Philip Green doesn’t create wealth.
Over the last month, UK Uncut has seen wide public support. For the most recent day of action, I was in Oxford. We shut down 5 separate tax dodgers. Passers by applauded and cheered.
However, there are, of course, some right wingers who are never going to support us. And here is what many of the say:
“These companies create a lot of wealth. In doing so, they create jobs, and pay income tax on these jobs. Without the wealth they created, we would be a much poorer country”.
Which is an interesting economic analysis.
Because, if we believe Adam Smith, and if supply follows demand, then the demand for clothing would always have been met by the market. There would have been jobs selling those clothes with or without Philip Green.
All that the Arcadia group has done is monopolise that market. That isn’t good for anyone, apart from Philip Green.
Of course, we may not believe that supply follows demand. We may believe that Topshop has created demand for clothing. Whether or not this is a good thing is dubious. Are Philip Green’s fans are arguing that the Arcadia group persuaded people to spend when they wouldn’t have done so otherwise? Surely, given their target audience, they are admitting complicity in the drive to debt which contributed to the credit crunch in the first place? And this says nothing of environmental consequences.
But, assuming that this increase in demand is a good thing – and it is true that it contributed towards the tax take – then who has created that wealth?
Well, wealth is created when you take a primary good (raw material), and make it into something people want or need. So, when someone takes cotton, and makes it into thread, they are creating wealth. When someone takes that thread, and weaves it into cloth, that creates wealth, and when someone sews that into clothes, that, too, creates wealth. The charming shop assistant also makes us feel better about ourselves, and it seems that this adds value to our lives in a way we are willing to pay for. So this, too, can be counted as wealth creation.
So, who is creating wealth here? Is it Philip Green? Well, to a certain extent. He (with his managers and executives) mobilises capital to buy new shops and Kate Moss’ stamp of approval. But it is mainly the fashion designers who make the clothes desirable, the shop assistants who encourage us to buy them, the sweatshop workers who make them and the children – quite possibly West African children – who pick the cotton – who create most of the wealth. More accurately, it is this whole supply chain, and the society and social infrastructure around it, that, together, create wealth. What Philip Green does is not so much create wealth, as ensure as much as possible that the costs of this process – the massive pollution of the cotton industry and the ill health this causes; the cost of failure to educate children; the waste produced by stacks of clothes being sent to landfill – are picked up by others.
And what Philip Green primarily does is control that wealth. He ensures that those at the bottom – the children, the sweatshop workers, get the smallest possible share of it, and he gets the biggest share. And the least we can expect him to do with the portion of it that he takes for himself (other than buy a solid gold monopoly set with all of the companies he owns*) is pay income tax.
The slightly ludicrous idea that rich people people like Philip Green create wealth and the rest of us spend it is expressed in a number of ways. Another one goes something like this: “the private sector creates wealth. The public sector spends it.”
I always think this is odd. What it implies is the following:
If I pay, with my wages, for a barber to cut my hair, then the hair dresser has created wealth. If I pay, with my national insurance, for a doctor to cut out my appendix, then she has spent (destroyed) wealth.
This is obviously ludicrous.
The truth is that everyone who contributes to society in ways that we are willing to pay for – either with our taxes or with our take home pay – is creating monetary wealth. And everyone who is contributing to society in any way at all is creating a civilisation capable of being wealthy.
Of course, the difference between most of those of us who create wealth and Philip Green is that we pay taxes in this country. And if he doesn’t want to, he can take his gold monopoly set, and go somewhere where he is willing to contribute. Because he hasn’t made us richer. The workers he employs – and the public services they depend on – have made him rich.
And even if our right wing friends don’t believe that, then surely they believe in the market? Surely their ‘invisible hand’ will ensure new employers will take his place? Isn’t that how market forces are meant to work? Funny how the right stop believing in them when it isn’t helpful for the mega-rich.
*yes, he really has one of these