Monday 30 April 2012

Inequality is being made.

The good thing about the Sunday Times publishing its annual Rich List is that it gives us all a day or two to remind us of just how rich the rich are, and how much richer they have become.

Owen Jones has written an article here:

which lays out the meat and potatoes of the matter, which I suppose can be summarised by saying that since Lehman Brothers went bust, the super-rich in this country have got richer by £414 billion pounds. Crisis? What crisis?

For those of us who see inequality as a problem, it's tempting to think that this is all we need to say on the matter: 'Look! There's plenty of wealth. It's just that it's unevenly distributed!' End of. However, if you take up this position (not wrong in itself), it doesn't take long for the other side to tell us why such inequality is OK, or indeed essential to keep everything going along nicely most of the time.

So, it seems to me that we need to pick the bones out of this.

Firstly, the key thing about inequality represented by statistics, is that it appears to be static and of the moment.  We understand things much more easily when they are shown to us as still photographs and ratios are just that. But we don't live and work in still photographs and ratios. We are in constant motion in relation to each other, existing across long periods of time. So, when we say 'inequality', we need to think of that firstly as a continuous state of being over whole lifetimes, not just when someone pops up with the stats. Secondly, we need to understand that inequality is a process. It's produced - and is going on being produced and reproduced - by a way of how wealth is made.

So, to take these in turn: the continuity of it inequality is hidden from us by a constant blather directed at us about lottery winners, achievement, self-improvement, success, rags to riches stories and the like. A martian could be forgiven for thinking that our society is like a saucepan full of boiling peas, with the peas on the bottom racing to the top and the peas on the top racing to the bottom, all in some kind of joyous bubbly circulation. The metaphor couldn't be more wrong. Much more accurate would be something like a moussaka with its thick creamy crusty layer on top and a huge chunk of spiced minced lamb underneath.

The point about the continuity of inequality though is that it belies what happens when a layer of working class people improve their living standards, say over 30 or 40 years. We are led to believe that inequality doesn't matter because we've done alright. What this does is break up the idea that we should have institutions in our lives (health, education, housing) which are paid by for all of us, and serve all of us. One trick by our leaders is to keep referring to terms like the 'kitty' or 'in the pot' meaning the sum of money that's raised through taxation - as if that is the sum total of a country's wealth! Meanwhile, the rich and the super-rich are salting away trillions. But, this apparently is not our concern, it's just a necessary part of how 'we' improved our living standards over a two or three decades, say.  In fact, for a good deal of time, it's very hard to find out exactly how much this rich and super-rich pot adds up to. And even harder is to find out by how much it increases year on year.

In some kind of right-wing sci-fi world you could conjure up a society in which massive inequality existed but everyone's needs were served - enough food, shelter, education and health provision, and access to leisure facilities and goods. This after all was the 1950s American dream and was projected worldwide as if the whole of America lived in detached houses planted on half-acre sites. Out of sight tens of millions didn't live that even at the height of the boom years of car and armament production.

So, this leads to the second point, what is the process by which inequality is produced? To read the many articles which are bothered by inequality, one could easily imagine that it's produced by a combination of unfair taxation, tax dodging and cunning systems of inheritance. It's very cheering to see these aspects of inequality being highlighted but they are what they are: dodges, tricks, benefits. They don't produce the inequality. It's quite possible to make an argument for saying they are necessary part of inequality, in the sense that this is part of how wealth is salted away, hidden, conserved within families and the rich class as a whole.

Ultimately, wealth can only be made by human beings. This is what we mean by work - by hand and brain. So you could produce a model of an industry, a firm, a business of a harmonious group of people making, distributing, servicing (or whatever) and every day it produces a bit more wealth. This is how most politicians talk. All the talk about 'jobs' or 'growth' is rests on this idea that the people who own and run the firm are in the same boat as the people sitting at computers, driving trucks, working on production lines or whatever. And so, Ed Balls and George Osborne battle it out over who can make this happen so that there are more jobs and more growth.

The snag is that it's the 'jobs' and 'growth' that produce the inequality! That's to say, the way that capitalism works is that what a firm grosses per year must always come out worth more than the firm's total costs - rents, plant, wages, investment. This is profit, distributed as dividends. If there's no profit, the firm goes bust, or as people who believe in this system say, that's a fact of life In fact it isn't. It's a fact of capitalism, one way in which human beings have figured out to produce, distribute and consume  stuff.

So, every day, the dynamic of capitalism is that it's producing profits, or if you prefer, inequality. (Digression, it's always easier to imagine capitalism in terms of shops, or small businesses making calling cards or something but this isn't where or how the major inequality occurs. The figure cited by Owen Jones and derived from the Sunday Times Rich List is £414 billion since the Lehman Bros went bust. That's not £414 billion owned and shared out between corner shop owners! This is owned by the top thousand wealth-owners, the owners of massive multi-national companies.)

Now where are we at?

We're at a moment in history when every day, politicians are telling us what 'we' can't afford, what 'we' must stop having, how there isn't the money to pay for the kinds of hospitals, schools, housing and social welfare we've had in the past. In fact, they say, there are all sorts of drains on the economy, dragging us down: people on disability benefit who aren't as sick as they make out (the politicians say), the non-industrious poor who won't work and so on. They keep telling us that the problem is 'the deficit' ie the debt created by a shortfall in what has been raised by taxation - the old 'kitty', the pot. And notice, time and again they tell us about a ratio: the ratio between that debt ('deficit') and the Gross Domestic Product - the amount of money raised by the sale of all the goods made in the UK.

Cunning, huh? Because what's missing from this ratio, is the profits being made and remade and re-remade year in year out by the rich and the super-rich. Where's all that?

Where is the £414 billion? (Some would argue, by the way, that this is probably only a fraction of the real figure of wealth owned by the top thousand, because part of being super-wealthy is knowing how to remove vast amounts of wealth from the public eye, stored up in tax havens, trusts, foreign investments and so on. And indeed, most wealthy people know how to put swathes of their daily living costs own as 'investment' ie as part of what the firm has to spend to survive and is therefore not taxed. As a tiny picture of that, no wealthy person spends his or her disposable income on a car, weekday meals, stays in hotels. What add up to poor people's main expenditure comes free if you're wealthy. )

But let's just deal with that £414 billion. Imagine what could be done with it. Imagine how it could be used to make sure that we developed the very best sustainable energy sources, let's say. Or how it could be used to ensure that we had the best medical service we could possibly imagine. Or that it could be ploughed into investing in people's training, education, and development of skills and ideas. Or that it was channeled into solving the problems of housing for all.

But while we might dream of that, we have to remember that the owners of that £414 billion aren't going to do that. We don't have any means, through our elected representatives in parliament or local government to get that money put into these things we want and need. And yet it was only possible to make that money from selling goods, products and services at more than the cost of employing the people who made them.  The employee produced the profit but are not allowed to benefit from the profit they made. It's not even mentioned whenever our elected representatives tell us about what we can afford!

So, we are forever being given the kind of picture of a room you see through a keyhole. That snapshot of the 'kitty' or even of the 'inequality' doesn't show us what is going on, the process. And because of that, we are fobbed off again and again with crumbs.

Instead, we have to push open the door, look at what is really going on with the process of how inequality is produced, and then do some figuring of whether there could be other ways to produce, service and distribute things so that the value of what we do is not taken away by a tiny minority. If there are, the problem then is how do we get from here to there.