When you’ve known someone for a long time it’s hard to separate the person from their work. And in Doreen’s case it would be unfair too, because her influence extended beyond her writing to her way of being – as an academic, an activist and a person. From a working-class background, she grew up during the exceptional decades of growth and increasing equality that followed the Second World War. Like many others, she celebrated the end of deference; she showed that one could be excellent without being elitist, and profound without being pompous or obscure. There was nothing incongruous in laughing at a silly joke one moment (often a Pythonesque send-up of academia) and being completely serious the next; in fact this was the way to work and live. Round about 1989, Doreen and I and Open University colleague John Allen formed our own discussion group – “The Brighton Pier Social Theory Group” – that met several times in Brighton, and once in Copenhagen. The ingredients of the meetings were social and spatial theory, ontology, coffee and pastries, and irreverent laughter, combined in any order. While being with her could be fun, she could also be scarily intense, with a formidable ability to encapsulate the complex briefly and to zero in on the weakness of others’ ideas, so you often felt you needed to be on your toes when you were with her. She had an insatiable appetite for learning, for writing, for engaging in politics, and getting the most out of life. While her championing of the importance of space linked her firmly to geography, she was also a post-disciplinary thinker whose work defied identification with any single - ism, and she was exceptionally widely read. Whether the subject was space, politics, social theory, Marx, feminism, Bergson, geology, or bird watching – all were approached with her inimitable relish.

Her range of interests was wide, but she always strove to find connections, relations among things. Hence her overtures to physical geography (Massey 1999g). She used to carry a geology map of the UK with her in her travels so she could check out the underlying rocks wherever she was.

Any economy depends on people contributing to provisioning as well as consuming what has been provided. Not everyone is able to contribute but everyone needs to consume to live. Those who can contribute – whether farming, producing machines or software, delivering products, teaching, training, caring and so on - usually don’t mind supporting at least some others who are unable to work, certainly if they are their loved ones or part of their community, and sometimes beyond too. But some people can get an income by extracting wealth from the economy simply through their control of key resources that others need but lack, and by charging them for their use.

As we’ll see, this is the key to the exceptional wealth of the rich. Access to mechanisms of wealth extraction, rather than wealth creation, is what marks them out. To understand why we can’t afford the rich, we need to look into how this is done. Part One examines the main methods of wealth extraction.

But it so happens that the very vocabulary we use to describe and understand economic practices in our economy is systematically misleading. Even simple words like ‘earnings’ and ‘investment’ are dangerously ambiguous and conceal a great deal. We need to open up how these simple terms are used, so as to guard against mystification. And we also need to revive a distinction that used to be part of our economic vocabularies: between earned and unearned income. Chapters Two and Three explain these matters. Only when we’ve done this can we understand wealth extraction in all its guises.

The classic big three mechanisms of wealth extraction are rent, interest and profit from ownership of enterprises, but there are other, less obvious ones. The remaining chapters in Part One deal with these in turn, except for the last chapter, Chapter Eight, which answers some of the most common objections in defence of the rich, such as the claim that they create jobs and are special, entrepreneurial, innovative and hence deserving people, and that their wealth benefits others by ‘trickling down’. It also answers the most likely objections to come from mainstream economists.

What have the rich got to do with the economic crisis? A great deal. Like the resurgence of the rich, the roots of the current crisis go back to the 1970s. And they are both associated with the growing dominance of the financial sector, or ‘financialisation’ as it’s sometimes called. In fact, the rise of the rich is an integral feature of the crisis, just as it was of the Great Depression in the early part of the 20th century. But there’s also a big difference: this time, many of the rich have not only got richer in the build-up to the crisis but – except for some short-term losses – after it too. Compared to their predecessors in the 1920s and 1930s, who then lost out, they are having a good crisis. Capitalism’s most successful decades in Europe and the US – the 1950s and 1960s – were also the period when the share of national income cornered by the rich was at its lowest. As we’ll see, this was no accident.

