The lavish and extended wedding celebrations of billionaire Mukesh Ambani’s youngest son has brought to the forefront the question of “conspicuous consumption” of the rich.
In a capitalist society beset by high levels of inequality, how do we make sense of such displays of private wealth by the elite?
Liberal capitalist view
A defence of billionaires’ consumption would run as follows: in a liberal capitalist democracy, there are no restrictions on what one chooses to do with one’s private property.
Assuming that market processes are fair, billionaires’ consumption expenditure — no matter how lavish — is a legitimate exercise of their private freedoms and cannot be faulted.
The existence of inequality is not their concern, but the manifestation of flawed policy that restricts market freedom and curtails pure competition.
Increasing market access, in this view, would ensure that everyone has adequate wealth.
Marxist View
On the opposite end of the political spectrum, the Marxist view holds that since value is created solely by labour, profits represent an unfair extraction of value.
Thus, all forms of billionaire consumption is illegitimate, since private riches are generated through a denial of the rightful claims of workers.
The co-existence of a large working class with low wages and a small number of billionaires does not arise because of a faulty market mechanism, but is an undeniable feature of capitalism itself.
The rights over private property enshrined in liberal societies hide deep structural imbalances that serve to continually enrich a few at the expense of the many; in this framework, there can be no way to justify billionaire consumption
Keynesian Perspective on Capitalist Societies
According to the celebrated British economist John Maynard Keynes, capitalist societies rest on a peculiar social contract.
The capitalist classes are allowed greater wealth, control of production and a substantial share of net output produced each year, provided they ensure high levels of investment that generate sufficient employment and rising productivity
They must also ensure that prices are not increased drastically so that real wages do not fall.
This can be the only grounds for an unequal distribution of resources in a capitalist society from a Keynesian perspective
As opposed to a Marxist analysis, a Keynesian understanding would hold that lavish consumption of the rich is a problem only if enough investment is not forthcoming to absorb those searching for jobs and if the consumption of working classes is curtailed through high monopoly prices.
Public Policy and Inequality
In the context of high youth unemployment, stagnant real wages and a significant loss of jobs in the informal sector, the stark inequalities on display represent a very real public policy problem that we have shown an inability and unwillingness to confront.
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