Wednesday, 6 November 2019

Confusing wealth ownership with wealth creation

Elections inevitably draw out hyperbole and given the future former Prime Minister’s reputation as a ‘journalist’, the use of the technique against Corbyn is only to be expected.  That doesn’t make it fair or reasonable, of course, and his comparison of Corbyn with Stalin is a case in point.  It’s also unfortunate in that the invitation to think about the key attributes of Stalin – a hatred of democracy, a tendency to purge his party of those who don’t agree with him, and a demand that parliament does as he tells it - do indeed ring a bell in relation to a current prominent party leader, but it isn’t Corbyn.
More specifically, however, he interprets Corbyn’s antipathy to billionaires as meaning that Corbyn is an enemy of wealth creation, an accusation which reveals more about Johnson’s own lack of understanding of economics and wealth than it does about Corbyn.  Simply equating the possession of personal wealth with wealth creation is a fundamental error.  There are many ways of accumulating extreme wealth, and not all of them are honest, to put it mildly.  Even amongst the ‘honest’ routes to extreme wealth there are methods which owe more to redistribution of wealth created by others than they do to actual wealth creation, a fact which many of the conservative party’s donors demonstrate well.
Of course, there are some billionaires who have had a brilliant idea, set up a company to exploit it, sold millions of whatever, and ended up filthy rich.  To the extent that they personally created the personal wealth that they enjoy, it is through the original idea and its exploitation, but did they really personally create all that wealth?  Did their employees not contribute at least something to that success?  There’s another aspect to the question as well.  As Chris Dillow wrote last week, the very existence of so many billionaires could be seen and interpreted from a Conservative viewpoint (let alone a leftist one) as being a symptom of market failure, not its success.
Most economists would define ‘wealth’ in terms of GDP or some variant on it; the country as a whole is wealthier if its GDP is higher.  It’s a definition which says absolutely nothing about how that wealth is then distributed.  Corbyn’s opposition to the concentration of wealth in an increasingly small number of hands is not anti-capitalist in the sense in which Johnson tries to portray it; indeed a more valid critique from a socialist perspective might be that trying to make capitalism work more fairly perpetuates the system, making Corbyn a better friend of the system than Johnson.  Protecting the interests of the super-rich, as Johnson seems to want, is actually a bigger danger to capitalism in the long term.


dafis said...

That "Stumbling and Mumbling" article to which you refer is a gem and should be a "must read"for politicians and commentators of all persuasions.

The writer makes a valid point about the concentration of wealth, the corruption of "competitive free enterprise" by monopolistic or oligopolistic forces that are currently very much in play. Conservatives claim to represent an ideal of free enterprise with competitive markets but most of their actions act in favour of the latter. In its present form so does the leadership of the EU who just love their relationship with major global corporates and large scale financial institutions.

Simon Neville said...

It is a truth universally acknowledged that the most effective way to become rich is, er, to be rich.