John Kay’s column in the FT on 6 January 2015 is headed: “Rise in US and UK inequality principally due to financialisation and executive pay.” He says: “The rise in inequality in some western countries is principally the result of two interrelated causes: the growth of the finance sector; and the explosion of the remuneration of senior executives. The people who ran big companies were always relatively well paid, but the meaning of “relatively well paid” is now altogether different.” (John’s new book, Other People’s Money, will be published by Profile later this year.)
This is from Ralph Milliband in [amazon_link id=”0850366887″ target=”_blank” ]The State in Capitalist Society[/amazon_link] (1973):
“The most important political fact about advanced capitalist societies…is the continued existence in them of private and ever more concentrated economic power. As a result of that power, the men owners and controllers in whose hands it lies enjoy a massive preponderance in society, in the political system, and in the determination of the states policy and actions.”
[amazon_image id=”0850366887″ link=”true” target=”_blank” size=”medium” ]The State in Capitalist Society[/amazon_image]
As Orazio Attanasio said at the recent CEPR/Bank of England conference on [amazon_link id=”B00I2WNYJW” target=”_blank” ]Thomas Piketty’s book[/amazon_link], there are two inequality problems, the bottom 10% and the top 1%. The latter are mainly the bankers and CEOs.
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Where I profoundly disagree with Ralph Miliband, whose lectures I was once obliged to attend, is the word “advanced”. In deep historical terms it might be “regressed” or “reversion”. What it means is the concentration of power and wealth of various kinds in the hands of relatively few. This was characteristic of the Norman’s of the Middle Ages and period of the Roman Empire after the collapse of the Republic. One could go on. In recent years technology has delivered major and compound change that has created more wealth. At one stage it was more widely distributed but now another reversion has occurred. Add to that ideas of complexity and you have engines of change. What is striking is that open societies enable the young to progress, more closed ones do not with the relevant stresses.
I would suggest the following two books for a wider and more human perspective on inequality:
M G Marmot’s The Status Syndrome
http://www.amazon.co.uk/gp/product/B007N3HEEM?btkr=1
an article by Marmot here:
http://www.sph.umich.edu/sep/downloads/Mamot_Status_Syndrome_challenge_to_Medicine.pdf
and the more widely known:
http://www.equalitytrust.org.uk/resources/spirit-level-why-equality-better-everyone
Both works in their differing ways show that inequality at the levels currently prevailing is lethal, dysfunctional socially, and an enemy of economic and social development.