britain
The Inequality of Wealth: Why it Matters and How to Fix it – review
In The Inequality of Wealth: Why it Matters and How to Fix it, Liam Byrne examines the UK’s deep-seated inequality which has channelled wealth away from ordinary people (disproportionately youth and minority groups) and into the hands of the super-rich. While the solutions Byrne presents – from boosting wages to implementing an annual wealth tax – are not new, the book synthesises them into a coherent strategy for tackling this critical problem, writes Vamika Goel.
Liam Byrne launched the book at an LSE event in February 2024: watch it back on YouTube.
The Inequality of Wealth: Why it Matters and How to Fix it. Liam Byrne. Bloomsbury. 2024.
Wealth inequality, a pressing issue of our times, reinforces all other forms of inequality, from social and political to ecological inequality. In The Inequality of Wealth, Liam Byrne recognises this fact and emphasises the need to move away from a narrow focus on addressing income inequality. He reaffirms the need to deal with wealth inequality and address the issue of inequality holistically.
The book adopts a multi-pronged approach to addressing wealth inequality in the UK. It is divided into three parts. The first part discusses the extent of wealth inequality and how it affects democracy and damages meritocracy. The second part discusses the emergence of neoliberalism which has promoted unequal distribution of resources, while the third part proposes corrective measures to reverse wealth inequality.
According to Forbes, the world’s billionaires have doubled from 1001 to 2640 during 2010 and 2022, adding around £7.1 trillion to their combined wealth.
The first chapter reflects on the exorbitant surge in wealth globally during the past decade, primarily enjoyed by the world’s super-rich. According to Forbes, the world’s billionaires have doubled from 1001 to 2640 during 2010 and 2022, adding around £7.1 trillion to their combined wealth. In the UK, wealth disparity has risen, with the top 10 per cent holding about half of the wealth while the bottom 50 per cent held only 5 per cent in Great Britain in 2018-20, as per the Wealth and Assets Survey. Byrne claims that this inequality has only been exacerbated in recent years. Despite adverse negative shocks like the COVID-19 pandemic, austerity, and Brexit, about £87 billion has been added to UK billionaire’s wealth during 2021 and 2023.
The book highlights that youth have borne the brunt of this widening wealth disparity. According to data from Office of National Statistics (ONS), those aged between twenty and forty, hold only eight per cent of Britain’s total wealth. In contrast, people aged between fifty-five and seventy-five owned over half of Britain’s total wealth in 2018-20. Their prospects of wealth accumulation have further declined with a squeeze in wages and booming asset prices as a result of quantitative easing. Byrne contends that this has made Britain an “inheritocracy” wherein a person’s parental wealth, social connections and the ability to access good education are more important determinants of wealth than hard work and talent.
Those aged between twenty and forty, hold only eight per cent of Britain’s total wealth.
The second part of the book explores the spread of the idea of neoliberalism since the 1980s, that helped sustain and flourish wealth inequality. Neoliberalism promoted the idea of market supremacism and reduced the role of the state. The later chapters in this section engage in depth with rent-seeking behaviour by corporates and the increase in market concentration via mergers and acquisitions.
The third part of the book proposes corrective measures needed to reverse wealth inequality. The book contends that the starting point of arresting wealth disparity is to boost labour incomes by creating well-paying, knowledge-intensive jobs. Byrne does not elucidate as to what he means by these knowledge-intensive jobs. Usually, knowledge-intensive jobs are those in financial services, high-tech manufacturing, health, telecommunications, and education. Byrne argues that earnings in knowledge-intensive jobs are about 30 per cent higher than average pay. However, these jobs accounted for only about a fifth of all jobs and a quarter of economic output in 2021. Hence, promoting such jobs will significantly raise workers’ earnings.
The author maintains that knowledge-intensive jobs can be generated by giving impetus to state-backed research and development (R&D) spending and innovation. He draws attention to low growth in R&D spending in UK at per cent between 2000 and 2020, when global R&D spending has more than tripled to £1.9 trillion. However, there are some fundamental concerns regarding the effectiveness of such reforms in curbing inequality and ensuring social mobility.
People of Black African ethnicity are disproportionately employed in caring, leisure and other service-based occupations. They also hold about eight times less wealth than their white counterparts.
