Britain and the world could solve all its financial programmes overnight if only we introduced a more egalitarian economy. So why, asks Colin Tudge, won’t any major political party do what’s obvious, or even take the idea seriously?
The Tories and Labour alike both emphasize the need for economic growth. Or indeed as Liz Truss was wont to say, for “Growth, growth, growth!” (for as the Bellman said in Lewis Carroll’s The Hunting of the Snark, “What I tell you three times is true”).
On the face of things, the call for growth seems to make some sense. After all, in Britain right now, all the essential infrastructure is in crisis — housing, the NHS, schools, the social services, the judiciary, the prison service, transport (especially buses), agriculture (once we look beneath the surface) and, of course, all too conspicuously, the natural world. And, so the major political parties seem agreed, if only we had a few more pounds in the coffers (or at least a few hundred billions) we could fix it all.
Yet the biggest problem by far with Britain’s and the world’s economy is not lack of wealth. It’s inequality. The gap between rich and poor is truly grotesque – and the gap is increased by the economic system that now prevails worldwide: the 20th century offshoot of capitalism known as Neoliberalism.
Neoliberals put all their faith in the so-called “free”, or “deregulated”, global market. There should, say the extreme neoliberals, be no restraint on production or trade except those imposed by the market itself. All the players in the global market should simply compete with each other for profit and for market share. Those that fall short go to the wall, so only the best are left. To succeed commercially in this ruthless environment the producers and traders must above all be efficient. And the players in the market succeed only by producing things that people want — so the market is also, ipso facto, democratic. So the free market brings us efficiency and democracy. What more could we want?
In practice, though, the global “free” market has emerged as a global dogfight, a ruthless scrabble for material gain. Above all (apart from a few cartels and special deals) the market is designed to be competitive. Many have pointed out that we – and all creatures – achieve most when we cooperate, but in the neoliberal world the greatest of all virtues is competitiveness. The goal is to come out on top. To be a winner. The winners in the present global economy are the giant corporates including the near or actual monopolies that now dominate all world trade, and their executives and shareholders, and the various brands of financiers who keep them all well lubricated. Some of the biggest players are far richer than all but a handful of nation-states.
There’s a snag, though. In any competition there are many more losers than winners. And so it is that in the modern, neoliberal world only a minority are rich, although some of them – the super-rich — make Solomon and Croesus and Cleopatra and all those other heroes and heroines of history and myth seem positively middle-class. Yet from Bangkok and Mumbai to Washington and Los Angeles, side by side with the world’s great palaces and trade centres we find slums. In the richest as well as the poorest countries many millions of people cannot afford even those material basics, like good food and comfortable shelter, that the UN has declared should be seen as human rights. And this is abundantly true even in modern Britain, which is still the fifth or sixth largest economy in the world. For in truth there is no simple relationship between overall wealth and wellbeing. But then, the market doesn’t do wellbeing. That’s not its brief.
The point is not that everyone should have the same income – some people need more and some deserve more (if we assume as seems reasonable that those who contribute most to society should be the most rewarded). But a more egalitarian society would benefit everyone. For as Kate Pickett and Richard Wilkinson described in The Spirit Level in 2009, it is better in all ways to be moderately well off in an egalitarian society than to be exceedingly rich in an unequal one. I wonder if the reason is as Adam Smith intimated. For although Smith is seen as the father of modern capitalism and hence as the godfather of neoliberalism he was a moralist before he was an economist and as he suggested in the opening lines of his first ever book in 1759, The Theory of Moral Sentiments,
“How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it.”
Perhaps the super-rich feel miserable deep down because, deep down, they feel the pain and deprivation of their fellows, and know that they themselves have more than their share. Just a thought.
Be that as it may, the inequality in the present world is unconscionable. In their report of January 2023, Survival of the Richest, Oxfam tells us that “the richest 1% own almost half of the world’s wealth, while the poorest half of the world own just 0.75%”. And just “81 billionaires have more wealth than 50% of the world combined”. It seems then that if the most favoured 81 gave away 99 per cent of their wealth to the rest of us, they would still be far richer than most of us, and far richer than anyone needs to be, while the rest of us could all be almost twice as well off as we are now. Britain’s junior doctors have been asking of late for a 35% raise, the nurses 14%. Since they are required to flog themselves to death to keep the rest of us alive and functional and often can’t make ends meet even so, their demands seems eminently reasonable. But our government thinks they are outrageous. Yet if the economy was not expressly designed to make fat cats fatter, the doctors and nurses and all of us could have nearly 100% more. That is a simplistic argument of course, but it’s true in essence nonetheless.
