Why I wrote this book – widening inequality and what it’s doing to our society outraged monstrous lie – that the welfare state is to blame for the crisis – those who are worried by the lack of action on climate change Return of the rich is unjust, dysfunctional and unsustainable – But first let’s look at the return of the rich - although I’m an academic I’ve tried to avoid an academic style of writing . . .
Total Spending £546.4 billion Pensions £143.2 billion Health Care £126.7 billion Education £41.9 billion Defence £44.3 billion Welfare £58.0 billion
Ricardo, J.S. Mill, Marx, J.A.Hobson, Ruskin, Tawney, Henry George Just when unearned income was making a huge comeback – the distinction got forgotten Unwarranted – they get it because they can. Warranted – they get it because it’s judged to be right by others. Needs based. Earned includes public sector e.g. teaching or E.g. state pension granted/donated unearned income; private pensions asset-based, extracted unearned income
Benyon admits to his family having been a landowner in the area for 150 years Benyon joins up a lot of the dots in the picture of the rich class – richest MP in Westminster - £110m, bedroom tax, He’s rentier – someone whose wealth . . .
Mill – like Piketty – noted how
Smith, Ricardo, Marx, Henry George, Winston Churchill, R.H.Tawney, Michael Hudson – even Milton Friedman . . .
The second has become more commonly seen – plus reluctance to acknowledge a) that public expenditure includes investment and b) that most of the first kind made by private firms is financed internally from profits rather than from loans or shares. Academics tend to use this term for the latter. One of the extraordinary things about capitalist rationality or irrationality is that it matters little to capitals and individuals whether their investments are productive or predqtoryas long as they yield a return. Ideologically the slippage between the two meanings is of enormous importance – those who are involved in ‘investment’ defend themselves by passing off their activity as investment.
Let’s acknowledge that lots of people see their houses as investments – even if they do no more than maintain them as they are, they expect them to rise in value – why? Any money they make in this way is unearned income - . . . . Lots of people are part-time, small-time rentiers – but it still a way of siphoning off wealth
Rentier income – unearned income based on control of assets that are used not for producing goods and services but for extracting unearned income from others who lack that control Friend e.g. Usury
The genius of credit
UK gains slightly more skewed to rich Usury – redistributes wealth from the poor to the rich – international level – poor countries borrowing from rich countries - Personal level
Dyson £1.45billion 84yrs Jobs 266 - Remember Wright
Finance – Bonds Rule of the rich ‘When plunder becomes a way of life for a group of men living in society, they create for themselves, in the course of time, a legal system that authorizes it and a moral code that glorifies it.’ (Frederic Bastiat, French writer and economist.) From http://www.nakedcapitalism.com/2012/10/john-kenneth-galbraith-on-the-moral-justifications-for-wealth-and-inequality.html#qvYXvQ1HKPM5ihYI.99
Mike Berners Lee Addicts and dealers
Care work valued – less competition – focus on service rather than competition to cut costs and climb greasy pole of league tables – should competing be our god, or should service and cooperation? Is our goal to consume more and more stuff?
Not a conspiracy – the Citigroup writer was trying to recruit support from clients – hostile brothers
Why We Can't Afford the Rich: Cardiff launch
1913-1989 Top 1% income share – married couples and single adults
1990-2011 Top 1% income share – adults
Top Income Shares in the UK 1914-2011
Source: Alvaredo, F., Anthony B. Atkinson, A.B., Piketty, T. and Saez, E. The world top incomes database,
http://topincomes.g-mond.parisschoolofeconomics.eu/ , dd/mm/yyyy 16th April 2014
Wealth concentration at the top
Collective wealth of the UK’s 1000 richest
1997 = £98 billion
2008 = £413 billion
2010 = £336 billion
2012 = £414 billion
2013 = £450 billion
2014 = £519 billion
Source: Sunday Times Rich List
Cost of the NHS, 2014 = £127bn
Office of National Statistics:
Earned and Unearned Income
Earned: conditional on producing goods and services
Unearned and extracted - ‘because they can’: derived
from ownership of assets wanted by others, rather
than from contributions to the production and
distribution of goods and services (asset-based)
Recovering a lost vocabulary: ‘rentiers’, ‘property
without function’ (Tawney), ‘improperty’ (Hobson),
‘illth’ (Ruskin), ‘functionless investor’ (Keynes), ‘the
class of parasites’ (Marx)
John Stuart Mill on Rentiers
"Landlords grow rich in their sleep
without working, risking or
“If some of us grow rich in our sleep,
where do we think this wealth is
coming from? It doesn't materialize
out of thin air. It doesn't come
without costing someone, another
human being. It comes from the
fruits of others' labours, which they
(1848) Principles of Political Economy,
Bk.v, Ch. II
Photo: Wikipedia commons
"John-stuart-mill 1". Licensed under Public domain via Wikimedia Commons.
