capital vs wealth

We call the United States a capitalist economy, but we’ve become a wealth-hoarding oligarchy. This is a failure of capitalism and a danger to our future.

Here is one of the most important lines from Yuval Noah Harari’s wonderful book Sapiens:

Capitalism distinguishes “capital” from mere “wealth.”

We use both words so thoughtlessly that we rarely stop to remember what they mean. Too often, we conflate them, which is a mistake that allows the wealthy to continue to steal prosperity from the rest of us while undermining both the economy and political stability. To clarify this a bit, let’s turn to that radical anti-wealth preacher, Jesus.

In Matthew 25, right before he warns that not caring for the poor, the sick, the jailed and others will result in going to hell, Jesus told a parable about a master who entrusted various sums of wealth to certain servants. Those who took that wealth and created more, which they returned to their master, were rewarded. The servant who buried the bag of gold so he could simply return it – fearing to lose what he’d been entrusted with – was punished.

Hoarding wealth is a punishable offense in the eyes of Jesus and not just Karl Marx. Religion and economic theory aside, this makes sense. “Wealth” is money stashed aside and put to no use but to accumulate for an individual. “Capital” is money used to create other things: jobs, products, services, and, of course, more money. The difference between capitalism and socialism isn’t about capital itself; the Soviet Union needed capital to build state-run enterprises. Stuff had to be bought; workers had to be paid.

The problem is not capital; capital is a good thing. We can argue about whether or not capital should be prioritized in the way modern capitalism would have it or whether some other form of control is preferable, but in conducting that argument we lose sight of what matters more: How much wealth is being generated, who is getting hold of it, and what are they doing with it.

The answer in the United States, of course, is that our amazing economy is generating massive amounts of profit, but that profit is being hoarded by a very few people in the form of wealth. Money that could be used to grow the economy and to ensure that all people live good, happy, prosperous lives is instead being taken by a few who buy some stuff but mostly keep the rest of us from having what we need – and, in more and more cases, what we’ve actually earned.

Most of us know this, too. That’s why Americans of every political stripe support a wealth tax; not increased taxes per se but a tax to recover some of that massive wealth that we all recognize is far beyond what any human has earned or needs. Republicans worth a few million dollars know that their wealth is more than enough; they see that having more than $50 million in wealth is an excess that justifies a small tax to benefit the rest of society.

Some of us believe that wealth above a certain level is unjustifiable and should be eliminated. Lots of people are uncomfortable with vast wealth but equally uncomfortable with saying what that level is. And given how Americans are trained from infancy to expect and demand more and more stuff, especially wealth, overcoming that indoctrination is difficult. But give people a couple of numbers they can comprehend – $50,000,000 and 2% – and the problem gets much less complex.

“You betcha,” is the answer given by around 80% of Americans; “that’s a tax we need.”

The threat for the target of that tax isn’t that the tax might grow – hell, getting it instituted in the first place is going to be a massive battle – but that wealth might be taken at all. Those who get to a point where they have wealth also have their brains transformed by that wealth. They believe, with few exceptions, that they have earned that wealth. That they deserve that wealth. A small wealth tax is a personal attack on them. Their entire mental framework is under attack, and by god, they’re not having it.

But wealth is not a useful thing in a capitalist economy. Capital is a means, not an end. Adam Smith’s entire vision was of smart people using capital to create more capital, which would mean jobs and security and prosperity for all. For Smith, wealth was not a billion dollars in stock and property; it was the dynamic flow of capital throughout the nation. Wealth was a shared blessing that enabled those with skills and talents to prosper according to their abilities and to provide sufficient means for all people to have at least enough for a good and decent life.

What we have today is not capitalism. The hoarding of wealth has a fitting parallel in the obesity crisis: more people suffering the ill-health effects of having too much rather than too little. (This is true; more people suffer from obesity in the United States than from hunger.) It’s stupid beyond words that we have so many people living such difficult lives for the simple reason that they lack money. Jeff Bezos has tens of billions in stashed-away wealth, while more than 3,000 people live in tents or under sheets of cardboard on the streets of Portland. We demand that the mayor somehow fix this, but why aren’t just taxing the shit out of Bezos and letting him pay for that housing?

Wealth is a poison. It’s a mental illness. It’s a worse threat to capitalism than communism ever was. In a nation where a majority of people call themselves Christians, wealth is unjustifiable. We can’t just elect a bunch of people who’ll institute a 90% wealth tax, of course; the wealthy would happily abandon their homeland to save their wealth. But we cannot continue to sit back and allow the destruction of this country in the form of wealth hoarding.

For capitalists more than anyone else, wealth should be an affront. Bezos’ billions should be working to create prosperity by being used productively. If Bezos’ worth was reduced to a single billion – or we could be generous and let him have two – and the rest was invested in the way capital is meant to be invested, we would vastly improve the nation’s economic health – and the welfare of the people who do the actual work on which any economy is based.

Socialism or capitalism or whatever you want to subscribe to as your political-economic belief system, it doesn’t matter. Capital is money used to do productive things for the benefit of all involved. It’s the planting of a field and the harvesting of a crop that is much greater than what was sown.

Wealth is sitting on the bag of seeds in your private mansion while your neighbors slowly starve – and your own future is doomed.

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