There is at present an unprecedented wave of concern about pay disparities. We have the bankers’ bonuses, both main parties promising to limit high salaries in the UK public sector and a vigorous debate in Scotland about the high levels of pay of some Health Board managers.
Last week, the New Economics Foundation (NEF) published a report in which they calculated the benefit to society of various low and high paid workers per £1 of income. Whatever one might say about the rigour of their methods, the report makes a strong case for current income disparities having little basis in social contribution. My view is that as a nation we are at last waking up to two realities of ‘political economy’.
Firstly, society has the collective right, and ultimately the power should it choose to exercise it, to decide individual material rewards. The claim that the ‘free market’ somehow avoids the need for conscious allocation is a myth. Whatever allocation method is chosen, the criteria should be that each individual receives, not what they can get or what an employer can get away with paying them, but the resources they need to play their fullest role in society.
Secondly, we are confused about money. We see money move; as incomes, as profits, and as tax revenue, and we think something of value must be happening. But since the quantity of money is always increasing and the world is not static, money will always move, and will always be accumulating somewhere. From the viewpoint of the individual or firm it is almost impossible to see whether there is benefit or harm as a consequence.
The type of analysis conducted by the NEF can help us see behind the numbers that mislead to the reality beneath. But we must all, bankers to bar-staff and cleaners to consultants, be willing to genuinely think about what we want from each other and what we can each offer in return. Only then can we structure our economy to make the best of this reality.