One percent of the world’s population own about 39 percent of the world’s wealth and that trend is rising. Responsible for that is the creation of globally operating corporate structures and the establishment of international financial markets.
Is this the price the world has to pay for the rising economic and cultural hegemony of the "American way of life"?
Human societies have always known poverty and wealth. Even the allegedly egalitarian communist countries knew that. The reasons for that are diverse: Inheritances, personal accomplishments, luck, misfortune, creativity, as well as external circumstances have played a role in the distribution of wealth for thousands of years.
In primitive societies one clan had more luck hunting than the other. One clan survived the winter and got stronger, while the other suffered in fighting power and health. This brought further advantages for the superior clan. Later on, when the first settlements were founded, natural resources became the foundation for economic success.
Ore deposits to build weapons, salt stocks to trade and favorable geographic and climatic conditions all played a large role. Even during these times society’s wealth reflected itself in the support for its weaker members. Compared to a Siberian settlement away from all trade routes, poverty probably wasn’t a big issue in Hallstatt, which was very successful due to its salt trade.
Even today we can see obvious differences in the definition of poverty. Someone surviving with 500 Euro in Germany and Austria is deemed poor. In some parts of Africa, Asia or Latin America having 500 Euro makes you wealthy. Surely the costs of living differ, but poverty has fewer effects in rich countries than it does in the poorest.
Globalization however shows its true colors. Because of the globalized trade of natural resources including wheat, maize and rice, we have similar prices for these products worldwide. Without the world market we would pay twice, if not three times as much of the price that we regard as normal today.
This is an advantage for farmers even in poor countries, because they would get much less for their products without the world market. But this advantage comes at a high price, because other products also depend on the prices set by the world market.
Therefore people in poor countries pay more or less the same as people in Europe and North America, despite the fact that they have a much lower income.
In local or regional markets the choice of products would be less, but most of the goods would be affordable.
The formation of global markets clearly shows how wealth is defined.
In the past being rich meant having real estate and a few Million Euros, today it is not Millions but Billions. Compared to the majority of the population you are rich, when you own 50 Million Euros, but it is nothing special anymore. The main reason for that is the globalized world.
In past times people only had the resources of their region and some from foreign traders. From time to time raids in neighboring countries brought additional resources, but everything was very limited. This changed with the beginning of the colonization of the world by Europeans. Suddenly people had not just their own resources, but those of the colonies at their disposal.
Especially the colonial powers experienced increasing abundance. At one time Spain for example didn’t know what they were going to do with all the gold, they had amassed. This rang in the age of the super-rich.
In the course of industrialization and the expansion of markets during the last centuries, and the development of the modern banking system corporate dynasties suddenly came into existence, which are still controlled by the richest and most influential individuals of the world today. They created present day’s corporate empires.
The Rockefellers, Morgans, Rothschilds and Krupps are a few of these well-known dynasties, although they do seem to fade, because of the newcomers, who, in the triumphal march of the internet and the computer, have risen to the top and now also belong to the small circle of money aristocrats.
But how was that possible? The solution lies in the world markets, the liberalization of trade and capital and the domination of the “American way of life”. 300 years ago Coca-Cola could have sold the sugar soda primarily on the home market, VW Golfs probably would have driven primarily in Europe and Samsung Smartphones would have been used mainly in East Asia. And today?
One example: Coca-Cola is one of the world’s largest corporations. In 2010 the company had a turnover of 35.1 Billion Dollars and a net gain of 11.8 Billion Dollars. Money from all over the world flows to Coca-Cola’s bank accounts.
The masses worldwide consume, while a few hundred thousand stockholders, a small group of people, which is increasingly out of touch with the real world, executes a growing social and political power with their wealth. The financial elite are disproportionately “rewarded” with more and more wealth, because one who holds lots of capital benefits most from the system of interest and dividends.
According to a study the assets of the 111 000 wealthiest people increased by 11% from 2011 to 2012, at the time when the world economy was struggling, Millions lost their jobs and poverty was on the rise.
If a success story made Millions on a national market in the past, it is Billions today. Back in the days Mozart and Beethoven would have been internationally celebrated stars, if there would have been CDs, Internet, Radio and TV. Only a few people would have known Elton John and Rihanna. This shows that globalization helps only the tiny few to amass staggering amounts of wealth, fed by numerous small inflows worldwide.
Most of the money ends up on the international financial markets, while only a small amount flows back into the economic cycle, those financial markets, which because of the continuously increasing sums want an increasingly large amount of the economically generated “cake” of the world’s population.
This is a very dangerous trend, which sooner rather than later will lead to massive social unrest, because people have to work more, to get a larger piece of that “cake”, while the “cake” itself shrinks by the day. In former times regents and governments could intervene, today they are powerless against the monetary supremacy of the financial elite, at least for so long as they are not willing to work together.
Disclaimer: All articles and letters published on MyNews24 have been independently written by members of News24's community. The views of users published on News24 are therefore their own and do not necessarily represent the views of News24. News24 editors also reserve the right to edit or delete any and all comments received.