The Fable . . .
Wealth Means Worth. Although the neo-liberals insist that their ideology produces prosperity for all, it actually results in a new hierarchy of money to replace the divinely ordered Great Chain of Being. According to this narrative the rich are wealthy and the poor are miserable because the former are smart and hard-working and the latter are lazy and worthless. The market is the new god, dispensing perfect justice. Or it would, if only we got rid of government hand-outs for the lazy and let the market do its work. The well-off, regardless of how they acquired it, are convinced that their wealth is a true reflection of how wonderful they are. Mitt Romney's notorious rant against the “forty-seven percent” was not an aberration; it is exactly what the coddled and privileged really believe. It is merely politically inconvenient to say it out loud.
Noblesse n'oblige pas. One consequence of replacing the Great Chain of Being story with this Social Darwinist story is that is conveniently gets rid of the pesky obligation of noblesse oblige. The privileged have no responsibility or duty toward the unfortunate. If you are poor, it is your own damn fault, since anyone can become rich if only they work hard enough.
While believing this narrative of personal wealth being the reward for productivity and hard work, and ignoring all the facts that give it the lie, they are blind to the truth that our economic system is based on assumptions that actually disadvantage those who do the work.
. . . and the Reality.
The system privileges owners over workers. We are so used to this that we assume that it is natural and inevitable, but it is not. It is a convention of society. “Capitalism“ got its name from the fact that it is a system which privileges income that is derived from the ownership of capital. In this system owners are the principals and workers are just a commodity. Economics is about how humans interact to obtain the goods and services that we all need or desire. As we have noted more than once, that requires both labor and resources. For reasons that we will discuss, unless society deliberately arranges things differently, resources tend to accumulate in fewer and fewer hands. It is sort of like musical chairs. When that happens the world becomes divided into the Elves, who do all the work, and the Trolls, who collect tolls for the use of the resources.
The Sacred Right of Private Property. In our system the product of that joint effort first belongs entirely to the Trolls—the capitalists. That includes any improvement made in the resources or any new resources which are made by the worker. If an engineer employed by a company designs and builds a better machine, that machine belongs to the employer, not the designer. Property rules. And capitalism has found ways to expand the realm of property. Ideas now are property, created by workers and owned by the capitalists. Genetic information is now property owned and controlled by capitalists. For millennia farmers have saved seed from their harvests of grain to be sown in the next season; they are no longer allowed to do that, for capitalists now own the genetic information stored in those seeds and must be paid tribute.
Farmers have altered genetic information through breeding since the beginning of agriculture; only now is that information something that can be owned and exploited.
Those Who Have, Get More. One consequence of the musical chairs aspect of capitalism is that as more and more of exploitable property falls into fewer hands, there are increasingly more propertyless workers. Add that to the ever increasing productivity of workers through automation, and the supply of workers increases relative to the demand. The share of the pie going to the workers goes down; the share for the capitalists goes up. That, in a nutshell, is the reason for our current growing inequality. (Yes, there is more to it, but that will do for now.) The fable says that prosperity is the product of individual work and talent, but it is due mostly in fact to ownership. Property.
The essential thing to remember is that all this is due, not to some divinely ordered decree, but to laws and conventions that have been made by society. Having been made by society, they can be changed by society. All that is necessary is the understanding and the will.
Let's Get Back to Science. So now we can return to the attempt to understand economics as a science, or at least as the object of careful, objective study. We just have to remember that a power-driven ideology is always lurking over our shoulders, insisting that it is the real economics. In economics, ideology and science are have been so muddled that it can be difficult at times to tease them apart. Bear in mind, however, that economics can never be totally separated from politics because money forever means power.
