Once again, it’s remarkable to see how little is understood about the workings of capitalism by those who operate at the very top of it (Bank of England boss criticised for asking workers not to demand pay rise, 4 February). “The rich cannot buy great quantities of bread,” the economist JK Galbraith observed after the Wall Street crash of 1929 and America’s struggle to revive its economy. He meant that the goods and services that keep the high street (and its suppliers and manufacturers) going come from the everyday spending of the masses, not from the activities of the very few mega-rich speculators and rentiers who always end up causing volatility and boom and bust.
While no one would want a return to the union militancy of the 1970s, it was pointed out at the time by some economists that at least the big pay rises to workers put money in their pockets to spend, which stopped the economy tilting into recession.
The real problems today come from high rents, a dysfunctional housing market and private sector greed. The average household is mired in personal or mortgage debt – a problem that wouldn’t have been so evident in the 1970s, but is certainly a problem today, as the Bank of England worries about the effects of raised interest rates.
David Redshaw
Gravesend, Kent
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