Creating Freedom. Raoul Martinez
economy’.17 Adding insult to injury, when slavery was eventually abolished in Britain, 46,000 slave-owners were compensated for their loss of ‘property’ to the tune of £17 billion in today’s money. Their freed slaves did not receive a penny.18
What about capital that is secured through talent and hard work – does this entitle an owner to generate unlimited income from it? After a given point, the income generated from capital goes well beyond what is necessary to compensate the owner for any initial effort. As Piketty points out, ‘no matter how justified inequalities of wealth may be initially, fortunes can form and perpetuate themselves beyond all reasonable limits and beyond any possible rational justification in terms of social utility. Entrepreneurs thus tend to turn into rentiers, not only with the passing of generations but even within a single lifetime . . .’.19
The problems go deeper than this, however. Many who reject the idea that we should be able to generate income simply from owning capital still believe that we should be rewarded in accordance with the value of our personal contribution. But how do we measure the value of someone’s contribution? In 2010, the world’s highest paid footballer earned over £500,000 a week.20 In the UK, in the same year, a nurse starting in her or his first year earned close to £400 a week.21 How does the market determine that a footballer’s contribution is worth over a thousand times more than the contribution of a nurse?
The mainstream theory of wages defines ‘contribution’ as the market value of what workers produce as determined by supply and demand, but this value changes with market conditions. If 90 per cent of engineers dropped dead tomorrow, the market value of the skills of the remaining 10 per cent would promptly increase. This would have nothing to do with any change in their efforts or output. Numerous factors beyond our control determine the market value of what we can contribute. Ultimately, as with inheritance, it’s just a matter of luck.
Even the ‘self-made’ rich owe a debt greater than their fortune to those who developed the technologies, institutions, laws and infrastructure that made their enrichment possible. Billionaire Warren Buffett concedes that ‘society is responsible’ for most of what he has earned. ‘If you stick me down in the middle of Bangladesh or Peru or someplace, you’ll find out how much this talent is going to produce in the wrong kind of soil. I will be struggling thirty years later. I work in a market system that happens to reward what I do very well – disproportionately well.’22
What’s more, what we can contribute is also a matter of chance. The opportunity to cultivate our innate potential depends on conditions we play no part in creating. For instance, in the US, only 9 per cent of students in elite universities come from the poorer half of the population.23 Another study released in 2015 by the UK Social Mobility and Child Poverty Commission exploded the myth of a meritocratic society.24 According to its findings, children from wealthier families with less academic intelligence than their poorer counterparts were nevertheless 35 per cent more likely to end up becoming high earners. Wealthy parents employ a range of strategies to ensure their children end up in ‘top jobs’ but, whether it’s by tapping into powerful personal networks or subsidising unpaid internships, the result is the same: an absence of downward mobility. And, because high-earning jobs are in limited supply, gifted students from less advantaged backgrounds face an uphill struggle to turn their potential into market rewards.
In terms of economic remuneration, talent and hard work mean little if they are not granted the right conditions in which to flourish. Human potential is squandered on an enormous scale because of the extreme inequalities of opportunity that exist in the world. Countless people have perished from preventable diseases, died in senseless wars and starved in avoidable poverty. Billions have been denied the freedom necessary to realise even a fraction of their promise. Many potential Shakespeares and Einsteins, Maya Angelous and Emmy Noethers must have lived and died without ever knowing the wonders of which they were capable.
Just as we should reject the idea that a person deserves large rewards because of inherited wealth, we should not accept that a person deserves large rewards because of their genetic and social inheritance. Influential neoliberal economist Milton Friedman showed up the hypocrisy of rejecting one form of inheritance and not the other by asking, ‘Is there any greater ethical justification for the high returns to the individual who inherits from his parents a peculiar voice for which there is a great demand than for the high returns to the individual who inherits property?’25
However, there is a distinction to be made between inheriting wealth and inheriting the talent and opportunities to develop it. Becoming rich through inherited wealth requires no effort, whereas becoming rich through inherited talent does. It is not easy to develop talent or to use it to make a valuable contribution. Doctors, lawyers and scientists have to study for years to succeed in their professions; top athletes, artists and musicians must dedicate their lives to cultivating their abilities; and entrepreneurs must often work extremely hard to create successful businesses. But as soon as we bring effort into the equation, we have deviated from the principle of reward according to the market value of contribution. I may dedicate my life to playing tennis but it’s clear to anyone who’s seen me play that I will never be rewarded for my efforts. Top professionals are ultimately rewarded for what they achieve, not how hard they try.26
But would it be fairer to reward people according to effort? We neither choose our innate capacities nor the freedom we’re given to develop them; moreover, once these capacities are developed, we do not determine the value the market will assign to them. It all comes down to luck. So, what about the efforts we make? The first thing to say is that working hard is not in itself a virtue. Financial speculators, arms dealers, corporate lobbyists and fossil-fuel executives may work very hard, but they also make the world a worse place to live in for many others.
Some progressive economists have suggested that people should be rewarded in accordance with their socially useful efforts. However, the ability to make socially useful efforts is, nevertheless, an ability. It may be more evenly distributed throughout the population than other abilities, but, no matter how hard they try, the very old, the very young, the severely disabled and the sick are often unable to contribute in ways the market recognises or remunerates.27 Our capacity to be self-disciplined, to persevere, to focus, is just as much a part of our genetic and environmental inheritance as any other capacity. The treatment we receive as children – and whether we are prone to hyper-activity, have trouble maintaining our attention, lack confidence or self-esteem, suffer from severe headaches or depression, and so on – can all impact on our capacity to channel our energies in productive ways. Both the inclination and capacity to work hard reflect the way we are and, for that, we are not responsible. Even remuneration based on socially useful effort, then, fails the test of fairness.28
The problem lies with the notion of reward itself. A reward is given in return for something. But no concept of reward sits comfortably with our lack of ultimate responsibility.29 Since we are not truly responsible for what we do, it does not make sense to distribute ‘rewards’ on the basis of behaviour. It does not make sense to apportion rewards at all. The intuitively compelling notion of ‘getting what you give’ ignores the fact that what we can give depends on what we get from our genetic and social inheritance. Whichever way we look at it, all paths to wealth, status and success are paved with luck. This fact supercharges calls for increased equality across society.30
The hoarding of vast resources – resources that could save countless people and enrich numerous lives – has been normalised and celebrated in our society, but there is no moral justification for it. No path to extreme wealth entitles us to hold on to it – not in a world in which so many fundamental needs go unmet. The idea that we could ever be entitled to vast wealth – that a disproportionate amount of Earth’s riches could ever really belong to us – is a dangerous fiction, one that has been cultivated to mask naked greed. Great wealth is never deserved. The fact that some people attain it is merely the product of strange institutions, emerging from an odd culture, developed by a flawed species.
For a principle of distribution to satisfy the test of fairness, it has to be based on need. In a world that took a principle