Economics Exposed: Rich or poor (1987)

The Economics Exposed column from the October 1987 issue of the Socialist Standard

In the last century, William Morris summed up the economics of capitalism simply but wisely, by saying that there were rich and poor, and that the rich were rich because they robbed the poor. That honest statement of the power relationship which lies at the heart of present-day society was worth more than the hundreds of pages of economic claptrap which have tried to persuade us that capitalism is inevitable (even though it has only occupied the most recent fraction of human history). And yet today, a hundred years later, it is often claimed that real class division between rich and poor has become a thing of the past. Thanks to pension funds, social reforms and wage rises, we are told, everyone now has a chance to "make it". Well, who are the truly rich in Britain today, and what chance do the rest of us have of becoming that rich ourselves?

In answering the first of these questions, it is important to bear in mind that wealth and poverty are relative, social concepts. To have owned a television some decades ago may have suggested some relative status or prosperity, whereas today it would by no means disprove that someone was in poverty. Henry VIII may have been one of the richest men of his age. but he still did not enjoy modern central heating (or drive a Rolls Royce). If you want to decide whether you are in poverty. then ask yourself two questions: "Am I fully in a position to enjoy the fruits of modern technology, such as good food, secure housing, extensive travel and so on, without ever having to scrimp, save, worry or settle for second best? And are there others, living in the same society, who are able to enjoy better food, housing and so on than I am, purely and simply because they do not share the same official "poverty" label as I do in this society?"

According to a major survey taken last year (British Social Attitudes, publ. Gower). 70 per cent of British people describe themselves as “working class ". But in fact, an even greater percentage, over 90 per cent of the population, are in the class which has to work for a living, to sell our abilities on the labour market in order to survive. Those who do not have to are certainly rich, as they have the resources at their disposal to rescue them from the pressures and indignities of wage — or salaried work. Such people may be termed "capitalists" as they own and control substantial capital, but the press tend to spare them the trouble of having their monopoly of capital highlighted too much, and give them instead a great range of other names: industrialists, entrepreneurs, captains of industry, business-people, members of the "business community", financiers and bankers, commercial magnates and investors. Well, socialists might also be tempted to give these people a great range of other names. However, we forgo that temptation, since our case against capitalism is based not on any personal hostility towards such people, but on the knowledge that under their system (which the majority still support) the interests of the working-class majority can never be met.

When we speak of the minority who are genuinely "rich", we are referring to people like David Sainsbury, whose £1 billion provides him with over £30,000 per day in dividends alone. People who could quite easily afford the cars advertised earlier this year for £150,000 and £275.000 (Sunday Times, 8 March 1987). Individuals like Robert Maxwell and Gerald Ronson whose monopoly of capital to the value of half a billion each provides them both with unearned incomes of approximately £1 million each week. Let us now move on, however, to some facts which will help us to answer the second question, what chance do the rest of us have of escaping at all from the poverty of our working lives?

Last year, an LWT television series called Fortune dealt with the subject of wealth in Britain, and the information was summarised in New Society, 22 August 1986. The research was specially carried out by Professor Bill Rubinstein of Deakin University, Australia and Professor Anthony Shorrocks of Essex University. Some of the findings to emerge were as follows:

1. The richest 43,500 people in Britain today, or about one thousandth of the population, own between them 7 per cent of all wealth, which is nearly twice as much as the wealth owned by the whole of the poorest 50 per cent of the population together. These 43.500 have individual fortunes of £740,000 upwards.
2. The richest 5 per cent of the population (about two million people) possess between them 41 per cent of all wealth. Even people with as "little” as £75,000 to their name would belong to this group, rather than to the remaining 95 per cent of the population who therefore suffer relative poverty.
3. A scientific study was made of all those who died in 1984 or 1985 leaving a million pounds or more. It was found that 68 per cent of these modem millionaires had parents who were "aristocrats, businessmen or farmers" and a further 12 per cent had parents who were described as "higher professionals". 43 per cent of millionaires had been left over £100,000, and exactly three quarters of them were found to have inherited at least £10,000 in their earlier days (and such sums would have been worth far more then than now)! A study by C.D. Harbury conducted in the 1950s and 1960s had found, similarly, that 58 per cent of those who were leaving £100,000 or more had themselves been left at least £50,000 by the previous generation.

All of this indicates just how little has changed in this respect since the days of William Morris. However, one point should be added. Even in the unlikely event of capitalism being so reformed as to make inheritance of little significance (and such a change is made particularly impracticable by the fact that this economic system is founded on the successive accumulation of capital), still the system would fail to meet the needs of the majority. The rich would still rob the poor, even if each generation had to jump through hoops, throw darts at each other or draw lots to see whose turn it was. The only solution is to replace this wage labour/capital relationship with social co-operation to meet needs. And the flexibility of human behaviour makes that prospect as workable as it is compelling.

Clifford Slapper