Cooking the Books: The First Lost Decade Since the 1860s

In a speech in Liverpool on 5 December Mark Carney, the Governor of the Bank of England, described the current decade as ‘the first lost decade since the 1860s’ (bankofengland.co.uk/publications/Documents/speeches/2016/speech946.pdf). At that time, he stated, ‘Karl Marx was scribbling in the British Library, warning of a spectre haunting Europe: the spectre of communism.’ Not quite, as Marx wrote about that much earlier, in 1848, when he was living in Brussels. But he would have been in the British Museum taking notes for his major work, Capital, that was to be published in 1867.

Before that, in1864, Marx drafted the Inaugural Address of the International Working Men’s Association that had been set in September of that year. In it, he noted a statement Gladstone had made in his budget speech to the House of Commons in April 1863:

‘Dazzled by the “Progress of the Nation” statistics dancing before his eyes, the Chancellor of the Exchequer exclaims in wild ecstasy: “From 1842 to 1852, the taxable income of the country increased by 6 per cent; in the eight years from 1853 to 1861, it has increased from the basis taken in 1853, 20 per cent! The fact is so astonishing to be almost incredible! … This intoxicating augmentation of wealth and power,” adds Mr. Gladstone, “is entirely confined to classes of property!”’

Later, critics were to accuse Marx of distorting what Gladstone had said. The controversy is described by Engels in his Preface to the fourth German edition of Capital in 1890.  Basically what happened was that Gladstone had exercised the right of MPs to alter Hansard if they had said something they didn’t mean and had deleted the part about the increase in wealth and power being ‘entirely confined to classes of property’, even though this is what the newspapers the following day had reported him as having said.

Carney’s speech was accompanied by a graph (chart 6 on page 5) which showed that in the ten years up to 1864 real wages fell. So Gladstone’s initial statement had been correct. The increase in wealth during that period was ‘entirely confined to classes of property’. Just as it has been during the current ‘lost decade.’ Carney quoted some figures which showed that, as then, the richer got richer:

‘In recent decades, as global inequality has fallen markedly, it has edged ever higher in most advanced economies. In Anglo-Saxon countries, the income share of the top 1% has risen notably since 1980. Today, in the US, the richest 1% of households receive  20% of all income. Such high income inequalities are dwarfed by staggering wealth inequalities. The proportion of the wealth held by the richest 1% of Americans increased from 25% in 1990 to 40% in 2012. Globally, the share of wealth held by the richest 1% in the world rose from one-third in 2000 to one-half in 2010.The picture in the UK is complex but in general suggests relatively stable but high levels of overall inequality, with sharper disparities emerging in recent times for the top 1%.’

Plus ça change.