No 50: Why do high rates of poverty and economic inequality persist in the UK?

Our ‘moral economy’ plays a key role but we can and must change it

Inequality persists in the UK in large part due to a moral economy that valorises competition and meritocracy and denigrates lack of financial success.
March in solidarity with refugees, London, UK, 2015. (Julian Stallabrass/Creative Commons)

by Karen Rowlingson

The UK is one of the wealthiest countries in the world and yet levels of poverty and economic inequality are extremely high. In 2016, the top 1 per cent in the UK owned 10 per cent of all income and 20 per cent of all wealth. New research shows that poverty and inequality are linked and cause considerable harm to individuals, families and our society more broadly. Growing destitution, street homelessness, child poverty, in-work poverty and precarity, health inequalities, pensioner poverty and so on, are all on the increase alongside growing affluence at the top.  

The negative impacts of poverty and economic inequality, including those relating to physical and mental health, are not randomly distributed. They affect people disproportionately by ‘race’, ethnicity, religion, gender, social class, age, and disability.  

Why do we continue to tolerate this? Understanding our ‘moral economy’ is key to answering this question.

Why do poverty and inequality persist in a wealthy country?

As Thomas Piketty and Emmanuel Saez have argued, ‘social norms regarding fairness and the distribution of inequality’ may well be the ‘ultimate driver of inequality and policy’ in democracies. And Danny Dorling has similarly argued that the persistence of certain ‘myths’ and beliefs helps to explain high levels of inequality in the UK. For example, these myths include: elitism is efficient; exclusion is necessary; prejudice is natural; greed is good; despair is inevitable. These norms and beliefs are all part of our ‘moral economy’.

The term ‘moral economy’ is increasingly used, though not always in the same way. I use it here to describe the moral dimension of economic practices and institutions which shape and are in turn shaped by collective norms and beliefs about what constitutes a fair distribution of resources.   

The UK’s current moral economy: competition, individual effort and reward

Moral economies differ from country to country and over time. In the UK currently, the majority of people think that inequality is too high but many believe it is the result of hard work on the one hand and laziness on the other and so they see it, to some extent, as fair (affluent groups are most likely to believe this). The public also believe strongly that people should have equal chances to succeed and therefore they show support for policies to support education and training, rather than for raising taxes and social security payments. Our current tax and social security systems broadly reflect these moral understandings with relatively low taxation rates and a punitive benefits regime.

The UK’s current moral economy is, therefore, one based largely on belief in the importance of competition, individual effort and meritocracy. Inequality is not generally welcomed but it is often grudgingly accepted as the outcome of perceived ‘fair reward’. And the moral economy legitimises punitive measures in our social security system, including harsh conditionality and benefit sanctions.

The British public is not alone in thinking this way. Sebastien Koos and Patrick Sachweh have identified a distinct moral economy among Anglo Saxon countries (USA, Canada, Australia, New Zealand and the UK) in which there is strong support for competition and less for reciprocity and redistribution. And Peter Taylor-Gooby and Benjamin Leruth have also argued that the UK differs from other European countries with its ‘extreme’ emphasis on individual responsibility and work ethic.

Critiquing the competitive, individualised moral economy

There are numerous critiques of this particular type of moral economy. For example, meritocracy can be seen as ‘promoting a socially corrosive ethic of competitive self-interest which both legitimates inequality and damages community by requiring people to be in constant competition with each other .’ And we might also reflect on whether our increasing rates of anxiety, stress and mental ill health are linked to this kind of competitive moral economy.

But even if we believe that ‘success’ should be rewarded, we might also challenge how success is measured and how far success can really be claimed by individuals alone and not also belong to the families that support them, the teams they work with and the socio-economic structures that surround them.

And if we accept the need or desirability for some individual incentives/rewards, we might also challenge the idea that ‘the market’ is the best or only way to decide which kinds of effort are rewarded, and by how much.

