Inequality in Britain

Alan Ware

• Publisher: Routledge
• Year: 2019
• Print ISBN: 9780367331696
• eBook ISBN: 9781000727050
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: Politics
• Index: Politics & International Relations

This book provides a thorough and engaging analysis of inequality in Britain, including its long-term development and transformation since the beginning of the 20th century.

The author argues that inequality is not what it used to be – no longer can policy-makers consider it just in terms of status, wealth and income. Having resurfaced strongly as an issue after the financial crisis of 2007–2008, a truly informed discussion of inequality must now be wide ranging and take account of a variety of interacting factors. They include both a radically different role for education in the labour market and the interests of future generations. Government policies, market failures and fundamental changes in British society and economy in earlier decades have all contributed to inequality's contemporary scope, its intensity and who it affects.

Alan Ware traces and illuminates the altered nature of inequality in Britain, its consequences and especially its political implications. It offers a timely, concise and illuminating examination that will be of interest to all those concerned about inequality and, more broadly, to scholars and students of sociology, social/public policy, contemporary British history, political sociology and political theory.

1

Introduction

In a radio broadcast during the Great Depression, the humourist and political commentator Will Rogers made the following observation about America:

Here we are in a country with more wheat, and more corn, more money in the banks, and more cotton, more everything in the world… yet we've got people starving. We'll hold the distinction of being the only nation in the history of the world that ever went to the poor house in an automobile.

His remark of 1931 illustrates well an important aspect of inequality in all modern societies. Deprivation for a large minority can exist alongside overall abundance. In real terms, average income per head in Britain is about three times higher than it was 60 years ago, but food banks are currently experiencing much greater demand than they used to. Those born into poor households can expect to live 9 years fewer than others, and the gap in life expectancy between rich and poor is increasing. Although, overall, men now follow the earlier trend among women in living longer than ever, for the first time since the late 19th century the difference in longevity between poor men and the more affluent is growing (Mayhew and Smith, 2016). Some necessary expenditures, such as housing, account for a greater proportion of household income than they did decades ago. Additionally, the poor are more likely than others to be victims of crime, and escaping poverty remains difficult. Upward social mobility has not increased for those born into poor households – there is about the same likelihood of their remaining poor as there was for their predecessors a century ago.

That the gap in longevity between poor and affluent men is now growing parallels a slightly older, and related, trend in inequality. After the 1970s, income and wealth inequality rose. With both, an earlier direction of change evident since the late Victorian era reversed. It might not be surprising, therefore, that inequality features more prominently in British political debate than just a few years ago. Indeed, since the world’s financial crisis of 2008, public attention has increasingly been drawn to some aspects of this development. For instance, that the CEOs of FTSE 100 companies would earn more during the first three working days of 2018 than the typical British worker would in a year was well publicized. It was dubbed Fat Cat Thursday (Hodgson, 2018).

However, it is not only the poor, nor arguably mainly the poor, who have been vocal in their opposition to inegalitarian developments. Within a large sector of the middle class there has been a squeeze on certain aspects of their lives. One result is resentment at what is perceived by them as a worse situation than that faced previously by their older counterparts. Yet while their complaints may be directed primarily towards a generational inequality, it is their standing in relation to those with higher incomes and greater wealth in their own generation that is one cause of their situation. Like the poor, they are losing out to contemporaries who are more able to access key resources for which, largely, there is either a fixed or a limited supply. This point helps highlight two important features of poverty and inequality.

The first is that poverty and deprivation are relational conceptions, which is one valid point underpinning the assertion in Matthew’s Gospel that “the poor are always with us”. People are poor in relation to conditions in their own society. How the poor lived and survived 2000 years ago is not relevant to assessing the extent and impact of poverty in 21st century Britain. The British poor today are clearly much better off absolutely, but what matters is how effectively they can function and participate in contemporary society. What, if anything, can they do to improve their situations significantly without bearing absurdly high costs? Identifying poverty as being “relative” does not mean that there is necessarily deprivation in all contemporary societies, but it does mean that beyond a certain level of inequality there is poverty.

Deprivation is also relational in a separate way. Most poor people do not know just how wealthy the rich are, and, correspondingly, many of the latter believe that the poor must have higher spending power than they actually have. Some manual workers may know from the media that successful London barristers earn far more than they do, but quite how that affects the better-offs’ lifestyles is largely unknown by those who are considerably less affluent. Much that barristers might buy – second homes in the country, expensive holidays or regular tickets to the opera – goes unobserved, and hence is only imperfectly imagined. We are more likely to perceive inequality by looking at those whose lives we know better – people who are more affluent than us, but not well beyond the range of our social acquaintances. What we are missing in relation to the latter can be seen by us, but it will usually give us a false impression of the money the best-off sections of the population really have. In other words, the groups to which people refer when making comparisons about wealth or income are restricted and are shaped mainly by imperfect personal knowledge. It has been known for at least 50 years that “comparative reference groups are limited in scope”. There is always a gap between how unequal incomes are and how badly-off or well-off people believe themselves to be compared with others – the concept known by sociologists as “relative deprivation”. There is a “considerable discrepancy between inequality and relative deprivation” (Runciman, 1966, p. 192).

A second feature of poverty and inequality is that those most disaffected by some aspects of social inequality, but in a position to protest effectively, are often not the least well-off. For example, one well-known interpretation of the origins of the French Revolution is that it was primarily elements in the bourgeoisie who facilitated it (Lefebvre, 1967). They had greater resources, including education, to promote dissent than the far more numerous poor. Any new or growing inequality adversely affecting relatively well-resourced groups has the potential to extend political conflict. It is not just declining living standards overall, or only small increases over time, that may act as a catalyst for their discontent. Today some sectors of the middle class have experienced much longer waits to enter the housing market, higher costs associated with attending university, and a reduction in the anticipated value of many occupational pensions. Since 2008 this experience has run in parallel with relatively low rates of growth in incomes and in the national economy. To a limited extent their new relative deprivation, by reference to their own social group at an earlier period, has helped to draw some public attention to broader issues of social inequality.

