Organized Combat or Triumph of Ideas?: The Politics of Inequality and the Winner-Take-All Economy in the UK

Abstract

In this paper we subject Jacob Hacker and Paul Pierson’s ‘winner-take-all’ to comparative scrutiny by examining the politics of rising inequality and top income growth in the UK. The US and the UK, despite key differences in their economic structures, constitutional arrangements, party organizations, interest group patterns and electoral preferences, both experienced a dramatic shift in favour of top earners that was not replicated elsewhere in the advanced world. The common factor in these two cases is the transformative exercise of political power by ideologically motivated political leaders, and a rapid growth of the financial sector resulting from the application of neoliberal ideas to financial markets. These transformations became possible because of the weakening of the labour movement and the division between skilled and unskilled workers, but in the UK, the organizational power of capital was less decisive than Hacker and Pierson imply it was for the US: the initial shift in favour of finance owed as much to ideological commitments than material interests, and the ‘winners’ from financialization have been able to get their own way without having to draw on the organizational resources used by wealthy interests in the US. A Winner-Take-All political economy has certainly emerged in Britain, but its beneficiaries – an increasingly international group of financial institutions and wealthy individuals - were not decisively present at its inception. Instead, WTA politics in the UK is the result of an ideological project which created a new super-wealthy elite, rather than the other way around.