Inequality, class and the crisis

17th February, 2012 12:01 pm

Redistributive policies need to be part of the answer to income inequality, and politicians should lead the way in building public support for them. Labour must convince the public that extreme inequality is not an inevitable product of a capitalist society.

One positive by-product of the economic crisis is that public awareness and concern about inequality is greater than at any time in living memory. The damaging economic and social impact of inequality has been widely recognised, whether by the leader columns of the Financial Times or the tents of those identifying as part of the 99%. In particular this resentment has been reflected against the City and the undeserving rich. The recent Fabian/TUC poll suggests inequality is now an issue that the UK’s ‘squeezed middle’ are concerned about.

For egalitarians, this potentially offers a great opportunity. But, as we saw with the economic crisis, the right can be adept at re-framing to their advantage what should rebound on them.  We must acknowledge the increasingly punitive and demonising attitudes towards those at the bottom, who are seen by many as even more undeserving than those in the City. Class is a social relation as well as an economic distributive category that shapes life chances. The ‘hidden injuries of class’, as Richard Sennett put it, are one of the themes of Owen Jones’s book Chavs: The Demonization of the Working Class. In my own work, I have called this the ‘othering’ of people in poverty. This ‘othering’ diminishes the sympathy and solidarity necessary to build public support for effective action against poverty.

The potential problem with the notion of the ‘squeezed middle’ is that it runs the danger of encouraging resentment against those at the bottom as well as the top, particularly when reinforced by constant references to the merits of ‘hard-working families’.

We also need to take on board that, in spite of the consistent public belief that the income gap is too wide, enthusiasm for egalitarian policies is diminishing, with particular regard to redistribution via the tax and benefits system. Some will respond that we should give up on further redistribution. But public attitudes are not fixed; politicians should lead, not simply follow public opinion. While certainly redistribution is not the only answer to inequality, it has to be part of the answer. Even the OECD acknowledged the importance of redistributive tax-benefit policies in its recent report on growing inequality. The report recognised the potential for top earners to pay more of their fair share of tax, given their greater share of overall income. It also noted that the tax and benefits system had become less redistributive in the UK since 1975.

A number of analysts have suggested that the shift in public attitudes against redistribution reflects, in part at least, New Labour’s antipathy to the idea (even if in practice it was redistributing by stealth). I agree. Nevertheless, as Karen Rowlingson and colleagues pointed out in the 2010 British Social Attitudes Survey, a significant proportion of people “are sitting on the fence” when it comes to redistribution. They argue that, by making a stronger case for redistribution, politicians and lobby groups could play an important role in getting them off the fence.

However there are other ways, aside from income redistribution, that we should be tackling inequality. We also need to challenge the distribution of original income, asking fundamental questions about the value we attach to different kinds of work. This must be done in relation to both high and low pay, and will be a highly gendered question. The importance of what has been called the ‘pre-distribution’ of income is the central theme of a new Smith Institute report by David Coats, From the Poor Law to Welfare to Work. And inequalities of wealth are even greater than those of income: we must also address these and the role of inheritance.

Whatever the specific policy agenda, the left needs to challenge the idea that such extreme inequality is inevitable in a capitalist society. The task is to persuade people that a more equal society would mean both a stronger economy and a society in which the great majority can live better lives and be free to pursue their dreams.

This is an essay from the latest Fabian Society pamphlet “The Economic Alternative”, posted here as part of our “Economic Alternative Day”. You can download the pamphlet in full here.

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