New Internationalist

Is ‘ethical wealth’ a contradiction?

Issue 441

Can the accumulation of personal wealth be a positive force in the world? Or is the good that can be done by rich individuals outweighed by the negative effects that extreme disparities of wealth have on society?

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Paul

Well… there’s nothing innately immoral about wealth, or virtuous about frugality. I’m broke, but in terms of sheer physical luxury, I live better than a medieval baron (although my flat is a lot smaller than a castle, and no-one’s trembling at my commands.) If everyone in the world was a millionaire – then so what? It’s comparative wealth and consumption that’s the issue – particularly in the light of environmental constraints.

Global poverty is a symptom of global wealth – the riches of the few, no matter how hard they’ve worked, haven’t simply appeared from nowhere… any more than the wealth of a Victorian mill owner came from nowhere. Profits are created at the base of the global labour pyramid, and the only reason such lifestyles are available to anyone is because the majority are paid a pittance for their hard work.

Yes, the wealthy can be a philanthropic influence for good, should the mood take them. But this ignores a very simple question – in a world where democratic equality is seen as a virtue, by what right have they acquired this influence in the first place? If being a multi-millionaire in a world where thousands of children die of malnutrition isn’t unethical, then what is?

Mark

I agree that for those of us living in wealthy societies that have shelter, food and good health, everything else is comparative. The fact that any child dies of malnutrition in a world that knows how to feed everyone is a crime that each of us must take responsibility for.

Entrepreneurs, ethical or otherwise, provide a service to society. Due to a psychological drive to better themselves and those around them, they create something. There are seven founders of Lush and we invent our products and teach others to manufacture them. We put them in shops that we rent and fit out, then teach more colleagues how to explain them to customers. We fund this ourselves with a little help from the bank, and practise the business until we learn enough to make the profit that ensures secure and gainful employment. So I argue that it’s not just how the pie is cut up, it’s the fact that there’s a pie at all.

My motivation when I was asked by my colleagues to help start Lush was to feed my family and pay the mortgage. That done, I was curious to see if I could get people using unpackaged, unpreserved fresh cosmetics. At one time I was so frightened that I had spoilt the first by pushing the second that the others banned me from the shops.

Once you have invented a shampoo with no bottle and can stop millions of unneeded bottles going to landfill, it could be argued that you should have plenty of stores worldwide to make sure responsible people can get hold of the stuff. Once you have these stores it’s fun to see what else can be done with them. If you then decide that what you want to do is highlight issues you care about that need some action taken, it’s faster, easier and less frustrating if you pay for it yourself.

Paul

I agree that entrepreneurs are crucial. But if we simply dismiss the idea of a moral limit to how much of the world’s wealth one person should be allowed to take, isn’t that just blatantly denying that there’s such a thing as greed? What else does the word mean? Should there be no moral restraints on the acquisition of profit? Particularly since the wealthy élite represents unelected, undemocratic power, of the kind that Rupert Murdoch wields?

We may be in denial about it, but the proportion by which the global pie is cut up (in other words, who gets paid what for their labour) is the fundamental reason why people are impoverished; 20 per cent of the world’s population control 80 per cent of its wealth. The more people we have insisting they deserve an extravagant reward for their efforts from the limited share of what’s available, the less economic space there is within which others can obtain a living wage.

I don’t deny entrepreneurs deserve a comparative wage incentive, but because I also think there is such a thing as disproportionate wealth, I’d suggest an ethical solution would consist of an across-the-board, fixed ratio between the highest and lowest wage within any given company, country or other economic entity. How about 10 to 1? 20 to 1? Or shall we stick with business as usual and say ‘it’s ethically OK just to accumulate as much wealth as you can get away with’?

Mark

I agree that ethical wealth is a contradiction, but not for your reasons. I think money should work, and try to remember Gibran’s advice in The Prophet: ‘Is not dread of thirst, when your well is full, the thirst that is unquenchable?’

You quote Pareto’s rule that 20 per cent of the world’s population control 80 per cent of its wealth. I wonder if this has ever been true? One of the current estimates gives 10 per cent control of 85 per cent of the world’s assets. Nevertheless, if you don’t mind, I’d like to suggest a couple of my own rules.

