Rotten Capitalism

Some time ago Noam Chomsky, Professor Emeritus at the MIT, wrote an interesting article on Al Jazeera.

He starts off explaining the history of income inequality in the USA, similar what we have explained earlier on this blog. Then he shows the current trend in society towards two distinct classes: the plutonomy and the precariat.

Plutonomy refers to the rich, those who buy luxury goods and so on, and that’s where the action is. As for the rest, we set them adrift. We don’t really care about them. We don’t really need them. They have to be around to provide a powerful state, which will protect us and bail us out when we get into trouble, but other than that they essentially have no function. These days they’re sometimes called the “precariat” - people who live a precarious existence at the periphery of society. Only it’s not the periphery anymore. It’s becoming a very substantial part of society in the United States and indeed elsewhere.

We have already seen before that this income inequality doesn’t come by surprise, but was regulated. For example we can just cite Alan Greenspan, former chairman of the FED:

[Alan Greenspan] said a lot of [the economy’s] success was based on… ‘growing worker insecurity’. If working people are insecure, if they’re part of the precariat, living precarious existences, they’re not going to make demands.

So no wonder that despite of increasing productivity, the workers do not profit any more from it.