In this time of runaway wealth, there is an alternative for Britain
Rising inequality is the result of the neoliberal economic system that has wreaked havoc since the 1980s. A different path is possible
Leafing through the Financial Times Weekend property pages recently, as one does, there were central London properties which, while somewhat outside my aspirations, are good examples of the current era of runaway wealth.
One seven-bedroom apartment, conveniently located between Buckingham Palace and St James’s Palace, had a ‘guide price’ of £22.5m. A few streets north in Mayfair, there was a six-bedroom house for £19.75m, and those seeking a cosier pad could snap up a two-bedroom nearby for a mere £12.95m. These prices are typical for that part of London, and indeed are not even the most expensive available.
South of the city in the scenic Surrey Hills, there is an even more interesting location for the super-rich, St George’s Hill estate. Among the properties currently available is an eight-bedroom, eight-bathroom house, described as “an unparalleled masterpiece”, that is set in 1.5 acres of land and priced at £14.5m – which is towards the upper level for this estate, but not the dearest.
This 1,000-acre private estate in Weybridge, Surrey, is an exclusive community with barriers and a guardhouse at the entrance, that was developed by a local builder, George Tarrant, over a century ago, to fulfil “his vision of creating a gentleman’s refuge for captains of industry on London’s doorstep”. The estate developed slowly after the Second World War, until the 1980s, when the practice began of demolishing the original Tudor-style houses and replacing them with super-luxury properties – an easy way to make a lot of money fast, given the continuing demand for grand homes.
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St George’s Hill, with over 400 properties, is one of the larger private estates in the UK – but it is very much part of a worldwide phenomenon of exclusive gated sanctuaries for the super-rich, some of which are described in rather blunter terms. Heritage Park, rising from the winelands outside Cape Town in South Africa, featured in this a column in this series in 2007, when the housing development was further expanded into a town, complete with schools and everything residents needed – surrounded by a 33,000-volt electric fence.
As one of the early sales brochures put it, “We have taken a leaf or two out of the medieval past and placed it in our future. To be precise, we have stolen the concept of whole-town fortification to create a crime-free state.”
Stagnating wages amid austerity
While exclusive estates like these are a mere fantasy for all apart from the super-rich, what remains surprising, as touched on in a recent column, is how this runaway wealth continues to accelerate, at the same time that wages stagnate for ordinary taxpayers and governments focus on public austerity.
Let’s explore this further.
To start with, the increase in wealth in the hands of a few tens of thousands of people worldwide is becoming mind-boggling. Of course, the inequality between poor and rich has long existed but it is notable how the richest have enjoyed a surge in wealth and power since the 1980s. In Britain for example, a 2019 report showed that the six richest people controlled as much wealth as the poorest 13 million, and The Sunday Times 2018 Rich List showed that the richest 1,000 people had a combined wealth of over £700bn. Meanwhile, the top 20 on The Sunday Times 2021 Rich List now control a mammoth £232.56bn between them. Elon Musk is now the world’s richest person, with a net worth of $278bn (£209bn).
This surge in wealth among the super-rich is happening on a global scale and even became a subject of brief concern around the time of the 2017 World Economic Forum. By then, the richest 1% of the world’s population controlled as much wealth as the rest of the world combined, and the richest eight people alone had as much wealth as the poorer half (3.7 billion people).
And since then, this immense wealth has become even more concentrated, peaking during the COVID-19 pandemic. In 2020 alone, the fortunes of the world’s billionaires increased to a record US$10.2trn (£7.6trn at present rates), a 70% increase in only three years.
The 1980s transition to the neoliberal economic model is now reaping a deeply unfair and thoroughly unjustified reward
At the other end of the scale, both the direct and indirect impacts of COVID-19 have already been far worse for people on the margins, whether in the Global North, but of course much more so across the Global South. In June, the UN Department of Economic and Social Affairs warned that years of gains in reducing global poverty were being reversed, with the pandemic leading to 97 million more people being pushed into poverty in 2020. In short, the tens of thousands of super-rich the world over grow ever richer, while millions at the other end of the scale become more marginalised.
We have entered an era of runaway wealth, with many local influences involved and one overarching cause – the transition to the neoliberal economic model that came to prominence in the early 1980s. It was simple in its mechanics but is now reaping a deeply unfair and thoroughly unjustified reward.
The previous mixed economy approach from the late 1940s was not remotely a model of fairness, given the deeply unbalanced trading system that had easily survived the colonial era, but even that could not match the damaging and divisive impact of neoliberalism.
In essence, it is a system rooted in competition driven by near-ideological commitment, where the thriving of untrammelled shareholder capitalism must be encouraged as the first and continual requirement of the whole system. This was not an invention of the late 1970s, but its implementation during that time period certainly led to a much more embedded belief in the fundamental necessity of competition within a deregulated financial model. If you had winners you had to have losers, but this was countered by the curious assumption that enough wealth would “trickle down” to keep the losers sufficiently content.
