This is one of the few ways capitalistic systems "touch" social systems. Naturally, the capitalistic forces overwhelm the social forces.
Class striations were fairly stable over the last few centuries. Middle class people would remain middle class all their lives. Poor would remain poor. Rich would stay rich. There was moderate jumping around. A few rags to riches stories and a few riches to rags stories. The middle class moved around a lot, but only between lower, middle and upper middle classes. Shades of black.
Indeed, some people believed that this was the natural order of things. People in lower classes deserved to be there. This view is generally known as SocialDarwinism. Oddly enough, not many people thought they didn't deserve to be richer, but that's how things go. They were probably correct, though. Social systems are probably evolutionary. However, the manipulation of Social Darwinists was artificial to the system.
Nowadays, ClassStriation is becoming more prominent (some would say severe). The poor are getting poorer, the rich are getting richer, and the middle class just won't budge. The socio-economic fabric is reweaving itself in disastrous ways. Well, disastrous if you aren't DotComedy? rich.
[Originally from Wiki:ClassStriation]
I disagree with myself. Before democratic capitalism, the strias were stable. After democratic capitalism, it became possible to jump between classes, especially as post-secondary education became practical for nearly everyone. Think about it: where do most people meet their future spouses these days? Post-secondary mixes up the gene pool.
If you're poor then you meet your spouse at your workplace, where other poor people work. If you're rich, you would be very suspicious of any poor person wanting to marry you. If by some stroke of insanity you do marry a poor person then your parents and grandparents will be likely to withdraw your trust fund and effectively disown you.
Additionally, DavidBrin makes a good point about how inheritance taxes prevent wealth from passing from one generation to the next in the United States (cf. ). Although, I'm under the impression that Canada no longer has inheritance tax. Your situation may vary.
Some countries, like the Netherlands, have heavy inheritance taxes. Other countries, like the United States of America, do not. USA taxes in no way prevent the accumulation of vast family fortunes. In theory, the USA has inheritance taxes, in practice it does not.
Anyway, things are changing again now to what they were before. I think private school is both a symptom and a cause. And while I don't think inheritance tax is the only thing preventing the slide of the diamond model back to the pyramid model as Brin calls it, I think the general concept of family wealth is growing stronger. Or if not family wealth, corporate wealth which certainly lasts longer than one lifetime.
Not that any of this directly applies to me. My background is not North American. I have stronger class distinctions to worry about. -- SunirShah
You can tell the rich people in the USA by their strong family allegiances (up to and including making up coats of arms), their trust funds, their political connections and intermarrying with European royalty.
The definition of the word "fortune" was 30 million USD around 1960. It is now upwards of 250 million USD. Lotto winners need not apply; what you can win from a lottery is a "nice chunk of change" or a "tidy sum", not a fortune. A fortune need not be owned by one individual; it can be spread out among many members of an extended family (a clan) who act in a coordinated manner as a matter of course. A fortune can even be "unowned" (in the coffers of a charitable foundation") because what matters is who controls it; who wields this immense economic power to their own advantage.
In the USA, someone who is not born into wealth but acquires it during their lifetime will never be accepted by the rich as one of their own. His children will be but never himself. Being rich means being born with a trust fund so by definition it is impossible for a person to move themselves into the upper class.
Bill Gates isn't upper class? Whether "the rich" accept him as one of their own or not, it seems to me that any definition of "upper class" that doesn't include him is seriously flawed.
(Not to belittle the point of the nouveau riche, but Bill Gates was born rich.)
In Palm Beach County, as well as many other places, the urban development has been created ala archipelagos. $350 000 houses are clustered together, $200 000 houses are clustered together, $100 000 houses are clustered together. Due to CarCulture, this means that people of different incomes go to different stores, different schools, different churches, different hospitals. This is ClassStriation through architecture.
I disagree with myself again (can you tell I'm not an economist). I'm starting to think the trend that the rich get richer and the poor get poorer has be fallout from the PowerLaw. Now that the United States has been dismantling the great liberalist (a la SocialCapitalism) experiment in favour of libertarianism for quite some time, pure competitive forces seem to have been unleashed unconstrained. One of the chief purposes of the State in a liberal society is to maintain egalitarianism, but it limits its ability to do this if it continues to reprivatize its power. -- SunirShah
Really? I can imagine a fiercely redistributive government that is otherwise very libertarian. Just have high, simple, compulsorary taxes (~45% GDP), and convert 90% of that money into a universal flat-rate benefit. Spend what's left on stuff that even libertarians think should be done by the state. -- MartinHarper
Sure, but what would happen next? That system depends on the libertarian society remaining unchanging, but with that much freedom alloted to each individual, it seems highly probable that some person would organize to dismantle the tax system that undercuts his or her ability to become richer. One doesn't have to look very far to see that happening today. After all, what segment of society is proposing a flat tax? -- SunirShah
The UK Greens propose a flat benefit, and other left-wing groups in Europe have similar schemes. A flat-rate tax would be unworkable in practice, but less interventionist tax regimes have been proposed. Certainly people would be able to organise to dismantle the tax system, just as people can and do organise to promote the use of the Thames as a crocodile sanctuary, but that doesn't mean it's going to happen. If such a system worked well, or was seen to work well, then it could be quite stable. --MartinHarper
The trend that the rich get richer and the poor get poorer is a myth, at least in the USA. Even accounting for inflation, the rich have gotten richer and the poor have gotten richer in the last 80-100 years (even in the last 30). The rich just get richer faster than the poor.
Nevertheless, the gap is spreading, thus increasing ConflictPotential?
I think this is the wrong way to understand economic classes. The classes aren't distinguished by how much money / wealth they have. What distinguishishes classes is how they earn their income. It's this that gives them such distinct views on what's good and bad for the economy.
The traditional theory breaks the classes like this :
To which we can add some others
Each class has a different perspective because what will benefit them differs. In the 19th Century England, landowners wanted protectionism on wheat so they could sell it at a profit, factory owners wanted free trade so that bread was cheaper which brought down the cost of salaries. Workers want higher salaries, better working conditions and more security. Capitalists want lower salaries, more flexibility. Senior employees help to squeeze the junior salaried employees and earn large productivity bonuses. Traders want more volatility whether the market is going up or down. Factory owners want less. Civil servants support more government supervision.
I think Sunir is spot on with the PowerLaw point. And it's what's wrong with SocialCapitalism. Social Capitalism assumes the only cause of inequality is "historical" accident. And if only, like TonyBlair?, we could ensure equality of opportunity for everyone, then any other inequality is merely due to differences of skill. But as KarlMarx? noticed and mathematicians are demonstrating now, there is a ParetoEffect?. The system has intrinsic dynamics which push it towards an unequal distribution of wealth. If money was equally redistributed tomorrow, the market's emergent behaviour would redistribute unequally the day after.
This is why, if you care about inequality (and many people don't) it isn't enough to ask for historical problems to be rectified. You have to actually address the system as a whole. Be willing to look at all the nuts and bolts, levers and incentives, and argue that, yes, they need to be adjusted, not merely cleaned and oiled.