Super-Rich Reviews Roundup

Books Reviewed:

Scott, John ‘Who Rules Britain?’ (1991) Polity Press

Haseler, Stephen ‘The Super-Rich: The Unjust World of Global Capitalism’ (2000) Palgrave Macmillan

Williams Hywel ‘Britain’s Power Elites: The Rebirth of the Ruling Class’ (2006) Constable

Hutton, Will ‘Them and Us: Changing Britain – Why We Need a Fairer Society (2010) Little, Brown

Kempf, Herve ‘How the Rich are Destroying the Earth’ (2008) Chelsea Green Publishing

This week’s reading has been an excursion into the notion of ‘elite’ power. I’ve started doing preliminary research for a longer piece (more on this later) and so thought I would share some of the work here. I want to know if it’s helpful to approach capitalism from the perspective of a ruling elite, additional to and commensurate with, an underlying and anonymous rationality. What I mean by ‘elite’ is a class of people who, with relative exclusivity, make decisions which determine the direction of society. This, in turn, leads to further questions because if such a class of people do exist, and manifest their will regularly, what are the implications?

The first book, ‘Who Rules Britain?’, is refreshingly dry. Although I didn’t know it at the time, I would soon look back fondly on the empirically rigorous, non-hyperbolic tone of John Scott’s 1994 book. His central thesis is twofold. First, capitalism is increasingly directed by ‘impersonal capital’ or rather financial institutions which manage to acquire sufficient shares in institutions. Speaking about 1988, he writes:

“The significance of institutional ownership can be seen very clearly…Seventeen of the top 50 financials and 96 of the top 200 non-financials – almost a half of the top 250 enterprises – were controlled by institutions. In these companies, there was no single shareholder or group of associated shareholders with sufficient shares to determine the affairs of the enterprise. The shares were, in each case, widely dispersed, but the degree of dispersal was not of the kind depicted by proponents of the managerial revolution. The bulk of the shares were held not by an anonymous mass of small shareholders but by vigorous and well-informed institutions: banks, insurance companies, pensions funds, and investment groups.” (78)

These financial institutions, what Scott calls the new ‘rentiers’, are those who maintain assets in a number of different places:

“They depend upon diversified sources of wealth holding, and their assets are system-wide in their scope and extent. Their property consists predominantly of institutional assets – bank deposits., shares managed by trust companies, etc., – and so their wealth and income depend upon the operation of the system of impersonal possession. “ (91)

Being unfamiliar with the structure of wealth, I was surprised to hear this. It’s also interesting in comparison to emerging BRIC economies in which, as Stephen Armstrong argues in his book ‘The Super-Rich Will Inherit the Earth’  are controlled to a much greater extent by individuals and families.

The second, interconnected, idea in the book is that organization of power in Britain is today exercised less through the traditional ‘establishment’ and more through official channels.   Older forms of organization still have a role, as his section on private schools and private clubs makes clear, but he emphasizes instead the formal organs of business organization, such as the CIB.  As Scott writes:

“The ‘establishment’, a ‘traditional’ alignment based around shared values and a similarity of background, continues to exist, but in only a very attenuated form…organization of capital – employer’s organizations and business interest groups – have organized wider elements of the capitalist class outside the establishment, and have sought to represent business interests through more formal channels…As the establishment has weakened, so the state elite has been recruited from wider sections of the capitalist class and from the middle classes. It remains subject to capitalist-class domination, but formal mechanisms of interest representation are now a more important element in the exercise of political power. “ (139)

The class basis and disproportionate influence of these bodies is made clear as are the shared values, inculcated by institutions like Oxford and Eton, give this class some degree of coherency, particular within the judiciary, the civil service, the military and other parts of the state machinery:

“..trades unions and the Labour party have sought to use similar formal channels to represent working-class interests and have, on occasion, been able to secure parliamentary majorities and to form governments which introduce people from a wider social background. The remainder of the state elite, however, has remained firmly dominated by the power bloc…The Labour party has governed, but it has not ruled. “ (139)

This makes for interesting reading. While it would be entirely possible to imagine Scott here sliding into paranoia about the new ‘rulers’, he posits a very tame definition of power, which is :

