wealth inequality
Limitarianism: The Case Against Extreme Wealth – review
In the face of soaring wealth inequality, Ingrid Robeyns‘ Limitarianism: The Case Against Extreme Wealth calls for restrictions on individual fortunes. Robeyns puts forward a strong moral case for imposing wealth caps, though how to navigate the political and practical hurdles involved remains unclear, writes Stewart Lansley.
Watch a YouTube recording of an LSE event where Ingrid Robeyns spoke about the book.
Limitarianism: The Case Against Extreme Wealth. Ingrid Robeyns. Allen Lane. 2023.
Ingrid Robeyns’ Limitarianism is the latest in a long line of critiques – such as Thomas Piketty’s Capital and Branko Milanovic’s Visions of Inequality – of the soaring wealth and income gaps of recent decades. Limitarianism focuses on personal wealth, which is much more unequally distributed than incomes, and is arguably the most urgent of these trends. It draws most closely on the United States, where, according to Forbes, nine of the world’s top 15 billionaires are citizens.
Robeyns argues that given the wider damage from the enrichment of the few, with its negative impact on economic strength and on wider life chances and social resilience, we must now impose a limit on individual wealth holdings. Thinkers have been making the case for this “limitarianism” and the capping of business rewards for centuries. The Classical Greek Philosopher, Plato, argued that political stability required the richest to own no more than four times that of the poorest. The Gilded Age financier, J. P. Morgan – one of the most powerful of American plutocrats of the nineteenth century – maintained that executives should earn no more than twenty times the pay of the lowest paid worker. In 1942, President Roosevelt proposed a 100 percent top tax rate, stating that “[n]o American citizen ought to have a net income, after he has paid his taxes, of more than $25,000 a year (about $1m in today’s terms).” “The most forthright and effective way of enhancing equality within the firm would be to specify the maximum range between average and maximum compensation”, wrote the influential American economist J. K. Galbraith in 1973.
The Gilded Age financier, J. P. Morgan […] maintained that executives should earn no more than twenty times the pay of the lowest paid worker.
One of the effects of the 2008 financial crisis was to trigger a debate about the role played by excessive compensation packages in banking. Others have argued that the introduction of guaranteed minimum wages – which limits employer freedom over employees – should come with a maximum too. As wealth inequality has deepened in recent decades, there have been growing calls for measures to reduce this concentration, not least among some members of the global super-rich club. Yet there has been perilously little political action. Each year the world’s mega-rich, facing few constraints, carry on appropriating a larger share of national and global wealth pools.
Robeyns sets out a powerful moral case against today’s wealth divide and asks the all-important question: “how much is too much?”. She calls for setting limits to the size of individual fortunes that would vary across countries. In the case of the Netherlands, where she lives, “we should aim to create a society in which no one has more than €10m. There shouldn’t be any decamillionaires.” This, she argues should be politically imposed. She also adds a second aspirational goal, an appeal to a new voluntary moral code applied by individuals themselves: “I contend that … the ethical limit [on wealth] will be around 1 million pounds, dollars or euros per person.”
Although there are many critics who dismiss the philosophical concept as either unfeasible or undesirable, history suggests the idea is far from utopian. Limits operated pretty effectively among nations – including the UK and the US – in the post-war decades and became an important instrument in the move towards greater equality.
War has long proved a powerful equalising force, and the post-1945 decades brought peak egalitarianism.
War has long proved a powerful equalising force, and the post-1945 decades brought peak egalitarianism. States shifted from their pre-war pro-inequality role to become agents of equality. This brought (albeit temporary) upward pressure on the lowest incomes and downward pressure on the highest. These limits operated in two ways: through regulation and taxation, and changes in cultural norms. Nations imposed highly progressive tax systems, with especially high tax rates at the top – that were sustained in the UK until the 1980s – the expansion of protective welfare states, and a shift in bargaining power from the boardroom to the workforce.
These policies were also enabled by a significant pro-equality cultural shift. This brought a tighter check on top business rewards and the size of fortunes. Until the early 1980s, business behaviour became more restrained, and wealth gaps narrowed. The kind of business appropriation that has become so widespread today would, for the most part, have been unacceptable to public and political opinion then. Gone were the public displays of extravagance and the high living of the inter-war years. Up to the 1970s, and the return of what Edward Heath called the “unacceptable face of capitalism”, executive salaries in the UK were moderated by a kind of hidden “shame gene”, an unwritten social code – similar in some ways to Robeyns’ call for voluntary limits – which acted as a check on greed. It was a code that was largely adhered to, partly because of fear of public outrage towards excessive wealth.
