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Labour must abandon the dangerous language of “wealth creators“

The reality is that everyone, not just business owners, create wealth.

By David Blagden

Yvette Cooper’s attempt to position herself as the pro-business candidate for the Labour Party’s leadership – and perhaps stem the tide of Andy Burnham’s gathering momentumyesterday saw her embrace one of the most perniciously used terms in contemporary political discourse: the “wealth creators”. Explaining that “our rhetoric can’t be set against the wealth creators and drivers of our future economic growth”, Ms Cooper has adopted a label dear to Labour’s Blairite wing – and their Conservative rivals – as totemic of their support for private enterprise. Chuka Umunna’s abortive candidacy had done the same last week, and it is a term we are sure to hear again as the party tries to recapture the electoral success of Blair-era centrism by shedding its anti-business image.

The creation of wealth for both Britain and Britons is unambiguously A Good Thing. A move to the right by Labour is probably also both morally just and electorally necessary. But the rhetorical purpose of the “wealth creators” label, as it is used politically today, is both insidious and divisive. The closest antonyms of “creation” are “destruction”, “consumption”, or “absorption” – thus the antonyms of “creators” are “destroyers”, “consumers”, or “absorbers”. In pointing to those (and implicitly only those) who create jobs as “wealth creators”, therefore, anyone who invokes that label risks juxtaposing business-owners in a position to hire against the implied “wealth destroyers”, “absorbers”, and “consumers” who work for them (and elsewhere in the economy).

Such juxtaposition neglects the fact, however, that the total wealth generated by any business is a product of all of the capital, both financial and human, that has been invested in it. The business owner’s personal labour is part of this, but it is not all. The midwives who bring a company’s workers (including its owners) into the world, the teachers who give its workers (including its owners) their literacy and numeracy, the university academics who refine its high-skilled workers’ (including its owners’) analytical skills and conduct productivity-boosting foundational research, the construction workers providing the infrastructure for business and wider daily life, the doctors who preserve the workers’ (including the owners’) economic effectiveness both prior to and whilst working for the business, the police and military personnel who create a secure environment for all past and present economic activity, and indeed, the company’s own payroll employees are all intrinsic parts of the wealth creation process. 

All are therefore “wealth creators”, not just those in a position to make hiring decisions. The difference is that the business owner has concentrated property rights, since he/she is present at the point of sale, whilst all of those prior contributors have only diffuse property rights, leaving the former in a better position to claim a disproportionate share of the returns on total invested human capital than the latter. Whereas a management consultant can sell her intellectual property directly to a business for its full market value, because she has clearly-defined and -protected property rights, a primary school teacher hands his over thirty years in advance for a price that under-reflects his total economic contribution.

To be clear, this is not some anti-business rant: businesses do create wealth, as part of a wider wealth-creating economy. Much of that added value, moreover, owes to effective management. The point, however, is that simply owning and running a business – even if doing so very well – is not the same as individually creating all of the wealth that it generates. Likewise, being present at the point of hiring – making the job creation decision, in effect – does not mean that a business owner personally created all of the wealth that enabled the new hire.

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The purpose of “wealth creator” as a rhetorical label, of course, is that it engenders a more positive emotional response than “wealth holders”. When used by the worst on the right – in the same way that right-of-the-party Labour leadership contenders now risk doing – it provides cover for the divisive juxtaposition of wealth holders against those who work for them. This is not to say that wealth holders and workers are distinct, non-overlapping camps, of course. On the contrary, one of the tragedies of using the “wealth creator” label to mean business owners is that it creates an unnecessary dichotomy, and thus nurtures class antagonism. To profess One Nation politics whilst implying two different tiers of citizenry – the “wealth creators”, and the mere consumers – is a contradiction in terms.

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Labour is probably correct to move to the right: electorally, because only then can they hope to again form a government, and morally, because the “squeezed middle” – high-skilled salaried labour and even small business owners – are also, like those at the very bottom, on the negative receiving end of rising inequality. Yet moving to the right need not mean an unreflective embrace of the worst of right-wing rhetoric. Even if the “wealth creator” label must be invoked for ultimately well-intentioned electoral purposes – as Ms Cooper and Mr Umunna have evidently calculated that it must – we should not lose sight of its insidious rhetorical effect.