Why inequality arises and persists

Among many important questions relating to inequality are why it arises and how it persists. Various explanations have been proffered to account for the general phenomenon of inequality in many types of human society. Karl Marx’s great contribution was to identify the role played by the means through which production was organized. For him, different modes of production generated different mechanisms that both created and then sustained inequality. His theory was that the capitalist mode of production had internal contradictions which eventually would result in vastly increased immiseration of the working class, such that the system would be overturned in a revolution. Irrespective of the many defects in his analysis, his key point is surely correct – that the emergence of capitalism in the 18th century fundamentally changed the mechanisms by which social inequality developed. Quite how it did so, however, has been the subject of considerable debate for over a century and a half.

A major limitation of Marx’s arguments is that they largely ignore the role that other social divisions can play in capitalist societies, both independently of the means of production or in conjunction with it. Most especially, in many countries including Britain there are divisions based on gender and race that create inequalities. An obvious illustration of this: During the industrial era, access for the working class to the better paid and more interesting manual jobs was via apprenticeship systems. However, typically apprenticeships were open only to boys, so that, throughout their lives, most working-class women would be worse off than men because they either had to work in lower paid jobs or in an unpaid domestic role. The origins of this inequality were much older than capitalism. They lay in traditional cultural values about sex-based differences and in how different kinds of labour had been organized in peasant communities. Capitalist organization then modified how these divisions generated inequalities.

Thus, the significance of Marx’s analysis cannot lie in its being comprehensive. Rather, it is primarily in his identification of the sheer scale and scope of the inequalities that necessarily arise within the class system. The social class into which you are born, and in which you work as an adult, is the major determinant of so many resources that you would need to lead the kind of life to which you might aspire. Typically, and even today, a girl from a middle-class family will acquire fewer such resources subsequently than will a middle-class boy, but usually both end up with more of these resources than either boys or girls from working class backgrounds. While class is not the end of any discussion about inequality in Britain, it is certainly the most obvious beginning. Curiously though, before the passage of the 2010 Equality Act, class background had not been included in British legislation, as had other groups at the sharp end of inequality – women, racial minorities and disabled people. Before the current decade it had not been one of “the responsibilities of the Minister for Women and Equality” (Harman, 2017, p. 292).

This century the most important and well-publicized contribution to answering the general question of “why does inequality arise?” has been that of Thomas Piketty (2014). His starting point is that, at the beginning of the capitalist era, societies were highly unequal and with no forces counteracting the concentration of wealth. However, when it was rapid, the facilitation of economic growth by capitalism would provide such a counterforce, and that would occur following major technological progress or from a large growth in population size. Alternatively, states could intervene to restrict the unequal distribution of wealth and income. In the absence of these factors, and under normal conditions, the push towards wealth being concentrated in the hands of a few would continue. Yet during the 20th century that momentum towards its concentration was interrupted by the consequences of two world wars and the intervening Great Depression. Those effects included the high rates of taxation required for conducting the wars, while the Depression created both bankruptcies and the subsequent development of welfare states. The holdings of the wealthy thereby declined. In addition, the Second World War was followed not just by state welfare provision in the advanced economies but also by more than a quarter of a century of relatively high economic growth. During those years the concentration of both income and wealth was reduced, with many advanced economies becoming more egalitarian than earlier. For Piketty, the successor to that era is one in which there have been few counterforces to the tendency towards greater inequality. Nevertheless, some analysts of inequality have argued that, irrespective of tendencies towards it, this is not an inevitable future (for example, Dorling, 2017).

While macro-analysis of this kind is crucial to understanding inequality, there are both significant differences between countries, as well as variations within them over time, in how inequality has been sustained. This diversity cannot be explained just by focussing on the macro-level of economic production, and it forms the context in which this short book is set. Its subject is the origins of contemporary inequality in Britain and of how the bases of inequality here have changed radically since the middle of the last century. Inequality is sustained by different factors now, some of which were the consequences of public policy, while others were the result of social and economic change. Moreover, any discussion must be wide-ranging in scope, because inequality relates not merely to the divergent levels of income or wealth people have. For example, the focus should also include the divergent treatment some people might receive in their social worlds, as well as to the prospects facing a person’s descendants. Not all the relevant issues can be discussed in an extended way here, so that it is useful to commence this account by briefly introducing some of the key elements that are relevant when thinking about inequality, elements that then arise in various ways during later chapters.

Inequality of resources

Resources enable you to get what you want. Some highly specific resources are necessary for some wants. You cannot become a fighter pilot unless you have excellent eyesight. Being enfranchised is essential for voting in a democracy, although it is only a tiny individual resource and its impact depends on others voting too. Some resources are more general, in that they enable those who have them to obtain a wide range of the things that they want, need, or believe that they need. Especially in the most advanced economies, money is the most general of resources, one for which there is extensive data facilitating comparisons between countries. Usually, therefore, discussions of inequality begin with distributions of income and wealth. Of course, in understanding the functioning of some societies it may not necessarily be the best starting point. (India’s caste system restricts someone’s social opportunities there on the bas...

Table of contents

• Cover
• Endorsement
• Half Title
• Series
• Title
• Dedication
• Contents
• Preface and acknowledgements
• 1 Introduction
• 2 Money and status
• 3 Positional competition
• 4 Merit, markets and luck
• 5 Generations and policies
• 6 Social inequality and diversity
• 7 Inequality in a democracy
• 8 Observations on future redistribution in Britain
• Index