Up to the 1970s, and the return of what Edward Heath called the ‘unacceptable face of capitalism’, executive salaries in the UK were moderated by a kind of hidden ‘shame gene’
Robeyns is making a conceptual case. She doesn’t give much detail of how limitarianism might work in practice, and doesn’t draw lessons from the post-war experience (though this was the product of the particular circumstances of the time). She recognises the hurdles needed to make the politics of limitarianism a reality. There are plenty of questions of detail that would need to be settled. How, as a society, would we determine the appropriate “rich lines” above which is too much? Would the “undeserving rich” whose wealth is achieved by extraction that hurts wider society, be treated differently from the ‘deserving’ who through exceptional skill, effort and risk-taking, create new wealth in ways that benefit others as well as themselves?
The expectation that the tremors of the 2008 meltdown would trigger a shift towards a more progressive governing philosophy that embraced a more equal sharing of wealth has failed to materialise.
The greatest hurdle is political. The expectation that the tremors of the 2008 meltdown would trigger a shift towards a more progressive governing philosophy that embraced a more equal sharing of wealth has failed to materialise. The pro-market, anti-state politics of recent decades are now largely discredited. International Monetary Fund staff, for example, have called neoliberal politics “oversold”. There are widespread calls for the reset of capitalism, with as Robeyns puts it, “a more considerate, values-based economic system”. Although such a system may yet emerge, there are few signs of the kind of value-shift and new cultural norms that would be a pre-condition for a politics of restraint and limitarianism.
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: dvlcom on Shutterstock.
Hijacked: How Neoliberalism Turned The Work Ethic Against Workers and How Workers Can Take It Back – review
In Hijacked: How Neoliberalism Turned The Work Ethic Against Workers and How Workers Can Take It Back, Elizabeth Anderson argues that neoliberalism has perverted the Protestant work ethic to exploit workers and enrich the one per cent. Magdalene D’Silva finds the book a compelling call to renew a progressive, socially democratic work ethic that promotes dignity for workers.
Hijacked: How Neoliberalism Turned The Work Ethic Against Workers and How Workers Can Take It Back. Elizabeth Anderson. Cambridge University Press. 2023.
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Elizabeth Anderson’s excellent 2023 book Hijacked was published the same month Australian multi-millionaire Tim Gurner said:
“Unemployment has to jump … we need to see pain … Employees feel the employer is extremely lucky to have them … We’ve gotta kill that attitude…”
America’s Senator Bernie Sanders rebuked Gurner’s diatribe as “disgusting. It’s hard to believe that you have that kind of mentality among the ruling class in the year 2023.”
Ironically, Gurner’s comments favouring employees’ objectification and employer coercive control show just what Hijacked says is: [T]he ascendance of the conservative work ethic… (which) tells workers … they owe their employers relentless toil and unquestioning obedience under whatever harsh conditions their employer chooses …”(xii).
Indeed, “neoliberalism is the descendant of this harsh version of the work ethic … [i]t entrenches the commodification of labor … people have no alternative but to submit to the arbitrary government of employers to survive.” (xii).
Anderson defines neoliberalism as an ideology favouring market orderings over state regulation […] to maximise the wealth and power of capital relative to labour
Anderson defines neoliberalism as an ideology favouring market orderings over state regulation (xii) to maximise the wealth and power of capital relative to labour (272) where the so-called “de-regulation” of labour and other markets doesn’t liberate ordinary people from the state; it transfers state regulatory authority to the most powerful, dominant firms in each market (xii).
Hijacked follows Anderson’s prior writing on neoliberalism’s replacement of democratically elected public government by the state, with unelected private government by employers. Like other work ethic critiques, Hijacked explains how Puritan theologians behind the work ethic dismissed feelings with contempt for emotional styles of faith worship (3).
Hijacked explains how Puritan theologians behind the work ethic dismissed feelings with contempt for emotional styles of faith worship
The original work ethic proselytised utilitarianism (19) but with inherent contradictions between progressive and conservative ideals (14). Early conservative work ethic advocates included Joseph Priestley, Jeremy Bentham, Thomas Malthus and Edmund Burke (Chapters 2 and 3) who aligned with the new capitalist, manager entrepreneur classes and “lazy landlords, speculators and predatory capitalists” (65) who claimed they exemplified the work ethic (127).
