Jeremy Corbyn’s recent call for a maximum wage is a good move, even though he has now faded it out.
Around midday on Wednesday 4 January, after just two and a half days of the new work year, Britain’s top bosses passed the UK average salary of £28,200. They had passed workers on the minimum wage, and others like the present writer, after a single day or so. A few days later Oxfam reported that just eight individuals own as much wealth as the poorer 50% of the world’s population added together. It is hard for most of us to understand why millionaires are not content, and strive so hard to become billionaires, and then multi-billionaires. But they do. That is how capitalist society works.
The urge to become even richer increases at higher levels of income and wealth. And the result is that more and more people live in poverty. As right-wingers so often point out, it is relative poverty: poor people in many countries today have fridges and phones which even the richest did not have 100 years ago. But, above the level of actual starvation, relative poverty is what matters: being able, or not able, to take part in society in a reasonably economically-secure, relaxed, dignified, and comfortable way.
In the Bolshevik years after the Russian revolution of 1917 (before the Stalinist counter-revolution), the “party maximum” rule prevented any party member, however high her or his official post, getting more than a skilled worker. A maximum wage is not new in the UK. In 1944-5 (under a Tory-led government), Britain had a top income-tax rate of 98%, which meant that almost no-one was paid a rate in the top tax brackets. There was a de facto maximum wage. The top rate remained around 90% or higher for a long time. It was 96.25% in the late 1960s. It was reduced decisively — then, down to 40% — only by the Thatcher government after 1979.
As soon as the top rate was slashed, a process began of top pay spiralling higher and higher above ordinary wages. Francois Hollande won the French presidential election of 2012 partly by promising a top income tax rate of 75%. But then he backed down. A maximum wage, or a punitive top income-tax rate, would be good, but would put only a very loose limit on inequality. Between the 1940s and the 1970s, the rich in Britain did not cease to live it up. They just found ways of raking it in — high “expenses”, for example — which escaped income tax. To tackle inequality seriously, we need public ownership of all the major concentrations of productive wealth.