Wages are dropping at their fastest rate on record, but executive pay rose by nearly 40% last year. That it’s workers, not bosses, being told to practice pay restraint is a reminder that the whole system is rigged in favour of the rich.
The average CEO now earns 109 times more than the average worker, up from 79 times in 2020. (skynesher / Getty Images)
As inflation is predicted to reach over 18 percent and real pay falls at the fastest rate in a century, not everyone is feeling the pinch. Executive pay rose by nearly 40 percent in 2021. The average CEO now earns more than they did before the pandemic, despite widespread economic turmoil, and around 109 times more than the average worker, up from 79 times in 2020.
As Judge Rinder pointed out on my appearance on Good Morning Britain yesterday morning, those responsible for the sewage being dumped into our waterways took home around £14 million worth of compensation last year. The boss of Royal Mail, the heads of most of our train operators and many other executives currently in dispute with ‘greedy’ workers are all on hundreds of thousands of pounds a year.
While those on the right have spent the last several decades justifying these extraordinary increases in inequality (including a memorable line from Peter Mandelson, who declared he was ‘intensely relaxed about people getting filthy rich’), it’s hard to find people willing to support the extraordinary salaries being offered to those running some of the country’s most incompetent and unethical corporations.
And it isn’t hard to see why. How could anyone argue that the bosses of privatised natural monopolies, which have utterly failed to invest in our creaking infrastructure, and which are now hiking up prices for consumers and trying to deny workers wage increase in line with inflation, are ‘wealth creators’? These bosses are the rentiers par excellence, creating nothing of use and deriving huge returns from their monopolistic control over some of our society’s most important resources.
And it’s not just the utilities and transport operators. Britain’s economy is, as Brett Christophers documented extensively in his book Rentier Capitalism, dominated by rent-seeking. Whether in finance, real estate, natural resource extraction, tech or infrastructure, most of the largest companies listed on the FTSE100 generate a substantial proportion of their revenue from rent seeking.
High executive pay is not, as some have argued, a reward for effort, merit, or even long-term profitability—it is a return on rent-seeking. Huge compensation packages are a tithe extracted from working people by those with a stranglehold over the British economy, not dissimilar to the relationship between serfs and landowners during feudalism.
Some accept these points and argue that the solution is to declare war on the rentiers and attempt to replace them with ‘good’, ‘productive’ capitalists. But such a position reflects a fundamental misunderstanding of the way that capitalism works.
The rise of the rentier reflects the growing concentration of power in the economy in ever-fewer hands, which is an inevitable outcome of the growth of capital accumulation. Successful corporations and wealthy individuals are able to lock in their success over time, whether due to economies of scale, political patronage, or their ability to purchase their smaller competitors.
And even without rent-seeking pushing executive pay up into the stratosphere, the money ‘earned’ by senior executives always reflects their exploitation of the people who actually do the work. Like their rent-seeking, this exploitation is premised upon a fundamental and irrevocable imbalance of power that exists in all capitalist societies: most people can’t afford to say no to work.
Yet this imbalance of power only exists between workers and bosses as individuals. As an organised class, the power of workers far exceeds the power of bosses. As the saying goes, ‘we are many, they are few’.
Bosses have tended to respond to this imbalance of power by appealing to the capitalist state. If they can’t defeat workers on their own, they corral politicians and bureaucrats into doing it for them—whether by using the police, the tax and benefits system, or the threat of unemployment. Margaret Thatcher used all three of these tactics to break the miners’ strike with great success.
Today, we are experiencing another face off between capital and the state on one side and working people on the other. By the end of the year, we could be seeing half a million workers on strike at the same time—numbers that haven’t been seen in decades.
What’s more, campaigns like Enough is Enough are bringing disparate struggles together into a coherent narrative that has the potential to radicalise the population at large. With the cost of living crisis set to deepen over the coming months, it is likely that popular support for strikers will grow.
This will, of course, put capital’s political defenders—whether in the Conservative or Labour parties—in a difficult situation. The Tories can’t support striking workers, and the Labour Party won’t (mainly because Keir Starmer is refusing to adopt any policy mooted by Jeremy Corbyn, regardless of how popular it might be).
This much is to be expected. What is less easy to anticipate is how the growing well of popular discontent in the UK will express itself in the context of a well-organised labour movement. Such a situation hasn’t obtained since the 1970s, and the economic crisis today is in many ways far deeper than it was then.
While Jeremy Corbyn’s Labour Party may have failed to affect a fundamental redistribution of wealth and power from the few to the many, it’s hard to see how people will tolerate the combination of gross inequality and abject human suffering for much longer. Conditions might not be revolutionary, but they are certainly febrile.Original post