First, knowledge-intensive jobs are highly capital-intensive and high R&D spending may not generate enough jobs or may make some existing jobs redundant. The author has not substantiated his claim with any empirical evidence. Second, it’s possible that innovation spending and jobs perpetuate the existing social and regional inequalities. In the UK, about half of all knowledge-intensive jobs are generated in just two regions: London and the South East. To address regional disparities, Byrne suggests setting up regional banks, training skills and integration at the regional level, and promoting Research and Development (R&D) in small and medium enterprises (SMEs) via tax credits and innovation vouchers. However, no mechanism is laid out with which to tackle social inequality. People of Black African ethnicity are disproportionately employed in caring, leisure and other service-based occupations. They also hold about eight times less wealth than their white counterparts. It seems likely that new knowledge-intensive jobs would disproportionately benefit people of white ethnicity from wealthy backgrounds with connections and access to good education.
Another measure specified to boost labour incomes is to shift towards a system that adequately rewards workers for their services, that is, a system of “civic capitalism”, as coined by Colin Hay. Byrne alleges that one step to ensure this is to create an in-built mechanism that ensures workers’ savings are channelled into companies that adopt sustainable and labour-friendly practices. One of the ways to achieve this is to require the National Employment Savings Trust (NEST) sets up guidelines and benchmarks for social and environmental goals for the companies in which it invests. In this way, Byrne has adopted an indirect approach to workers’ welfare, as opposed to a direct approach through promoting trade unionisation among workers, which in the UK has fallen from 32.4 per cent in 1995 to 22.3 per cent in 2022 . This would enhance workers’ bargaining power to increase their wages and secure better benefits and security.
Apart from boosting workers’ wages, Byrne underscores the need to create wealth for all, ie, a wealth-owning democracy. Inspired by Michael Sherraden’s idea of “asset-based welfare” and Individual Development Accounts, Byrne proposes to create a Universal Savings Account that enables every individual to accumulate both pension and human capital. He advocates that a Universal Savings Account can be created by merging Auto-enrolment pension accounts, Lifetime Individual Savings Accounts (LISAs) and the Help to Save scheme. Re-iterating the proposals from the pioneering studies by the Institute of Fiscal Studies and the Resolution Foundation, Byrne proposes to expand the coverage of the auto-enrolment pension scheme to low-income earners, the self-employed and youth aged between 16 and 18, to increase savings rates and to reduce withdrawal limits from the pension fund.
In the last chapter, Byrne emphasises the enlargement of net household wealth relative to GDP from 435 per cent in 2000 to about 700 per cent by 2017, without any commensurate change in wealth-related taxes to GDP share. This has created a problem of unequal taxation across income groups, which, he states, must be rectified. To do this, he endorses Arun Advani, Alex Cobham and James Meade’s proposals of introducing an annual wealth tax.
Byrne attempts to encapsulate an existing range of ideas for reform pertaining to diverse domains like state-backed institutions, corporate law restructuring, social security and tax reforms.
Overall, the book presents a coherent strategy to reverse wealth disparity and build a wealth-owning democracy through a guiding principle of delivering social justice and promoting equality. The remedies for reversing wealth inequality offered in the book are not new; rather, Byrne attempts to encapsulate an existing range of ideas for reform pertaining to diverse domains like state-backed institutions, corporate law restructuring, social security and tax reforms. The pathway for the acceptance and adoption of all these reforms is no mean feat; it would entail a shift from a narrow focus on profit-maximisation towards holistic attempts to adequately reward workers for their services and improve their wellbeing.
Note: This post gives the views of the author, and not the position of the LSE Review of Books blog, or of the London School of Economics and Political Science.
Image credit: Cagkan Sayin on Shutterstock.
The Wealth of a Nation: Institutional Foundations of English Capitalism – review
In The Wealth of a Nation: Institutional Foundations of English Capitalism, Geoffrey Hodgson traces the roots of modern capitalism to financial and legal institutions established in England in the 17th and 18th centuries. Hodgson’s astute historical analysis foregrounds the alienability of property rights as a key condition of capitalism’s rise to supremacy, though it leaves questions around the social dimensions of the free market system unanswered, writes S M Amadae.
The Wealth of a Nation: Institutional Foundations of English Capitalism. Geoffrey M. Hodgson. Princeton University Press. 2024.
English capitalism was built on empire and slavery…State intervention and slavery are examples of impurities within capitalism. Impurities can be necessary or contingent for the system. Some state intervention was arguably necessary, but slavery was not. (13)
Countering conventional understandings of capitalism, Geoffrey Hodgson contends that “Secure property rights were not enough,” because “[m]ore wealth had to become alienable and usable as collateral for borrowing and financing investment” (119). Hodgson’s The Wealth of a Nation: Institutional Foundations of English Capitalism is a welcome contribution to heterodox economics that incorporates historical excavation and theoretical analysis to provide refreshing nuance to established accounts of the rise of capitalism. Hodgson provides historical details of Great Britain’s early modern property rights and finance institutions, building on his previous works and covering a dense corpus of theories and data going back to Adam Smith’s 1776 Wealth of Nations. Hodgson’s analysis of the financial origins of English capitalism focuses on types of property rights from 1689 to 1760 and varieties of financial credit supporting British industrialisation between 1760 and 1830. While readers can expect a perceptive analysis of the origins of British capitalism, they should not expect a critique of the social dimensions of the free market system.
