For anarchists, class analysis is an important means of understanding the world and what is going on in it. While recognition of the fact that classes actually exist is less prevalent now than it once was, this does not mean that classes have ceased to exist. Quite the contrary. As we'll see, it means only that the ruling class has been more successful than before in obscuring the existence of class.
Class can be objectively defined: the relationship between an individual and the sources of power within society determines his or her class. We live in a class society in which a few people possess far more political and economic power than the majority, who usually work for the minority that controls them and the decisions that affect them. This means that class is based both on exploitation and oppression, with some controlling the labour of others for their own gain. The means of oppression have been indicated in earlier parts of section B, while section C (What are the myths of capitalist economics?) indicates exactly how exploitation occurs within a society apparently based on free and equal exchange. In addition, it also highlights the effects on the economic system itself of this exploitation. The social and political impact of the system and the classes and hierarchies it creates is discussed in depth in section D (How do statism and capitalism affect society?).
We must emphasise at the outset that the idea of the "working class" as composed of nothing but industrial workers is simply false. It is not applicable today, if it ever was. Power, in terms of hire/fire and investment decisions, is the important thing. Ownership of capital as a means of determining a person's class, while still important, does not tell the whole story. An obvious example is that of the higher layers of management within corporations. They have massive power within the company, basically taking over the role held by the actual capitalist in smaller firms. While they may technically be "salary slaves" their power and position in the social hierarchy indicate that they are members of the ruling class in practice (and, consequently, their income is best thought of as a share of profits rather than a wage). Much the same can be said of politicians and state bureaucrats whose power and influence does not derive from the ownership of the means of production but rather then control over the means of coercion. Moreover, many large companies are owned by other large companies, through pension funds, multinationals, etc. (in 1945, 93% of shares were owned by individuals; by 1997, this had fallen to 43%). Needless to say, if working-class people own shares that does not make them capitalists as the dividends are not enough to live on nor do they give them any say in how a company is run).
For most anarchists, there are two main classes:
(2) Ruling class -- those who control investment decisions, determine high level policy, set the agenda for capital and state. This is the elite at the top, owners or top managers of large companies, multinationals and banks (i.e., the capitalists), owners of large amounts of land (i.e. landlords or the aristocracy, if applicable), top-level state officials, politicians, and so forth. They have real power within the economy and/or state, and so control society. In a nutshell, the owners of power (whether political, social or economic) or the master class. This group consists of around the top 5-15% of the population.
Obviously there are "grey" areas in any society, individuals and groups who do not fit exactly into either the working or ruling class. Such people include those who work but have some control over other people, e.g. power of hire/fire. These are the people who make the minor, day-to-day decisions concerning the running of capital or state. This area includes lower to middle management, professionals, and small capitalists.
There is some argument within the anarchist movement whether this "grey" area constitutes another ("middle") class or not. Most anarchists say no, most of this "grey" area are working class, others (such as the British Class War Federation) argue it is a different class. One thing is sure, all anarchists agree that most people in this "grey" area have an interest in getting rid of the current system just as much as the working class (we should point out here that what is usually called "middle class" in the USA and elsewhere is nothing of the kind, and usually refers to working class people with decent jobs, homes, etc. As class is considered a rude word in polite society in the USA, such mystification is to be expected).
So, there will be exceptions to this classification scheme. However, most of society share common interests, as they face the economic uncertainties and hierarchical nature of capitalism.