In 2022, according to the American business magazine, Forbes, the world’s richest man was Elon Musk. At the peak of his fortune in November 2021 he had an estimated $340 billion – almost £270 billion. No-one could possibly earn that amount – where “earn” implies a fair day’s money for a fair day’s work. Indeed, as the Dutch economist Ingrid Robeyns tells us in her new book, Limitarianism; the Case against Extreme Wealth, to make as much money as Musk once had a mere wage-earner would need to work 50 hours a week for 45 years at nearly two million dollars an hour. In fact, no-one could make even one billion dollars just by working for it. And yet right now there are nearly 2600 dollar billionaires in the world.
The average billionaire has around $4.75 billion. So between them the world’s billionaires hold around $13,300 billion, which is $13.3 trillion. The world could solve an awful lot of its problems with $13.3 trillion, if the money was spent wisely. Indeed we could argue that humanity and the world are now in such dire straits because a relative handful of people have commandeered half our loot – and yet most of the rest of us, all 8 billion-plus of us, just stand by and watch it happen. Furthermore, with wealth in this money-dependent world comes power, and the strategies of the whole world, and the technologies we develop (or fail to develop), are determined in large part by the whims and caprices of the super-rich. Professor Robeyns suggests not only that we should introduce a wealth tax. We should also impose a ceiling on personal wealth – which is what she means by “Limitarianism”. Indeed, she suggests, no-one should hold more than £10 million. For the super-rich £10 million is petty cash. But £10 million is far beyond the dreams of most of us, even of Britain’s aspirant middle classes — and who really needs more?
None of the arguments in favour of the super-rich stand up. Thus it’s claimed that their wealth “trickles down” to the rest of us – but as Barack Obama observed in his presidential days, “Guess what. Trickle down doesn’t work”. So it is that Oxfam tells us in its latest report Inequality Inc, published in January 2024, that the richest one per cent has commandeered almost two-thirds of all the wealth generated in the world since 2020. During the Covid epidemic, the super-rich did particularly well. Yet, since 2020, 60 per cent of the world’s people have grown poorer. Liz Truss’s chosen Chancellor and soul-mate Kwasi Kwarteng assured us that all this is OK because the super-rich pay huge taxes which swell the general coffers. But they don’t. Thus, says Oxfam, Elon Musk these past few years has paid a “true tax rate” of 3.2% while Jeff Bezos of Amazon has paid just one per cent. In a money-dominated world, the super-rich pull the strings and determine who pays what. As the expression has it, they mark their own homework.
All in all, then, the case for a wealth tax and indeed for a limit on personal wealth seems open and shut. But our demi-billionaire Prime Minister Rishi Sunak doesn’t want to know. “It’s not something the British people are interested in”, he says. Is this true? How does he know this? Who has tried concertedly to find out what people think about economic inequality, and a tax and cap on personal wealth? Where are the data? Even if Rishi has guessed right, so what? Evidently, in his desperate scramble for votes, Rishi is content simply to be a populist. Albeit a seriously unpopular populist who flies by the seat of his pants. It’s hard for a PM to be as bad as Liz Truss but in the race for the bottom he seems to be doing his best. As the Duke of Wellington remarked in a slightly different context, “It’s a damn’ near-run thing”.
Keir Starmer and the Lib Dem’s Ed Davey have been equally dismissive. Indeed, shadow chancellor Rachel Reeves recently defended bankers’ bonuses – but what is the “bonus culture”, when you boil it down, but legalized embezzlement? In truth, it seems that the one thing that’s sacrosanct in super-secular monetized Britain is the incomes of the rich.
So what can we do instead? The answer, I suggest – as many millions of others do too – lies with the grassroots. More later.
Coda
** In truth, like everything else, the economy and indeed the whole discipline of economics needs to be re-thought from first principles – if, that is, we seriously care about the future of humanity and our fellow creatures. And as I have suggested many a time and oft the first or “bedrock” principles are those of morality, which aspires to tell us what it is good to do; and of ecology, which tells us what it is necessary to do in order to do good; and what it is possible to do within the limits of this all-too obviously finite world. The economy is key, for in practice it is the mechanism and the means by which we translate our aspirations into action – or are prevented from doing so. It isn’t just a game of money though that is how it is regarded and how, for the most part, it is taught.
But the global market that now prevails worldwide makes its own morality. Whatever people will pay is good, and whatever they will pay most for is best. To be sure, some things are taboo, including child pornography. But other things – guns, SUVs, marinas full of power-boats, prestige buildings that leak energy — are very big business, and in the neoliberal world that is justification enough. Indeed it seems, the things that are most profitable, because they are most prestigious and appeal to the super-rich, are also often the most damaging – to the natural world and to traditional ways of life.
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