Boardrooms and carbon quotas

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When newspapers describe a political leader as staging a fightback, it’s usually clear that the newspapers concerned have decided that the leader’s days are numbered.  Poor old Ed Miliband – hardly been in the job five minutes and already he’s staging a fightback.

He’s leading it with an attack on boardroom pay (coupled with an attack on abuses of the benefits system, just for a nice bit of balance).  It’s hard to say how serious he is.  It’s the sort of thing that Labour politicians say when in opposition - and sometimes even when in government – but whether they’ll ever actually do anything about it other than mount verbal attacks is another question.

I suspect not; the emphasis seemed to be very much on appealing to the highest paid to moderate their behaviour on the basis of some sense of fairness or higher moral values.  Somehow, that doesn’t seem likely to work to me.

His basic point, though, is a valid one.  The level of economic inequality in our society is large and growing (and it grew consistently under Labour as well).  I’d agree with him that it needs to be tackled – but he’s whistling in the wind if he believes that it can be tackled by appealing to anyone’s sense of fair play.

Traditionally, many have believed that it can be tackled through the tax and welfare systems, as though the government is some sort of Robin Hood writ large, taking from the rich to give to the poor.  Government action can indeed be used up to a point to achieve greater equality of access to services and goods, if it’s willing to adopt a highly progressive tax system coupled with an extension of collective purchase of goods and services (which is the way I prefer to describe provision made by the state).  The potential effect of that approach is limited though. 

It depends on people being willing to vote for a high tax government in return for a high level of ‘free’ or ‘subsidised’ provision; and the reality of such an approach is that the ‘rich’ who have to pay the higher taxes are not merely the super-rich – whose votes are too few to be an obstacle in purely electoral terms – but also a very much wider swathe of those on higher than average pay.  And whilst very many of us will tell the opinion pollsters that we’re in favour of higher tax for better services, the harsh reality is that most respondents actually mean higher tax for somebody else.

Inequality also needs to be tackled at a more fundamental level.  But it helps if we understand how inequality arises, and why it is growing, in the first place.  Economic inequality largely follows economic power.  Or, as Marxists might say, capital, and those who control it, have the power, labour doesn’t.  I wouldn’t describe myself as a Marxist; but the mere fact that Marx said it doesn’t make it false either. 

The fact that the balance of power has shifted even further away from labour towards capital in recent years is not unrelated to the huge and continuing growth in the supply of labour.  And most particularly, cheap labour, in places such as India and China.  The ability of manufacturers to move their capital to where the labour is cheapest has led directly to the decline of UK manufacturing.  And the weakening of the power of labour coupled with a strengthening in the power of capital and those who control it has also – on a global scale, not just a local one – allowed an increase in inequality in society.

To believe that curbing boardroom pay in the UK, even were it possible, is going to address this issue of inequality – which seems to be where Miliband is starting – is delusional at best.  We actually need a shift in the balance of power. 

In days gone by, the assumption was that that shift would be the result of collective action.  And certainly, there is plenty of scope for more collective and co-operative action on the small scale; but the days of mass unionisation and effective collective action at a larger scale seem to have passed in an age of increasing affluence and individualism.

There is, though, one limiting factor which constrains the compound growth of both capital and labour – and that is the finite resources of the planet on which we live.  Food production capacity, clean air to breathe, clean water to drink, and most particularly, the capacity of the eco-system to handle our impact on it – all of these things are of necessity limited in a way which a world with a much smaller population didn’t really notice. 

And we have a choice about how we share those resources out between us; we can either do it competitively or we can do it co-operatively on a basis of equality.  Of the two, I am completely convinced that only a co-operative approach will be sustainable for the long term – both within our own Welsh or UK society and on a global scale.  And if the extent to which wealth can buy unequal access to resources is limited, wealth itself becomes less valuable. 

Economic inequality and environmental unsustainability are, in a sense, different sides of the same coin.  If Miliband is really serious, he needs to mint a new currency which has sustainability on one side, and equality on the other.  Personal, or domestic, carbon quotas woud be a very good place to start.