We do not aim to fit all of reality into this class scheme, but only to develop it as reality indicates, based on our own experiences of the changing patterns of modern society. Nor is this scheme intended to suggest that all members of a class have identical interests or that competition does not exist between members of the same class, as it does between the classes. Capitalism, by its very nature, is a competitive system. As Malatesta pointed out, "one must bear in mind that on the one hand the bourgeoisie (the property owners) are always at war amongst themselves. . . and that on the other hand the government, though springing from the bourgeoisie and its servant and protector, tends, as every servant and every protector, to achieve its own emancipation and to dominate whoever it protects. Thus the game of the swings, the manoeuvres, the concessions and the withdrawals, the attempts to find allies among the people and against the conservatives, and among conservatives against the people, which is the science of the governors, and which blinds the ingenuous and phlegmatic who always wait for salvation to come down to them from above." [Anarchy, p. 25]
However, no matter how much inter-elite rivalry goes on, at the slightest threat to the system from which they benefit, the ruling class will unite to defend their common interests. Once the threat passes, they will return to competing among themselves for power, market share and wealth. Unfortunately, the working class rarely unites as a class, mainly due to its chronic economic and social position. At best, certain sections unite and experience the benefits and pleasure of co-operation. Anarchists, by their ideas and action try to change this situation and encourage solidarity within the working class in order to resist, and ultimately get rid of, capitalism. However, their activity is helped by the fact that those in struggle often realise that "solidarity is strength" and so start to work together and unite their struggles against their common enemy. Indeed, history is full of such developments.
So do classes actually exist, or are anarchists making them up? The fact that we even need to consider this question points to the pervasive propaganda efforts by the ruling class to suppress class consciousness, which will be discussed further on. First, however, let's examine some statistics, taking the USA as an example. We have done so because the state has the reputation of being a land of opportunity and capitalism. Moreover, class is seldom talked about there (although its business class is very class conscious). Moreover, when countries have followed the US model of freer capitalism (for example, the UK), a similar explosion of inequality develops along side increased poverty rates and concentration of wealth into fewer and fewer hands.
There are two ways of looking into class, by income and by wealth. Of the two, the distribution of wealth is the most important to understanding the class structure as this represents your assets, what you own rather than what you earn in a year. Given that wealth is the source of income, this represents the impact and power of private property and the class system it represents. After all, while all employed workers have an income (i.e. a wage), their actual wealth usually amounts to their personal items and their house (if they are lucky). As such, their wealth generates little or no income, unlike the owners of resources like companies, land and patents. Unsurprisingly, wealth insulates its holders from personal economic crises, like unemployment and sickness, as well as gives its holders social and political power. It, and its perks, can also be passed down the generations. Equally unsurprisingly, the distribution of wealth is much more unequal than the distribution of income.
At the start of the 1990s, the share of total US income was as follows: one third went to the top 10% of the population, the next 30% gets another third and the bottom 60% gets the last third. Dividing the wealth into thirds, we find that the top 1% owns a third, the next 9% owns a third, and bottom 90% owns the rest. [David Schweickart, After Capitalism, p. 92] Over the 1990s, the inequalities in US society have continued to increase. In 1980, the richest fifth of Americans had incomes about ten times those of the poorest fifth. A decade later, they has twelve times. By 2001, they had incomes over fourteen times greater. [Doug Henwood, After the New Economy, p. 79] Looking at the figures for private family wealth, we find that in 1976 the wealthiest one percent of Americans owned 19% of it, the next 9% owned 30% and the bottom 90% of the population owned 51%. By 1995 the top 1% owned 40%, more than owned by the bottom 92% of the US population combined -- the next 9% had 31% while the bottom 90% had only 29% of total (see Edward N. Wolff, Top Heavy: A Study of Increasing Inequality in America for details).
So in terms of wealth ownership, we see a system in which a very small minority own the means of life. In 1992 the richest 1% of households -- about 2 million adults -- owned 39% of the stock owned by individuals. The top 10%, owned over 81%. In other words, the bottom 90% of the population had a smaller share (23%) of investable capital of all kinds than the richest 1/2% (29%). Stock ownership was even more densely concentrated, with the richest 5% holding 95% of all shares. [Doug Henwood, Wall Street: Class racket] Three years later, "the richest 1% of households . . . owned 42% of the stock owned by individuals, and 56% of the bonds . . . the top 10% together owned nearly 90% of both." Given that around 50% of all corporate stock is owned by households, this means that 1% of the population "owns a quarter of the productive capital and future profits of corporate America; the top 10% nearly half." [Doug Henwood, Wall Street, pp. 66-7] Unsurprisingly, the Congressional Budget Office estimates that more than half of corporate profits ultimately accrue to the wealthiest 1 percent of taxpayers, while only about 8 percent go to the bottom 60 percent.
