‘Occupy’ demonstrations and the dangers of inequality

Quote
“The love of property and consciousness of right and wrong have conflicting places in our organization, which often makes a man's course seem crooked, his conduct a riddle.”  Abraham Lincoln

News

The High Pay Commission published its long awaited report last week after a year of research into executive remuneration in the UK.  Chairperson Deborah Hargreaves stated, “There's a crisis at the top of British business… When pay for senior executives is set behind closed doors, does not reflect company success and is fuelling massive inequality it represents a deep malaise at the very top of our society.”

That malaise is being expressed visibly by the Occupy movement, whose tent cities in Madrid, New York, London, Rome and other financial centres are bracing for winter.  Inequality is the key issue, and campaigners in the US rally under the banner, “We are the 99%”.  At the heart of their protests is the sense of injustice that top executives, especially in the financial sector, have seen their salaries rise substantially over the last 3 years, while the vast majority of the working population face falling real incomes in an era of austerity. 

Not only is income distribution becoming more unequal, even greater inequality exists in asset ownership.  The top 1% of Americans now own 37% of the nation’s wealth; the bottom 80% own just 15% - and the gap has widened more rapidly in the last 3 years than it has for decades. 

The Occupy movement demonstrates that trust in business elites is in sharp decline; no longer is it assumed that their wealth generating talents and entrepreneurial skills will benefit the wider population.  Something has gone badly wrong with Capitalism, but the search for alternatives struggles to move beyond a call for more regulation, taxation and red tape.

Capitalist economics is primarily about generating a return on capital; what might a more relational economy look like?  Drawing its inspiration from the Judeo-Christian ethical tradition, ‘Relational Thinking’ understands all financial decisions to be expressions of relationships – for example between buyer and seller, lender and borrower, employer and employee, taxpayer and government.  Ensuring these relationships are close, fair and lasting is essential to a successful economy; rising inequality is a sign that they are moving in the opposite direction.

The clamour against financial injustice is growing globally; in the quest for ways to recover values and agree a moral framework for markets, the concept and language of relationships offers a fresh perspective.  The challenge is to incorporate relational values into the structures and working practices of organisations; reducing the accountability gap between capital providers and users and between company board members and their lowest paid staff is a good place to begin. 

Read on

‘Transforming Capitalism from Within’ by Jonathan Rushworth and Michael Schluter sets out an alternative, relational approach to the purpose, performance and assessment of companies.  This report proposes far-reaching reforms as to how companies could operate as ‘Relational communities’ in a sustainable and profitable way, rather than as vehicles within which all parties compete for short-term financial gain.  Read the executive summary here.

Walk the talk

Every time you make a financial transaction over the next week, pause first to think about the relationship inherent in the matter; is there anything you might do differently to make that relationship closer, fairer or more long-lasting?

The last word
From the Bible, Luke chapter 12, verse 56: “You know how to interpret the appearance of the earth and the sky. How is it that you don't know how to interpret this present time?”