• As wealth creation – focus on what is invested
in (e.g. infrastructure, equipment, training).
• As wealth extraction - focus on the financial
gains from any kind of lending, saving, trading
of financial assets or speculation – regardless
of whether it contributes to any objective
investment(wealth creation), or benefits
Billionaires’ Benefits Street:
Bishops’ Row, London
Source: Kennedy, M. (2012) Occupy money, New Society Publishers
Shares: a bizarre institution
• 97+% are bought in secondary market – money
doesn’t go to firm
• Entitles owner to dividends and speculative gains
– unearned income
• Why are absentee, uncommitted shareholders
the prime stakeholders in firms?
• Why are workers/employees (present, committed
and dependent), who produce the goods and
services on which the firm depends, not
What about ‘the working rich’?
• Salary earning – but from rentier organizations
(e.g. financial institutions, property firms) i.e.
• Markets are not meritocracies . . .
• ‘Because they can’
• Disempowered labour, empowered
management, shareholder value
The Jobs/Dyson* defence: truly innovative
people deserve everything they get
• 1. how much would they
have got, if they hadn’t
owned (much of) their
capitalists: Owners take the
profit (financial and
symbolic) produced partly
by unacknowledged others.
*Steve Jobs (Apple) $8.3billion;
James Dyson (Dyson vacuum cleaners)
The Rule of the Rich
but plutocracy is about more than toffs . . .
The rule of the rich
• Structural – control commanding heights
• Lobbying, thinktanks, political donations,
consultancies/jobs for politicians, ‘researchers’,
• Tax havens
• TTIP – Transatlantic Trade and Investment Partnership
• Legal corruption - ‘When plunder becomes a way of life
for a group of men living in society, they create for
themselves, in the course of time, a legal system that
authorizes it and a moral code that glorifies it.’ (Bastiat)
• Symbolic - philanthropy
A diabolical double crisis of economy
Contraction and convergence
• Target C02 emissions per person =
Capacity of earth to absorb C02, divided by world’s
• Rich countries – rapid cuts in emissions to meet
• Poor countries – rise in emissions permissible up
• Plus contraction and convergence within
Back to basics
• What’s an economy for?
• Fair, promoting well-being, sustainable
• What is wealth?
• The good news: the well-being threshold
• Different ways of life?
Suggestions . . .
• Contract and converge
• Wealth taxes, land-value tax and other taxes on
• Controls on movements of capital
• Reject TTIP
• State funding of political parties
• Nationalise energy companies. Green taxes.
• Workers/employees and consumer reps as chief
stakeholders in organizations
• Massive investment in low CO2 energy
• And many more . . .
Diolch yn fawr
Andrew Sayer, Lancaster University
From the second, Citigroup Plutonomy Report Part 2
‘Rising Tides Lifting Yachts’ Mar 5 2006
”Our whole plutonomy thesis is based on the idea that the rich will keep
getting richer. This thesis is not without its risks. For example, a policy
error leading to asset deflation, would likely damage plutonomy.
Furthermore, the rising wealth gap between the rich and poor will
probably at some point lead to a political backlash. Whilst the rich are
getting a greater share of the wealth, and the poor a lesser share, political
enfranchisement remains as was -- one person, one vote (in the
plutonomies). At some point it is likely that labor will fight back against the
rising profit share of the rich and there will be a political backlash against
the rising wealth of the rich. This could be felt through higher taxation on
the rich (or indirectly through higher corporate taxes/regulation) or
through trying to protect indigenous laborers, in a push-back on
globalization -- either anti-immigration, or protectionism. We don’t see
this happening yet, though there are signs of rising political tensions.
However we are keeping a close eye on developments.”
[emphasis in original]
UK Earnings and productivity
Source: Resolution Foundation (2012) Gaining from Growth: The Final Report of the Commission on Living Standards, p.24