In different countries, the priorities differed depending on variants of the mixed-economy neo-Keynesian rubric. In the US, there was financial deregulation and taxation orientated to the already wealthy – “Reaganomics” being the crude title. That deregulation, especially the 1982 Garn-St Germain Depository Institutions Act, led to the toxic loans of the early 2000s that culminated in the 2008 financial crisis.
In Britain, the increased inequality was also a consequence of the so-called Big Bang of financial deregulation in 1988. Thatcherism directed plenty of tax cuts to the rich in the early- to mid-1980s, but then went much further than that, with vigorous curtailing of labour rights, sell-offs of social housing, and privatisation of numerous state assets, including electricity, gas, water, telecommunications and the railways.
The neoliberal process continued in many countries into the 1990s, hugely boosted by the collapse of the centrally planned Soviet system, proof if any was required of the need for a vigorous, neoliberal alternative. Meanwhile, the IMF/World Bank-led “Washington Consensus” ensured the spread of the model across much of the Global South.
Over the past 30 years, the impact of the neoliberal system has increased, with even China’s authoritarian capitalism model becoming connected. At the same time, the transnational global elite has evolved and grown substantially and, with that power, has become more able to manipulate political systems with ease, corrupting politicians as required and comfortable in its own security.
Deeply unjust economic system
On those very rare occasions that serious opposition and presentation of alternatives gain political traction, they can be dealt with. In Greece, the formerly small radical party, SYRIZA (The Coalition of the Radical Left – Progressive Alliance) became subject to the power of the European Central Bank, but in Britain the risk of Corbynism became a real problem. Labour’s 2017 election manifesto didn’t just present a plausible alternative to neoliberal excess, it proved uncomfortably popular and helped deprive the Tories of an overall majority. That was a real shock to the elite system and required sustained effort by multiple parties to curb.
We are now facing a global situation of a deeply unjust economic system leading to increasing marginalisation that is being exacerbated by the pandemic and likely to be made even worse if climate breakdown kicks in. On present trends, perhaps the safest prediction has to be a decay into an era of “revolts from the margins” as movements emerge that act against the centres of power. One assessment from 2000’s ‘Losing Control: Global Security in the Twenty-first Century’ concluded that: “What should be expected is that new social movements will develop that are essentially anti-elite in nature and will draw their support from people, especially men, on the margins.
“In different contexts and circumstances, they may have their roots in political ideologies, religious beliefs, ethnic, nationalist or cultural identities, or a complex combination of several of these. They may be focused on individuals or groups, but the most common feature is an opposition to existing centres of power... What can be said is that, on present trends, anti-elite action will be a core feature of the next 30 years – not so much a clash of civilisations, more an age of insurgencies.”
Nearly a quarter of a century later, there is plenty of evidence of that, with a rapid growth of remote warfare techniques to counter the violent revolts in far-off places, and a wide range of lesser control measures for handling lower levels of dissent. Britain is at the forefront of both trends. It has been the closest ally of the United States in its multiple, if mostly failed, wars on terror, whether in Iraq, Syria, Afghanistan, Yemen or the Sahel, while domestically, the Johnson government is rushing through laws to limit protest and the powers of the judiciary, as well as doing its best to side-line parliamentary scrutiny.
In many ways, Britain is now a negative role model for how to maintain elite power in a fractured and divided world. The wealthy get progressively wealthier, the marginalised become more marginalised, the Conservative Party moves further to the Right and the idea of “One Nation Conservatism” recedes into the distant past. The government looks for scapegoats, ranging from migrants to a supposedly “woke” liberal elite and is aided in its endeavours by a supportive media and copious financial support lubricated by corrupt practice.
There are choices. Britain could be a very different role model, going for fair taxation and serious control of tax avoidance and evasion, as well as of tax havens. Financial deregulation could be reversed, and the main utilities put into public ownership. There could be the active encouragement of a more mixed economy, including active support for cooperatives, co-ownerships and mutuals. The creeping privatisation of health and social care could be reversed. Labour rights could be protected, and, above all, substantial infrastructure investment could be the order of the day.
There is little sign of that just now and prospects look bleak, but a good start always involves remembering that there is another way forward. The current path is not preordained.
Change does not have to be through violent social upheavals or sudden revolutions. All too often, they do little more than merely change the accents of the elites. Rapid change can still be incremental and come from below as much as from above, from a supposed periphery more than an assumed centre. Indeed, it is more likely to be sustained if it is in combination. The starting point, though, is to remember that even in unpromising times, the light can still get in.
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