ABSTRACT
This chapter describes the extreme inequality in US capitalism that threatens the stability of the system. Historically, in good times, elites spin the Meritocracy story, justifying the “capitalist house” as offering opportunity for hardworking and talented people to become successful. Despite its upstairs/downstairs architecture, capitalism is sold as a meritocratic order in which the best and brightest succeed and others gain in proportion to their abilities and efforts.
But the US has moved into the most extreme form of inequality in its history, as we document in a striking set of statistics and stories about income and wealth distribution in the US. As mobility declines, and the gap between the very rich and others erodes, the stairways of the upstairs/downstairs capitalist house narrow and the meritocracy myth becomes problematic. As the prominent economist, Thomas Piketty shows, elites become capitalist aristocrats, living on inherited wealth while the majority faces declining living standards and shorter, more insecure lives. The elites thus turn from the Meritocracy story to the Security story, which legitimates their power as a way to protect ordinary people from foreign and domestic enemies that threaten well-being and even survival. The Security story supplants the Meritocracy story as the basis of faith in the ruling order.