The main arguments so far apply to any phase of the history of capitalism, and whether they are right or wrong doesn’t hinge on whether capitalism is in a boom or a crisis. But while unearned income based on control of assets has always been a problem, it’s grown steadily over the last 40 years. Financialisation represents ‘the revenge of the rentier’ after being side-lined during the mid-20th century. They’re active rather than passive rentiers – part of the so-called working rich – ever seeking out new ways of extracting wealth from the economic system through rent-seeking. Financialisation has been both cause and consequence of a shift from wealth creation to wealth extraction and, with that, a shift of wealth to the rich.

All this can easily get overlooked in accounting for the crisis. It’s common to suppose that our current economic problems just go back a few years and result simply from irresponsible behaviour in the financial sector as it mismanaged risk on a spectacular scale. But although there has certainly been extraordinary irresponsibility, mismanagement, irrational exuberance, not to mention greed and indeed criminality, the basic causes go back decades, and they weren’t all to do with finance.

It might seem from what I’ve said so far that wealth depends purely on people producing goods and services. But they don’t do it on their own, from scratch, but mainly by using and building on what’s already been produced, on what today’s society inherits from yesterday’s, and by drawing upon nature’s resources. This is our common inheritance – or simply ‘the commons’.

Compare today’s earnings now with those of people in the 19th century; workers today are of course much better off. But this is not because they are working any harder or are more deserving than their ancestors. They are producing far more output for each hour they work – in the US, output per person per hour is estimated to have increased 15-fold since 1870 – but that’s because they are working with better technology, in better-organised workplaces, in a society with faster communication and distribution systems. So the difference in wealth is a result of society as a whole being more productive. The accumulated intelligence, know-how and investments of successive generations are what have made us so productive now. Without them we would be desperately poor. Yet we so easily fail to notice our enormous debts to the past and imagine that our pay is simply a reflection of our personal merit and effort or contribution. Some of this inheritance may be privatised by a minority – and not the ones who created it! – with far-reaching implications for the production and distribution of wealth, but I’ll come to that in a bit.

Most of what we so easily attribute to our own intelligence and efforts is the hard-won product of previous generations’ thought and labour, to which any one of us can rarely add more than a little. Indeed, the more this inheritance grows, the smaller our additions in proportion to it. In their important book, Unjust Deserts, Gar Alperovitz and Lew Daly quote this halting challenge from the Bible:

Tax havens, where many of the rich hide their wealth, are a major component of plutocracy. They are not just places that happen to have low taxes, but secrecy jurisdictions in which financial wealth can be hidden. They conceal who owns this wealth, how much they own and where it comes from. The owners may be individuals, banks, corporations, drug cartels, the mafia or arms dealers, but their identities are hidden by front or ‘shell’ companies and ‘offshore trusts’. According to research by ActionAid, in 2011, 98 of the top 100 companies listed on London’s stock exchange used tax havens, with 4,492 of their overseas companies located in subsidiaries. This doesn’t mean that the money actually stays there, for once its original sources have been concealed it can be recirculated, usually back to major financial centres, to be ‘invested’; but the ownership of that money is vested in anonymous companies registered offshore.

The Tax Justice Network estimates that in July 2012 at least US$21 trillion – and possibly as much as US$32 trillion – was hidden in tax havens by the world’s wealthiest people. Such figures do not include ‘the vast amount of wealth held in the form of real estate, superyachts, works of art and even racehorses that is “owned” by secretive offshore companies, trusts and foundations. An estimated c. $250 billion is lost in taxes each year by governments by wealthy individuals holding assets offshore.’

Tax havens enable companies not only to avoid tax but to escape regulation of their activities, so they can do offshore what is illegal onshore. They provide a means for banks to hide their most risky, indeed reckless, activities off their balance sheets and avoid reserve requirements and other regulations.

There are scores of different accounts of the origins of the crisis. The causes are complex, and different experts give different emphasis to them. Many of the elements are mutually reinforcing so it’s often hard to say what came first: but I will at least provide a sketch of the main elements and processes, highlighting the role of the rich.

The crisis was not just a result of the malignant growth of the financial sector alone, but of the interaction between it and the so-called ‘real economy’. So it’s important to begin by clarifying this relationship.

