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Why Does Wealth Inequality Exist?

Wealth Distribution

June 06, 2020

In medieval Europe, society was divided into classes, lords and peasantry. Feudal lords owned wide areas of property, which they were either given or  inherited. Peasants were obliged to live on their lord's land and work for him. They did not have to the right to leave the piece of land to which they were assigned. The peasants didn’t own the land they lived on, they couldn’t sell it or rent it out. But if a lord sold the land to which a peasant was assigned, the peasants were part of the sale.

So the lord-peasant relations were defined. This relationship enabled the lords to accumulate wealth based on how productive his peasant workers were.

In today’s capitalist society, most people sell their working hours to company owners, making a living by doing what the company owners want them to do.They may be data analysts or sophisticated engineers, they may be skilled or unskilled, but what they have in common is that they are not owners. Unlike employees, owners have capital, the money necessary to start a business. With this capital, owners buy land, build factories, invest in machines and hire employees. Owners sell their products made by their employees to generate profits and make their companies bigger and accumulate wealth. But if a company owner sells a company where an employee works, the employees are part of the sale. Employees receive wages from their company owners, which they use to pay their living expenses, rent, insurance, food, entertainment, vacations, and perhaps some savings.

What is the difference between the peasants of the medieval society and the employees of today? In the medieval feudal society it was not possible to become an owner, a land owner, if land was not inherited or granted.  Today opportunity for social mobility exists. Social mobility is the ability, as an employee, to become an owner. It is the movement of individuals, families, or households within or between socio-economic levels in a society. Today workers/employees can not only become owners, but they can also have a voice in society. Today many workers, employees have the opportunity to become owners.

How does the data analyst, hair stylist, auditor, or mechanic become an owner? He/she buys small pieces of companies, shares, becoming a shareholder. Becoming a shareholder/company owner means that not only do you own a company, but that you also have a right to exercise your opinion about the company. So for the new shareholder there are two benefits, one financial and one philosophical benefit. On the one hand the worker/employee owns a piece of a good company. On the other hand the new shareholder also has a say in how the company is run by voicing his/her opinion at the annual meetings. Of course his/her opinion is diluted by all of the other shareholder opinions, but nonetheless /she can voice his/her opinion about how the company is run.

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