Inequality: what really matters

Inequality: what really matters

Imagine a room with 100 hundred people. 90 people are so short they can hardly reach the door handle to get out. Another nine people are only high enough to get a drink from the table. But one person is so huge that his or her head hits the ceiling and bursts through it.  Such is the scale of inequality and concentration of wealth in capitalist economies. Even the top 10% of wealth holders really own only their house that they live in along with maybe a reasonable pension. It’s the top 1% or even the top 0.1% who really have wealth in stocks, bonds and commercial property and businesses etc.

The country’s five richest families (oligarchs) now own more wealth than the poorest 20% of the population, according to Oxfam. A handful of the super-rich, headed by the Duke of Westminster, have more money and financial assets than 12.6 million Britons put together.  The poorest 20% in the UK have wealth totalling £28.1bn – an average of £2,230 each. The five top UK entries – the family of the Duke of Westminster, David and Simon Reuben, the Hinduja brothers, the Cadogan family, and Sports Direct retail boss Mike Ashley – between them have property, savings and other assets worth £28.2bn.

And this wealth gap is widening as a result of the ability of the better off to capture the lion’s share of the proceeds of growth. Since the mid-1990s, the incomes of the top 0.1% have grown by £461 a week or £24,000 a year. By contrast, the bottom 90% has seen a real terms increase of only £2.82 a week or £147 a year.

But amid all the talk and debate about growing inequality of income and wealth around the major economies, what matters is who owns the bulk of stocks and shares, government bonds and property that can deliver capital income in the form of profits, interest and rent. Among British households, the poorest 20% don’t have much personal wealth, but of what they do have, 51% is in the home that they part own (with the mortgage company). In contrast, for the top 20%, property wealth is only about one third of their wealth held.

The ownership of shares in the UK has shifted dramatically over the last few decades from individual ownership (now just 10% of all shares) to ownership by unit trusts (10%), pension funds (5%), banks (12%) and foreign investors (53%). In other words, most financial wealth is controlled by corporations and investment funds, pooling the savings and profits of the rich. The property-owning, shareholding democracy spun by Thatcher in the 1980s and since by the Tories is a myth.

And what really matters is not personal wealth, but the ownership of the means of production. That gives you power as well as wealth – this is what oligarchs have. What is decisive for capitalism is surplus value (profit, interest and rent), not wage income or spending. Control of that surplus is key. The main feature of the last 100 years of capitalism has not been growing inequality of income. The main feature has been a growing concentration and centralisation of wealth, not income. And it has been in the wealth held in means of production and not just household wealth.

Three systems theorists at the Swiss Federal Institute of Technology in Zurich have taken a database listing 37 million companies and investors worldwide and analyzed all 43,060 transnational corporations and share ownerships linking them (see They have a built a model of who owns what and what their revenues are, mapping out the whole edifice of economic power. They discovered that a dominant core of 147 firms through interlocking stakes in others together control 40% of the wealth in the network. A total of 737 companies control 80% of it all. The owners and managers of these companies control the world.

This is the inequality that matters for the functioning of capitalism – the concentrated power of capital. Britain’s oligarchs are part of this nexus.


Michael Roberts is a Marxist economist. He blogs at

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