Inherited capital is the greatest source of social inequality. Capital ownership keeps specific families on top of the social and wealth pyramid for multiple generations. Capital and power are synonyms. The system of social class, with its various divisions, sits on the ownership of capital and wealth above any other consideration.
In the Virgin Islands, native ownership of land — a form of capital — propelled certain families up the social ladder after slavery and the plantation era. They remain at the top even to this day, aided by distinctions such as the ability to read and write; the ability to speak the “Queen’s English;” wile; and, in some cases, fairer skin.
Looking abroad, a glance at the list of global corporations and their owners tells a story. Most of these businesses are American, Chinese Pacific, and European: Walmart to JP Morgan, Facebook to Twitter, Ali Baba to Tik Tok, Virgin Atlantic to Dyson, Marriott to the Hilton, Apple to Google, Tesla to Exxon Mobil, Christian Dior to Louis Vuitton. Then add a host of international businesses, from India to South Korea and Mexico to Nigeria. In general, corporations concentrate wealth and power in a few hands.
Meanwhile, global capital controlled by a handful of people and their families is the reality and the norm. Global corporations and their owners rule the world. Sometimes, though, this ownership is disguised by fund managers, trusts, offshore accounts, foundations and complex securities. Global capital often uses an army of lawyers, accountants, bankers, financiers, security types, and administrators to create a buffer between the one percent and the rest.
‘Outlasts its owners’
The nature of capital is such that it tends to outlast its owners, who are wise enough to ensure that the control of their assets stays within their families or a select group of individuals and organisations after they die.
And in societies that are strong scientifically, socially and economically, sustaining wealth from one generation to the next is much easier than in poorer lands. A billionaire in the United States is better able to ensure that future generations enjoy his wealth than a billionaire in Nigeria. Social and economic stability better protects the wealthy. In a crisis-ridden land and war-torn country, a fortune can be lost at the drop of a hat if the investor is not cautious.
One of the features of wealthy families is that they are inheritors of wealth and capital. The idea often called the “American Dream” — that all start at the same level and have access to the same opportunities — is a fairy tale.
Inheritance drives social inequality despite attempts by socialist governments to create a level playing field through wealth tax, inheritance tax and progressive taxation. Consider two similar individuals with equal competence, where one inherits millions and the other is encumbered by poverty and deprivation. It is easy to know who will prevail in the game of life. Capital will ensure the former rules over the latter.
Geography is another major part of why social inequality exists globally. A child born in a rich country — with an annual income per capita exceeding $50,000 and access to great healthcare and education — has better life chances than a child born in a poor and destitute country where the average income is $1,000 per annum and life expectancy is 50. Education and competence may aid the child in the poor country, but usually that means migration to the richer land.
Capital ownership and inheritance are by no means the only factors in the wealth stakes. Education, competence and sheer good fortune all factor into why some are wealthy, middle income, or poor. Inheritance remains invincible as the route to wealth, however. Capital and its ownership are the most brutal dividers of people into the different social and income groups. That is the narrative of history.