By Markar Melkonian

In a best-selling book, the late Nobel-laureate economist Milton Friedman wrote that, “…if inequality is measured by differences in levels of living between the privileged and other classes, such inequality may well be decidedly less in capitalist than in communist countries.”  (Milton Friedman, Capitalism and Freedom, p. 169.)

Friedman built his career on confident pronouncements like this. 

A quarter of a century ago, a generation of intellectuals in Yerevan seized on such statements, which became articles of a Free Market faith that seemed new and exciting at the time.  They hoisted the banner of capitalism high above their heads and waved it around furiously. Since then, they have had many cold winters to reconsider the claim that capitalism would narrow the gap between rich and poor. 

Armenians, of course, have not been alone in their disillusionment.  According to a recent report by the international relief organization Oxfam, “In 2014, the richest 1% of people in the world owned 48% of global wealth, leaving just 52% to be shared between the other 99% of the adults on the planet.”  Almost all of the remaining 52% of global wealth, the report claims, is owned by the richest 20%, leaving only 5.5% of global wealth to the remaining 80% of the human population of Earth.  (Deborah Hardoon, “Wealth:  Having It All and Wanting More,” Oxfam G.B. for Oxfam International, January 2015, p. 2.) The eighty percent at the bottom, presumably, includes the population of the Republic of Armenia.

Oxfam reports, furthermore, that the wealth of the poorest 50% of the human population of Earth is less in 2014 that it was in 2009, while the wealth of the richest eighty individuals doubled in nominal terms between 2009 and 2014.In fact, “The wealth of these eighty individuals is now the same as that owned by the bottom 50% of the global population, such that 3.5 billion people share between them the same amount of wealth as that of these extremely wealthy 80 people.”(Hardoon, pp. 2-3.)

The Oxfam report is just the latest of a long series of reports and studies that point to a huge and growing gap between the super-rich and the rest, both in the former Soviet republics and across the globe.These reports come as no surprise to some of us, but theyplainly contradict the claims of Friedman and the Free Market faithful, from Washington to Yerevan and beyond. TheAmerican journalist and former hedge-fund manager, Jim Cramer, summarized the lesson:  “The only guy who really called this right,” he said, “was Karl Marx.”  (Time magazine, “Ten Questions for Jim Cramer,” May 14, 2009.)

There is much evidence that within the wealthiest and most powerful countries, too, the gap between the richest and the rest is growing.  A quick way to fathom the dimensions of that gap is to examine the American Profile Poster, a graphic representation of a large amount of data collected from the U.S. Census Bureau. (Stephen J. Rose, Social Stratification in the United States:  The American Profile Poster, The New Press, 2007.) 

The figure at the very top of the poster’s main chart represents 190,000 individuals with the highest reported incomes in the United States.  The chart is evenly calibrated and the poster itself measures about one meter in height. If it were to represent the 20,000 individuals with the highest income as a separate figure, the chart would have to extend twenty stories above the poster!  That is the distance that separates the income of America’s super rich from the rest of the country.

(The latest edition of the poster was published in 2007, using data collected before the Great Recession.  If anything, the recession has further skewed the trends registered in that edition. Every indication is that an updated chart will represent an even greater gap between the super-rich and the rest.)

The Occupy activists of a few years back denounced “the 1%” of the wealthiest Americans.  In fact, the super-rich in the United States make up less than one-one hundredth of one percent of the population of the country.  Indeed, according to U.S. Census Bureau data, the 400 richest Americans control more than 38% of the country’s wealth, and 10% of the population of the U.S.A. controls 70% of the wealth. No wonder, then, that even the current administration in Washington D.C. publicly expresses alarm at the growing gap. 

The United States of America enjoys huge advantages that Armenia will never enjoy.  A vast country of 316 million people, with immense natural resources and thousands of miles of coastline, the United States dominates its own hemisphere--and most of the rest of the globe, too--economically, culturally, and militarily.  And yet forty percent of the U.S. population has a net worth of zero; they have no assets.  If it were not for social security, tens of millions of these Americans would be destitute. 

This is the country that the leaders of the counter-revolution in Yerevan twenty-five years ago looked to as a model.

But perhaps the past quarter of a century of poverty and misery is just a passing phase.  Perhaps, under more propitious circumstancesand in the even-longer run, Free Enterprise mightyet narrow the gap between the super rich and the rest, as Milton Friedman claimed it does.  Perhaps, despite appearances to the contrary, Armenian is on the way to a natural equilibrium state in which the markets will work their magic happily ever after. 

This is a claim one hears these days, as it has become clear that capitalism has failed to make good on its promises.  The economist John Maynard Keynes once noted that “in the long run” we are all dead.  This observation becomes worse than ominous in the case of Armenia, in view of the long-term economic, strategic, and security consequences ofits dramatically diminished population. 

But even setting that consideration aside, the facts of capitalism wipe out the “passing phase” article of faith, too. Thomas Piketty’s much-discussed book, Capital in the Twenty-First Century, has shown that, over the course of the last two centuries, the rate of return on capital has exceeded the rate of economic growth. 

Piketty’s book, a popular presentation of exhaustive research, shows that in the West no less than in Armenia, capitalism left to its own “free market” devices leads to greater and greater disparities of wealth.  Without state intervention, the rich get richer and the poor get poorer, even as productivity soars.  For all of his confidence, then, Friedman was clearly wrong:  even in the long-run, capitalism left to its own devices leads to greater and greater inequalities.

But this would hardly come as a shock to most residents of the Republic of Armenia today.

If by now Armenia’s Free Marketeers have not seen the error of their ways, they never will.  Indeed, why should they?  The leaders of Armenia’s counter-revolutionary generation have by now safely squirrelled away their loot and either left the country or ensconced themselves in mansions, behind gates. Capitalism certainly has worked for them.

But what about Armenia’s wage-earners, the unemployed, the under-employed, those on fixed incomes, and the poor?  These people, together with their dependents, make up the larger part of the population of the Republic of Armenia. 

People who care about Armenia had better hope for a generation of working-class Armenians who will break with the delusions of their parents and grandparents as thoroughly as the counter-revolutionary generation twenty-five years ago blotted the lives and hopes of their Soviet Armenian predecessors.

We had better hope for a generation that will recognize that the guy who really got this right was Karl Marx.

(Markar Melkonian is a nonfiction writer and a philosophy instructor.  His books include Richard Rorty’s Politics:  Liberalism at the End of the American Century (Humanities Press, 1999), Marxism: A Post-Cold War Primer (Westview Press, 1996), and My Brother’s Road (I.B. Tauris, 2005, 2007), a memoir/biography about Monte Melkonian, co-written with Seta Melkonian)