The Wealth of a Nation […] incorporates historical excavation and theoretical analysis to provide refreshing nuance to established accounts of the rise of capitalism.
Part II, “Explaining England’s Economic Development,” including Chapter Three “Land, Law, War,” Chapter Four “From the Glorious to the Industrial Revolution,” and Chapter Five “Finance and Industrialization,” carries the brunt of Hodgson’s argumentation. Three aspects of the book stand out. The first is his overarching argument that the central institution enabling the rise of modern political economy in England was finance: the ability to alienate the ownership of land and other property to serve as collateral for investment loans. The second is Hodgson’s heterodox economic analysis emphasising historical contingency (as opposed to universal laws); Darwinian Variation, Selection, Replication (203-206); and the role of institutions. The third is Hodgson’s apparent embrace of capitalism. He celebrates the productive power of finance capital and industrial investment, but eschews a critical analysis of capitalism’s social consequences articulated by the likes of Karl Marx, John Maynard Keynes and Karl Polanyi.
[Hodgson] celebrates the productive power of finance capital and industrial investment, but eschews a critical analysis of capitalism’s social consequences
Hodgson engages the theories of Karl Marx, Douglass North and Barry Weingast and Deirdre McCloskey, criticising their arguments for being incomplete or flawed. Marx identified the exploitation of the working class by the bourgeoisie; he missed that changes in law preceded changes in the material base that ultimately consolidated bourgeois power. North and Weingast apprehend the importance of secure property rights but missed that these could encompass feudal property rights mandating primogeniture (oldest son inherits all property) and entailments rather than the new class of alienable property rights. McCloskey rightly focuses on ideas as a force for social evolution but misses the exigencies of paying for costly wars and the practical need for legal means to pay off sovereign debt.
The key underlying factor of the British Industrial Revolution from 1760-1830 was the ability to obtain finance.
Hodgson’s treatment is astute. The Dutch were leaders in public finance, and William III’s accession to the British throne in 1689 brought those practices into Britain (121). The period from 1689-1815 was one of “war capitalism” requiring that the state be efficient in raising taxes. The state gained the right to create money by decree, and debt itself could be sold along with contractual obligations to repay the debt. Hodgson dates the financial revolution to 1660-1760 (135) and associates the growing sovereign debt with the need to finance war efforts. The key underlying factor of the British Industrial Revolution from 1760-1830 was the ability to obtain finance. Hodgson challenges the conventional view that entrepreneurs obtained loans from family and friends. His argument rests on documenting that investors were able to stake collateral for their loans. He presents evidence on mortgages, such as for canals, and the rising ratio of capital existing as financial assets versus as physical assets. The British banking system had to adapt to offer credit for investment because the central bank was focused on financing sovereign debt for war efforts.
Hodgson redirects attention from the security of property rights to their alienability as the driving institutional invention critical for capitalism to emerge. Slaves represented a crucial category of this exchangeable type of property. Hodgson acknowledges that “By the end of the eighteenth century, slaves amounted to about a third of the capital value of all owned assets in the British Empire” (109). A sizeable category of alienable property in the early 18th century was that of slaves: £6.4 billion was land, buildings, animals, ships, equipment and other non-human assets, while £3 billion was slaves (2021 currency values, 149). Hodgson’s treatment of slaves’ contribution to the origins of what Adam Smith called the “system of natural liberty” is limited to their functional role as legally institutionalised property that could be alienated. Readers looking to heterodox economics to provide a critical stance on the origins of western free markets may seek more than Hodgson’s proposition that the institution of slavery was merely a contingent factor in the system’s rise. Hodgson acknowledges that the £20 million compensation paid to former slave owners for the 1833 Slavery Abolition Act stands as a historically unprecedented sum of liquid financial capital freely available for industrial investment in the 19th century.
The £20 million compensation paid to former slave owners for the 1833 Slavery Abolition Act stands as a historically unprecedented sum of liquid financial capital freely available for industrial investment in the 19th century.