The work ethic split into conservative and progressive versions which Anderson distinguishes by class-based power relations, rather than competitive markets
The work ethic split into conservative and progressive versions which Anderson distinguishes by class-based power relations, rather than competitive markets, as conservatives “favour government by and for property owners, assign different duties to employers and employees, rich and poor” (while expecting) “workers to submit to despotic employer authority” (and) “regard poverty as a sign of bad character … poor workers as morally inferior” (xv).
Progressives like Adam Smith (130-135) supported “democracy and worker self-government. They oppose class-based duties … and reject stigmatization of poverty” (xvi). Anderson traces this “progressive” work ethic to classical liberals like John Locke (Chapter 2), Adam Smith (132-135), John Stuart Mill (Chapter 6) and progressive, socialist thinkers like Karl Marx (Chapter 7) who stressed how paid work should not alienate workers “from their essence or species-being…” (209) but express their individuality, as “[t]he distinctively human essence is to freely shape oneself…” (209).
Marx applied Mill’s emphasis on the importance of individuality, which Anderson links to the Puritan idea that our vocation must match our individual talents and interests (206) whatever our economic class.
Furthermore, Locke “condemned the idle predatory rich as well as able-bodied beggars” (65). Marx applied Mill’s emphasis on the importance of individuality, which Anderson links to the Puritan idea that our vocation must match our individual talents and interests (206) whatever our economic class.
Yet our worthiness now had to be proved (to God) by ‘work’ that entailed: disciplining drudgery (9), slavery (10, 259), racism (97-99), exploitative maltreatment of poor people (106) and industrious productivity (52) which became conspicuously competitive, luxury consumption (170).
Conservatives (Chapters 3, 4) secularised these ideas so the “upper-class targets of the Puritan critique hijacked the work ethic … into an instrument of class warfare against workers. Now only workers were held to its demands … the busy schemers who … extract value from others cast themselves as heroes of the work ethic, the poor as the only scoundrels” (65).
Anderson doesn’t idolise Locke, Smith, J. S. Mill and other early progressive work ethic advocates like Ricardo (Chapter 5) by highlighting harsh contradictions in their views. For example, within Locke’s pro-worker agenda were draconian measures for poor children (61) such that Anderson says Locke’s harsh policies for those he called the idle poor, contain “the seeds of the ultimate hijacking of the work ethic by capital owners” (25).
[Anderson’s] scrutiny of both left and right-wing support of the neoliberal conservative work ethic complements other critiques of the left-wing origins of neoliberal markets.
Anderson criticises the perversion and reversal of the work ethic’s originally progressive, classical liberal aspirations “and successor traditions on the left” (xviii). Her scrutiny of both left and right-wing support of the neoliberal conservative work ethic complements other critiques of the left-wing origins of neoliberal markets. Anderson also says the conservative work ethic arose in a period of rapidly rising productivity and stagnant wages, “when market discipline was reserved for workers, not the rich” (108).
Yet it was the progressive work ethic that culminated in social democracy throughout Western Europe by promoting the “freedom, dignity and welfare of each” (242). Marx was so influenced by the progressive work ethic espoused by classical liberals, his most developed work on economic theory apparently quotes Adam Smith copiously and admiringly (226). Anderson thus contends that criticism of social democracy as a radical break from classical liberalism – is a myth, as ideas like social insurance “developed within the classical liberal tradition” (227).
However, “Cold War ideology represented social democracy as … a slippery slope to totalitarianism … the title of Friederich Hayek’s … Road to Serfdom, says it all” (226).
Social democracy declined worldwide in the 1970s and 1980s when neoliberalism arose and the conservative work ethic returned with the elections of Ronald Reagan and Margaret Thatcher
Social democracy declined worldwide in the 1970s and 1980s when neoliberalism arose and the conservative work ethic returned with the elections of Ronald Reagan and Margaret Thatcher (Chapter 9). Social democratic centre-left parties like the US Democrats and the UK’s Labour Party (293) didn’t counter neoliberalism’s conservative work ethic, as “the demographics of these parties shifted… from the working class to the professional managerial class” (257), seduced by meritocracy ideology in a competitive race for (their own) superior status (257). Anderson’s observation complements Elizabeth Humphry’s research on how Australia’s Labor Party and labour union movement introduced vanguard neoliberalism to Australia against workers, in the 1980s.
