How capitalism is a class society

The FTSE 100 index of the share prices of top companies has just reached an all-time high, 16% up on October 2022.

Those top companies paid out about £83 billion in dividends in 2022, and £50.3 bn in share buybacks.

MoneyWeek expects "FTSE 100 ordinary dividend payments to keep setting new records in 2023".

To get an idea of scale here, the journalist Philip Inman calculates that a 10.1% pay rise across the public sector would cost the government £8.5 billion (if we factor in the government recouping some of the rise through income tax and VAT on workers' spending).

Supporters of capitalism accuse socialists who advocate equality of "envy" and of wanting to level down to "universal mediocrity". To try to crop the "tall poppies", they say, will slow progress for all.

Frederick Engels conceded that "the elimination of all social and political inequality" was indeed "a most dubious expression". "As between... one place and another", for example, "living conditions will always evince a certain inequality".

Socialists indict, and will get rid of, not all inequality but class exploitation, the system where one large category of people gets rich at the expense of and by squeezing and lording it over another.

Kate Pickett's and Richard Wilkinson's The Inner Level suggests that the main social driver of mental ill-health is inequality rather than the general living standard (above a certain minimum).

Their study is on contemporary societies, i.e. societies of gross class inequalities. There is no reason to suppose that, if those gross class inequalities are eliminated, me feeling "envious" of you having better weather where you live (if I do) will have drastic effects.

Karl Marx emphasised that the idea of class and class struggle was not original to him. He got it from bourgeois historians. Most precapitalist societies categorised by "estate" and "rank". France before the Revolution of 1789-93, for example, had the monarchy, the First Estate (clergy), the Second Estate (nobility), and the Third Estate (everyone else, from paupers through wage-workers, smallholders, and craftspeople to factory-owners and merchants).

To make sense of the Revolution and its sequels, historians had to categorise the large groups in society with shared interests and drives by their parts in economic life.

In capitalist society, argued Marx, there is a large group, shaped not by some legal badge but by the flow of economic life, who own productive wealth and derive income from property, i.e. directly or indirectly from the surplus-value which those who own the means of production can draw from squeezing wage-workers.

These days, he would add in those who draw multi-million "salaries" as managers. (In fact pretty much all of those will have set aside large stashes of wealth and will draw income on top of their "salaries" from "investing" that wealth.)

Another large group of us own no wealth apart from household hardware, so draw no or negligible income from property, and subsist by selling all we have to sell, our capacity to labour.

There are complications ("class" usually categorises children, for example, by reference to their household even though the children themselves neither own factories nor do wage-work), intermediate groups, and many grey areas, but analysis shows that these two classes develop collective interests and drives, and in opposition to each other. A thousand studies show a high correlation between the basic economic definition of class and access to leisure and culture, personal autonomy, sense of "entitlement", etc.

Capitalism constantly regenerates that class divide, and in its current phase is sharpening it. Socialism will abolish it by making productive wealth social property under democratic control.