In a twist of prevailing perception that the burden of debt is a form of bondage (eg David Graeber’s Debt, 2012), Hodgson frames indebtedness as the means of liberation to finance capital, which in turn drives economic growth. Hodson effectively defends Hernando De Soto’s property rights institutions to increase the welfare of the destitute by issuing land titles as a means to obtain credit. In a similar inversion of conventional sentiment, we can recall Adam Smith’s admonishment, counter to contemporary American libertarians, that tax, including poll tax, “is to the person who pays it a badge, not of slavery, but of liberty” because tax payers are subjects of government.
Hodgson adopts a Darwinian-inspired methodology based on variation, selection, and replication (the “V-S-R” system, 204). The section “Applying Darwinism to Scientific and Economic Evolution,” (206) is conjectural. He observes that, “Some individuals were more successful than others, affecting their chances of survival and procreation” (207). He rejects either a material account or a mental account of agency. The latter refers to “folk psychology” which attributes action to individuals’ desires and beliefs. Hodgson follows the school of thought holding that human action occurs before intention is conscious or rationalised (189-190). He holds that habits and dispositions, rather than deliberately formed intentions, govern action and form the bedrock of institutions.
[Hodgson] holds that habits and dispositions, rather than deliberately formed intentions, govern action and form the bedrock of institutions.
How, then, do we assess the merits of, or the underlying affirming conditions for, either the institution of slavery or alienable property and financial capital? Hodgson observes that,
People often obey laws out of respect for authority and justice, and not because they calculate advantages and disadvantages of compliance. Dispositions to respect authority have evolved over millions of years because they aided cohesion and survival of primate and human groups (201).
Hodgson’s argument that alienable property and appropriate financial institutions for investment were a condition for the rise of capitalism in Britain is convincing. However, without a clear conceptualisation of effective human agency, other than that driven by dispositions and habits, we are left with the stubborn question of the extent to which capitalist institutions are either emancipatory or the best means to better the human condition.
Note: This post gives the views of the author, and not the position of the LSE Review of Books blog, or of the London School of Economics and Political Science.
Image: The painting Coalbrookdale by Night by Philippe Jacques de Loutherbourg depicting the Bedlam furnaces at Coalbrookdale in Shropshire, England. Credit: The Science Museum, London.
Rinse and repeat – Truss chaos – the new benchmark
For years, those who want selective access to government spending benefits (like the military-industrial complex and other parasitic sectors), while claiming the government cannot afford to provide adequate income support to the most disadvantaged citizens have used various ruses to give an air of authority or legitimacy to their claims. So in the UK, the…
Growing evidence that Covid has incapacitated a huge number of workers with little policy response forthcoming
Regular readers will know I have been assessing the evolving data concerning the longer-run impacts of Covid on the labour force. As time passes and infections continue, our immediate awareness of the severity of the pandemic has dulled, largely because governments no longer publish regular data on infection rates, hospitalisations and deaths. So the day-to-day,…
I was banned from Elon’s ‘free speech’ X app for offending power
Following years of pressure from Israel lobbyists and British spooks, I was finally banned by Twitter/X. What does my removal say about Elon Musk, who flaunts his opposition to censorship, while promising to build an “everything app” where you could lose access to banking and messaging for violating dubious speech codes? On February 17, I was suspended from Twitter/X without warning. The cause was mass-reporting by Zionist activists I’d offended. My removal was justified on the basis that I violated […]
The post I was banned from Elon’s ‘free speech’ X app for offending power first appeared on The Grayzone.
The post I was banned from Elon’s ‘free speech’ X app for offending power appeared first on The Grayzone.
Abbott Demands Albo Send The Army To The UK To Help Find The Princess
Former Prime Minister (yep, really) Tony Abbott, has demanded that current Prime Minister, Anthony Albanese, send the army over to the UK to help track down Princess Kate.
”A strong monarchy makes a strong Australia,” said Mr Rabbit. ”Albo needs to stop obsessing over his beloved Rabbitohs and start obsessing over the Royals.”
”Like normal people do.”
When asked if he seriously wanted to Australia to waste resources in the middle of a cost of living crisis, Mr Rabbit said: ”Well, uh, huh, huh, the Australian people want the very best for our Royal family.”
”They won’t mind if we sacrifice a new school for a Royal visit, or a new hospital to send a search team to the UK.”
”Things like education and healthcare come and go, but King Charles and the Royals, they’ll be with us forever.”
”Now, if you’ll excuse me, I need to pick up some supplies for my trip to the UK, I hope Harris farm is still open.”