“For a ruling class to exist, therefore, it is simply necessary that the advantages derived by its partners in the power bloc are not made in such a way as to disadvantage systematically the dominant class and its conditions of reproduction…What is significant is that the capitalist class should benefit to a greater extent than any other group.” (141)

He also makes the stranglehold over the state that big business holds:

“A modern state must raise its revenue from taxation and from borrowing. These fiscal constraints mean that the state depends on the existence of a profitable sector of private business and so much support social policies which will be directly or indirectly supportive of capital accumulation. It can engage in other policies only if they do not seriously undermine the private profitability which allows the operations of private capitalism to continue to generate sufficient tax revenue or borrowing capacity.” (144)

For me, this implies that privatization of state assets might be understood as a way of transferring power away from the state and towards business, as well as providing a quick cash-in for the lucky few.

There is a lot of research in the book, alongside a clear systematization. What it lacks, however, are agents.  As Scott notes: “…Britain does have a ruling class. Much remains to be done in documenting the anatomy and personnel of this class, but the general picture is, I believe, clear.” (151) There are attempts to address this also, such as the lists of the richest people in Britain and some discussion of various political figures which proceeds in light of the above. Another interesting aspect of the book is the demonstrations that, no matter how we might like to imagine a ‘democratization’ of the super-rich, as signifiers like Richard Branson suggest is possible, the amount of money necessary to shape the economy in the manner of the ‘rentier’ capitalists is completely out of reach to anyone who isn’t born or married into it. However, without a clearer account of the guilty parties and the role they play, the account is not only less racy and sensational (though we’re going to have plenty of that later) it also makes it harder to imagine opposing.

This is also a problem shared by Stephen Haseler’s ‘The Super Rich: The Unjust World of Global Capitalism’. Here we have an account which is unambiguous about the growth of an international elite and a corresponding fall in average living standards in the US and Britain. Haseler sees these as linked phenomenons, as he writes in his impassioned preface:

“It is the central thesis of this book that there is now a divergence of interest between the mass of the western world’s peoples and the global super rich – as they work the global system…This brave new world is all about economics. The new global system – big capital and the super-rich – is, literally, recreating the world: building a regime tailor-made to its needs in which even the realm of culture and ideology bends to its’ demands..” Preface xi-xiii.

So no fooling around here. And the emergence of the new class of super-rich companies with their attendant super-rich class is made very clear from the evidence presented:

“…the combined wealth of the world’s dollar millionaires is more than twice the entire gross national product of the United State and equal to the combined GNP of the ‘Group of Seven’ countries…the wealth of just one of these super-rich individuals is equal to that of about 12.5 million of his fellow humans…Just as awe-inspiring is the fact that the total wealth of the world’s few hundred billionaires equaled the combined income of 45 per cent of the planet’s population. “ (8-9)

Haseler is similarly decisive about how this system has emerged, citing: “The key to this whole system…is the free movement of capital around a world that is no longer divided between hostile nations and ideologies.” (28-9). The interconnection of capital – while by no means exhaustively explored – and it’s lack of nationality, are recurring themes.

Alongside this growth in exorbitant wealth, Haseler is at pains to stress that the new world of economic globalization has, at least in the West, resulted in falling standards of living and greater inequality.

“…Yet for the first seven decades of the twentieth century things were slowly improving with the top 1 per cent’s stake declining from 68 per cent in 1911 (for England and Wales) to 20 per cent in 1976 (for the UK as a whole)….During the 1980s and 1990s wealth distribution remained static. Britain, like the US remained a country with vast wealth inequalities. By the end of the 1980s – after a decade of Thatcherite market radicalism – the top 10 per cent of adults owned 45 per cent of the wealth, and 30 per cent of adults still had less than £5000 in assets.” (48)

There is too much data to go into all of it here,  but the general picture that emerges is of increased flexibilization of work and falling wages combined with an ecstatic feeding frenzy at the top of the food chain. He also focuses on inheritance and the importance of it in class construction, which echoes with the above account. Stagnating wages, insecurity and rising unemployment are all seen as being linked to the changes in the global economy, which occurs alongside the growing power of the ‘super-rich’. As Haseler writes:

“This turn-of-the-century British super-rich class – which includes most of the same super-rich who were at the top before Thatcher’s ‘free-market revolution’ – is in some sense truly aristocratic, in the old English sense….Through tax breaks, privatization and lower inheritance taxes on the one hand, and integration into a global economy that encourages low costs and high profits on the other, the capital and wealth of this aristocracy is given priority by public policy.” pp. 81

The book, however, has three problems. One is the writing style, which is over-wrought and spends too much time making moral claims when the data, frankly, speaks for itself.  There is a rushed feeling to the text and the research seems hastily assembled. Then there is the structure, which tends towards long detours and irrelevancies, most notably the long excursion into the origin of the nation state. The third problem is the closing section, which points to the European Union as providing hope for the future. As the author argues: “According to the globalist gospel, the living standards of the peoples of the European Union are far too high to be sustainable in the early twenty-first century…The kind of major ‘modernizing’ change adopted in the US and Britain during the 1980s still needs to be wrought…Europe will simply not be able to adjust to lower living standards and sharply divided societies without considerable social upheaval” (169-70).

I think it’s important to pick up on this point only because  salvation via bigger and more powerful institutions is a common position on the left, particularly in the context of security and war. This is a problem because it doesn’t explore what is surely one of the basic dangers of large systems, which is their potential for capture by minority – by which I mean international capitalist – interests. Allegedly international organizations like the IMF and the World Bank show that large global institutions are incredibly effective at maintaining global hegemony rather than fostering resistance. Haseler also shrugs off the undemocratic nature of the EU on the basis that it needs (and is capable of) reform.

The next book I started was David Craig and … ‘Fleeced’ which had to be abandoned mid-chapter. It is, to date, the only book I’ve ever read which appeared to be a satirical argument for referencing. What I mean is that when you are prepared to charge the government with wasting a fifth of the entire budget, with no definition of waste, and ultra sparse referencing, but have carefully footnoted your quotation from a Charles Dickens novel, I can’t help but assume some sort of deep-cover ruse.

The next book, Hywel William’s Britain’s Power Elites: The Rebirth of the Ruling Class, is another one that should have known better. This book, released with a garish yellow cover and an clear editorial push for ‘sensation’ marches you through the government, the professions, and the City of London in what should a concise and considered assessment but is instead a lofty, contemptuous account of the status quo. This is problematic because the argument turns both on your willingness to believe Williams’ sources, but also to trust his generalizations about ‘brain-dead’ professionals and venal politicians. There are some upsides, however, which mainly consist of journalistic gossip. So we get things like this:

“Up to a dozen senior executives at six major British drug companies are currently under investigation concerning allegations relating to the operation of a cartel, which cost the NHS more than £100 million, in order to fix the prices of generic drugs and share the profits…executive at Kent Pharmaceuticals, Norton Healthcare, the Goldshield Group, Generics UK, Ranbaxy Laboraties Unit and Regent-GM Laboratories Ltd., Generics UK and Ranbaxy have agreed to pay compensation of £12 million and £4.5 million, respectively, without admission of liability.” pp. 196

And this:

“Dame Pauline Neville-Jones was political director of the Foreign Office, 1994-6, and a prime influence on the British government’s policy during the break-up of Yugoslavia and the war waged by Serbia against Bosnia. As the chief British representation at the Dayton peace talks she argued energetically for an end to sanctions against Serbia…Even while she was at Dayton, however, Neville-Jones was already negotiating with NatWest Markets about the possibility of a private sector job. Hurd had become a deputy chairman of the bank shortly after resigning from the government in 1995 and Neville-Jones became managing director in July 1996. The two, liberated from officialdom’s constraints, then travelled to Serbia in order to negotiate one of the consequences of the abolition of sanctions: ‘At a “working breakfast” in Belgrade, Milosevic signed a lucrative deal whereby NatWest Markets would privatize Serbia’s post and telephone system for a fee of about $10 million. For a further large fee [NatWest markets] agreed to manage the Serbian national debt. Hurd and Neville-Jones claimed that this hideous partnership with the Butcher of Belgrade was “in the interests of the west” since it committed Milosevic to a process of “liberalization”.’ But the partial privatization of a 49 per cent stake in Telecom Serbia was simply a way of raising government cash in order to finance the next military offensive against Kosovo, which duly went ahead.” (191-2)