[Anderson] argues the focus on efficiency and aggregate growth neglected workers’ conditions and plight as neoliberal work (for welfare) policies degrade people’s autonomy and capabilities
Anderson recognises the success of some neoliberal policies in the US’s economic stagnation in the 1970s, like trucking deregulation, emissions reduction trade schemes and international trade liberalisation (285-287). However, she argues the focus on efficiency and aggregate growth neglected workers’ conditions and plight as neoliberal work (for welfare) policies degrade people’s autonomy and capabilities because “the most important product of our economic system is ourselves” (288).
Hijacked’s last chapter recommends social democracy renewal and updating the progressive work ethic “to ensure … every person … has the resources and opportunities to develop … their talents … engage with others on terms of trust, sympathy and genuine cooperation” (298). Employees could be empowered through worker cooperatives (297).
A gap in Hijacked’s analysis is a lack of clear definition of “work.” Anderson doesn’t distinguish between “employment” in a “job,” and rich elites’ voluntary, symbolic “duties,” like those of Britain’s “working royals” who call their activities “work”.
Another dilemma is whether economic class power struggles can change peacefully, noting Peter Turchin says we’re facing ‘end times’ of war and political disintegration because competing elites won’t relinquish power.
Nevertheless, Hijacked is compelling reading for everyone on the left and the right who needs employment in a paid job to survive, so today’s neoliberal conservative work ethic no longer gaslights us to believe our dignity demands our exploitation.
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. The LSE RB blog may receive a small commission if you choose to make a purchase through the above Amazon affiliate link. This is entirely independent of the coverage of the book on LSE Review of Books.
Image Credit: Daniel Foster on Flickr.
Permacrisis: A Plan to Fix a Fractured World – review
In Permacrisis: A Plan to Fix a Fractured World, Gordon Brown, Mohamed El-Erian and Michael Spence put forward a strategy on growth, economic management and governance to prevent crises and shape a better society. Danny Dorling contends that the book’s suggested policy solutions for economic and social problems, stemming from a hypercapitalist ethos, would entrench rather than reduce inequalities.
Permacrisis: A Plan to Fix a Fractured World. Gordon Brown, Mohamed El-Erian and Michael Spence, with Reid Lidow. Simon & Schuster. 2023.
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Permacrisis is a remarkable book, but not for the reasons its authors might have hoped. It explains brilliantly why so much of our politics and economics is in such a terrible mess. The book argues that economic growth is progress, that we need this type of growth above all else to prosper, and that with just a minimal extra layer of regulation, such growth can spread the good life to the masses. Two quotations from Permacrisis, I believe, sum up both the core mantra of the three authors and what they think of as good growth and the good life. First, the mantra:
”You see, growth is progress. Growth is what has given the world the tablet you’re reading this book on, the medicines by your bedside, the economic breakthroughs that have lifted billions out of poverty. The problem is how growth has been achieved […] the old unsustainable “profits over people” methods of the past have outstayed their welcome and today are not just failing individuals and our environment but national economies” (14).
[The authors] assume that the development of a tablet computer is due to economics rather than developments in universities and other state-funded bodies which created the micro-components that that enable a computer to be transmuted into tablet form.
The authors make a series of assumptions that help to explain why people like them think like they do. For example, in the above quotation, they assume that the development of a tablet computer is due to economics rather than developments in universities and other state-funded bodies which created the micro-components that that enable a computer to be transmuted into tablet form. Computers, and electricity before that, were not products of “the market” but technological inventions that have been marketised.
Perhaps they choose to assume their reader uses a tablet rather than a print copy because it is impossible to argue that the invention of the book, or typesetting or the printing press, was due to economic growth. This is because it happened long before the concept of economic growth existed, when a group of monks in Korea invented movable type in 1377. Instead, it was economic growth that got us to a state, in the Netherlands in the 1990s, where we were publishing more books than people could read by those purchasing them, peaking at over a thousand new titles a year per million potential readers (see image below). At this point, middle-class Dutch people stopped buying books just to display in their homes, and the publication of new titles plummeted (see Figure 12 below from the book Slowdown).
As the above example illustrates, economic growth can produce waste more than uplift and “progress” for the vast majority of people. Similarly, industrialisation reduced life expectancy not just in the mill towns of England, but across India. As I write global life expectancy hovers just above 70. In the US between 2020 and 2021, it dropped from 77 to 76.1, its lowest level since 1996. Most people in the world have far too little, a few have far too much. Social, medical, educational, housing, and cultural progress have all been made when the greediest aspects of market behaviour have been held in check, as the UK’s history of service provision demonstrates. Technological progress has depended on collaboration over profits. Those working in the US and UK produce very few innovations per head, as compared to people in the Nordic countries or Japan. But, the authors of this book appear utterly unaware of such arguments.
