RESPONSIBILlTY IN THE MARKET
How we value something is reflected in how we reward each other for it. It is wise to ensure that work is rewarded according to the quality of the work, the difficulty of the task, how much time and effort is expended, how dangerous it is, and the value that that work adds to a product or company and society in general.
In rewarding adequately, we demonstrate the true value of hard work, and we encourage quality people to do the kinds of work that would most benefit our country, our society, our companies and our people. However, because we have lost our values and use "the market" as an excuse, most employers reward people according to how desperate their employees are for work and money…the more desperate our workers are, the less we reward them, regardless of the quality of their work or value added.
In our market driven system, the salary of a worker is not determined by the quality of his work or the value that his labour adds to a product or company, but rather by the supply of labour. The more jobless people there are who can do that work, and the more desperate they are for work and money, the more bargaining power an employer has compared to the employee. Irresponsible employers have taken advantage of this bargaining power to drive down the wages of employees so that their own reward can be increased.
Large wage gaps cannot just be explained through the law of supply and demand. A large factor influencing wage gaps is the simple fact that executives often decide their own salaries and also the salaries of their workers. This explains the disparity between the salary of a teacher, nurse or policeman, and the salary of a member of parliament: There is a shortage of teachers etc, but always a surplus of politicians. Politicians may argue that their job is more important than a teacher’s, but I doubt anybody else would agree with them. Teachers add huge value to society, and there is no doubt as to who makes more sacrifices and works harder, though admittedly there are some hard working and dedicated politicians. The private sector is similar. When bosses don’t decide their own salaries, it is common knowledge that most remuneration boards are made up of like-minded executives who sit on each other's boards and scratch each-other’s backs.
We should also remember that market price is not just affected by the supply of a commodity (in this case labour). It is also affected by the demand for money. A poor and desperate person will sell a valuable product for less than a rich person would, because he/she needs the money more urgently than the rich person who can shop around for a better price or wait for a better offer. Employers take advantage of this bargaining power and consequently the wage gap is growing continuously.
Part of the reason why inequality is so persistent is that many people still imagine there is some sort of magical divide between the rich and the poor, between capitalists and labour. Fundamentalist capitalist and socialist ideologies entrench this imagined divide. This is a form of Apartheid. These divisions are imaginary. There is no divide. We are one people.
At the moment we are not acting responsibly. The total pay of the CEO compared to that of entry-level workers averages around 150 times for JSE listed companies, while the gap in larger companies is around 300 times. In a well-publicized example in 2011 one executive accepted 10 000 times more than his lowest paid employees earned. These unsustainable income gaps are leading us to a crises point, and our crises can only be averted through responsible leadership. Our business leaders have an opportunity to use their vast potential to shape a society they are proud of, where people value and trust each other, and interact with each other in a respectful manner.
Our people (including executives) are more important than “the market”. We are the market. We have the power to shape a better world. If we cede our responsibility in how we value each other to "market forces", then inequalities will continue to grow, leading to more mistrust, disrespect, social unrest, more crime, less investor confidence, more strikes etc.
Ever increasing inequality will inevitably lead to revolution.
Evolution would be far more beneficial, and in order to evolve peacefully to prosperity and unity, we have to take back our power, act responsibly and tackle inequality, by choosing to truly value each other.
FREEDOM THROUGH RESPONSIBILITY
It is only through disciplined practice that an artist, musician or sportsman can attain freedom of expression…what we might call mastery. Behaviour is much the same. Without responsibility, freedom is impossible. If we all behaved in a responsible manner, external laws and controls on us would not be necessary.
We hear so many calls for freedom these days. Some parties call for “economic freedom” for all people, and they are right to do so. Others call for a free market without government control. The Responsible Market Foundation calls for responsibility. We call for responsibility, because only responsible actions will afford us the environment in which real freedom is attainable.
It is no co-incidence that we have become a nation plagued by poverty, unemployment, inequality, crime, violence etc. Apartheid and centuries of colonialism and racism left us with a legacy of inequality that we have failed to address. It is becoming increasingly clear that freedom without responsibility is not possible: Our poor are trapped in a cycle of poverty and squalor, and the rest of us live in gated communities, locked behind burglar bars, too afraid to walk the streets at night. Poverty and ever increasing inequality have reached the point where populist revolution seems increasingly inevitable.
Fortunately, its not too late to change things for the better and to heal and build our great nation. Our beautiful people are so truly powerful, there is no limit to what we will achieve once we get our values straight.