The IPPR tells us that we're all off to hell in a handbasket therefore capitalism must be fundamentally reformed. We too think that are useful things which can be done to improve matters but we do tend to base our ideas in a knowledge of the present. Unlike some:
The rise of the machine economy risks social disruption by widening the gap between rich and poor in Britain, as automation threatens jobs generating £290bn in wages.
Their underlying analysis is here. And they claim that the profit share, or capital share if you prefer, is getting larger. Given the unequal distribution of capital ownership this increases inequality. QED.
Except, if you look at figures 1 and 2 you will see that they are using two entirely different measures of the labour share. One is all going to labour, total compensation, the second is wages and salaries. Such confusion does not bode well. For if we insist, as we do, upon paid holidays, automatic pensions and the rest then the compensation share will stay static while the wages share falls. Such non-wage costs are of course incident upon the wage packet.
It gets worse we're afraid. They measure the peak of the labour share as being the mid-70s. Entirely true. But this is not a useful point to be making, for at that time the profit share wasn't even large enough to cover depreciation. The country was eating its own capital as the capital sector as a whole was making losses. We simply shouldn't use that time as a comparator - except of what not to do.
And worse again. They actually give us no evidence that the profit or capital share is increasing. They simply tell us that the labour share is decreasing and the assumption made is that the capital share is the mirror image. It isn't. Obviously, if we look only at the wage share, it isn't, we must add back in the other costs of employment (yes, including increased NI contributions, taxes upon employment) to gain the true labour share. But even that's not enough.
There are four sectors to the national income, capital, labour, mixed income, subsidies to production and taxes upon consumption. Mixed income has risen as there are more self employed about. This reduces the labour share while not changing the profit share one iota. Taxes and subsidies - well, think on VAT, a tax on consumption, this has risen substantially over the decades. So too has the amount of subsidy to production - think of all those feed in tariffs, this is where they appear in the national income.
We would not swear to this in detail, our research into this matter was done a few years back. But the general view is indeed that after the recovery from that unsustainable position of the 1970s, the capital or profit share is around its long term average for this country. The labour share has fallen, entirely true. But what has risen is self employment and taxes and subsidies on consumption and production.
The capital share just isn't the mirror of the labour share, the capital share hasn't been rising as the labour share declines, therefore the entirety of the analysis being presented is simply flat out wrong.
This ain't a great starting point for an attempt to plan the economy really. We having found that starting with reality is something of a boon.