By David Barber
David Barber is an assistant professor of American history at the University of Tennessee at Martin. He is the author of A Hard Rain Fell: SDS and Why it Failed (University Press of Mississippi, 2008).
American society’s fantastically skewed distribution of wealth stands as one of the main structural fault lines underpinning the Crash of 2008.America’s richest one percent of the population own over forty percent of America’s wealth – exclusive of home ownership – in this, the most opulent society history has ever known. On the other hand, the bottom sixty percent of Americans own approximately one percent of all of America’s wealth.
If we picture an auditorium with one hundred people and one hundred seats, the single richest person would be able to spread out smartly over nearly forty-three seats. The poorest sixty people in the auditorium would have to make due squeezing into a single seat.
This mal-distribution of wealth does not bode well for a society based on the buying and selling of goods. Our super-rich plutocrats, after all, do not need more than five or ten automobiles or five or ten homes each.
This top one percent – 3 million people – certainly cannot purchase all the goods that the poorest 180 million Americans would be capable of purchasing had our society a more equal distribution of wealth.
And so debt has had to sustain our market economy: the more skewed the distribution of wealth has grown over time, the more frantically has the economy been forced to create a growing array of consumer debt mechanisms – subprime mortgages, payday loans, more and more intricately structured credit card debt – in order simply to maintain its functioning.
When a critical mass of poor and working-class Americans could no longer pay their fabulously expensive subprime mortgages and usurious credit card bills, this house of cards collapsed.
A number of the financial institutions built on this consumer debt foundered and the remainder required unprecedented injections of federal funds to remain afloat.
The housing market and new residential construction, the market for consumer goods – automobiles, appliances, electronics – all crumbled, taking down with them the jobs and retirement savings of millions of Americans.
The Crash, in short, was not an episode of mass hysteria or panic; it represented a structural crisis in part rooted in the grossly unequal distribution of wealth in this society. When millions of Americans could no longer buy goods, industry had to stomp on the brakes.
And what is true in the United States of the unequal distribution of wealth, and of the consequences of that unequal distribution, is true again on a world scale. Nearly half the world’s population lives on $2 per day or less.
This super-poor mass of humanity, from whose soil is ripped vast amounts of mineral and agricultural wealth, and out of whose labor the world’s manufactured goods increasingly come, are almost wholly excluded from participating in the world’s market economy.
These people, too, must depend upon debt, public debt in this case. More importantly, the survival of our world’s economic system, as it is currently configured, depends upon these people being both poor and indebted. But it is both the poverty and the debt which lead inexorably to the Crash.