The 1% syndrome — the concentration of wealth in a mere 1% of the population. Why does that happen in essentially every economic system from dictatorships, to communism, to capitalism? It happens because all organisms including people need energy and water to survive. So all organisms including people develop strategies to ensure that energy and water is constantly available. The “requirement” to have such a strategy means that on an evolutionary basis, there is a drive to access or control energy and water either by remaining close to the sources, or by defending a territory around or to the sources. In economic terms such a strategy also applies to energy and key resources. The concept of controlling production and distribution of products so that wealth can be distributed among a select group is derived directly and spontaneously from the inner drive that organisms have to ensure a safe and secure future. By controlling production, or the source of production, and how it is to be shared or distributed leads, willy-nilly, to the potential for acquiring more than individual need and spills over to broader support for families and extended families in many species and certainly among people. In an economic system, the concept of an extended family can reach out to favoured friends or in capitalist systems to corporate shareholders. The more successfully the strategy of control is implemented, the more production and sharing is limited to that individual’s or corporation’s influence.
So the tendency to concentrate the basic production sources in a small number of individual-based groups or families and corporations is perfectly natural. In fact, although one might consider a government to be outside this system, in all cases, the government is inside the system and subject to exactly the same tendencies. There is often a quiet struggle amongst the most wealthy and the leaders of the government to see which will actually control the production and distribution of wealth. Sometimes that struggle dissolves into a strategic partnership akin to a parasite or commensal relationship. In a parasitic relationship the government draws resources from the corporations and in a non-democratic society distributes it to the governmental inner circle. In democratic societies, a parasitic government controls access to the resources, but does not deliver programs but draws resources from the corporations and distributes them to the extended family of the government. In a commensal relationship between governments and corporations, the government is also responsible for controlling production (managing programs that have products ranging from agriculture, forestry etc. to the production of actual industrial products – such as military materials) and distribution (delivering the products to the customers and receiving wealth in return). At the same time the corporations benefit from this activity by having infrastructure provided from a central source.
The concentration of wealth or biomass in a small number of species or types of corporations takes time. In a new or recently distressed economic or ecological system, the situation is very different. Pioneer species (or corporations) come to new areas and very quickly the number of different types of organisms or corporations blossoms. Competition at first is not very fierce because there are lots of resources to go around. More and more individuals (or business hopefuls) arrive and the number of different types rapidly increases as different relationships develop. In both ecosystems and econosystems, these range from various forms of dependencies to strategic alliances. As time passes, the increasing population and diversity slows as a balance between the demands and the resources begins to put a strain on the community. Competitiveness increases and the specializations become narrower, while at the same time more subtle dependencies and alliances emerge. Primary producers (plants in a terrestrial ecosystem; agriculture, forestry, and mining in an econosystem) begin to dominate the landscape. Eventually in a closed system, the primary producers will be the most prominent species and harbour the bulk of the biomass as well as providing the infrastructure of the environment. Many dependencies ranging from finding shelter or support, to deriving energy from the primary producers will be the main features of the system. The population levels have become stable and mortality is largely in older individuals (or business owners), as opposed to early stages when most of the mortality is in either juveniles (or brand new businesses). In both ecosystems and econosystems that are not closed, but instead rely on imports of primary production or finished products (migrating or drifting organisms in an ecosystem), the dominant forms are not usually primary producers, but instead are consumers of various levels. Note that in economic nomenclature the producers include manufacturers that prepare materials for use in creating finished products. An example of this type of system in nature is a coral reef. While there are certainly primary producers on the reef, the dominating forms are consumers such as corals, sponges, gorgonians, and plankton-feeding fish. The sessile forms create an organic matrix that becomes the infrastructure. The situation is exactly parallel in econosystems. Where an economic system is not closed (most of the major economies of the world are in this category), the dominant types of corporations tend eventually not to be agricultural, forestry, or mining. In more mature economic systems even the manufacturers dwindle in favour of financial and wholesale/retail corporations, all types of corporations that are the importers.
