Last Sunday in the New York Times, some 120 billionaires jointly advertised their opposition to George Bush's proposal to abolish the remnants of inheritance tax. It was a threat to democracy and economic vitality, they argued, because it would guarantee that the United States became an aristocracy of the wealthy. Opposition to Republican tax cuts is not coming from the Democrats; it was coming from those they were designed to benefit.
It is an extraordinary moment, but it has not come out of a clear blue sky. It was two years ago that 150 billionaires joined together and took the 'Tax Fairness Pledge', donating the proceeds of the 1997 capital gains tax cut to support groups that campaign for a fair tax system and 'real economic justice'. Their position is simple. The wealthy are doing too well in America. Since 1976, the share of wealth owned by the wealthiest 1 per cent of Americans has doubled courtesy of the explosion of stock options, near halving of the top rate of income tax and the cuts in inheritance and capital gains tax. As a result, the top 1 per cent of households own more than the bottom 95 per cent of Americans combined. Families headed by people under 55, reports their umbrella lobby group 'Responsible Wealth', have found their net worth falling over the last 10 years.
This is not just a protest against extravagance sitting side by side with outrageous poverty; half the world's 100-foot-plus yachts are owned by Americans and the trophy home is becoming a byword for irrational opulence while the percentage of Americans living in extreme poverty is rising.
Rather, this is concern over what this degree of wealth means for individual opportunity to which this profoundly democratic society is so attached. No one knows better than the rich how riches are self-reproducing, and how the children of the rich are advantaged in terms of education and access to privileged insider networks. As Warren Buffett, legendary investor, fourth richest American and supporter of Responsible Wealth puts it, dropping inheritance tax would be like 'choosing the 2020 Olympics team by picking the eldest sons of the gold medal winners in the 2000 Olympics'.
Conservative purists have reacted with scorn and charged that the responsible rich have no idea about what makes capitalism work. Amity Shlaes, writing in the Financial Times , for example, ascribes this evident aberration in an America never more comfortable with money and capitalism to what she describes as a new guilt culture. Regarding tax cuts as an essential component of the US's economic performance, she sees false guilt as potentially undermining the sinews of American dynamism.
But America, thankfully, is more complicated than the simple syllogism that the greater the inequality, the greater the commitment to capitalist dynamism. The American rich have always had a vital philanthropic tradition, inspired by a genuine love of the country and such values as the importance of everybody having the chance to be as rich as Croesus. Once American culture becomes ossified by the emergence of a self-perpetuating oligarchy, the country is weakened. Rich citizens have obligations to ensure that the nation does not turn into a capitalist aristocracy. This democratic vitality is as much the clue to American economic strength as its tolerance of inequality.
In any case, the American economic success story needs to be qualified. Per capita incomes and productivity over the 1990s have grown at the same pace as in Germany and France, where productivity per man hour remains higher. Job generation was more rapid in the US for part of the 1990s, but recently Europe has begun to outstrip the US in job generation. And while it is true that the later phases of the internet bubble were driven by sheer greed, these were the frothier and more useless elements; the foundations of the IT revolution were laid by entrepreneurs as excited about the democratic and enabling possibilities of IT as they were about their own fortunes. The quest for profit is a necessary but not sufficient condition for a successful capitalism.
The notion of social responsibility does not stop with billionaires. There is a growing movement in both the US and Europe for companies to display responsibility towards the societies in which they trade, now more necessary than ever as governments withdraw from the business of managing, directing and regulating the conduct of economic activity. The tripartite world of corporatism is now universally vilified as inefficient and anti-market, but from companies' point of view it had one redeeming feature - it meant that government was seen to be taking the lead in trying to manage the best social outcomes from capitalist decision-making. In an unregulated world, that defence is removed, and banks, oil companies, drug companies and privatised utilities like Railtrack and BT find themselves straight in the line of popular fire if the social consequences of their private, profit-seeking decisions are seen to be unacceptable.
If they want to avoid grievous damage to their brand and reputation, they need to take social and environmental concerns more seriously. In addition, there is a growing recognition that truly successful companies have a purpose and integrity that goes beyond their role as profit-maximising organisations - and that, paradoxically, companies that operate simply as profit engines end up destroying the loyalty, innovation and commitment on which their success depends.
So, in the face of a growing ethical investment movement (now worth $1.5 trillion in the US), aggressive consumer pressure groups and campaigning NGOs, some companies are beginning to take corporate social responsibility as seriously as Responsible Wealth takes the case for equitable taxation.
There is now a case for the Government to launch a public debate about what society considers the public component of a public limited company to mean. It should not just imply the right to win investment and credit from the financial community by the publication of annual public accounts; it should imply a cultural and legal recognition that companies have reciprocal obligations to give an account of their stewardship in the widest sense, including their social and environmental record. If companies cannot meet the challenge voluntarily, the Government should legislate within five years.This would be good for society and good for them, and as important as keeping the avenues of individual opportunity open through equitable taxation of wealth.
There is a message for New Labour in this. Its stunning opinion poll lead and the eclipse of William Hague's Tories is not because New Labour is proving the better Conservative Party. It is because New Labour is not a conservative party, and voters believe, perhaps with increasing scepticism, that it is more likely to move with the mood of the times than the Tories. These have been good years for the rich and for business, and bad for notions of the public realm, public service and public obligation. Voters don't want to go back to old days, but they do want the rebalancing for which Responsible Wealth argues. Let us hope that Labour is brave enough to offer it.
© Guardian Newspapers Limited 2001