Mark Williamson
@MWChatShow
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British government designs fiscal policy within a flawed framework – result = poor policy
This week, the UK Chancellor releases the latest fiscal statement (aka ‘the budget’) and will also have a eye to the general election which must be held before January 28, 2025. One would expect the government would stall the announcement and delay the election for as long as is possible, given the current situation and…
Apparently the bond vigilantes are saddling up – on their ride to oblivion
When I was in London recently, I was repeatedly assailed with the idea that the Liz Truss debacle proves that the financial markets in Britain are more powerful than the government and can force the latter to comply with lower spending and lower taxes. It seems the progressives have a new historical marker which they…
Britain’s future is being compromised by the massive increase in long-term sickness among the working age population
When I was in London recently, I noticed an increase in people in the street who were clearly not working and looked to be in severe hardship from my last visit in 2020. Of course, in the intervening period the world has endured (is enduring) a major pandemic that has permanently compromised the health status…
How Britain is Helping Israel to Bomb Gaza, with Matt Kennard
Editor’s Note: Dear Readers, MintPress News’ YouTube channel was recently demonetized, and many of our videos made age-restricted. We would greatly appreciate your support by becoming a member of our Patreon page so that we can continue to bring you important stories like this one. Much of the work that we do is supported by viewers like you.
The MintPress podcast, “The Watchdog,” hosted by British-Iraqi hip hop artist Lowkey, closely examines organizations about which it is in the public interest to know – including intelligence, lobby and special interest groups influencing policies that infringe on free speech and target dissent. “The Watchdog” goes against the grain by casting a light on stories largely ignored by the mainstream, corporate media.
Even after more than 100 days of genocidal attacks on Gaza, the Israeli assault continues to rage. The onslaught itself is very well documented by courageous Palestinian journalists who risk their lives daily. However, the role of Western governments in all this is not nearly as widely reported.
One outlet that has tried to buck this trend is Declassified UK, which has constantly shone a light on the activities of Great Britain and the United States in enabling the genocidal attack.
Joining “The Watchdog” today to talk about this issue is returning guest Matt Kennard, a writer and investigative journalist for Declassified UK. Kennard has broken several stories about secret British collaboration and support for Israeli actions, which he will discuss today. Previously, he worked as a reporter for The Financial Times and was a fellow and a director of the Center For Investigative Journalism in London. His latest book is “Silent Coup: How Corporations Overthrew Democracy.”
Even with the war in Iraq, Kennard noted, the Bush and Blair administrations spoke the language of freedom and democracy. But the Israeli government constantly announces its intent in plain language to ethnically cleanse Gaza of more than two million Palestinians. “And yet still, our governments don’t say a word of criticism against it,” he said, adding:
And not only our governments but the oppositions in both the U.S. and the U.K… So there is no mainstream anti-genocide party. And that’s a wake-up call for all of us. We need to change the system from top to bottom. This is a red line. If we don’t make it a red line, we lose our humanity.”
On October 13, the U.K. government announced it was deploying a wide range of military assets to the Eastern Mediterranean area, including spy planes and 1,000 troops. From its military bases in Cyprus, the British military has been flying large numbers of supply flights to Israel, helping sustain the Israeli attack. As Kennard noted, in December 2020, the U.K. government signed a secret military agreement with Israel that likely commits it to “defending” the apartheid state if it comes under attack.
Britain’s military hub in the region is RAF Akrotiri, a vast, sprawling military compound in southern Cyprus. It is not only the center of British imperialism in the Mediterranean but is also home to more than 120 U.S. airmen and hosts of spies from the N.S.A. From there, both countries project their power across the Middle East, Europe, and North Africa.
But even as the British government supports Israel, the Israeli state is attempting to penetrate and interfere in U.K. politics. In 2019, Alan Duncan revealed that he was blocked from becoming Middle East Minister in Theresa May’s cabinet at the behest of the Israelis because of his mildly pro-Palestine positions. The Conservative Friends of Israel – which acts as a front group for the Israeli state – wields enormous power within the party, including the ability to make and break political careers.
The Labour Party is also deeply connected to Israel, to the point where Israeli lobbyists have funded 40% of Keir Starmer’s shadow cabinet. This kind of “entrenched espionage” eats away at and makes a mockery of the idea of British democracy, Kennard told Lowkey today.
Lowkey is a British-Iraqi hip-hop artist, academic and political campaigner. As a musician, he has collaborated with the Arctic Monkeys, Wretch 32, Immortal Technique and Akala. He is a patron of Stop The War Coalition, the Palestine Solidarity Campaign, the Racial Justice Network and The Peace and Justice Project, founded by Jeremy Corbyn. He has spoken and performed on platforms from the Oxford Union to the Royal Albert Hall and Glastonbury. His latest album, Soundtrack To The Struggle 2, featured Noam Chomsky and Frankie Boyle and has been streamed millions of times.
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