Henwood summarises the situation by noting that "the richest tenth of the population has a bit over three-quarters of all the wealth in this society, and the bottom half has almost none -- but it has lots of debt." Most middle-income people have most of their (limited) wealth in their homes and if we look at non-residential wealth we find a "very, very concentrated" situation. The "bottom half of the population claimed about 20% of all income in 2001 -- but only 2% of non-residential wealth. The richest 5% of the population claimed about 23% of income, a bit more than the entire bottom half. But it owned almost two-thirds -- 65% -- of the wealth." [After the New Economy, p. 122]
In terms of income, the period since 1970 has also been marked by increasing inequalities and concentration:
"According to estimates by the economists Thomas Piketty and Emmanuel Saez -- confirmed by data from the Congressional Budget Office -- between 1973 and 2000 the average real income of the bottom 90 percent of American taxpayers actually fell by 7 percent. Meanwhile, the income of the top 1 percent rose by 148 percent, the income of the top 0.1 percent rose by 343 percent and the income of the top 0.01 percent rose 599 percent." [Paul Krugman, "The Death of Horatio Alger", The Nation, January 5, 2004]
Doug Henwood provides some more details on income [Op. Cit., p. 90]:
| real income growth 1977-99 |
Share of total income | |||
|---|---|---|---|---|
| 1977 | 1999 | Change | ||
| poorest 20% | -9% | 5.7% | 4.2% | -1.5% |
| second 20% | +1 | 11.5 | 9.7 | -1.8 |
| middle 20% | +8 | 16.4 | 14.7 | -1.7 |
| fourth 20% | +14 | 22.8 | 21.3 | -1.5 |
| top 20% | +43 | 44.2 | 50.4 | +6.2 |
| top 1% | +115 | 7.3 | 12.9 | +5.6 |
By far the biggest gainers from the wealth concentration since the 1980s have been the super-rich. The closer you get to the top, the bigger the gains. In other words, it is not simply that the top 20 percent of families have had bigger percentage gains than the rest. Rather, the top 5 percent have done better than the next 15, the top 1 percent better than the next 4 per cent, and so on.
As such, if someone argues that while the share of national income going to the top 10 percent of earners has increased that it does not matter because anyone with an income over $81,000 is in that top 10 percent they are missing the point. The lower end of the top ten per cent were not the big winners over the last 30 years. Most of the gains in the share in that top ten percent went to the top 1 percent (who earn at least $230,000). Of these gains, 60 percent went to the top 0.1 percent (who earn more than $790,000). And of these gains, almost half went to the top 0.01 percent (a mere 13,000 people who had an income of at least $3.6 million and an average income of $17 million). [Paul Krugman, "For Richer", New York Times, 20/10/02]
All this proves that classes do in fact exist, with wealth and power concentrating at the top of society, in the hands of the few.
To put this inequality of income into some perspective, the average full-time Wal-Mart employee was paid only about $17,000 a year in 2004. Benefits are few, with less than half the company's workers covered by its health care plan. In the same year Wal-Mart's chief executive, Scott Lee Jr., was paid $17.5 million. In other words, every two weeks he was paid about as much as his average employee would earn after a lifetime working for him.
Since the 1970s, most Americans have had only modest salary increases (if that). The average annual salary in America, expressed in 1998 dollars (i.e., adjusted for inflation) went from $32,522 in 1970 to $35,864 in 1999. That is a mere 10 percent increase over nearly 30 years. Over the same period, however, according to Fortune magazine, the average real annual compensation of the top 100 C.E.O.'s went from $1.3 million -- 39 times the pay of an average worker -- to $37.5 million, more than 1,000 times the pay of ordinary workers.
Yet even here, we are likely to miss the real picture. The average salary is misleading as this does not reflect the distribution of wealth. For example, in the UK in