The tendency to concentrate biomass or wealth over time is accompanied by a tendency to increase the diversity of species or types of corporations that are not dominant. The maximum diversity of species or types of corporations arises, not from simple competition, but instead from a wide array of strategies designed to ensure a supply of energy and water in biology, and energy and key resources in economic systems. Many of the strategies involve strategic alliances with smaller organisms or corporations living with or working with the larger organisms or corporations.
In natural systems the diversity is high, and comprised of small to medium-sized species each of which has a minor to moderate share of the resources. In general there are not as many individuals per species in comparison to species found in less mature situations. In a very large percentage of the species, the relationship is intensely competitive on an intra-specific basis, and in an alliance with one of more other species. Many of the dependent relationships are with the large species forming the infrastructure. Because the infrastructure is itself organic, it can respond to the dependencies. This organic matrix exists where the highest diversity is found. In highly diverse situations, the number of young produced by each different species tends to be small, and the organisms tend to care for them and in some instances teach and provide protection until they are mature. Because the niches are mostly used up and because competition on the intra-specific level is high, any excess individuals produced are likely not going to find a place to make a living, except when one of their own species dies providing an opportunity for it to be replaced.
In economic systems, the mature economy is similar in many respects. The economic structure of a stable well-developed country such as the United States or some countries in Europe, have relatively few very large corporations that dominate. The government of a mature economy is essentially a different type of corporation, and as with other corporations it will also create strategies over time to ensure it has access to energy and key resources. If it and the other corporations create strategic alliances or dependencies they will grow to large sizes and dominate the infrastructure and economy, sequestering most of the wealth. In the most dominant form, a government can have almost all the wealth. In others wealth is mostly divided between the government and the largest corporations. A large diversity of businesses can and do develop to take advantage of the infrastructure and form many types of dependent alliances both among themselves and also with the larger corporations. Just as with nature, these alliances range from parasitic, to commensal, to symbiotic, all different degrees of dependencies. As in nature the competition is intense between similar corporations and most of the resources are finely divided with not much left over. For individuals in such a system, success and survival depends on either growth (implying the system has not reached a fully mature dynamic balance), or the replacement of an existing individual of its species. In economic terms, if an individual corporation wants to spawn a sub company or split off a division, that new entity will face stiff competition for the same energy and key resources. Franchises for example can only succeed if there is no other similar franchise competing for the same customer base. Thus to grow the franchisee must find an empty niche or outcompete a similar type of company. Once a relationship develops in which a highly specialized type of supplier carries out processes that the larger corporation no longer has the skills or knowledge to carry out, but upon which the larger corporation depends, that relationship becomes obligatory. If for some reason the specialty suppliers are not available (skills or people disappear), the larger corporation must re-establish a similar relationship or die.
Thus while competition remains in both ecosystems and econosystems even at the highest levels of diversity, there is a broad spectrum of other types of relationships than the oft-touted “survival of the fittest” implying fierce and often ruthless competition. Competition takes place at the level of individuals in nature and corporations in economic systems. In both instances, the fiercest competition takes place amongst those individuals of the same species or corporations most similar to themselves and most likely to need the same or similar types of energy and water supplies in organisms and energy and key resources in corporations. Thus the most aggressive competition is often, although not always, intra-specific, not inter-specific, that is amongst the same types of corporations, not corporations that are different. The evolutionary result of intra-specific competition over extremely long periods of time is that the characteristics of a given species are increasingly finely honed to its survival needs thus lasting for a longer period time and in many cases, increasing in abundance. In economic terms, intra-specific competition tends to favour the best of the best of similar corporations, which means they survive for longer periods of time, and often increase in size and wealth.
In both cases, natural and economic, if the conditions to which the species or type of corporation is fine-tuned change, then the species or type of corporation must also change and adapt to the different conditions. There are many examples in nature and economy where the shift in conditions was simply too fast or too severe for adaptation to happen fast enough, and the species or type of corporation simply disappeared. If the changes are slow enough that multiple generations can occur before survival limits are encountered, then a species has a chance to adapt. Exactly the same applies to types of corporations. If individual corporations can spawn innovative changes or divisions or sub companies that are adaptable to the new conditions, then the corporation can survive. In both natural and economic cases, the end species or type of corporation is different; they have evolved.
