How to Save the Underclass

Citation

Oehlers, A.L. (1998), "How to Save the Underclass", International Journal of Social Economics, Vol. 25 No. 9, pp. 1446-1448. https://doi.org/10.1108/ijse.1998.25.9.1446.2

Robin Marris has enjoyed a long and distinguished academic career and is currently Emeritus Professor of Economics at Birkbeck College, the University of London. A supporter of the British Labour Party, Marris situates himself to the left on the political spectrum ‐ “a liberal in the American sense” (p.1). Believing there is “a serious problem of an underclass in the modern affluent society” (p. 1) ‐ particularly in Britain and the USA ‐ the book sets out to alert readers of the dimensions and nature of this problem as well as to offer a number of proposals to address it.

According to Marris, the problem of the underclass is essentially threefold. There is, first, the existence of an underclass itself, encompassing the 10 to 20 per cent of the population having “a long‐term probability of needing state support to avoid poverty and/or starvation” (p. 12). The second aspect concerns the next 10 to 15 per cent of the population, who live under the constant threat of falling into the underclass. Third and finally, there is the problem of rising income inequality within economic groups.

Marris argues that this underclass syndrome largely stems from what he terms the “paradox of meritocracy”. Owing to the extension of equal opportunities, a new élitism based on merit and ability has been created, with incomes consequently skewed towards those possessing the “brains”. As he points out, however, the severity of such inequality may vary. In a “severe meritocracy”, incomes are highly skewed. In a “moderate meritocracy”, on the other hand, only moderate inequality exists. For Marris, the key factor determining the type of meritocracy in existence is the macroeconomic environment and, by extension, the buoyancy of the labour market. Generally, the stronger long‐run economic growth is and the more buoyant the labour market, the more moderate the form of meritocracy. In such a context, even those lacking the requisite levels of skill or knowledge would be likely to find employment. By contrast, with weaker economic growth and a sluggish labour market, a more severe form of meritocracy would result. As fewer employment opportunities emerged and with these falling increasingly to those with “brains”, the distribution of income would worsen both between and within economic groups.

Marris contends that it is precisely this latter set of circumstances that has prevailed in the UK and the USA since the 1970s. Four other factors are recognised as having aggravated the situation, contributing to the emergence of a “severe meritocracy”: the technology revolution, by further privileging the intelligent and enhancing their earning capacities; increasing trade with the South, by lowering the demand for, and wages of, unskilled labour in the North; the broad structural shift to services, which exercised a depressive effect on overall wages and growth; and finally, the rising participation rates of women, which displaced some males from their jobs and depressed both male and female wages at the lower end of the skill spectrum. While judged significant, all these, however, are held to be subsidiary to the main cause. For Marris, the fundamental factor behind the underclass problem remains the slower rate of economic growth since the 1970s.

But what caused this slow‐down in economic growth in the first place? And why did it persist into the 1990s? As Marris explains, the origins of the slow‐down are to be found in the external oil shocks of the 1970s ‐ developments that were, to a large extent, beyond the control of governments. The persistence of the slow‐down, however, may largely be blamed on the subsequent policies that were pursued. Obsessed with the maintenance of “stability” ‐ by which is meant, invariably, price stability ‐ an assortment of demand and supply‐side policies were practised that effectively retarded economic growth. As Marris points out, this policy stance subsequently spawned other developments that reinforced the prejudice against growth. Taking their cue from the official obsession with price stability, for instance, financial markets soon developed “perverse” or “irrational expectations”: any good news in the real economy came to be seen as bad, setting off counteracting influences on these markets which strangled growth. Further, in a context marked by intense take‐over activity ‐ facilitated in large part by financial deregulation ‐ corporations were more concerned with raising dividends and protecting their short‐term position than investment and long‐term growth. This, according to Marris, had serious macro implications and was yet another factor behind the growth slow‐down during the 1980s and 1990s.

To close the book, Marris offers a number of policy proposals which, in his opinion, are capable of reversing the current situation. In keeping with his belief that it is the official obsession with inflation that is largely behind the economic stagnation now endured, he places at the top of this list a re‐ordering of government priorities. “Governments should indicate that their first priority is the achievement of a substantial increase in the sustainable rate of growth” (p. 207). A firm commitment must be given to this objective; there must be the political will to pursue it relentlessly. Below this over‐arching commitment, more specific policies are proposed, both of a demand‐ and supply‐side nature. Also suggested are specific measures to counter the previously‐identified negative tendencies exacerbating the growth slow‐down.

How to Save the Underclass is a fairly easy read, containing a number of important insights and quite a persuasive argument. It is, however, rough in parts, reflecting the author’s concession that it was a “quick short book” (p. 4) to deal with a topical matter. Some readers may wish to take issue with Marris’s central point. After all, at the end of the day, are a commitment from government and political will all that are required to turn the situation around? Or may the underclass be a manifestation of a much deeper flaw within capitalism — something that, even with political will, cannot be overcome? Will a massive dose of reform, as Marris proposes, be sufficient to save the underclass? Despite these reservations, Marris’s effort must count as a significant contribution to the current debate. At the very least, he provides a useful antidote to the right wing diatribe that dominates so much public discussion of this issue. In opposition to the ideologues of the right who preach a general abdication of government responsibility for the social and economic problems of society, Marris successfully focuses attention once again on the pivotal role, and indeed, duty of the state in alleviating these.