Is the rising cost of right-to-profit for the rich keeping the rest of us poor?

If Karl Marx were alive today, he would have really found it a very exciting because we are yet again at a point where a new economics is required to explain the strange situation that we have around us.

Marx is now forgotten as an economist, but he did try to make sense of a strange phenomenon called “profit” had burst out on the scene (especially after the Industrial Revolution) and no one could figure out where it came from.

Marx postulated that the “profit” was nothing but the amount that the labor deserved but could not realise because of their lower position in the power dynamics.

The economists have debated his, what looks to be hyper-simplified idea about profit that ignores concepts like innovation or management-efficiency-differential in a market place, but some part of it still makes sense.

Some people do get more out of the common kitty and wealth distribution is hence never too uniform. This is a problem and the post-industrial revolution economists have tried to solve it by creating frameworks like “free market” or “equal opportunity to all”, but what is most interesting to note is that the problem has just got worse.

Today, we are heading for yet another market revolution, and world is staring at a never-before gap between the rich and poor.

Somehow, while trying to “solve” the problem, we have managed exactly opposite and even with exploiting and evil institutions like colonialism demolished, the gap between us and them is getting bigger everyday.

This makes it interesting to ponder over the issue of what is driving this “profit”, i.e., the wealth-gap between the rich and the poor, and one reason that I see is worth looking at.

There is a great possibility that the profit is increasing for a very counterintuitive reason, and that is the cost of being and remaining in power that the new-age rich have to pay.

If we look at the phenomenon of profit from Marxian perspective, it demands presence of two key stakeholders, i.e., the profiteers and the exploited, and this brings in the issue of power.

The profiteer-exploited duo exists only because of lopsided power distribution, and if that is not maintained, profit is bound to start diminishing. So, the equation needs to consider the cost of remaining in power in case of the profiteer. That cost is obviously part of the input cost when profit has to be calculated.

If we look back at the history, the right-to-profit was driven mostly by simple idea of social-status-by-birth. You are born a king or a baron, you are entitled to the profit that Marx “discovered” by looking at the condition of the exploited of that era.

Another interesting part of that world was that it was torn with small battles that keep changing this dynamics so if there was an an “input cost”, it was the cost of war, and regular upheavals never allowed this cost to go too high.

If we juxtapose the above two point in a modern world where losing the right-to-profit is not decided by a short war fought by sword and cannons but by managing politicians=anarchists spread across the globe, a new equation can be sensed.

The gap between the rich and the poor can be increasing because the cost of acquiring the right-to-profit is going high in a world that has almost reached a point that a redistributing war is economically unaffordable.

There are two forces/costs at play today, one is to acquire the right-to-profit and other is to maintain status quo of the global market to retain and enjoy the right.

Look around and it is not to difficult to see that the world has reached a completely different scale in the above equation, as the stakes today are often as high as acquiring the right to run world’s largest economy by paying the cost for the same.

Due to this dynamics, the centralisation of the wealth has to behave like motion of a snowball because staying in power is a race you cant afford to lose at any cost.

The “poor” 1% holding 90% of the wealth of the world are forced to keep paying for the right-to-profit by constantly increasing their power. With no social system protecting their “divine” right to the profit, they are forced to amass more wealth each day or collapse.

As most of us are not in this coveted position of enjoying right-to-profit, does this hypothesis offer any solution to the problem of us getting poorer by each day?

There is a solution, provided we see the game and refuse to play it.

If we look carefully, we are the market and it is our consumption that allows the rich to have a handle over us. So, if we start tapering down the consumption, the fevered frenzy of the race they are running can be toned down.

They will scare us by calling it an economic “depression”, but not only we the poor, but our Mother Earth (that is burning like a furnace since renaissance and Industrial Revolution) also desperately needs it.

It is all about us realising that being poor is an idea that is sold to us to make us run for the illusory profit that they need. If we can get rid of the psychological trap, we are not poor as long as the basic needs of life are satiated.

It may sound crazy, but we the people of the world can change the power dynamics completely if mindless consumption and hoarding is curbed.

In such a brave new world where gratification is replaced by satisfaction, being rich would be as pointless as owning a diamond on the white dwarf star BPM 37093!.