Inequality is central to the workings of capitalism, writes Grace Blakeley, with the battle for power between workers and bosses a perennial feature of the system. Yet in recent decades, people seem to have accepted extreme inequality as a natural occurrence. How has this happened? And how can capitalism’s exploitative ideology be overcome?

Inequality is a part of the foundations of capitalism. For a capitalist economy to function, some people must own all the resources required to produce commodities, while others are forced to sell their labour power merely to survive.

The creation of this divide between worker and capitalist was a critical step in the development of capitalism. Common land was enclosed, leading to the emergence of a landless class of workers with no choice other than to sell their labour power to industrialists in towns and cities. But the exploitation of these workers, crowded together in small spaces with little hope for the future, also laid the groundwork for the emergence of socialism. To this day, this divide remains critical for the ongoing functioning of global capitalism – while also being one of its greatest weaknesses.

The exploitative essence of capitalism

The profitability of the world’s largest companies, centred in the rich world, depends upon the exploitation of workers centred in the global South.

Fast fashion companies like Shein pay garment workers across China as little as 3p per item they produce, forcing them to work up to 18 hour days with no weekends. Apple’s iPhones are manufactured using metals stripped out of war-torn countries like the Democratic Republic of Congo, and put together by hyper-exploited workers huddled together in factories across China. Even the modern AI revolution would not be possible were it not for the poorly-paid, repetitive work of those labelling images and sorting information so it can be exploited by powerful tech companies.

But workers do not accept these conditions lying down. Wherever there is exploitation, there is resistance. Today, as has been the case throughout the history of capitalism, workers all over the world are organising, often in extraordinarily challenging conditions, to fight for their freedom.

In Bangladesh, garment workers went on strike last year demanding higher pay and better conditions, leading to the shutdown of hundreds of factories across the country. Amazon workers all over the world – from the UK and the US, to Germany and Poland – have been attempting to form unions, in the face of extreme resistance from the company. Even in China, where the state exerts such intense control over workers’ lives in the service of capitalist interests, the number of strikes tripled between 2022 and 2023.

This battle for power between workers and bosses has been a perennial feature of capitalism. For most of history, the trend was towards much greater levels of organizing. The workers exploited by capital were supposed to be its gravediggers. But over recent decades, people seem to have accepted extreme inequality – it has become naturalized. How has this happened?

How inequality came to be seen as natural

The first factor is globalization. Capital is able to move around the world seamlessly, while workers are stuck in place, which means powerful monopolistic corporations headquartered in the rich world are able to exploit workers in the global South. Poor workers living in poor countries find themselves unable to leave in search of better economic opportunities, and their attempts to organize are quashed by authoritarian governments captured by corporate interests. Wealthy states also seek to maintain this global division of labour through rigid policing of national borders.

The end result is that the poor remain stuck in poor countries with few economic opportunities and very little freedom, producing commodities to be consumed by people in rich countries. This inequality is not naturalized so much as it is rendered invisible. No iPhone user ever sees the conditions in which their phones are made, and even if they did, they would never have to worry that they might face similar working conditions.

The second factor is ideology. Even within the rich world, people seem to accept extreme inequalities that are very much visible. Elon Musk and Jeff Bezos are viewed as heroes in our societies, despite their outsize role in exploiting workers and undermining democratic values like personal privacy and freedom of the press.

Capitalist ideology suggests that inequality naturally emerges from the operation of the free market. Intelligent, capable, hard-working individuals with valuable skills are paid more than unintelligent, lazy, low-skilled individuals. Some of those intelligent individuals are gifted with skills so far beyond those of the average person that they are able to create their own capitalist enterprises, transforming themselves from workers into entrepreneurs.

This story of the plucky entrepreneur who comes from nothing to make his fortune has always been the exception rather than the rule. In the UK, the birthplace of industrial capitalism, capitalism emerged as a joint venture between aristocrats, merchants, and financiers – all supported by the British state – which only served to consolidate the power and wealth of those at the top. Even today, one third of billionaire wealth is inherited, while another third comes from “crony connections to government and monopoly”.

There should be no mistake: those who make their wealth “on their own” do so by exploiting both common resources – from legal systems, to infrastructure, to the natural environment – and the labour power of other human beings. The people being exploited in this relationship are not too stupid, inept or unskilled to run their own businesses – they were simply unlucky enough to be born into situations in which the economic opportunities taken for granted by the wealthy did not exist.

Those who make their wealth “on their own” do so by exploiting both common resources – from legal systems to the natural environment – and the labour power of other human beings

Nevertheless, the ideology of inequality remains an incredibly powerful force naturalizing the gap between rich and poor. The belief that inequality is somehow justified is the glue that holds advanced capitalist societies together. It is the foundation of the legitimacy of the ruling class in these societies. It is the basis of the American Dream.

The real possibilities of a genuinely egalitarian economy

It is only when this ideology is challenged that we begin to see resistance to inequality re-emerge. And this ideology is only challenged when workers realize that they have the power, and the skills, to govern themselves.

In Vulture Capitalism, I look at the example of the Lucas Plan, where workers at Lucas Aerospace developed a plan to transform their ailing employer from a privately-owned weapons manufacturer into a worker-owned, democratically governed producer of socially useful technologies. Workers from across the organization contributed ideas as to how existing resources could be repurposed to create technologies like wind turbines and kidney dialysis machines – and they proposed a clear and coherent plan as to how the governance of the organization could be democratized.

Naturally, the Lucas Plan terrified the British establishment. Not because the transformation of one single firm would threaten the interests of capital, but because it challenged the ideology that legitimised the entire system of production: the idea that workers had to be governed and controlled by their superiors.

Today, the spirit of the Lucas Plan is kept alive by workers, community organizers and activists seeking to create a democratic economy. From community wealth building, to participatory budgeting, to the tenants’ movement and the labour movement, those organizing to take control of the resources we all need to survive are at the forefront of the fight against inequality.

Inequality is sustained by the unfounded belief that those at the top are destined to rule, while those at the bottom are destined to obey. The only way to build a genuinely egalitarian economy is to build a democratic economy.

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All articles posted on this blog give the views of the author(s). They do not represent the position of LSE Inequalities, nor of the London School of Economics and Political Science. 

Image credits: Zeynep Demir Aslim and Mamunur Rashid via Shutterstock