Overall though, there is too much hyperbole, poor referencing and unsystematic thinking to make this a convincing account. The ascendant power of financial capital, which is basically the core of the book, is explored through the close relationships between the City and government, as well as the shifting positions and the glaring inequality that it engenders. By approaching this material anecdotally, however, a broader picture is lost.

The next book on the list is Will Hutton’s Them And Us. This is a book that calls to mind the following moment in Camus’ The Plague:

“When a war breaks out, people say: “It’s too stupid; it can’t last long.” But though the war may well be “too stupid,” that doesn’t prevent its lasting. Stupidity has a knack of getting its way; as we should see if we were not always so much wrapped up in ourselves.”

This is basic feeling I emerged with when I put down the book because, for all it’s effective debunking of the arguments for excessive pay and unequal societies and it’s assertion of fairness as ‘necessary’ for capitalism, the book doesn’t realistically engage with power and it’s vicissitudes. . The irrationality of the current system is clear, but the fact that some of the irrationality benefits a certain number of people disproportionately, who might militate to keep it, isn’t addressed all that successfully.

But let’s discuss the good points first. The book is nothing if not thorough, and offers one of the most complete accounts of the financial crisis I have read so far. I picked it out because I enjoyed The State We’re In and I’m consistently impressed by Hutton’s ability to blend together so much research into a coherent picture. There is a strong sense throughout this book that things could work out OK if we can support our investment environment through state regulation and if we can recreate a sense of ‘fairness’ and the evidence offers some support. In addition, after painstakingly laying out what ‘fairness’ means, with accounts of just deserts, equal contribution, and so on, Hutton advocates a number of ways in which this system might be made more fair. What is missing and what I find problematic in the book, however, is a sense of how to make this happen. Ecology and international poverty are also completely absent here, as are more ‘radical’ critiques of capitalism,  but I sort of signed up for that when I pulled the book off the shelf.

For example, towards the end of chapter ten, which outlines a massive program of social change, heaping more demands on top of chapters already calling for far-reaching reform of British finance, he ends:

“The opportunity is there and so, potentially, are the resources even in an era of deficit reduction…It just takes the intellectual conviction, social support and political chutzpah to do it.” (309)

This is a very bold claim. Reading it in the context of the above discussions about the general interpenetration of the ruling capitalist class and the state, as well as the global nature of the phenomenon, on what basis does Hutton assert a) a separation between the dominant institutions and capitalism in Britain and b) the possibility of change, especially in a context where, as Scott notes the government is essentially only entitled to borrowing and taxation to maintain an income?

Well, we need to rekindle democracy, naturally enough. However, this is difficult because the media has become too powerful and degraded by celebrity culture, particularly the Daily Mail. To reform it, we need a proportional election system, more local autonomy and regulation of the press. Nothing is made of the earlier observations about the circulation between politics and the City, nor of government’s lack of ability to generate revenue or the rise of tax havens.

Here it’s worth reiterating the injunction from Zizek’s First as Tragedy, speaking of Caputo’s suggestion that if far-left politicians could reform government to provide for a variety of left wing ideas (universal health care, reform capitalism, change America’s position in international affairs, different taxes, restricting campaign finance reform etc) then ‘capital’ would not longer be a threat. Zizek responds with characteristic energy:

“The problem here is not Caputo’s conclusion that if one can achieve all that within capitalism, why not remain within the system? The problem lies with the “utopian” premise that it is possible to achieve all that within the coordinates of global capitalism. What if the particular malfunctionings of capitalism enumerated by Caputo are not merely accidental disturbances but are rather structurally necessary?” (78)

This is the issue confronting Hutton in this book. To get round it he attempts to ‘ground’ the notion of a fairer capitalism in the previous capitalism, citing the “virtuous cycle” (127) that occurred seemingly sometime between 1750 and 1850. To argue that the capitalism performed its function during this time is a fairly ballsy move, considering the disenfranchisement, appalling poverty, poor working conditions and imperial conquests that characterized the period. The torch then passes to the United States, who managed to maintain “openness”  (134)  in the economy, and thus there is no surprise that they’re economy has grown at such a rate and that so much innovation has occurred. Even if Hutton is right, and there is a virtuous version of capitalism, but it is difficult to imagine that current financiers in the City of London would risk their opulent lifestyles, state subsidized lifestyles in pursuing it.

