Is the Property of the 1% Legitimate?

The dominant ideology in our society would have us believe that whatever results from capitalist markets is presumptively just. The idea is that whatever the 1% gets from the market is authoritatively theirs. Thus, pre-tax income appears as something "natural" and taxation appears as something alien, which swoops in from the outside to "intervene" and "interfere" with the "natural" workings of the market.

Some accept this ideology, even as they call for increased taxation on the 1%. While arguing that the present wealth of the 1% is excessive, many continue to assume that pre-tax incomes in capitalist societies are in some sense "natural" and presumptively legitimate. This is expressed in the following thought: "maybe the rich should be taxed more heavily, but at least some of they have is legitimate theirs."

Now, within the horizons of this liberal perspective, I certainly agree that the wealth of the 1% is in some sense "excessive". I also agree that unmet human needs override any ownership claims that might be invoked to argue against re-distributive taxation in a capitalist society. But this concedes far too much to the rich and powerful. We shouldn't just say that the wealth of the 1% is excessive; we should say that it is illegitimate through and through.

To talk of redistribution, after all, is to talk of altering some prior production and distribution of goods. But how does that prior production and distribution come about? And what makes it legitimate in the first place?

It's obvious that the 1% has a vested interest in making sure that the majority of the population think that their wealth is legitimate. It hardly matters whether it's aristocratic privilege, family lineage, racial or sexual supremacy that makes a group dominant. Throughout history dominant groups always try to preserve the basis of their dominance.

Now, dominant groups have at least two (analytically distinct, but in practice interwoven) means of maintaining their dominance. The first is obvious. Dominant groups typically monopolize control of the means of exerting physical repression. If you push too hard against the status quo, dominant groups will always (if possible) push back with physical repression in order to protect their dominant status. This explains the violent force used against the Occupy movement all over the country.

But dominant groups can't maintain their dominance through naked violence alone, at least not for long. Thus all ruling classes are compelled to stabilize their rule by telling stories to the ruled about why their power and privilege is legitimate. As Marx and Engels put it in The German Ideology:

The ideas of the ruling class are in every epoch the ruling ideas, i.e. the class which is the ruling material force of society, is at the same time its ruling intellectual force. The class which has the means of material production at its disposal, has control at the same time over the means of mental production, so that thereby, generally speaking, the ideas of those who lack the means of mental production are subject to it. The ruling ideas are nothing more than the ideal expression of the dominant material relationships, the dominant material relationships grasped as ideas; hence of the relationships which make the one class the ruling one, therefore, the ideas of its dominance.

Think of the "divine right" of Kings, the "positive good" doctrine that purported to justify the dominance of Slave owners, the so-called "civilizing mission" that justified colonial domination, or the supposedly "scientific" expertise that justifies the power of bureaucracies. The stories the rich tell about the supposed legitimacy of their wealth are part of a long tradition of lying to the masses to the protect privilege and power of the few.

What stories do the rich tell in our society? By my count there are at least four. Now, it's worth noting that growing numbers of people don't need to be told that these stories are bogus. Millions of people are coming around to the idea that the wealth of the 1% isn't simply excessive, but fundamentally illegitimate. Still, it's worthwhile from time to time to puncture the self-image and self-justifications of those in power. It's worthwhile to go through and debunk the familiar myths handed down from above that purport to show us that the wealth of the ruling class is legitimate.

One common story is that the members of the 1% deserve what they have because they earned it. More precisely, they deserve what they get from the market because it represents their just reward for productive activity. According to this story, the market rewards productive contributions. Thus, the rich deserve their wealth because it must be their proportional reward for their productive contributions to society. Unfortunately this is nothing but a fairy tale. Set aside the bank bailouts showered upon failing financial elites. Capitalists—even the ideal capitalists of the textbook—earn from owning, not from working. The pure capitalist makes precisely zero productive contributions to society and does no productive labor. They pay others to do it and reap the rewards of what they produce. So it can't be that the profits raked in by capitalists are what they deserve for productive contributions to society, since they need not do anything productive.

The second story, related to the first, is that the wealth of the rich is legitimate because it represent their reward for having taken bold risks. The thought is this: capitalists assume risk when they invest their money, so whatever they get in profits must be legitimate. They could have lost it all, but they didn't, so what they get is legitimately theirs. But though this story is told often enough, it is actually quite obscure, even by its own lights. And then there's the fact that workers are forced to assume all of the risk (and then some) assumed by their employer, even though they are entitled to precisely zero of the benefits if the risk pays off. This story is ultimately unconvincing. Rather than proving that the wealth of the 1% is legitimate, upon reflection it undermines the legitimacy of their riches.