Alternative moral economies

The competitive, individualised moral economy appears fairly entrenched in the UK and many other Anglo Saxon countries. But we do not have to accept our current moral economy. Alternatives exist, and moral economies can, and do, change.  

For example, Sebastien Koos and Patrick Sachweh identified a group of European countries (Norway, Germany, Austria and Czech Republic) with strong support for competition but higher levels of support (than the UK) for redistribution and reciprocity. And they identified a further group of European countries (Poland, Hungary, Spain and France) where support for competition is weaker and support for redistribution and reciprocity is even stronger. Peter Taylor-Gooby and colleagues similarly identified an emphasis on reciprocity and the value of work in Germany; and inclusion and equality in Norway.

We might even look for alternative moral economies from the UK’s past. After all, the modern co-operative movement was effectively born in 1844 when the Rochdale Society of Equitable Pioneers established the ‘Rochdale Principles’. These have helped shape the values of the cooperative movement today as it champions self-help and self-responsibility alongside co-operation, solidarity and social responsibility.  

More recently, the post-war consensus in the UK, forged in the devastation of the Second World War, was built on values of solidarity and collective effort. These were essential to both win the war and then win the peace. The 1945 Labour government’s landslide electoral victory (with 393 seats and an overall majority of 183 in the House of Commons) shows how popular an alternative vision of the common good can be. Indeed, Paul Bew notes that the party’s manifesto, Let Us Face the Future, sold 1.5 million copies in the weeks prior to the election.

We are not experiencing total war today but we are faced with unprecedented, and potentially cataclysmic challenges – not just of poverty and inequality but also social division and climate change. We need a new direction based on new, or indeed reclaimed older values. Building on our past, and the present in other countries today, we could promote a new moral economy on the basis of reciprocity and collective effort as encouraging dignity, inclusion and responsibility.

How do we change our moral economy?

Those of us concerned about current levels of poverty and inequality in the UK need, first of all, to challenge current beliefs and critique policies and practices based on them. These policies effectively punish the weakest groups, including children, through vindictive benefit sanctions, the disastrous universal credit policy, the benefit freeze and the two-child policy. We also need to highlight policies which give the wealthy even greater advantages, often by stealth. And we need to use arguments based on both values and evidence to challenge these policies.

As well as challenging the moral basis of existing policy, we must also present positive alternatives to make hope possible that the way things are is not the way they have to be. And social policy needs to work on all fronts. We need both reformist and radical ideas here. These could include a basic income and a fifteen-hour working week as Rutger Bregman suggests in his book, Utopia for Realists. Or a citizens wealth fund as argued by Stewart Lansley in this blog series. The social policy academic community needs to work with colleagues in other disciplines to propose radical new ways forward, as well as with the public and the policy/practitioner community.

But identifying positive alternatives, alone, won’t bring change. Change requires action. And given the powerful vested interests who will undoubtedly resist change, we need large-scale, collective action. This could be through more traditional labour unions and political parties but also new forms of social movements, as we have seen with protest groups like Occupy and Extinction Rebellion. And as Pete Alcock argues, we critically need to engage young people to ensure that values of cooperation, reciprocity and responsibility become embedded for the future common good of our society.  

We are at a critical juncture, politically, economically, socially and environmentally. We can, and indeed must, work with others to establish a new moral economy for the good of all.

Karen Rowlingson is Professor of Social Policy and Deputy Head of the College of Social Sciences at the University of Birmingham and Chair-designate of the Social Policy Association. She is also Deputy Director of the Centre on Household Assets and Savings Management (CHASM). In 2017 she published Inter-generational financial gifts and inequality: Give and take in 21st century British families with Ricky Joseph and Louise Overton (Basingstoke: Palgrave Macmillan). In July 2019, a new report on Living on Different Incomes in London: Can public consensus identify a ‘riches line’? will be published with Abigail Davis, Katharina Hecht, Donald Hirsch, Tania Burchardt, Ian Gough and Kate Summers (Trust for London). She tweets @KarenRowlingson.

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