The last book on the list is the excellent, brief, and overwhelmingly environmentalist How the Rich are Destroying the Earth. In this book Herve Kempf has a very simple structure, and benefits from it. After laying out the massive danger of poorly managing the biosphere, he demonstrates that since the mid-90s, progress against hunger and poverty has been slowing down, with more malnourished people now in 2008 than in 2003, generalizing Haseler’s above narrative. As an additional bonus, Kempf discusses the environmental nature of poverty, given that it is the poor who lose out over depleted resources, a changing environment and inability to farm. As Kempf writes, over 2/3rds of those earning less than a dollar a day are from rural areas. This growing precariousness, of course, stands in sharp contrast with the wealth of the emerging global elite, each of whom possess as many resources as one million fellow humans.

So, the rich are rich, the poor are poor and the planet is collapsing. Where is the link? This is where Kempf wheels out rediscovered economist Veblen, and his theory of the leisure class. The idea is that those of superior position in society will try to demonstrate their wealth in conspicuous ways, which will in turn shape the rest of society in an attempt to copy them. This, for Kempf, is at the heart of the problem, as our commitment to increasing our consumption (both within and across our societies) will inevitably push the planet over the edge:

“Why then are the present characteristics of the global ruling class the essential factor in the environmental crisis?…Because this class opposes the radical changes that we would have to conduct to prevent the aggravation of the situation….How? Indirectly, by the status of its consumption: its model drags general consumption up by impelling others to imitate it. Directly, by control of economic and political power that allows it to maintain this inequality.” (70)

This is a fairly concise and damning judgment, but Kempf isn’t finished. The myth that growth will equalize our societies over time, “is the oligarchy’s only means of getting societies to accept extreme inequalities without questioning them.” (73). And thus, as growth does not reduce inequality, and aggravates the environmental crisis, as well as not sustainably reducing poverty, he comes out against growth. While the third point about reducing poverty is not substantiated as well it perhaps should be for such a brutal assertion, the tendency for growth to push environmental barriers, particularly in the context discussed above, and to not reduce inequality, makes this a conclusion worth considering.

The book ends on two points. The first is the authors belief that the oligarchy are determined to bastardize democracy. This chapter is, unfortunately, somewhat incomplete. While Kempf draws demonstrates the spreading of surveillance and changing legal norms from the last 10 years, he doesn’t really allow for counter-movements (the UK has rejected ID cards, for instance) and more importantly doesn’t draw a direct connection between the oligarchy so described and the technologies. This is disappointing, as it feels like perhaps there was more research that could have been done to substantiate these points. And then finally, we have the necessary chapter chiding the left for becoming too focused on social democracy and markets, and the need for it’s reinvention.

Well, that’s all for books about the super-rich. I think I’ve learned a couple of things from taking such a broad selection of titles. The first is that this is an extremely difficult thing to write about because of the evidential constraints on the author. It’s generally easier to monitor the poor, something particularly so in the context of the massive ‘offshore’ networks of anonymous bank accounts in tax havens detailed by Nicholas Shaxson in the excellent ‘Treasure Islands’. Thus we are left with accounts that are very much trying to tease together the cause from the effect. The second problem is how much the account should be driven by a systematic or an agent based approach. The third thing I learned here is that moralizing is fairly dull unless you’re introducing new analysis like Kempf. On the flip side, I’m also very tired with books engaging with the arguments of the super-rich, as debunking the ideology of a self-interested billionaire seems a poor use of space, when as I said before the facts kind of speak for themselves.

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