The biggest component of inequality: the appropriation of value generated by others.

A reminder of the main factors that generate inequality and the futility of pretending to transform the concentrating process of wealth and power without facing the big mechanisms of appropriation of value.

Much is on debate regarding inequality in reference to its magnitude, the effects it produces and how to abate it; issues that are all tightly linked. When inequality is huge and does not cease to grow as it happens in the contemporary world, the global trajectory and that of each national economy dramatically moves away from the criteria of equity and justice, as well as from its own sustainability [1] . Against that and without much success, many diverse strategies exist to overcome inequalities. What explains the futility of these strategies in almost all affluent countries and in some emergent economies, involves the feebleness with which its origin was conceived (ideological bias that conceals the interests of those who profit from inequalities) and the political weakness that prevails in countries where financial capital takes precedence, what prevents applying thorough solutions to transform the current process of economic concentration.

The origin of inequality

Truthfully, we should talk about the origins of inequality as there is no just one origin but several that historically overlap to conform the dramatic picture of contemporary inequality. However, not all these causes weigh the same. That is, a variety of factors contribute to generate inequality including, among others, wage negotiations among parties of unequal power, differences in productivity, those that take advantage of technological and medicinal discoveries, the social and territorial distribution of knowledge, information, and contacts, to have been colonies from which massive resources were extracted or colonizers that appropriate them, better or worse development policies. All factors generators of inequality should be identified, addressed, and, as the case may be, assured that its negative impacts be reduced as much as possible. All of them have a subjacent common denominator but some explain more than others the explosive and persistent growth of inequality in the last decades; not by chance they are ignored or concealed. Those factors make for the large scale appropriation of value generated by others done by powerful economic groups, organized crime, and, to a lesser extent though with serious impact on the social functioning, the political, media, entrepreneurial, judicial and trade union corruption.

Nobody can, just with the sweat of his brow, based on his own effort, accumulate wealth and, thus, power at the pace that value appropriator sectors do. This should be clear, despite being able to cite some exceptions that simply justify this distressing and outrageous affirmation. Not everybody who accumulates at those rates assume themselves as criminals appropriators of value not generated by them as some take special care to work within the legal framework they have helped established. Legal frameworks that, of course, favor them while harming big majorities, such as with the deregulation of the financial system, impositions included in labor or commercial treaties, taking advantage of the law to abuse the weak and vulnerable, the persecution and silencing of those who support transformations. Other appropriators, in addition to their illegitimate actions protected by the order that they have imposed on the rest, illegally operate violating even the judicial order that favors them.

Mechanisms of appropriation of value generated by others.

The mechanisms of appropriation of value are multiple and diverse; most of them subtle or concealed as they could not resist being operated nor defended in open air.

(i) The tremendous mobility of financial capital, protected by the opprobrious deregulation of the financial systems that they have managed to impose, allows them to force an endless speculation in terms of space and time. With their firepower not only they can take advantage but also generate every type of financial stress situations that favor them: from crises as the one that corners the world today to exchange runs, or the fact of establishing a strong foothold in certain markets and then unexpectedly moving out of them with serious consequences; deepening capital flights, benefiting from an eventual cease of payments, corporate bankruptcies, or financial asphyxias; if their privileges are threaten they destabilize governments and other economic groups, provoke various social and geopolitical conflicts. In all these situations they profit ruthlessly and mercilessly. They do not care if their speculative actions cause deaths, environmental destruction, distress, institutional breakdowns, or warlike conflicts; neither do they care if their profits are produced in alliance with the organized crime, economic felonies, political corruption or laundry of ill-gotten resources. They act as vultures over peoples and societies generating misery and destruction.

(ii) The uneven financial power that appropriator sectors hold allows them to maneuver in the acquisition at vile prices of assets of distressed people that lack any type of protection or assistance. With that, the appropriators manage to make their wealth grow exponentially accumulating even more not generated value.

(iii) Those who have market power due to their oligopolistic position or size have the ability to abuse their suppliers and customers through the imposition of prices and other conditions that let them obtain extraordinary illegitimate benefits. The prices, thus, become subtle value appropriation mechanisms by those who have the capacity to impose their interest through that venue. Supplier and consumer organizations try to restrain this abusive practice but it is such the power asymmetry among actors that converge in the market that, at the end, they depend on the State to regulate the economic practice and impede the abuses derived from power differences [2]. Hence, the situation gets out of hand, i.e., “act without respect or measure until loosing prudence and dignity,” when the State is colonized by the economic power with the complicity of political, media, and judicial sectors; instead of assuring equity, the State ends up defending privileged interests.

(iv) In its ambition to accumulate value at all costs, the economic power evades even taking charge of its fiscal responsibilities, while common citizens pay levies, taxes, and other fiscal contributions. Well known are the mechanisms used to materialize the huge tax evasion that big corporations do; for example, by exporting to a subsidiary based in other more lax jurisdictions in terms of taxes and transparency. They present invoices with undervalued prices to minimize profits in the country where the value was generated, while subsidiaries sell that export to the final recipient at the market price, thus, obtaining illegal profits that they then send to their headquarters based on central countries or, what is more common, in fiscal havens.

(v) Fiscal havens receive illegal remittances, or at least non-legitimate ones, from some large corporations together with other remittances coming from the organized crime and the political, media, judicial and labor union corruption. In terms of scale, corruption remittances make up 3% of the tax haven deposits, those from organized crime represent 35% and the rest, almost two thirds of what is hidden in those havens, comes from the economic power: corporations and affluent families from United States, England, Germany, France and other central countries but also from high-income sectors of Latin America, Africa, and besieged countries such as Greece, Spain, and Portugal whose peoples have suffered devastating adjustments conducted by the same powers that generated the crisis and evade their responsibilities.

Political weakness and critical points of intervention

In light of these circumstances, it is clear that abating inequality is essentially a political action. It is hard to believe that it might be possible to abate inequalities if those that profit with them maintain their control over the global course and national trajectories. Only when their privileges are threatened and they consider that the system they benefit from can collapse, they may agree to introduce minimal transformations so that the essence remains the same. That is what has been occurring through the history of humanity; just that in these decades, time has accelerated more than the reflexes of the value appropriation skippers.

In some countries, the repression of the transforming pursuit adapted itself to the democratic circumstances. Except for certain cases, brute force is no longer called upon as first line of defense of the established order; what prevails today are manipulation of public opinion, destabilization, and encouragement of alienation so as to divert the attention and sterilize energies that could be mobilized to face injustices, inequalities, and privileges. Even so, it is impossible to completely eliminate social freewill and the determination to transform that germinates with each generation. Outrage grows, knowledge expands, social mobilization weighs more and new political leaderships emerge involved with the transformation of the concentrating dynamic trying to give way to more fair societies.

An additional challenge that transforming forces face is looking for new courses of action and developing the organization of work on the go; that does not occur with conservative forces that use existent institutions and mechanisms to apply too-well-known policies orientated to preserve or restore their interests.

In the transforming processes, the fronts upon which work is needed are multiple and, though the ideal would be to tackle all the generating causes of inequality together, this is not always possible. There are many and diverse things to accomplish and there are considerable difficulties to face. In this context, dispersing efforts can compromise the sustainability of the trajectory. Hence, the critical point is to rank priorities and chose strategic points of intervention on which to focus most of the efforts. Though it might be simpler, in the beginning it is better not to focus with fury on the pettiness of small transgressors when the big villains keep bleeding out the country.

Therefore, the overriding focus of any transforming intervention should be to abate one by one the main mechanisms of value appropriation that might be working, including the aforementioned ones; something not simple to do but much needed and re-foundational of our societies.

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