson’s argument around this is undermined by his reliance on the analysis of the state provided by the Greek-French Marxist Search Results Nicos Poulantzas, who concluded that the analysis of the state developed by Lenin meant a “permanent skepticism about the state [which] precluded the possibility of mass intervention in existing politics.”
In contrast Dawson quotes James Angel arguing that the state “was not to be discounted as a ‘mere instrument of capital’.” Personally I think this is inadequate. After watching the crushing of the Paris Commune in 1871, Marx concluded that workers cannot simply take over the machinery of the state but find new ways of organizing. Engels wrote that the state was “armed men but also of material adjuncts, prisons, and institutions of coercion of all kinds.”
I think that analysis fits more closely with how governments behave in supporting fossil fuel corporations. But more importantly I think this approach to the state helps answer that important question that Dawson raises. How will we make the urgent change we need?
The answer lies in workers’ power — the new organs of working class democracy that revolutionary movements throw up. That’s not to say we should shun any attempts to build alternatives to the fossil fuel corporations today — though, as Dawson highlights, we need to be honest about the limitations of these within capitalism. In fact Dawson’s final chapter is a brilliant challenge to those who think we can build space within capitalism that can save the planet on its own.
“Unlike leaves … solar panels do not grow on trees: they must be manufactured, using chemicals that are often highly toxic and in conditions that do not escape the conditions of labour exploitation and degradation that characterise the era of fossil capitalism…. Eventually, the question of controlling the means of production returns … and energy transition that maintains existing forms of capitalist production and infrastructure will be nothing short of devastating for the planet and vulnerable frontline communities.”
Ashley Dawson’s book is a devastating critique of fossil fuel capitalism. Its a call to arms for a transformative approach to energy that places collective ownership, democracy and the rights and needs of everyone at the heart of the struggle for a sustainable planet. My minor criticisms aside, this is a really excellent read.
Martin Empson is a socialist and environmental activist in Manchester, UK. This review was first published on his blog, Resolute Reader.
