Understanding the class divide: the 99 per cent versus the 1 per cent in Australia

For weeks world attention has focussed on the Occupy movement that spread from Occupy Wall Street. Across the world placards have proclaimed “we are the 99 per cent”. Every society in the world is divided by class with a ruling class—the 1 per cent—owning and controlling the wealth of society. Tom Barnes looks at class in Australia.

The evidence on income and wealth inequality illustrates that the class divide in Australian society is alive and well. Australia may be a relatively rich society compared with countries like Bangladesh or even Egypt.

But Australian workers don’t have to be as absolutely poor as their third world sisters and brothers for them to make common cause against a system that exploits them both. People everywhere have understood that the struggle in Wall Street is the same as the struggle in Spain, Greece, Italy, Britain and the Philippines.

The key to understanding the impact of class in any society is relative inequality, that is, the income and assets considered necessary to survive from a general social or cultural level in that society.

The division in society between the 1 per cent and the 99 per cent points towards the persistence of classIf we set the poverty line at half of the national median income, then Australia ranks poorly by OECD standards. A study ten years ago by the Economic Policy Institute in the US found that 17 per cent of people in Australia were living in poverty, the second worst in the OECD after the US. For the elderly, the proportion was nearly 30 per cent.

Inequality has been on the increase. According to Frank Stilwell and Kirrily Jordan’s 2007 study, Who Gets What?, the incomes of the top 20 per cent of households rose four times faster than the bottom 20 per cent between the mid-1990s and late 2000s.

According to Bureau of Statistics figures just released, in terms of wealth (i.e. asset ownership such as shares or property), the wealthiest 20 per cent owns nearly 70 per cent of all wealth in Australia.

The Global Wealth Report by the Boston Consulting Group, released in June, shows an increasing concentration of wealth in Australia in 2010. Millionaire households jumped from 98,000 in 2009 to 133,000 last year—a record 36 per cent increase. Twelve more Australian families joined the “ultra wealthy” during the past year, taking the total to 231 households that have more than $US100 million ($94 million) in personal wealth.

The same report revealed something of the astonishing inequality at a global level—with 1 per cent of households having 39 per cent of the globe’s wealth.

Most people perceive this injustice. In the mid-2000s, the Australian Survey of Social Attitudes, which covers about 4000 respondents, found that 82 per cent believed the gap between rich and poor was too large.

So the carbon tax debate comes in the context of rising relative inequality and widespread opposition to this. In this context, arguing that we should all bear the burden of the transition to lower emissions is silly.

In the face of unaffordable housing and childcare costs, the suggestion that we are all well-off only strengthens the hand of the big polluters. In many people’s eyes, it confirms the caricature that proponents of action on climate change are middle-class elitists.

Marxism and theories of class

Marxists have always argued that capitalist society is divided by class. Marx argued that the emergence of capitalism drew social groups into two “great hostile camps”: the capitalists, who owned and controlled the means of production, and the working class, whose survival depended on the exchange of labour power for wages. A person’s relationship to production is therefore what determines their class position.

Capitalism’s competitive drive for profit compels employers to attack workers’ wages and conditions. This logic can force many different kinds of workers into defensive struggles, whether they work as teachers, nurses, and retail workers in the “services” sector or as manufacturing workers, bus drivers or in other “blue collar” occupations.

For Marxists, the key question is what drives workers to resist and how their ideas change in the process of fighting. It is such attacks motivated by their employers’ class interests which has pushed Qantas workers to fight against real wage cuts and public sector workers to campaign against draconian anti-union laws in NSW.

However, there are different “class analyses” which emphasise factors like occupation, status and income rather than class struggle.

One view, influenced by the German political economist Max Weber, says that class divisions represent the different economic resources that people are able to access by virtue of their social standing or wealth. While this sounds very similar to Marxism, Weberians have never been particularly concerned about class struggle. They have been far more likely to emphasise things like occupational status or levels of education.

For Marxists, the fact that a “blue collar” trade-qualified building worker might earn more than a university lecturer with a PhD is not the most important issue—the issue is how workers struggle, how these struggles can be linked together and how an anti-capitalist consciousness can be built.

