The Populist Narrative on Social and Economic Inequality

Late-stage capitalism is a term that describes the current phase of capitalism, characterized by extreme inequality, environmental degradation, social alienation, and political corruption. Late-stage capitalism is not a precise or scientific term, but rather a subjective and critical one. It reflects the perception that capitalism has reached a point where it is no longer sustainable, beneficial, or desirable for most people. As inequality and injustice increase, so does the potential for conflict and violence. People who feel marginalized, oppressed, or exploited may resort to protests, riots, revolutions, terrorism, or war to express their anger and frustration. This can lead to social chaos and instability. As capitalism alienates people from themselves, each other, and nature, it affects their physical and mental health. People also lose their sense of purpose, identity, community, and creativity. These structures of feelings and atmosphere are part of the conditions of formation and emergence of right-wing populism.

In late capitalism, the lack of dignity to human beings and their needs is so severe that so many people end up in dire financial situations. While homelessness has always been present in society, in late capitalism, the homelessness is so severe that it has become a crisis. While there is a lot of wealth, the gap between the wealthy and poor is so wide and there is barely a middle class anymore. What is now perceived as the middle class is actually a working class that is a little better off than those living in poverty. A quality of late capitalism is that there are programs managed by the State that intervene and stabilize some of the inequalities. With late-stage capitalism comes increased alienation and disillusionment from one’s self, labor, each other and the social and natural world. One of today’s issues is the dissatisfaction and disillusionment with a ‘system’ that creates increasing economic inequality for most.

Using the sociological imagination, we can see that there is an increase of depression and anxiety as capitalism advances and there are more ways to exploit people. Culturally, there is a mentality of “every man for himself” and therefore, those slightly better off financially will often be heard complaining about the poor and homeless people for “taking up free money from the government” whereas in reality, these people may still be suffering with too little welfare to live on. All workplaces, however harmonious they appear, contain a relatively high number of employees who are disillusioned or angry at what they see as real, hurtful and relevant issues of serious dissatisfaction with their lot. Late state capitalism is both a time of oppression and of social change. Many start to gain awareness and are now looking around to find better ways to live for themselves and each other.

As corporations and oligarchs gain more control over politics and society, they erode the principles and institutions of democracy and human rights. They undermine the rule of law, the separation of powers, the freedom of expression, the right to privacy, the right to education, the right to health care, and other civil liberties. They also promote authoritarianism, nationalism, populism, fascism, and other forms of extremism. Thus, social frustration, originating from socio-political and socio-economic problems, has been channeled by the populist parties, which feed and sharpen social polarization. Populist parties exploit discontent stemming from a perceived elites’ failure, and they find fertile ground in times of crisis. Such tendencies increase tribalism among ordinary citizens and the political establishment and originate from social resentment. Therefore, it is essential to understand the political importance of unacknowledged resentment as an explosive force in social relations.

Late-stage capitalism is a term that captures the dissatisfaction and disillusionment with the current state of capitalism. It describes a system that is unsustainable, unjust, and undesirable for most people. It leaves one with the sense that monopolies, and the oligarchs that run them, have rigged the system in their favor. To become disillusioned means to lose one’s illusions about something or someone. People who are disillusioned have lost their illusions. This is usually meant in a negative way, as disillusioned people tend to be a little bitter. When you’re disillusioned, you’re wiser but not necessarily happier: you’ve learned from experience that life isn’t always how you’d like it to be. Recognize that disillusionment is better than ignorance. Firstly, know that disillusionment (while unpleasant) is far better than ignorance. Late-stage capitalism is not inevitable or irreversible. It is a human-made system that can be changed or replaced by another system.

The sharp rise in inequality and the destruction of old sites of stable industrial employment that had accompanied globalization and the financialization of capitalism, led to widespread popular resentment, and this provided a fertile terrain for the rise of disillusionment and right populist politics. Because of growing disillusionment and anger students and workers voted for leaders outside the mainstream party candidates during the 2016 presidential primary elections – the consequence of being left behind by soaring inequality and the failure of government to deliver. Donald Trump – figured out how to harness their disillusionment and growing anger. The growing political chaos in America is the consequence of insecurity associated with rising inequality from many being left behind.