As with the tablet, the authors suggest that we have medicines because of economic growth rather than research and innovation; tellingly, the index to the book includes entries for “McKinsey” and “Pacific Investment Management Company (PIMCO)”, but none for “medicine” or “pharmaceuticals”.
As with the tablet, the authors suggest that we have medicines because of economic growth rather than research and innovation; tellingly, the index to the book includes entries for “McKinsey” and “Pacific Investment Management Company (PIMCO)”, but none for “medicine” or “pharmaceuticals”. This choice reveals what the book is actually about: the world of consultancy, international travel, and enormous amounts of money. McKinsey & Company is a global management consulting firm founded in 1926 by a University of Chicago professor (of accounting) that advises people with a lot of money how to acquire more. PIMCO, is an American investment firm that manages about two and a half trillion dollars of capital – to make more for people already rich. There is a pattern here.
Brown, El-Erian, and Spence suggest that, with a little more management by people like them, a little more of their kind of consulting, a little more of what they view as careful investment and better directing the trillions held by the world’s super rich, that we can somehow end the unsustainable “profits over people” behaviour of global economics.
The authors of this book believe that it was economic growth that “lifted billions out of poverty”. This view, along with the other core beliefs in Permacrisis, goes entirely unquestioned. Rather, Brown, El-Erian, and Spence suggest that, with a little more management by people like them, a little more of their kind of consulting, a little more of what they view as careful investment and better directing the trillions held by the world’s super rich, that we can somehow end the unsustainable “profits over people” behaviour of global economics. For them, the crisis is that they are not being listened to enough.
This brings us to how the book figures growth, and a second key quotation. In a long section celebrating the $1.50 Costco hot dog that entices shoppers through its doors, the authors explain their idea of economic growth and why they rate it so highly. Costco is a huge US chain of warehouses that started in 1976 as Price Club. It now has 125 million members, a number rising by around 6 million a year, and accelerating.
“The hotdog with the tantalising $1.50 price gets people in the door. And when they’re in the door, that’s when they see the knife set, back-yard patio set or the vacuum they can’t live without. And this business model has been a winner helping Costco reach a value in excess of $200 billion. Costco’s hotdog is a powerful and tasty reminder that growth isn’t always achieved by innovations developed in a Silicon Valley garage. Sometimes it’s as simple as keeping the price of a hotdog and soda steady – a decision that advances social goals by feeding those seeking an affordable snack, all while helping to power the growth of one of America’s largest companies. Costco’s chief financial officer was asked in late 2022 how long the $1.50 price would last. His response? Forever.” (30).
It is almost shocking to see such blatant endorsement of a particularly destructive form of economic growth, unplanned (at least as far as the consumer is concerned) instant gratification consumption, and such a warped view of social goals (to provide cheap hot dogs to the gullible).
Of the book’s authors – who were brought together by Jonny Geller of the global literary and talent agency, Curtis Brown (298) – one is Chief Advisor to “Allianz, the corporate parent of PIMCO, where he was CEO and co-CIO” (2) and husband of an executive director of Eco Oro Minerals Corp. Another was once UK Prime Minister and worked closely with Ed Balls, whose brother Andrew Balls has been for many decades a Chief Investment Officer of PIMCO (the other co-CIO). The third, who now lives in Milan, joined Oak Hill Capital in 1999 and was awarded a Nobel Prize in economics in 2001. They are what some economists view as masters of the universe: They believe their combined knowledge spans the breadth of global economic expertise: “While our personal and professional experience had natural touch points, like any good corporate merger the overlap and redundancy were minimal” (3). In fact, they are the crisis – and luckily, their beliefs are very far from permanent, sustainable or convincing, no matter how much they signal a sustainable ethos by adding the prefix ”‘eco-” before the ideas they put forward. In this book, they have encapsulated exactly what is wrong with the late twentieth-century hyper-capitalist worldview they champion that seeks to enrich the few and impoverish the rest of society.
Note: This review 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. The LSE RB blog may receive a small commission if you choose to make a purchase through the above Amazon affiliate link. This is entirely independent of the coverage of the book on LSE Review of Books.
Main Image Credit: hachiware on Shutterstock.
Figure from Slowdown: Reproduced with the author’s permission.