Construction workers with a long tradition of militant unionism might show a higher degree of class consciousness, but university lecturers themselves are becoming proletarianised as universities become tertiary industries. They are increasingly likely to be involved in industrial action over their employment conditions.

Another view—which students of politics or sociology are likely to come across—is that of French radical theorist Pierre Bourdieu in which class divisions reflect individuals identifying with particular groups, trends or tastes. For example, people use their “cultural capital” (such as their education, consumption habits, sense of fashion, etc), as well as their “economic capital” (wealth, assets and so on) to distinguish themselves from “lesser” groups.

An example of this might be the idea of the “bogan”, identified by their sense of dress, schooling, accent or any number of supposed, often derogatory, characteristics.

Like Weberians, followers of Bourdieu have a lot in common with Marxists. They draw links between people’s incomes, jobs and social tus. Bourdieu himself was an excellent critic of capitalism and a prominent activist.

There is significant agreement between all of these analyses. For example, they would acknowledge evidence which shows that where you live, or were brought up, has a huge impact on how much you will earn, how much wealth you will have or how you are regarded by others.

But Marxists differ because of their much clearer emphasis on class struggle. We argue that incomes, geography, social standing, etc, are all intimately connected with class divisions but they do not explain or subsume them. “Bogans” are part of the working class.

The prospect for a better society is ultimately linked to our orientation to the production process and whether we exercise any real control over it. The central divide is between the ruling capitalist class and the mass of wage-earners, the working class, rather than the differences between categories of wage-earners.

Confusion over the meaning of class has practical consequences. Take, for example, the debate over the means-test for family tax benefits and paid parental leave in Labor’s last budget.

The Liberals and News Ltd responded with the usual anti-Labor line, lamenting this as an attack on workers. Sydney’s Daily Telegraph raised this as a class argument with the headline, “It’s a bit rich”, suggesting that two-income households earning $150,000 were under attack. Many people responded that “upper middle class” families on this income were “bleating” for undeserved entitlements.

But the suggestion that workers on above-average incomes are undeserving reduces debates about tax and welfare to an issue of redistribution within the working class. While it’s fair that those workers on higher incomes should pay a bit more tax, the real money is not among people who rely on wages to survive.

A quick glance at Business Review Weekly’s top 200 “rich list” for 2011 clears up any confusion about this. The cut-off for this year’s list was a personal fortune of $215 million. Gina Rinehart topped the list ($10.3 billion), followed by commodities trader Ivan Glasenberg ($8.8 billion), miners Andrew Forrest ($6.2 billion) and Clive Palmer ($5.1 billion), manufacturer Anthony Pratt ($5.2 billion) and retail and property developer Frank Lowy ($5 billion).

The biggest money is with the miners, including Rinehart and Forrest who were instrumental in fighting Labor’s Mining Rent Resources Tax and currently want to derail any action on climate change. But, as the examples of Pratt and Packer show, there’s plenty of money elsewhere. James Packer, further down the list at $4 billion, was able to spend $12.5 million for recent house purchases in Vaucluse, Sydney, and planned to spend $13 million on a 13-car garage, a 23-metre pool, underground cinema and gym.

The super-rich occupy another world—and this should put debates about tax and welfare spending among wage-earning households in perspective. Hardly a week goes by without a media report attacking out-of-control CEO salaries.

A few years back, labour market researcher John Shields reported that the average total salary packages of CEOs in Australia’s top 51 companies listed with the Business Council of Australia rose from 18 times the average full-time wage in 1990 to 63 times in 2005.

These forces own and control the lion’s share of wealth and investment resources and make up the core of Australia’s ruling class. They are united in their belief that the profits of the companies they control should not take even a minor hit.

They are not accountable in any way to the “99 per cent” yet they have the power to create and manipulate markets. It is their decisions that largely determine the level of unemployment.

That’s why if society is to be run for human need and not profits, we need to take the power away from the 1 per cent and build a new socialist society in which the control of every aspect of society is democratically controlled from below.


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