Wealth Concentration - Opposition

Opposition

Marx promoted several explanations of the cause of wealth concentration. Some of the causes may include:

1. Cost of living is typically the same for everyone. In a free market economy, factors contributing to the cost of living will adjust so that poorest members of the society are forced to spend all their income on bare necessities (food, housing, medicine), whereas richer members will have enough excess income that they can save and invest. Thus, in a free-market capitalist economy, both savings and the investment income (Marxian surplus value) are disproportionally accumulated in hands of wealthiest individuals.
2. The process by which corporate officers are paid large salaries and bonuses: for example, average CEO pay is estimated to be between 200 and 300 times the pay of an average worker as of 2005. Critics of the corporate system have often charged that there is a substantial disconnect between a) officer performance and compensation, and b) officer compensation and worker compensation, and that officers are compensated at levels disproportionate to either performance or payroll because they are already part of the elite, and that this is a self-perpetuating methodology to maintain an elite class (see neofeudalism).
3. If the economy of any country is organized in the interests of the super-rich, or is a plutocracy in which only the wealthy can hold government office, it should be expected that wealth condensation will follow. Critics contend a modern example of this is the current executive of the U.S. In the view of critics like Paul Krugman the tax policies of the Bush administration vastly favored the wealthy over the poor and the middle class. The argument underlying this was that progressive tax systems were being scrapped in favor of regressive tax systems, driving wealth condensation (by allowing the wealthy to retain more of their wealth as disposable and investable income.)

Marx believed that wealth concentration is common throughout democratic countries with free market economies, which is exemplified the old phrase "The rich get richer and the poor get poorer". (Although most would concede that the extent to which this is true varies from regime to regime, particularly in regard to "unearned income tax" policies.) For instance, the "law of the centralization of capital" was posited by Marx as applying to all capitalist societies.