Read the following text, paying particular attention to the highlighted words.
Affluence and Inequality
When social commentators in the 1950s and early 1960s postulated a progressive transformation of capitalism into 'post-capitalism', the centrepiece of that diagnosis was an assumption that economic inequalities were steadily diminishing. Other important assumptions were built into the more sophisticated versions of the thesis. The nature of power, it was said, had changed drastically through its detachment from private property, and through the emergence of a complex network of pressures and interests resulting in diffusion of influence over the shape of society into many hands. Increasing social mobility was taken to be unfreezing fixed positions which individuals and families had previously occupied over their lifetimes, and to be forging new ties of personal acquaintance, experience and identity between the different strata of the population. But the touchstone of the 'affluent society' was a postulated reduction of economic inequalities to little more than frills. Capitalism, so it was at least implicitly acknowledged, had not in the past matched its creation of wealth by a fair and tolerable distribution of wealth. It was now doing so, through a more or less silent process of transformation from within.
Two sets of changes were thought to be at work, closely related to each other. First, and most simply, inequalities of income, property and security of life were assumed to be growing steadily smaller, and less significant in their impact. Second, so the argument ran, such economic inequalities as remained were much less class-tied than they had been before. They arose now far less from ownership and non-ownership of capital and from pressures of the labour market - from the relations of production - than from conditions unrelated, or only loosely related, to class. Residual poverty was seen as the product of old age, physical and mental handicap, high fertility, social incompetence - also, it was added later, of discrimination against women, against coloured people, against other minorities. As such it was remediable by some combination of improved welfare measures and socio-cultural therapy. No radical changes in the economic foundations of society would be needed. In so far as they might have seemed necessary earlier, such changes had now occurred or were occurring - quietly, almost surreptitiously, without fuss. Capitalism, in its new 'post-capitalist' form, was fulfilling the promise which it had long withheld.
The evidence adduced for this erosion of economic inequalities was very sketchy, and would have been highly vulnerable to criticism in a period less coloured than the 1950s by socio-political complacency. But there were at least some signs from the decade before which might seem to give support to the thesis. Explanations, on the other hand, were usually quite rudimentary. Some relied on assumptions about the consequences of taxation and welfare measures. In fact, attempts to measure the real impact of public policy on distribution were rare and little known, but already then underlined the need for caution in assuming that state action was spreading wealth much more evenly. Other explanations looked to changes in industrial and occupational structure - to a relative contraction in the numbers of unskilled and casual workers and to a concomitant expansion in the numbers of non-manual workers, in particular. There was inferred from these changes, on their own or in conjunction with crude data on money incomes, a transformation of the structure of jobs and incomes from the shape of a pyramid or cone to to the shape of a diamond or lozenge, bulging affluently in the middle. This kind of geometric distribution was dramatic, but both inaccurate and misleading. It was inaccurate because it attributed to the shape of income distribution in the post-war years a degree of simplicity and novelty which it did not have, while ignoring the continuing pyramidical shape of property ownership. It was misleading beyond that because it exaggerated the changes in occupational structure, and misinterpreted their significance, in ways that we shall discuss later.
In general, explanations of the postulated process of economic equalisation did not go beyond assumptions of these kinds, and brief references to reduction of unemployment and of earnings differentials by skill as well as by sex and age. Nor did they need to. For the thesis was borne less by evidence and by explicit argument than by faith. A theory of automatic progress has a long history in both popular and academic thought. It received fresh support in the 1950s - as a prognosis for the future, not as a characterisation of the past - both because some real, though quite limited, changes had occurred during the previous decade; and above all because the socio-political climate was hostile to the implications of any diagnosis that those changes had run their course.
Such as they were, these changes had indeed run their course by the early 1950's. But the point was obscured not only by the reluctance of most commentators to look at the signs; not only by the fact that the signs in any case were complex and took time to read; but also by a conceptual confusion so elementary that its persistence as a feature of the debate about capitalism and 'post-capitalism' seems wilful. No clear distinction was drawn between the question of absolute levels of living and security - the 'average' conditions of life - and the question of distribution, the range of inequality around the average. 'Affluence' reflected in rising overall levels of living for the population at large was, and still often is, equated ipso facto with a reduction of relative inequalities. If that equation were correct, then there would be nothing new by itself in the erosion of inequality alleged to mark the transition from capitalism to 'post-capitalism'. For increasing average 'affluence' has been a long-standing trend in Britain and other industrial capitalist societies - intermittent, it is true, and slower for many decades in Britain than in countries which industrialised later; but in the long run so far a pronounced upward trend nevertheless.
