“The inequality between the world’s individuals is staggering” – says Branko Milanovic, the top economist in the research department of the World Bank. “At the turn of the twenty-first century, the richest 5 percent of people receive one-third of total global income, as much as the poorest 80 percent”.
While a few poor countries are catching up with the rich world, the differences between the richest and poorest individuals around the globe are huge and likely growing. In the words of the 2005 UN report on world inequality, “it would be impossible for the 2.8bn people living on less than $2 a day to ever match the consumption levels of the rich”. It says that despite the considerable economic growth in some regions, planetary inequality has grown in the last ten years and the “wealthy nations are the main beneficiaries of economic development”. Under conditions of planetary deregulation of capital movements, economic growth does not translate into the growth of equality. Quite the opposite: it is a major factor in enriching the rich and further impoverishing the poor.
Not much news, thus far. In 2008, Glenn Firebaugh pointed out however that “we have a reversal of a longstanding trend, from rising inequality across nations and constant or declining inequality within nations, to declining inequality across nations and rising inequality within them. That’s the message of my 2003 book The New Geography of Global Income Inequality – a message since then confirmed”. How to explain that sudden round-about of trends?
Capital, free-floating in the “politics free” global “space of flows” (as Manuel Castells aptly and famously called it), is keen to search for the low-living-standard areas of the globe amenable to “virgin land” treatment – cashing on the (temporary and self-destructive) profit-generating differential between the lands of low wages but without institutions of self-defence and state protection of the poor, and the long-exploited lands afflicted by the impact of the “law of diminishing returns”.
The immediate consequence of that “free-floating” of capital emancipated from political control would most probably lead to the shrinking of that differential which set in motion the current tendency of the inter-state “levelling up” of living standards. The countries that released capital into the “space of flows” find themselves however in a situation in which they themselves turn into the objects of uncertainties generated by global finances and falling victim of the new power deficit. In the absence of global regulation, they are forced to retreat step by step from the protection which in the times preceding the power-politics divorce and privatisation of uncertainty they used to promise (and most of the time deliver) to their own native poor.
This could be the explanation of the U-turn of trends noted by Firebaugh. Relieved of their local checks and balances and released into the no-man’s land of the global “politics free” zone, capital accumulated in the “developed” parts of the world is free to re-create in distant places the conditions that ruled in their countries of origin at the times of “primitive accumulation”; with a proviso, however, that this time round the bosses are “absentee landlords”, thousands of miles apart from the labour they hire. The bosses have unilaterally broken the mutuality of dependence while multiplying freely the numbers of those exposed to the consequences of the bosses’ own new freedoms, and even more the number of those who crave for being so exposed…
This in its turn cannot but rebound on the conditions of the metropolitan labour left: labour is now constrained not only by the added uncertainty caused by the vastly expanded range of options open to their bosses, but also by the awesomely low prices of labour in the countries in which the free-to-move capital chooses to temporarily settle. In result, as Firebaugh observed, the distance between “developed” and “poor” countries tends to shrink, whereas in the countries that until not long ago seemed to have got rid of jarring social inequalities once and for all, the sky-is-the-limit growth of the distance between the “haves” and the “have-nots”, known in Europe of the early nineteenth century, is coming back with vengeance.