Over time, it is completely natural and spontaneous, not intrinsically evil or malicious, that in both ecosystems and econosystems, wealth or biomass eventually concentrates in a small number of dominant, often large species or types of corporations or governments. This has the effect of developing a high diversity of small interdependent species or corporations. In closed systems, the dominant forms will be primary producers in biological systems (mostly plants), and a combination of what are traditionally called primary (mostly agriculture forestry and mining) and secondary producers (mostly manufacturers of finished products) in economic terms. In open biological systems, the largest biomass or infrastructure is concentrated in species that do the importing. In open economic systems that import resources, the dominant forms tend to be importers that also take on the roles of distributors and retailers.
In all biological and economic systems, once the level of maturity is reached where most of the biomass or energy potential is stored in a few dominant species or types of corporations/governments, the level of productivity of the system is also maximized. However, in both systems the productivity is primarily aimed at the cost of maintenance and repair, and the cost of transferring the acquired energy into storage. Take the tropical rainforest (one of the most productive of all ecosystems) for example. The plants must maintain and repair their many life support systems, and transfer the sunlight and minerals into leaves and wood. The many animals must capture, chew and digest their prey (animal or plant) and transfer that into flesh, bones, nerves, and bones as well as fuel their day-to-day activities. The purpose of all this effort and energy on the part of each individual is to keep the material they built and use it to carry out their life processes — it is not initially intended to be shared by sacrificing themselves to predators. The same thing is true of an economic system. The corporations must maintain and repair their physical structures and machines as well as pay for their labour and energy. Then they must transfer the products and services that they sell into a storage-transfer material called money. The money is only used if needed. Otherwise, just as with the ecosystems and their biomass, the money is stored.
So while a topical rainforest or a very mature economic system may be highly productive, because most of the energy that the system acquires is stored in either biomass (for ecosystems) or money (for economic systems) it is not really available for general use. As time goes on the “rich get richer and the poor get poorer” in both the ecosystems and in the the economic systems.
Agriculture is a great demonstration of the principle in a biological situation. Tropical rainforests are hugely productive, but can support only a very small number of people because they do not easily give up their stored materials in forms suitable for people food and energy. To make a rainforest area capable of supporting a large number of people, it must be at least partly cut down and replaced by something that can more easily be used to transfer food and energy to people, always a net loss of overall productivity, but a gain in the number of people that can be supported.
Employment is a great example of the principle in an economic situation. Mature econosystems can be hugely productive and generate enormous amounts of real and imagined money, but the system can only support a small number of people because the large corporations and governments do not easily give up their stored money in a form that is easily accessible to a great number of people. The people who are employed by large corporations are paid the least possible amount, and are hired and fired according to specific requirements. To increase the ease of transferring the stored money, part of the large corporations would need to be cut down and replaced by a different type of corporation. Needless to say, large corporations, just like large trees, have some pretty sophisticated defense mechanism against having their assets transferred to other corporations or governments.
There you have it. It is perfectly natural that wealth becomes concentrated in a few. Being a natural phenomenon does not necessarily make it a fun event. Nature is efficient and completely unforgiving. If an animal or plant doesn’t compete or cooperate properly in the system, it dies. In a human society, however, one hopes the consequence of not being as fiercely competitive as another person doesn’t necessarily result in death. Society needs to ask the question if we need to be bound by the spontaneous forces that drive accumulation of wealth, or if instead we can consider collectively managing the acquisition and distribution of wealth in the form of usable energy and materials. The consequences of allowing a natural progression to take place is that a few people have most of the material and energy and the rest have as little of that to share as the few can manage. The basis on which the decision is made is the collective empathy and altruism that would disallow a natural process to take place and replace it with an artificial one that would likely lower overall productivity, but ensure a much broader distribution of wealth, just as agriculture does.