The Actuality of Marx’s Immiseration Thesis in the 21st Century
One of the main defenses of capitalism asserts that this system has elevated living standards to their highest point in human history. Under a globalized world order, the capitalist mode of production, distribution, and exchange has generated a superabundance of material wealth. However, the equitable distribution of this wealth remains a significant challenge. Social movements addressing inequality and poverty globally have gained momentum, sparking discussions about the escalating disparities between the rich and poor across class and country. These concerns have intensified alongside broader questions about the economic functionality of capitalism, particularly in the aftermath of the Great Recession. Ideological considerations are gaining prominence, with one powerful current making a resurgence, especially among Western youth — that of scientific socialism and the worldview of its progenitor, Karl Marx. Among the various tools provided to the working class, the immiseration thesis stands out today as one of the most relevant and viable, even a century and a half after its inception.
The Theory
The theory of immiseration associated with Marx is often attributed posthumously by his followers, as Marx himself preferred the term ‘pauperization’ over the phrase. According to Marx, the core idea of immiseration revolves around the belief that as capitalists accumulate wealth, the condition of the workers, regardless of their wages, deteriorates. This inverse relationship between the two classes is based on the notion that real wages stagnate in comparison to the overall increase in productivity.
Marx argued that capitalism gives rise to a reserve army of unemployed and underemployed labor, hindering the working class from improving its real wages at a pace matching productivity growth. The result is a reduction in real wages relative to overall labor productivity, leading to an increased rate of exploitation. This trend widens the gap between capitalists and workers, with the former accumulating capital at a rate equivalent to the productive increase of the laboring masses.
The consequences of this divergence in income include heightened inequality, stagnant living standards, increased class distinctions, slower economic growth, social instability, and greater alienation of the working class. Marx asserted that this immiseration would eventually lay the groundwork for a revolutionary upheaval, driven by the sharpening class contradictions between capitalists and workers.
Recent decades have seen support for the immiseration thesis, with real wages decreasing in proportion to the overall increase in productivity and the enrichment of the capitalist class. However, whether this economic trend leads to widespread upheaval, as warned by think tanks and prepared for by intelligence communities, remains a matter of time and destiny.
Examining recent macroeconomic data within the context of the U.S., the center of global capitalism, the text explores the neoliberal era that began in the late 1970s. This period is marked by a return to laissez-faire economic liberalism, characterized by privatization, deregulation, and austerity. The erosion of social and legal controls on wealth consolidation, coupled with the war against unions and worker rights, has led to an unprecedented concentration of wealth and power. The current economic landscape, resembling conditions from Marx’s time, prompts a resurgence of interest in his ideas and theories as global capitalism regresses to its 19th-century form.
Global Inequality
Bill Gates, ranking among the wealthiest individuals in world history with a net worth exceeding $100 billion, surpasses the annual GDP of 138 individual countries. In their annual public letter released in early April 2017, Bill Gates and his wife Melinda expressed optimism, stating that the global fight against poverty was making progress, citing a halving of those living on less than $1.25 a day (the UN’s definition of extreme poverty) since 1990. However, a substantial scholarly consensus contends that the poverty threshold should be set at $5 a day, a viewpoint supported by the US Department of Agriculture a decade ago, asserting it as the minimum necessary for individuals to maintain homeostasis. Adjusted to $7.40 a day in contemporary terms, this revised benchmark indicates that more than 60% of humanity, or 4.2 billion people, live in poverty, as per Marx’s immiseration thesis requiring a temporal dimension for validation. Regrettably, the number of people living below this threshold has increased by over 1 billion in the last 35 years, signaling a rise in global poverty, contrary to the optimistic statements by supranational organizations and billionaire philanthropists like Bill Gates, who resides in a $125 million mansion.
Oxfam, a coalition of charitable organizations overseen by Oxford, has gathered significant data highlighting the profound global wealth divergence. In 2010, their findings indicated that the richest 388 individuals possessed more wealth than the poorest half of the world. By early 2015, this number reduced to 80, further decreasing to 62 by late 2015, and reaching 42 by January 2018. In January 2019, it was reported that the 26 wealthiest individuals now own more wealth than the poorest 3.8 billion of humanity combined. Another Oxfam report emphasizes the crisis of inequality, revealing that seven out of ten people live in a country witnessing a rise in inequality over the past 30 years. Between 1988 and 2011, the incomes of the poorest 10 percent increased by a mere $65 per person, while the incomes of the richest 1 percent grew by $11,800 per person—182 times as much. A 2016 study found that the richest 1% now own the same wealth as the bottom 99% of humanity combined, representing 50% of global wealth, a significant increase from 2010. Furthermore, the wealthiest 10% control 87.7% of the world’s wealth, and the top 50% possess a staggering 99.3%, leaving the poorest 50% of humanity with only 0.7%. Despite the population of the poorest 50% increasing by 400 million since 2010, their wealth has decreased by approximately $1 trillion, while the 62 richest individuals have accumulated an additional $1.76 trillion.