Finance and ‘the real economy’

A capitalist economy needs not only producers of goods and services for sale, but a financial sector. When people talk about ‘the real economy’, they mean the part that produces and distributes goods and services, as opposed to the financial sector. But the terminology is awkward because the financial sector is no less real. Nor is it dispensable; it is absolutely necessary for the production of goods and services for sale. Provided we remember this, we can go along with the usual crude terminology. The trouble is, necessary though the financial sector is, it can also do things that have a devastating effect on the real economy, as we are now discovering. Finance has come to dominate rather than serve the productive sector of the economy. As Ann Pettifor puts it:

Its activities can seem dauntingly obscure and complex, and its technical language bizarre, but it affects the lives of every one of us. We need to open it up to public scrutiny and understand what it does – not only because we depend on it for loans and mortgages and entrust it with banking our pay and savings, but because we are having to bail out failed banks and rescue the system from itself. The sector has failed spectacularly, but ordinary people are picking up the bill.

Andrew Sayer has written a very good book which does much more than its title suggests. As well as explaining why we can’t afford the rich, it also explains why we go on doing so. The ideology that the rich shower on us is meant to justify their privilege, but it turns the truth completely inside out. When inequality reaches the insane levels it has done, the rich depend on hoodwinking us all into thinking that they are the source of jobs, prosperity and everything we value. But, to paraphrase George Monbiot, once we stop believing this, either governments have to tackle inequality or revolutions arise. So Sayer’s piece-by-piece unpicking of the economic justifications of the rich is an important political act.

Although this book has a light touch that masks the impressive scholarship which has gone into it, and is free of jargon and sometimes funny, to say it is a ‘good read’ would belie its seriousness of purpose. Above all, Sayer is concerned to help our societies surmount what he rightly calls a ‘diabolical double crisis’ – at once economic and environmental. But too often reading books or articles on the threats the world faces becomes little more than a form of consumerism. We read them to feel well informed – hopefully better informed than others. And it is easy to feel that the more threatening the problem under discussion, the more exhilarating it is as the plot of a ‘whodunnit’. Being well informed adds to our cultural capital and gives us more to say, but let us make sure this book also makes us part of the solution.

On the interface between the environment and inequality, Sayer quotes Pacala, saying that 7 per cent of the world’s population is responsible for 50 per cent of all greenhouse gas emissions. But even if we in the rich world give up flying, do without a car and eat little or no meat, we would probably reduce our total (direct and indirect) carbon emissions by no more than a third – only a modest contribution to the 80 or 90 per cent we need to achieve.

Fortunately, well-being and high carbon emissions are not inseparable.

Misunderstandings of how the rich get their wealth are underpinned by wider misconceptions about the causes of economic inequalities in general – not just between the 1% and the 99%, but within the latter. Many people think the rich deserve their wealth, because they believe that right across the board people generally get what they deserve. Even if we take out those whose income is mainly unearned, there are still significant inequalities within the rest. Don’t highly skilled people doing responsible jobs, like surgeons, get paid more than unskilled workers like cleaners because they deserve more? Doesn’t this explain the inequalities between them, and show them to be fair? It actually appears to be true. But, as we’ll see, this takes a lot for granted that needs to be questioned.

Surveys on attitudes to economic equality show that people are concerned not only with what people get in terms of income but also with what they contribute, in terms of work. And they expect there to be some relationship between the two. I agree that we should consider contributions as well as what people get – ‘distribution’; after all, the chapters so far are an attack on unwarranted free-riding on others’ work by the rich. To deal with these questions we need to

widen the scope of the argument to look at what produces economic inequalities within society as a whole. The answers take us deep into the basic structure of our societies.

The kind of wishful thinking involved in the belief in a just world may be partly the product of an understandable desire to avoid painful feelings of resentment at injustice and what might seem like mean-spiritedness. It’s tempting to jump to the conclusion that economic inequalities are basically fair, without investigating what does determine people’s incomes. When we do look at this in practice, we find that the issue of differences in what people seem to deserve shrinks considerably, because their jobs and income depend so much on other things; we realise that we don’t live in a just world.

