A changing Riyadh hits the big screen.

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.

In Liberalism Against Itself: Cold War Intellectuals and the Making of Our Times, Samuel Moyn dissects intellectual battles within Cold War liberalism through six key figures: Judith Shklar, Isaiah Berlin, Karl Popper, Gertrude Himmelfarb, Hannah Arendt and Lionel Trilling. Teasing out their complex relationships with Enlightenment ideals, historicism, Freudianism and decolonisation, Moyn’s masterful group biography sheds light on the evolution of liberalism and the cause of the Red Scare, writes Atreyee Majumder.

Liberalism Against Itself: Cold War Intellectuals and the Making of Our Times. Samuel Moyn. Yale University Press. 2023. 

In his most recent book, Samuel Moyn provides a set of intertwined intellectual profiles of six scholars of the Cold War, especially post-WWII era: Judith Shklar, Isaiah Berlin, Karl Popper, Gertrude Himmelfarb, Hannah Arendt and Lionel Trilling. Before I read Liberalism Against Itself: Cold War Intellectuals and the Making of Our Times, I had never come across the term Cold War liberalism. As Moyn clarifies, the term was coined in the 1960s by enemies of liberal ideas (presumably from within the Free World) emerging at the time, blaming “domestic compromises and foreign policy mistakes”. Moyn offers an intriguing argument that liberalism arrived at its current iteration through its defenders in the Anglo-American region during the Cold War.

Moyn offers an intriguing argument that liberalism arrived at its current iteration through its defenders in the Anglo-American region during the Cold War.

Interestingly, all the scholars in Moyn’s study except for Karl Popper are Jewish intellectuals of the post-Holocaust era or are children of American Jewish immigrants. An Austrian émigré in England, Popper was born Jewish but later converted to Lutheranism. Moyn takes great care not to reduce their loyalty to a certain iteration of liberalism to their religious identity (111). He employs an interesting writing strategy whereby he establishes a grapevine of conversations among these six figures and their various compatriot liberals. For instance, Shklar appears as a sharp critic of Hannah Arendt in Chapter five, while Berlin provides a corrective to Shklar’s rejection and blaming of Rousseau for sowing the roots of the red spectre with which the free world was confronted with in the twentieth century.

The first two chapters elaborate on Shklar and Berlin who have divergent attitudes towards the Enlightenment, Romanticism and Rousseau. Both are critical of the Enlightenment to the extent that they find themselves amplifying liberalism’s state-limiting function over its dimension of emphasising creative agency of the individual. They differ on the extent to which the Enlightenment could be held responsible for the rise of the Red Scare. It is in the Karl Popper chapter (Chapter Three) that the plot thickens, as Popper rejects “historicism” by way of rejecting Hegel and his infusion of the idea of progress with Christian “inevitabilism” (77, 80). As Moyn narrates, Popper held that history, if embraced, would mean the inevitable progress as argued for Hegel and later, in Marx’s terms, would lead to a communist version of progress that would usurp liberalism’s dominance. This anxiety made Popper reject the category of history itself. In fact, Jacob Talmon, the “slavish follower” of Popper, described “the idolization of history” as a “nineteenth century novelty” (80).

It is through Hannah Arendt that we see the uncomfortable relationship the Cold War liberals had with the decolonisation movements outside the west

The book reaches a crescendo in the last two chapters on Hannah Arendt and Lionel Trilling, respectively. It is through Hannah Arendt that we see the uncomfortable relationship the Cold War liberals had with the decolonisation movements outside the west; those that claimed the word ”freedom” for colonised populations. As a reader from the postcolony, I found it instructive to read Moyn’s discussion of Arendt’s ambivalence about reconciling her liberalism with the growing liberalisms of the former colonies. In an insightful section at the end of the Arendt chapter (137-8), Moyn discusses how nationalisms of these fledgling nations were objects of suspicion for Arendt and the Cold War liberals while they were eager to embrace the cause of Israel’s nationalism. In the final chapter we witness Lionel Trilling’s strange embrace of Freud’s psychoanalysis, especially Freud’s late work Civilization and its Discontents (1930). Trilling wanted to render a reformed liberalism – one that wasn’t so naïve and shocked at crisis or evil in the world. Moyn writes of Trilling’s use of Freud in working out his own theory of liberty and liberalism (152):

“…..Freudianism affected the theory of liberty. It turns out that people are constrained in the control they can win from the passions, and therefore in the freedom they should have in their self-making. They must use what autonomy they can gain in pitiless struggle with their own proclivities in the service of self-control.”

Trilling’s own treatment of Cold War liberalism […] could have arisen from his repeated attempts to process what he witnessed in Europe in the 1930s as fascism took hold

Trilling’s own treatment of Cold War liberalism, Moyn speculates, could have arisen from his repeated attempts to process what he witnessed in Europe in the 1930s as fascism took hold; Moyn writes that “he rationalized out of it a new liberalism” (153) – a kind of “survivalist” one. Trilling’s move for a reformed and less idealistic liberalism marked liberalism’s slow shift towards the right.

Moyn has written a masterful interconnected intellectual biography of Cold War liberals, unpacking arguments within the liberal establishment about what actually brought about the Red Scare.

Moyn has written a masterful interconnected intellectual biography of Cold War liberals, unpacking arguments within the liberal establishment about what actually brought about the Red Scare. Moyn also makes clear that these figures are not particularly worried about the institutional arrangement that will bring about such actualisation of freedoms and hence, their version of liberalism. Moyn often uses the term neoliberal and I understand that his usage is quite different from the commonplace social science use of that word – which is a political form accompanying the condition of late capitalism. Hence, I would have liked Moyn to delineate his specific use of the term. Moyn does discuss, especially, in the chapter on Hannah Arendt (Chapter Five), the discomfiture of the Cold War liberals with the rise of new nations across the globe, claiming for themselves the political and social goods of liberalism through their own interpretation of what these might entail. He especially mentions, David Scott’s indictment of Arendt for her erasure of Haiti (138). A blind spot about the rest of the world seems to have existed among the Cold War liberals, which Moyn could have explored further. Finally, I was curious about whether Western Marxism – of the Althusser variety (I believe many of them are writing at the same time as Althusser in the 1960s) – were at all in the conversations that the Cold War liberals engaged in. If so, how would they respond to the Althusserian idea that “freedom” as ideology that hides actual class relations in the name of a pleasurable political ideal which thereafter encodes their worlds of desire? Nonetheless, Liberalism Against Itself is an illuminating and, at times, counterintuitive account of the intellectual wars internal to liberal establishment while it was under attack during the Cold War.

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: DidemA on Shutterstock.

This is a good thread from Stephanie Kelton of Modern Money fame where she indicates how China understands money and uses it appropriately on the state’s behalf. Drawing on an old Bloomberg article, she says: “[O]ld-fashioned financial thinking [says] that the government should aim to balance its budget, but in reality China is already transitioning... Read more