To take just a few estimates, net national income per head of population in the United Kingdom has been calculated as more than doubling in real terms between the early 1920s and the middle 1960s. The trend was uneven. It had been downward in the preceding period around World War I; it was more or less flat during the depression years around 1930; it turned down again between the early and the late 1940s. But the long-term trend was upward both before and after World War II. By the early 1940s the index of per capita national income stood about 50 per cent above its level twenty years before; by 1965 it was some 50 to 60 per cent higher than in the early 1950s. The rates of increase during the periods of fastest expansion were much the same - 16 or 17 per cent over five years - both pre-war and post-war: from the early 1930s to the early 1940s, and again from the 1950s. Industrial productivity and real gross wages have been estimated for the United Kingdom as growing by an annual average of about 2 per cent per head over the period from 1871 to 1895; as stagnating with even some decline in real wages, from 1895 to 1913; as rising again, by an average of about 1 per cent from the early 1920s to 1938, and by more than 2 per cent a year from 1949 to 1960. Comparisons with corresponding estimates for the U.S.A., Sweden, Germany and France show the U.K. lagging behind these other countries in the two decades before World War I, and again in the years after World War II; it was behind the others for which data are available during the inter-war years, too, in terms of growth of industrial productivity, though not in terms of growth of real wages. The 1960s were marked by rising unemployment and increasingly uneven rates of economic growth. But the overall trend in real gross incomes from employment was still upwards. After discounting for price increases, average wage and salary earnings in the U.K. rose by about 3 per cent per year, or even slightly more, over the period 1960-70.
The issue here is not the slower rate of growth in output and real incomes in Britain by comparison with a number of other industrial capitalist countries for much of the time since the 1890s, relevant though the variety of explanations suggested for that are to other questions concerning the nature of British capitalism and its class structure. Nor is the point to argue that long-run economic growth - slow or fast - is an inherent and necessarily continuing feature of capitalism. To make that assumption would be to beg the questions raised by recent signs of a possibly deep-rooted economic crisis - by a conjunction of uneven growth rates, high unemployment and accelerating inflation with falling rates of profit, from the 1960s, long after Keynesian techniques of economic management were presumed to have mastered the major tendencies to recurrent stagnation characteristic of earlier capitalism. The point for the moment is a much simpler one. Increases in average levels of living are in no way a new phenomenon. The rates of increase which have prevailed since World War II have long historical precedents. Indeed the kinds of figures quoted earlier exaggerate recent trends of growth in disposable income - the real value of earnings in hand - because they are gross measures taken without regard to the effects of direct taxation. As more and more earners have been brought within the range of income tax, and as effective rates of direct taxation have been raised in the lower reaches of the range especially, net earnings have risen progressively slower than gross earnings. Those of male manual workers, for example, rose by an average of only about 1 per cent a year in the 1960s compared with about 2 per cent a year in the earlier period after World War II, although the rate of growth in gross earnings was faster in the 1960s than before.
There is, therefore, no magic or novelty attaching to the rising 'affluence' of the post-World War II epoch. It may of course be argued - it has certainly often been implied - that there is some qualitative difference between recent and earlier increases in real income: that prosperity in the 1950s and 1960s has raised the condition of the bulk of the population over some threshold between 'poverty' and 'affluence', above which inequalities of condition relate in the main only to inessentials. That argument, however, raises a series of questions about the criteria by which, and on whose judgement, 'essentials' are to be distinguished from 'frills'; we shall discuss these later. The argument does not dispose of the fact that generations of ordinary earners before the 1950s had experienced substantial improvements in their conditions in absolute terms. Merely to note the fact of such improvements, then and now, throws no light whatsoever on the critical question of trends in the range of relative inequality around the rising average.
It has now, by the early 1970s, become almost part of conventional wisdom to dismiss the faith of the 1950s in a progressive erosion of economic inequalities as either nonsense or at least glibly over-optimistic. The recognition of reality which that implies is welcome. But the very assurance with which this dismissal tends to be expressed carries at least two dangers with it.
The first is the risk of adopting a vulgar version of the theory 'plus ça change, plus c'est la même chose'. Such a theory, projecting the experience of the 1950s and 1960s backwards without qualification, is blind to those periods in which special circumstances have produced some genuine shifts in distribution. As we shall show, shifts of that kind have been moderate in extent, and the product of exceptional conjunctions of events. But they have given an impetus to reformist social policies which goes well beyond their actual achievements: they have helped to create illusions that evolutionary adaptations of policy are sufficient to spread income, wealth and security much more evenly within a continuing capitalist framework. The exceptional and limited character of such shifts in distribution has to be shown in order to dispel those illusions. That in turn entails recognition of their historical reality - not their dismissal by a crude theory that nothing ever changes.
The second danger arises from the way in which the rediscovery of inequality in the 1960s replaced the rival faith of earlier post-war years. It was the social turbulence of the 1960s which opened many eyes to the persistence of inequality, much more than an accumulation of factual evidence. Facts to question and refute the complacency of the 1950s were available well before they were generally used for that purpose. But they did not come into public and professional consciousness until mounting unrest - of different kinds and from a variety of sources - pointed to a partial dissolution of that 'consensus' about the established order which had been widely taken for granted in the 1950s. So the 1960s saw a change in fashions of social observation and commentary. But fashions can change again. Resistance to changes of fashion requires, among other things, a solid knowledge of facts. It is for this reason, not least, that a fairly detailed examination of the record with regard to trends in economic equality is essential, even though the outcome now - unlike ten years ago - is not likely to be much of a surprise.
(John Westergaard and Henrietta Resler: Class In A Capitalist Society)
Now try the exercises. Exercise a, Exercise b, Exercise c
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