Ed Balls has caused something of a furore by claiming that, in contrast with bankers paying themselves bloated salaries, Wayne Rooney earns every penny of his £300,000 per week. It’s a claim that’s worth unpacking a little, because it tells us quite a lot about some of the assumptions we make about wealth, risk and reward.
At first sight, the arguments for paying bankers and Wayne Rooney high salaries are the same. They are both portrayed as being rare talents who bring high returns to the organisations that employ them. They are paid high salaries because that is what the market dictates. Moreover, Rooney is unlikely to play professionally beyond his mid-thirties; his talent has an allotted time-span. His career could be ended by a single injury. I think this is what Ed Balls really meant; Rooney is unique and his talent is accompanied by risk. Hence the reward.
On the other hand, the key word here is “earn” as so often, as soon as we get into the more subjective world of effort and reward, the arguments start to fall apart at the seams. Bankers work hard, we are told; so, apparently, does Rooney. Do they work harder than, say, an NHS nurse earning £25,000 per year who has seen successive years of real terms pay cuts? Probably not. “Hard work” is an extremely subjective term. Or, to make a fairer comparison, does Rooney “work harder” than, say, a journeyman midfielder carving out a modest career at Accrington Stanley? Probably not – the point is that Rooney is being rewarded for a scarce talent that his peers are believed not to possess (and, linked to that, for the value he brings to the Manchester United brand). And as far as generating value is concerned, it’s always worth revisiting the New Economic Foundation’s work on the value that different occupations generate for society: high pay appears to have little basis in value generated. It’s a matter of convention, not economic reality.
Bankers would appear to believe the same: but there are questions of success criteria, and indeed of background. Rooney is under intense scrutiny every time he takes to the pitch; bankers like to set their own success criteria, but there are wider questions about whether the financial sector has served the wider economy and society well. Moreover, there are issues about the extent to which success in the banking world is determined as much by background and networking as by ability; in a week in which a Tory Education Secretary complains about the number of old Etonians in the Prime Minister’s inner circle, Ivan Illich’s comments about institutionalising the head start as achievement seem distinctly relevant. Moreover, many would argue that bankers have largely avoided the fallout from their catastrophic failures that led to the crash of 2007-8 – when bankers fail it appears that the risk falls on others.
In political terms – especially in relation to Balls’ position as Labour’s Chancellor-in-waiting, all of this matters because Labour is talking, quite explicitly, about being the party of work and making work pay. And the context to this statement is the way in which the benefits of economic growth in recent years have accrued almost entirely to rentiers rather than wage-earners; and that stagnating and indeed falling real wages are at the heart of the cost-of-living crisis that Labour is, quite rightly, putting at the centre of political debate. For me Ed Balls’ comparison shows that, more generally, we have yet really to get to grips with what “making work pay” really means, because we remain unclear about what work actually is. The discussion remains mired in ideology and moralistic assumptions. And until we can get beyond that, debates about work under late capitalism really are not going to take us very far.