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Leader: Inherited inequality in the age of meritocracy

Thomas Piketty’s book Capital in the 21st Century has had a rapturous reception. 

Not since John Rawls’s A Theory of Justice in 1971 has a work of political theory been as rapturously received on the left as Thomas Piketty’s Capital in the 21st Century. The book having reached the summit of the Amazon sales chart in the United States, its 43-year-old French author, who visited London last week and whom the New Statesman was the first British publication to profile, has become that rarest of things: a celebrity economist.

In this supposedly superficial and anti-intellectual age, his 690-page treatise on inequality, rich in empirical research, has resonated because it speaks to one of the central anxieties of our time: that society is becoming ever more fragmented as the very rich pull away from the rest. As Mr Piketty elegantly demonstrates, as long as the rate of return on what he calls capital continues to exceed the growth rate of the economy (as it has done since the 1970s), inequality will widen to levels unknown since the Victorian era.

It is the United Kingdom that best embodies the troubled future he sketches out: “a society even more inegalitarian than that of the 19th century, because it will combine the arbitrariness of inherited inequalities with a meritocratic discourse that makes the ‘losers’ responsible for their situation”. Britain is the land of the baronet and the banker, the landed aristocrat and the asset-stripper. It combines the worst of capitalism with the worst of feudalism. The result is a society in which both income and wealth are grossly mal­distributed, innovation is stifled and equality of opportunity remains a myth.

To date, Mr Piketty’s critics on the British right have chided him for his focus on inequality, contending that an alternative metric, such as GDP, is a better measure of a country’s long-term success. Yet, as meticulously charted in 2009 by Richard Wilkinson and Kate Pickett in their book The Spirit Level, after a certain point of development, how well a society performs is dependent not on how wealthy it is but on how equal it is. More egalitarian countries, such as the Nordic states and Japan, enjoy higher levels of social mobility, trust and educational performance and lower levels of crime, obesity and mental illness than their divided counterparts, notably the US and the UK. Mr Piketty, who, despite his book’s allusion to Marx, is a mainstream social democrat, not a revolutionary socialist, concedes that some degree of inequality is necessary to stimulate enterprise. But the US and the UK long ago exceeded this point.

If we accept the premise that inequality is a social ill, the question becomes how to reduce it to the benefit of all. After the Scandinavian countries, Britain has one of the most redistributive tax and benefit systems in the world. National Insurance, VAT, income tax – the government already takes a lot of our money. Yet so great is the initial gap between rich and poor that the divide persists.

The solution is twofold. First, policymakers should look to embrace what the Yale political scientist Jacob Hacker calls “predistribution”: seeking to stop inequality before it starts. By pledging to spread the use of the living wage, raise educational standards, build more affordable homes, improve lending to small and medium-sized businesses and expand free childcare, Ed Miliband is trying to develop a programme to do so.

Second, the next government should be bold and secure a more resilient tax base. It should seek to bring the super-rich into taxation. One way to do this is to tax so-called unearned income and inherited wealth, most obviously land and property (and other static assets), which in Britain is even more unequally distributed than income. Wealth taxes are progressive and hard to avoid in an age when capital is so mobile; they benefit the economy by shifting investment away from housing and into more productive industries.

Rather than a society in which birth determines destiny – or “parentage dictates progress”, as the Education Secretary, Michael Gove, puts it – our politicians should seek to build one in which reward is once again linked to contribution.

This article first appeared in the 08 May 2014 issue of the New Statesman, India's worst nightmare?

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Why I’m thinking of joining the Labour Party

There’s a lot to admire in the direction Jeremy Corbyn is taking the party – perhaps it’s time to get involved.

Why I'm leaving Labour”, as Owen Hatherley remarked a few days ago, appears to be the new “why I’m leaving London”. However, aside from a few high(ish) profile departures, the bigger story is the net increase in membership of 90,000 that Labour has enjoyed since Jeremy Corbyn became leader. Indeed, the last few weeks have got me seriously considering whether I should add to these impressive numbers and join the party myself.

