On The Economic Component of Class

I’ve been looking at voting intentions by class recently and thinking about class generally a bit recently.

I’ve also been thinking about the Living Wage and the work of Rowntree on the Poverty Line

Class is a strange thing in Britain. In Australia where I have lived class is different.  I don’t think it’s correct to say there is no class distinction in Australia but it’s more closely tied to economics than social position.

For me class in Britain seems to be some synthesis of current and future economic position, education, social position, the type of job you do and some kind of nebulous cultural affinity.  Is Alan Sugar working class or an aristocrat?

I’ve been trying to winnow out the economic element. My classification below is work in progress. I’d welcome any constructive criticism. I’m trying to focus on the impact economic positions have on choice, security and expectation.

When looking at income I’m not currently drawing a distinction between income from earnings, from social transfers or from free at point of use access to socialised services such as health care or education.

I do draw a distinction between income that is earned and income that is derived from owning capital. The key distinctions being choice about working or nor and choice about when you consume you’re lifetime wealth.

The key caveat when considering my classification is that is isn’t just your current position that matters to my mind but what you expect your lifetime position to be. I think there is a considerable difference between being a poor student at Oxford trying to live on £12k a year until your job offer to work for a bank comes in, someone who has just bought a house and so is spending most of their income on mortgage payments and has £12k a year after paying for housing and being a cleaner in your 50’s with no savings trying to live on £12k a year.

Classes of Labour

 On the Poverty Line / On the Living Wage – or just below.

 Too little income to participate in society fully and with dignity. Significant risk of long term health issues do to persistent material shortage. Significant risk of serious discomfort due to short term financial shocks. 

 (I’m struck by how similar the Poverty Line and the Living Wage are in conception.)

 Much lower than this and I think you are in danger of imminent death.

 Subsistence Labouring

 Sufficient income to meet current needs but no capacity to build up meaningful reserves.  An income from labour that allows some “luxuries”. A significant one off financial shock would result in Poverty Living for some time (e.g. a car crash resulting in absence from work and the need to buy a new car). Every penny is counted and accounted for. One is living from paycheck to paycheck.

 Comfortable Labouring

 Sufficient income to meet current needs and to save against certain one off shocks but still not able to accumulate significant amounts of capital.  Will never have the deposit for a house so will never own their home so will be paying rent forever. Essentially working until death or retiring into Poverty.

(Not really happy with the name for this group – I’m trying for something that suggests that life is pretty okay at the moment but only so long as you keep working.)

 Prosperous Labouring

 As Comfortable Labouring but with the ability to save significant amounts of capital for the long term future. By significant I mean sufficient to live on. So enjoying the material well-being of Comfortable Living whilst also saving for a mortgage, saving for a pension or putting aside cash. Someone who was in the Prosperous Labouring group might expect to retire into the Comfortable Labouring Class type material well-being.

 For me this is a key break point. This is the place where someone working can look forward to not working, or having choices about the amount or type of work they do. They can also face the future without fear of a significant material drop in their current living standard.

 Affluent Labouring

 As Prosperous Labouring but with sufficient saving ability that they would retire into Prosperity i.e. even after reaching the point where they can give up paid labour they are still able to put surplus cash aside and this gives them the ability to significantly assist children or grandchildren.

 (I am wondering if the one of the most profound social, economic and political  phenomenon we see in the early part of the 21^st Century might be the division of the UK into those whose grandparents left them a house in their will and those whose grandparents didn’t – this might be seen as the completion of Thatcher’s revolution or not.)

 Affluent living just keeps going. I don’t see any significant difference in outcome for people who work – it’s just how quickly you decide to trade working for not working and how much you decide to assist your offspring from current earned income.

 Classes of Capital Holding

 People may hold sufficient capital that they don’t have to work. This may be as a result of inheritance or by working for a while in the Affluent Labouring class.

 I’m going to skip cases where a modest pension and home has been bought and go straight to where there is a difference in outlook.

 Insulated.

 Sufficient capital accumulated to have a secure and materially comfortable life without working.  Wealthy enough that you are not significantly affected by economic cycles.  You are free from economic fear. You are not able to significantly influence social, cultural or political aspects of your community unless you put in labour work.

 Rich

 As Insulated but with sufficient income that one can support several dependents into Insulated status.  Neither you, nor your children (or perhaps even your grandchildren) will ever have to work.

 Perpetually Rich.

 As Rich but with sufficient capital that you and your decedents can live well off the income and never touch the capital.

 The change in outlook here is that one of legacy.

 Locally Influential.

 Rich enough that you could significantly alter social, cultural or political aspects of your local community.  E.g. your financial contribution would be enough to endow a local theatre group, arts centre or sports club or church or university professorship or to assist the electoral chances at a local election of your favoured party. Things get done because you will them. Or not done because you disapprove.

 (There is a bit of a grey area between owning the capital and managing capital on behalf of other people. The leadership of RBS can decide to sponsor local Edinburgh activities with other people’s money.)

 Nationally Influential

 As Locally Influential but at a national level. You probably have your own security service.

 (Clearly there are trade-offs of scope of influence for time of influence.  If I have £10m I can financially back my favoured candidate in my constituency indefinitely or I can spend most of my “spare” fortune on supporting them in a wider sphere once.

 Internationally Influential

 As Nationally Influential but on an International scale. Your wealth is equivalent to the GDP of a small country. Or you are the Hereditary Head of State of a small country.

 Globally Influential

 As Internationally Influential but on a Global scale.  The income from your wealth is equivalent to the GDP of a small country. As a point of reference we are talking Bill Gates here. By careful targeting of your resources you have the ability to significantly alter the prospects for humanity or at least large chunks of it.