Magazine article Monthly Review

The Changing Wealth of the U.S. Ruling Class

Magazine article Monthly Review

The Changing Wealth of the U.S. Ruling Class

Article excerpt

U.S. capitalism has been evolving in quite fundamental ways during the past twenty years. One school of analysis has detected the emergence of a post-industrial, high-technology information economy, while another has emphasized the ascendancy of finance, real estate, and speculative capital.' Several studies have pointed to the declining role of industrial capital, which no longer is the foundation upon which the economy stands. 2 By the 1980s, the U.S. had lost its place as the leading maker of machine tools. It had become a net importer of manufactures and was rapidly losing its dominant position in advanced computers. 3The ramifications of this transformation were manifold. Industrial employment for working-class youth dried up, forcing many to choose between minimum-wage service industries and the "underground economy," i.e., the drug trade and other such sources of illicit income. 4 Those writers who have argued the ascendancy of speculative and finance capital have also noted that a tolerably educated, housed, and healthy labor force is no longer necessary for capital. The reduction in state spending for education, housing, and health care is therefore entirely compatible with this new phase of capitalist development.

The growth of the junk bond" market symbolizes the ascendancy of speculative capital, as the high-risk, highexpected-return mentality is paramount. The total number of junk bonds outstanding rose from about 1 million in 1977 to over 45 million in 1986.," The growth of the paper economy creates an increasingly volatile climate punctuated by wild fluctuations of the stock market and burgeoning corporate indebtedness.

This restructuring of U.S. capitalism has had major effects of the internal structure of society, its economic stability, and its international competitive position. In this article we examine these structural changes as they are mirrored in the patterns of wealth holding of the richest Americans during the past decade. In particular, we examine the extent to which the wealth of the very rich has shifted away from industry and toward such speculative forms as finance and real estate. The Forbes 400

The basis for many of the claims made in this article is a compilation of data on the major industrial sources of wealth of the 400 richest Americans, the so-called "Forbes 400." These data are now available annually for the period from 1982-88, long enough to suggest some important trends. Since the data for 1982 are influenced by the severe recession of that year and contain a number of anomalies that may stem from the newness of the project,(7)the table below compares data from 1983 with those of 1988.

A strikingly large percentage of the Forbes 400, 38 percent, had the major sources of their wealth in finance and real estate in 1988, followed at a distance by manufacturing (19 percent) and the mass media (18 percent). Equally striking is the growth during the 80s of the dominance of the "paper economy" finance and real estate) over manufacturing. In 1983 only 25 percent of the very wealthy had their assets in the paper economy, about the same as in manufacturing. Between 1983 and 1988, the percentage whose wealth was concentrated in the paper economy increased by half, while the percentage concentrated in manufacturing declined noticeably. The route to the top of the economy has clearly shifted from productive to unproductive effort and, by implication, to speculative endeavor. There is scant evidence to justify the claim that the U.S. has shifted from being an industrial society to being an information society. The proportion of top capitalists with their main wealth in the high-tech sector, which was only 3 percent in 1983, was no more than 4 percent in 1988. The spread between the paper economy and high-tech actually widened from 22 percentage points in 1983 to 34 percentage points in 1988. Clearly, the very wealthy who have their money in high tech operate in a milieu- dominated by more numerous and powerful colleagues in the paper economy. …

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