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Wealth, Elites and Tax Justice

This theme will draw on the expertise of numerous LSE academics from different Departments, and from our international partners, including those in the global south.

Professor Mike Savage

This research theme led by Professor Mike Savagewill be active from 2019 to 2022 and has five different research clusters detailed below.

This theme will draw on the expertise of numerous LSE academics from different Departments, and from our international partners, including those in the global south. We have especially strong relationships in Africa with the African Centre for Excellence in Inequality Research, led by Murray Leibbrandt at UCT, and the Southern Centre for Inequality Studies at University of Witwatersrand which has a specific project on Intergenerational Wealth and Taxation. In South America, we work closely the Chilean Centre for Social Conflict and Cohesion Studies (COES) who have a programme of research.

 

Our research will be organised in the following five clusters:

1. Measuring and conceptualising wealth inequality, including trends over time 

2. Global financial capitalism: offshore wealth and tax havens

3. Wealth and social mobility: meritocracy and the legitimation of inequality

4. Developing comparative studies of plutocratic elites

5. Overarching policy theme: tax justice

Concerns with inequality have tended to focus on the nature and extent of income inequality, which is now well known to be growing in many nations since the 1980s. However, income inequality is only the tip of the iceberg. Following the influential arguments of Thomas Piketty, which rework Marx’s emphasis on capital accumulation, it is increasingly realised that wealth is a more fundamental driver of inequality dynamics. This insistence has been taken up by numerous campaigning groups such as Oxfam (with their startling statistic that 8 people own as much wealth as the bottom 50% of the world’s population attracting much critical concern). The concentration of wealth in the hands of small elites raises great concerns about ‘social sustainability’ and the power of wealthy plutocrats to stage ‘state capture’ and exert undue influence. 

Focusing on wealth inequality also highlights the significance of race and gender divides in distinctive ways. Since private wealth is often owned by families and households, gender relationships and inequities are central to its organization. Racial inequalities in wealth may exceed those in income, which may in part reflect the historical patterns of imperialism and racial capitalism from which racial minorities have been excluded. Demos (US) have recently identified this issue as The Asset Value of Whiteness.

However, although wealth is critical to the analysis of economic inequality, it is more difficult to theorise and measure than income. Wealth assets take numerous forms and can be concealed. Wealth is also highly mobile and cannot so easily be associated with national formations as income inequality. Significant amounts of wealth operate out of tax havens, and flows of corporate capital are central to the operations of financialised capitalism (as the deleterious effects of the 2008 crash revealed very powerfully). Analysing wealth inequality therefore forces us to operate at different scales, ranging from the global down to the urban. It also forces us to recognise the tensions between private and public wealth which lies at the heart of the contemporary politics of inequality since it addresses a range of key issues: Private versus public ownership of capital (including housing); private versus public services; private versus public pensions.

Focusing on wealth also challenges conventional justifications on economic inequality. Whereas analyses of the distribution of income inequality are often pitched as reflections of the significance of skill and human capital for affecting income differences, focusing on wealth opens up bigger concerns about the processes driving wealth accumulation, inheritance and privilege. The build-up of wealth can frequently be seen as ‘unearned income’ linked to the proliferation of rent extraction processes and asset markets, which thus threatens liberal and meritocratic values. 

Understanding the significance of wealth has direct implications for the politics of taxation. Although the principle of income tax is well established (though operates with very different degrees of progressiveness in different nations), principles of wealth and inheritance taxes are more controversial and disputed. We are also concerned to promote global financial transparency, off shore wealth, and tax avoidance. Strategies seeking to challenge wealth inequality also require interventions about more positive conceptions of wealth, (e.g. local wealth building strategies, strategies for reaffirming democratic ideals of equal human worth and dignity in the face of growing economic disparities perceived as reflecting the unequal social or moral worth of individuals).

 Nairobi