Constantine’s first rule of money: all money is not of equal value. A small sum of money in the right hands will always outperform a large sum of money in any hands. I would suggest for example that the $4,000 that Anita Roddick started the Body Shop with was worth far more than the $1 billion that L’Oréal paid for it.

Constantine’s second rule of money: money is worth more when valued highly and worked hard: $80,000 in the hands of an anti-fox hunting activist group will be more valued and worked more effectively than the $4 million spent annually on influencing British MPs by a pro-fox-hunting pressure group. I believe that when activist groups get hold of small sums of money and take on large vested interests they have the potential to create more positive social change than the last 13 years of Labour government in Britain.

While I’m being practical, let’s face it – I, as a perfumer, or come to that, you, as a writer – are fortunate when people value our products enough to give us any of their money. Come the revolution I doubt if either of us would be missed. What is a bit disconcerting is that so many more people value Rupert Murdoch’s products so highly. Perhaps we could persuade our readers to sit in the bath reading the New Internationalist and cancel their Sky subscriptions?

Paul

For a second there I thought you were quoting the Emperor Constantine!

I’m not questioning the fact that funds for campaigns can be really effective. I’m trying to have a debate with you about where we should draw the ethical line, in terms of how much wealth one individual is entitled to control… but I get the feeling you don’t want to engage with that point? What is the moral justification for owning millions and millions of pounds, in a world of poverty for the majority? I earn less than $24,000 a year and have no other income or capital, yet I struggle to justify my wealth and lifestyle.

You say you agree ethical wealth is a contradiction, but you don’t say why… how about spilling the beans?

Do you think there is such a thing as a disproportionate amount of wealth? Yes? No? Other?

Are you rejecting the suggestion of a fixed wage ratio? If so, why?

Sitting in the bath reading the New Internationalist sounds like a good idea. Let’s make it compulsory!

Mark

I’m not always that sure of my opinions, but let’s abandon debate and I’ll try to answer your questions in reverse order.

Am I rejecting a fixed wage ratio? No, I think they are good guiding principles. When young, I earned so little that I became homeless and was helped back on my feet by charity. On starting Lush, seven of us had no income for a couple of years, and from then until 2008, we drew an average salary with a ratio of less than 1 to 10. In the last three years Lush has made a good profit and the founders and senior staff have drawn dividends.

Do you think there is such a thing as a disproportionate amount of wealth?’ Maybe. The recent financial tsunami was shocking, and the fact that the gamblers involved were exposed yet remain the wealthiest in the world was enlightening. That it still continues (the top 25 hedge fund managers made on average $1 billion each in 2009) is wrong. If I were Emperor Constantine I would phase out stock exchanges, commodity trading, most forms of insurance, and speculating by venture capitalists, governments, pension funds and wealthy trade unions; and I’d reward saving and ethical bank lending with higher interest rates.

What moral justification can there be for owning millions of pounds?’ I worry that capping wealth and inheritance through taxation damages the fabric of a capitalist society. I’ve not read of or experienced other forms of wealth distribution but I would love to be involved in finding one that was successful.

As for ‘spilling the beans’…

Through my life I’ve been involved with selling products that provide ‘values for money’ and ‘money for values’. I like this idea. Customers like it too. Companies like ours are popular targets for venture capitalists and large public companies.

Why do the founders of such ‘ethical’ companies sell? Sometimes the money is too tempting. Mostly they have got into difficulty and taken finance from corporate investors who want a strong profit focus. Sadly, there are very few left in private hands; but a little ‘ethical wealth’ counters temptation and can keep the wolves from the door.

Paul Fitzgerald is a former careworker, now freelance writer and artist. A lifelong activist and member/director of several co-operatively owned small businesses, he was a founding member of ‘Enough’, the anti-consumerism campaign. Mark Constantine is founder and Managing Director of Lush Ltd – a cruelty-free cosmetics company which is now present in 43 countries and has an annual turnover of $340 million. He is also interested in birds, poetry, music and people.

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