While all men and women suffer from disillusionment, few know that their state of disillusionment is the result of the breakdown of an illusion they themselves had manufactured. Disillusion is never possible without fantasy – and the destructive strength of the disillusionment can never exceed the strength and energy that was used to create the fantasy in the first place. The adverse effect is that man places values on his illusions, and over values what is not true, or no longer exists. In order to clear these errors of thinking, man must release the emotion that keeps him tied to this false reality. The removal of illusion or fantasy involves understanding that expectations are not failed, but false. With this recognition comes an opportunity for change. The challenge: Populist rhetoric always promises a new, more inclusive political community but very often this only achieves new ways of exclusion.

Economic inequality is a tricky issue. Some level of inequality may be natural. While some inequality is inevitable in a market-based economic system as a result of differences in talent, effort, and luck, excessive inequality could erode social cohesion, lead to political polarization, and ultimately lower economic growth. Rising social spending has been used to combat inequality. Fiscal policy is a key policy instrument available to governments to achieve their distributional objectives. In advanced economies, taxes and transfers decrease income inequality by one-third, with most of this being achieved via public social spending (such as pensions and family benefits). Progressive income taxes also play an important redistributive function in some countries. However, it is important to ensure that social spending is adequate, effective and sustainable. Inequality can have adverse political and social consequences, with the potential to undermine macroeconomic stability and sustainable growth.

A fair and equitable distribution of income is a fundamental element of the social contract. Social contract theory says that people live together in society in accordance with an agreement that establishes moral and political rules of behavior. Some people believe that if we live according to a social contract, we can live morally by our own choice and not because a divine being requires it. During the 21st century the cost of many discretionary goods and services has fallen sharply, but basic necessities such as housing, healthcare, and education are absorbing an ever-larger proportion of incomes, aggravated by wage stagnation. These shifts point to an evolution in the “social contract”: the arrangements and expectations, often implicit, that govern the exchanges between individuals and institutions.1 Broadly, individuals have had to assume greater responsibility for their economic outcomes. For many individuals the changes are spurring uncertainty, pessimism, and a general loss of trust in institutions.

Ronald Reagan facilitated neoliberalism becoming a mainstream ideology. It was in 1972 that the World Bank took up the theme of poverty, which more or less corresponds to the beginning of the neoliberal global political economy, later to be known as the Washington Consensus, which reflected the set of policies that became their standard package of advice attached to loans. With the passing of time and according to the intentions of the user, the vocabulary evolved. ‘Elimination’ of poverty became ‘reduction’ of poverty and, over the last few years the concept of extreme poverty appeared, associated with hunger. These, it was declared, must gradually be eliminated, while poverty must be mitigated. The rich persuade themselves they acquired their wealth through merit, ignoring the advantages – such as education, inheritance and class that may have helped to secure it. The social contract of the neoliberals: the creed of docile respectful working poor to depend on inequality to drive the motor of the ideal market system.

Robert Nozick argued that any distribution of goods and benefits – even a highly unequal one – is just if it could have come about from a just distribution through transactions that did not violate anyone’s natural rights to life, liberty, and property. Because such transactions in a state of nature would have given rise to a “minimal state” (whose powers are limited to those necessary to prevent violence, theft, and fraud), only the minimal state is justified. This supported the Washington consensus, which ignored the problems associated with rising inequality and even encouraged the weakening of social safety nets. The backlash against rapid cultural change, the distal cause of the groundswell of support for right wing populists is the insecurity associated with rising inequality. The growing populist movement is a predictable response to stagnating wages, middle class contraction, and worker displacement. Yet populist policies will make the problem worse in the long run.

Thorstein Veblen (1857-1929) described the rich or leisure class as sheltered from economic pressures that prevailed. From this privileged position, as a class, they were less responsive to the demands required to change society. John Rawls social contract theory is the moral and political point of view is discovered via impartiality, and he argued for a set of basic principles of distributive justice (justice in the distribution of goods and benefits). It is a neoliberal ideology that defines the social relationships of poor people and the attitude towards them that supports an economic system that creates inequality. In 2023, 47 per cent in a recent survey of Canadians say they’re living paycheque to paycheque; while about 61% of Americans are living paycheque to paycheque. The growing disaffection among the working classes in established democracies concerning their sense of their ability to influence the policy decisions leads to populist anger. In order to combat this growing dissatisfaction and disillusionment, it is necessary to reframe the narrative on social and economic inequalities.


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