But there's a third story that we've yet to consider. That story is that the wealth of the 1% is legitimate because it arises from nothing except free market exchanges. If a voluntary exchange between two consenting adults is unobjectionable, and the accumulation of wealth by the rich arises from nothing but consensual market transactions, it must follow that their wealth is legitimately theirs. And anyone who disagrees must think that a third party should paternalistically "prohibit capitalist acts between consenting adults". But that can't be right. So the wealth of the 1% is legitimate.

Though this argument is rhetorically powerful at first glance, it falls apart rather quickly on closer inspection. First of all, in order for anything to be transferred or exchanged legitimately, it has to already be legitimate property. The market can't create legitimate titles; it can only circulate existing titles. But how did unowned things come to be legitimate property in the first place? How did, for example, natural resources or large swaths of lame come to be private property? By what historical process did society's means of production come to be the private property at all? A quick glance at history shows that violence, brute force, conquest, war, genocide, colonial expropriation and slavery explain the origins of this property. This is what Marx called "primitive accumulation." Insofar as the wealth of the 1% rests on a history of violence and obvious injustice, it is illegitimate, even if acquired through "voluntary" exchanges.

But there's an even deeper problem with this argument. Even if the historical legacy of "primitive accumulation" didn't undermine the legitimacy of the origins of existing property, the idea that capitalism is nothing but an aggregation of genuinely "free" market transactions is ludicrous. Unequal relations of power are constitutive of market exchanges. The equality of citizens deliberative together in a democratic general assembly is never reproduced in the market place. If I, for example, gouge you for a bottle of water during a drought, and you relent because there's nothing else for you to do but cough up $200 for the water, that is a "free" market exchange. You consent to buy the water and I consent to sell it. There are, to be sure, massive asymmetries of power between us, but the transaction satisfies the criterion of "consensual capitalist act between adults." But it is clearly illegitimate for me to profit from the misery and vulnerability of others. Less extreme cases bear the same problems. Workers, who by definition own and control no significant means of production, are forced to work for a capitalist to earn a living, even if they can choose which capitalist work for. But that mere fact gives capitalists a large degree of social power over workers. The labor contract struck between the individual, atomized worker and the employer, then, is hardly free or fair. But it fits the bill of "consensual capitalist acts between adults", because what other choice does the isolated, individual worker have except to consent to her exploitation so that she can earn a living? So much for the virtues of "free" market exchanges as a way of conferring legitimacy on the wealth of the 1%.

The fourth story is that the wealth of the rich is legitimate because it is necessary to produce the greatest overall amount of beneficial economic consequences for all. That is, massive wealth for the 1% is a necessary precondition for economic growth and prosperity. Without it, they would have no incentive to do all of the allegedly marvelous things that they do which, we're told, tend to produce jobs and prosperity for all.

For my money, this is by far the weakest argument of them all. As we've seen, capitalists don't need to do any work at all. They need not do anything productive to earn their profits. So, this argument doesn't even get off the ground, because it assumes that we actually need capitalists to have prosperity and a functioning system of social production. But the fact is that we don't. We do all the work: the boss needs us, but we don't need the boss.

The most obvious objection to this argument, however, arises out of the fact that we're in the midst of a protracted global economic crisis right now. And, perversely, profits have soared to record levels amidst sky-high unemployment and economic misery for the 99%. What's more, the misery of the 99% is directly tied to the record profits which have been largely reaped through bailouts and austerity. But this argument suggests that the cause of our misery is necessary to produce something the 99% does not presently enjoy, namely prosperity and economic security.

A more specific version of the above argument is that the wealth of capitalists is necessary to incentivize innovation. But this argument rests on nothing. It's not as if we have experimental data that prove that all non-capitalist means of generating innovations are flawed. Open-source software is an obvious counter-example, and there are too many others to name. Moreover, as I've already explained, capitalists don't actually do the innovating. That's what they pay R&D departments for (if, in fact, they pay them... often corporate R&D is public subsidized through universities). So the innovation incentive argument simply doesn't show us that the wealth of the 1% is legitimate.

Things aren't looking so good for the idea that the wealth of the 1% is legitimate. It is being undermined daily. After all, the mere fact that the State has to resort to acts of violence to repress resistance and protest from below shows that it's ideological hegemony is fractured and incomplete.