Takers
The public and political mandate for action against wealth extraction
Today we’re publishing a report, Takers, that sets out the scale of the public and political mandate for action against wealth extraction, as well as examining the policy arguments. You can read the report online or as a PDF.
At their best, well-run capitalist economies are engines of extraordinary value generation, rewarding productive contribution, innovation and entrepreneurship. Through risk-taking, enterprise, and investment, those economies produce goods and services that improve people’s lives. However, as the Labour Growth Group recently articulated in An Honest Day, economic activity in the UK has increasingly moved away from rewarding wealth creation in the economy in favour of rewarding those who extract wealth and value. Our recent paper by Will Hutton, Escaping The State We’re In, makes a similar argument that we must ‘grip the reins’ of capitalism more firmly, by mobilising investment, disciplining extraction, rebuilding state capacity and aligning growth with the common good. And Stewart Lansley wrote about the same issue last week in Labour List, arguing that “Keir Starmer rightly talks of the need for ‘wealth creation’, but draws no distinction between activity that serves the common good, and growth-sapping ‘appropriation’ aimed at diverting the gains from economic activity”.
The bias towards wealth extraction has created a deep unfairness in Britain’s economy, severing the link between contribution and reward. People who own assets - and organisations that can extract ‘rents’ from assets - have become much richer. Meanwhile, ordinary workers who play by the rules and work hard have seen their living standards decline markedly. Although some argue that benefits recipients or immigrants ‘take’ from our economy, the evidence overwhelmingly suggests that the problem with the ‘takers’ is at the top of the wealth distribution, not the bottom.
Coming hot on the heels of the publication of the Sunday Times Rich List, Takers, our report launched today, builds on original polling commissioned by the Fairness Foundation earlier this year, which found that voters reject the idea that all fortunes are alike. Instead, people support the idea that wealth creation through genuine innovation should be distinguished from wealth extraction, where wealth accumulates from the ownership of scarce resources.
This report aims to help to build a cross-party consensus on the need for bold action on two fronts: to stem the extraction of wealth from our economy, and to rebuild a society that allows everyone to contribute and rewards those contributions fairly. It sets out the level of public and political support that exists for action on wealth extraction, looking at polling evidence on attitudes to both companies and individuals, and exploring how parliamentarians from all of the major parties have raised concerns about the issue. It also discusses the reasons that wealth extraction is a problem, looking at the four pillars of the extraction economy - asset inflation, rentierism, market concentration and financialisation - and examines how policymakers can respond.
The political party that grasps the distinction between wealth creation and wealth extraction, and that builds a serious agenda around the idea that not all wealth is made equally, will find both the public and the evidence on its side. We challenge policymakers to heed this call for an economy that serves everyone, and that rewards genuine wealth creation rather than incentivising wealth extraction. The prize is a fairer country, where opportunity is available to all and contribution is fairly rewarded once again.
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Jump straight to a section:
Summary
The diagnosis
Why is wealth extraction a problem?
The public mandate
The political mandate
What can we do about wealth extraction?
Conclusion
Further reading