To uncover the most important reason why we can’t afford the rich, we need to rediscover the distinction between earned and unearned income. This distinction has been fundamental to the history of political economy, socialist thought and taxation. Indeed, it’s still implicit in the categories used in our tax returns. It sounds prosaic, but it’s hugely important. Politically, it’s dynamite, for it implies that the income of the wealthiest people is largely undeserved. Interestingly, while the distinction has a long history, it has fallen out of use over the last 40 years – just the period when the unearned income of the rich has ballooned.

Let’s take earned income first. Roughly speaking, this is what waged and salaried employees and self-employed people get for producing goods and services. I don’t mean to suggest that the size of their pay exactly reflects what they deserve, but that their pay is at least conditional on contributing to the provision of goods and services that others can use. The relation between what we might think people deserve for their work – however we might want to measure that – and the amount of pay they actually get is pretty loose, as we’ll see later. Nevertheless, their income is earned in the sense that it’s work-based, and the goods or services they help to produce and deliver have use-value, such as the nutritious and tasty quality of a meal, or the educational benefits of a maths lesson, or the warmth provided by a heating system. So there are two criteria here: earned income is dependent not just on working, but on work that contributes directly or indirectly to producing use-values. This is important because, as we’ll see shortly, it’s possible to work without producing any useful goods or services, and indeed in a way that merely extracts money from others without creating anything in return.

Some earned income is deferred. National insurance contributions paid by employees out of their earnings provide for a state pension in retirement and certain other benefits. So just because someone is receiving benefits without currently working it doesn’t mean that their income is necessarily unearned; they may just be getting back what they had earned but not used earlier.

‘Plutonomy’: for rich eyes only

Combining plutocracy with economy, ‘plutonomy’ was a term coined in 2005–06 by Ajay Kapur of Citigroup, a major US financial group bailed out by the American people in 2008 after sustaining huge losses in the crash. It was introduced in a series of reports, the last of which was called The Plutonomy Symposium – Rising Tides Lifting Yachts. It was sent only to Citigroup’s wealthiest customers, but leaked to the press. It claims that the US, Canada, UK and Australia are the only plutonomies; much of continental Europe and Japan, which haven’t experienced such major upturns in wealth controlled by the rich, are ‘the Egalitarian Bunch’.

According to the report, plutonomies have three key characteristics:

Kapur estimates that in 2005, the richest 20% may have been responsible for 60% of total spending.

Democracy is potentially a threat:

Nonetheless:

We may be able to add only a bit to what those before us have provided, but it is a vital bit, and of course work takes up much of our lives. Not surprisingly, we want to feel that we and others are fairly rewarded for it. We don’t want others free-riding on our efforts if they have no good reason for doing so.

In a capitalist economy, what people get is largely a function of power, not of moral or democratic judgement. However strongly we may feel about what would be fair and just, we have to remember that our incomes aren’t determined by people sitting around and deciding what we need or deserve. When an organisation decides it needs to create a new job, the person who draws up the job spec might possibly think about what someone doing it might deserve, but the finance department is likely to make sure they don’t set the pay higher than is necessary to get an employee of the required standard.

Do individuals’ incomes reflect the value of what they contribute?

We have already dealt with one major reason why workers in general don’t get paid the equivalent of what they have created: as long as there are rentiers and capitalists, workers have to produce enough not only to cover their own pay, but also to provide those owners with unearned income. They also provide transfers or warranted unearned income for those too young, old, sick or disabled to work. So the existence of unearned income of either kind means that, in general, those who produce goods and services will get paid less than the value of what they produce. (And remember, these workers could be anywhere; in a global economy they don’t have to be in the same country as those who get the surplus.)

It’s still possible for at least some productive workers to get paid more than they have contributed, perhaps by taking advantage of a particular source of power, such as having control over a key bit of technology on which their firm depends, or having specialist skills and knowledge, or a management role; in such cases they would be partly subsidised by their fellow, less powerful employees. Differences in what employees get paid depend heavily on how much power they have in terms of skill, know-how and authority.