For me, one of the most cheering pieces of news since Corbyn’s victory was the convening of an advisory committee to shadow chancellor John McDonnell, including policy and academic heavyweights such as Mariana Mazzucato, Ann Pettifor, Joseph Stiglitz and Thomas Piketty. It was a clear indication that some fresh and serious thought was going to be put into the creation of a plan for remaking and rejuvenating the British economy. The early signs are that Labour will be offering a dynamic, high-tech economy of the future, with good pay and job security at its heart, which will stand in sharp contrast to the miserable Randian dystopia George Osborne has been pushing the country into during his time at the Treasury.

Also refreshing has been Corbyn’s use of Prime Minister’s Questions to give a voice to those affected by austerity. Given that our media and political class is disproportionately populated by people from privileged backgrounds, it’s really important that an extra effort is made to ensure that we hear first-hand from those bearing the brunt of these policies. It’s right in principle, and it turns out to be good politics as well. Because apparently many Conservative MPs are too stupid to realise that responding to the concerns of working class people with loud, derisive braying merely provides the public with a neat and powerful illustration of whose side each party is on.

Corbyn has taken a lot of flak in the media, and from MPs on the Labour right, for his response to the Paris attacks. But as someone who researches, teaches and writes on British foreign policy, Middle East politics and security issues, my admiration for the Labour leader has only grown in recent days.  

In the atmosphere immediately after a terrorist atrocity, a discourse emerges where caring about the victims and being serious about dealing with the threat are taken to be synonymous with advocating military responses and clampdowns on civil liberties, irrespective of the fact that fourteen years of pursuing this approach under the “war on terror” has only served to make the problem far worse. At times like these it takes a great deal of courage to articulate a careful, cautious approach emphasising non-military forms of action that address root causes and whose effects may be less dramatic and immediate. Many people were simply not in the mood to hear this sort of thing from Corbyn, but his policies are objectively more likely to make us safer, and I admire him for not being intimidated into silence despite the gallons of vitriol that have been poured on him.

In general, on national security, there is something heavily gendered about the narrative that casts the alpha male Cameron keeping Britain safe versus the dithering milquetoast Corbyn who doesn't understand the harsh realities. We reached the nadir of this stone age machismo during the last election campaign when Very Serious Jeremy Paxman put it to Ed Miliband that he couldn’t have Vladimir Putin in a fight.  After the disasters of the last decade and a half, the time is right to articulate a more intelligent, sophisticated alternative to the expensive, counterproductive militarism of the Conservative Party and the Labour right wing.

The question of whether Corbyn can win an election is certainly one that preoccupies me. He will struggle to attract voters to his right just as Yvette Cooper, Andy Burnham or Liz Kendall would have struggled to win back votes Labour lost to the SNP and the Greens. Enthusing and rallying the perhaps 30 per cent of the electorate who are broadly on the left is one thing, but adding the other 6-7 per cent that you need to win an election is another challenge altogether. Corbyn and his team have been on a steep learning curve since their shock victory in September, and they urgently need to clarify their message and improve their media strategy. Almost all the corporate press are bound to remain hostile, but there are ways to provide them with as little ammunition as possible.

More importantly, Corbyn’s team need to find ways of connecting directly with the public and bring them actively into what he's trying to do. In the current anti-politics mood, an opposition party based on a genuine, engaged mass movement could be a formidable force. Initiatives like “Momentum” will need to make quick and substantial progress.

Fundamentally, Corbyn’s Labour has to do what everyone concerned with genuine social progress has had to do throughout history: articulate points of view that go against prevailing orthodoxy, and do so in as persuasive a way as possible. By definition, these are battles against the odds. But you can't win them if you don't fight them. And for me, and I think most people on Corbyn's part of the left, five years of austerity have taken us beyond the point where we can accept the least worst version of the status quo. That prospect has simply become too painful for too many people.

So will I join? I’m still unsure. Without doubt there will be times when the leadership needs constructive, even robust criticism, and as a writer and researcher I may feel more free to articulate that outside of the Labour tribe. But whatever choice I make, the point for me is that this isn’t really about Jeremy Corbyn so much as the wider movement he represents, demanding a real change of course on politics, economics and foreign policy. That collective effort is something I will certainly continue to play an active part in.

David Wearing researches UK-Saudi-Gulf relations at the School of Oriental and African Studies, where he teaches courses on Middle East politics and international political economy. He sits on the steering committee of Campaign Against Arms Trade.