Britain has experienced two crises this August, one on the streets and one in the markets. The French philosopher Jean-Jacques Rousseau perceived the common issue three centuries ago. The gangs he observed were not on the city streets or trading floors, they were huntsmen: “If a deer was to be taken, everyone saw that, in order to succeed, he must abide faithfully by his post: but if a hare happened to come within the reach of any one of them, it is not to be doubted that he pursued it without scruple, and, having seized his prey, cared very little, if by so doing he caused his companions to miss theirs.”
Rousseau was an early and incisive critic of the idea that self-interested behaviour would necessarily work to the benefit of all. If the hunt were to catch a deer, it would need to establish shared values, and probably impose them through some sort of hierarchy. Without such a structure, there would be no more for supper than the occasional hare. It is unlikely that the people who introduced the concept of “eat what you kill” into modern professional services had read Rousseau. Nor – it is safe to say – had the people who snatched electrical goods from the broken shop windows of Tottenham.
Two broad economic theories describe the allocation of income and wealth. The power theory states, broadly, that people get what they grab: from the forest, the markets, or the shop window. The distribution of income reflects the distribution of power. For most of history, this was plainly true – the landlord took what he could from the tenant, the baron what he could from the landlord, and the king what he could from everyone. The sixth Duke of Muck was rich because the first Duke of Muck had been an especially successful gang leader. The alternative theory is that what people earn reflects their marginal productivity – how much they personally add to the value of goods and services. The marginal productivity theory has many attractions, especially to those who are well paid: if what they receive is a product of their own efforts, their rewards are surely well deserved.
Collaborative organisation was only occasionally necessary in an agricultural society in which there were no asset-backed securities and no electrical goods in the shops. But in a complex modern economy, as in the deer forest, production requires the involvement of many. Adam Smith marvelled at the resulting efficiency in his description of a pin factory. But if, as Smith described, one man wrought the iron and another stretched it, who could say what was the marginal productivity of each? And what was the marginal product of the chief executive of the pin factory, or the person who hedged the foreign exchange exposure on the unfinished pins, whose contributions the Scots savant unaccountably failed to mention?
If the pin factory really did increase the productivity of the factory by a factor of at least 240, as Smith claimed, there was likely to be a surplus when the wage earners had received whatever their marginal product was. And when it came to dividing that surplus, the distribution of authority within that pin factory would be crucial. That distribution would surely favour the CEO. Since the CEO wrote – or at least commissioned – the pin factory’s annual report, the moral and economic argument could be turned on its head. If you were paid a lot, that showed that you contributed a lot. What the recipient earned was, by that fact alone, justified. So the ethic of just reward through effort gave way to the culture of present entitlement from possession.
A recent survey of children – by Sky television, of all organisations – showed that their career aspirations, once directed towards professions, were now aimed at celebrity. They hoped to be pop stars or footballers, not teachers or doctors. They wanted – like the sixth Duke of Muck – respect: to be valued for what they were, not for what they had contributed. Children, of course, tell adults what they want to hear. But adults’ expectations are further confirmation of how economic and social values have been eroded.