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This page deals with the second "bullet point" in the AQA Specification for Module 2: WEALTH, POVERTY & WELFARE. This is
- Different explanations of the distribution of poverty, wealth and income between different social groups.
This sounds a bit complicated, but is quite an easy idea, really. We know that different groups in society have different amounts of wealth and income. Some groups are extremely well off; some groups are less well off; and others are in poverty. This section of the syllabus is about identifying who these groups ARE; and also about EXPLAINING how people get to be rich or poor.
A study which you really ought to know thoroughly is by the Joseph Rowntree Foundation, and is called Inquiry Into Income & Wealth (1995). (Make sure that you don't confuse this with the Seebohm Rowntree survey of 1899 that we looked at when defining poverty!! Same name, same family, totally different study.) This study looks at the gap between rich and poor in our society: the income gap, or wealth gap. What the Joseph Rowntree Foundation found is that the income gap in the U.K. stayed fairly constant from the end of the Second World War until the 1960s (i.e. the rich didn't get any richer, or the poor any poorer, compared to the rest of society.) Then, in the 1960s, the wealth gap decreased: thanks to taxing the wealthy, and spending this money in benefits on the poor, income became more equal. Then, from about 1977 onwards, the income gap widened. The U.K. became less equal.
Many would argue that this was due to Mrs. Thatcher's (New Right) policies - she allowed the rich to pay less tax, so they got richer; and paid less in benefits to the poor, so they got poorer. The New Right think that such a wealth gap is OK, as it provides an incentive for poor people to work hard. In addition, they say that there will be a "trickle down" of wealth from the rich to the poor, as the rich will use the services of the poor as servants, nannies, cleaners, etc, and generate more business around them. The widening wealth gap shows, however, that "trickle down" is a myth. Not only did the rich get richer, the poor got poorer in real terms - they actually had less money as a result of New Right policies than they had before! You can use this to argue that if trends continue, we might see the emergence of absolute poverty in Britain.
Check out what has happened to the wealth gap since 1995; look at the Joseph Rowntree website. Since the Labour government came to power in 1997, the wealth gap has narrowed slightly. The poor have been helped by the minimum wage and increases in some benefits.
Also, check out the work of Adonis & Pollard. They argue that the 1990s saw the rise of a "superclass" (put it in quotes, and don't use the term in any other context!!). This is an extremely wealthy group who have a high-status lifestyle, are mainly based in London, and they make their money in new financial areas such as merchant banking, company law, and acountancy.
So what are the reasons for the differences in wealth in our society? What social changes have caused the increase in the wealth gap? Some ideas are:
- Marxist theory
Marxists argue that capitalism involves the exploitation of the proletariat (working class) by the bourgeoisie (capitalists/ruling class). The workers create the wealth through their labour, but they don't get paid the full value of their work - the bourgeoisie extract "surplus labour value" (profit). Thus, Marx said that the bourgeoisie would tend to get richer, and the proletariat would get poorer ("pauperisation"). So this explains the increasing wealth gap!
- New Right
They argue that differences in wealth reflect differences in ability and effort. Like cream, the talented and hard working rise to the top. The poor are poor because they lack talent, or don't work hard. This is known as a meritocracy. Lowering taxes means that the rich can get richer by keeping more of what they rightfully earn, and cutting benefits means that the talentless and idle get the poverty they deserve!
- Household Diversity
Relate this to last term! As family/household plurality increases, we see more dual-income families due to the feminisation of the workplace; and we also see more low-income households consisting of single parents or pensioners or unqualified young people. Thus, changes in household composition mean that some households get richer, while others get poorer.
- Lower Taxes
Will obviously allow the rich to keep more of their money! This is closely related to
- Lower Benefits,
which obviously means that the poor get poorer. Both 4 & 5 are favoured by the New Right, and occurred under the Conservative governments of the '80s & '90s.
- Ageing Population
As people live longer due to medical advances and better diets, etc, a larger proportion of the population are pensioners. And pensioners tend to be poorer, often relying upon benefits.
