The Unspoken Cost of Knowledge: How Academic Publishing Profits from Free Labor

When most people think of publishing, they imagine a writer being paid for their work, an editor polishing it, and a reader buying the final product. This transactional loop, however imperfect, makes a certain kind of economic sense.

Academic publishing, however, doesn’t follow this pattern. In fact, it inverts it.

In academic publishing, it is not the publishers that pay those who work to generate the content, it is the other way round. Then there are also the reviewers, experts in their particular fields, who are called upon to assess and review the content submitted by the authors before publication, a process that can take months with a lot of back and forth. They also work pro bono. Meanwhile, the publishers profit by charging either the readers through subscriptions or, more recently, the authors themselves through article processing charges (APCs). The result is a system where the people who create and validate knowledge are volunteering their time, while the organizations that distribute it turn a handsome profit.

This would be strange enough if it were a quirky side effect of bureaucracy. But it’s not. It’s the system. And it’s wildly profitable.

The Economics of an Asymmetry

Producing a peer-reviewed paper is not a trivial affair. Researchers spend months, sometimes years, gathering and analyzing data, refining arguments, and engaging with an ever-growing thicket of academic literature. When they’re finally ready to publish, they often face hefty charges just to make their work publicly available. Article processing charges commonly range from $1,600 to $4,000, with high-prestige journals charging much more. Nature, for instance, now charges over $12,000 for its Gold Open Access option.

Even when authors manage to publish without paying upfront, usually in subscription-based journals, universities and libraries still foot enormous bills to access that content. This is what makes the economic structure so peculiar: the costs are real, but they are rarely borne by the publishers. Independent studies estimate that the actual cost of processing and publishing a paper lies somewhere between $200 and $700. The rest? Pure profit.

And profit they do. Elsevier reported a 38% operating margin in 2023, a number that surpasses even tech giants like Apple or Alphabet. Springer Nature and Taylor & Francis reported margins in the 28% range and 35% range respectively. These are not the returns of a struggling industry. They are the hallmarks of a rentier model built on monopolizing access to knowledge.

To add insult to injury, authors often surrender copyright to their own work. That means they can’t freely share, reuse, or even publicly post their own findings, at least not in the final, published form, without explicit permission from the publisher. The content is no longer theirs. It belongs to the distributor.

Open Access: A Solution That Isn't

But what about Open Access journals? At first glance, Open Access seems like the fix we’ve all been waiting for: make all research freely available to everyone, no subscriptions, no gatekeeping. Knowledge for the many, not the few. And indeed, perhaps that was the intention, to remove paywalls and democratize access to scientific findings. But Open Access has not solved the problem. It has simply moved it.

Instead of charging readers or libraries to access research, publishers now charge authors to publish it. These are the aforementioned Article Processing Charges, often thousands of dollars per article, paid by researchers, their institutions, or more often, indirectly by the public through government-funded grants. So the cost hasn’t disappeared. It’s just been shifted upstream. The reader no longer pays, the writer does. And the writer’s wallet is frequently taxpayer-funded.

Meanwhile, the underlying business model remains intact. Publishers are still extracting massive profits, just from a different node in the chain. Worse, this system often introduces new barriers: now, if you want to publish in a prestigious journal, you don’t just need good ideas. You need funding. Researchers at underfunded institutions, in the Global South, or in fields with limited grant support, are once again priced out, not from reading the science, but from contributing to it.

The paywall hasn’t been demolished. It’s just been relocated.

The Oubliette

The academic publishing system persists because of an unspoken compromise between compliance and necessity. Academics know it’s exploitative, but early-career researchers are under immense pressure to publish in prestigious journals. For academics, especially early on in their careers, tenure, funding, credibility, it all hinges on where you publish, not just what you publish. 

So even when researchers are aware of the flaws, they cannot afford to not participate. It’s not apathy. It’s survival. Change, under these conditions, is not just difficult. It can be professionally dangerous.

On Academic Duty

Defenders of the system sometimes argue that writing and peer review are part of the  academic job, already paid for by salaries, grants, or public funding. Why not then consider peer review as a kind of civic duty? The problem is that this narrative overlooks the broader structure. First, academic salaries are modest, often significantly lower than those offered to individuals with comparable skills in industry. Most academics work on precarious contracts, with limited institutional support. Second, publicly funded research should be accessible to the public, not hidden behind paywalls that restrict its reach and impact. Third, tax money intended to support the advancement of science should not be diverted to enrich private publishing companies, but should instead be reinvested into further research and education. Fourth, the time and effort dedicated to peer reviewing and revising articles comes at the expense of teaching, mentoring, and conducting new research, core activities that universities and the public explicitly value. 

Peer review is essential labor. Without it, the entire edifice of scholarly communication collapses. And yet it is invisible in tenure files, promotion cases, and annual evaluations. It is uncredited, unremunerated, and often thankless.

There are broader implications, too. High APCs and subscription costs deepen the divide between wealthy institutions and the rest of the world. Researchers in lower-income countries, or even underfunded departments, simply can’t afford to participate in this system, either as authors or readers. The result is a kind of epistemic inequality: knowledge flows downhill, access is tiered, and entire regions are locked out of the global scientific conversation.

Reform and Solutions

Given these inequities, it is clear that reform is needed. One promising model is exemplified by platforms like the Open Journal of Astrophysics, which uses the arXiv preprint server as its submission system. Here, articles are submitted openly and peer reviewers are assigned to evaluate the work transparently. This system minimizes costs, maximizes accessibility, and keeps ownership with the researchers. This model could be expanded. Universities and consortia could collaborate to host decentralized, nonprofit journals. These would restore control to the scholarly community and reduce dependence on commercial platforms.

Alternatively, the publishing industry could introduce a model where both authors and reviewers are remunerated for their contributions. Reviewers could receive base compensation for their evaluations, with opportunities to earn higher rates for thorough, well-argued, and respectfully conducted reviews. Outstanding reviewers could be recognized through formal credentials and higher pay rates, encouraging a culture of constructive and diligent peer review. Authors could also be provided with modest stipends to offset the hidden costs of article preparation and revisions. Such a system would not only reward academic labor fairly but also improve the overall quality, rigor, and civility of scholarly communication.

Such reforms wouldn’t just create fairer conditions. They’d likely improve the quality, speed, and rigor of scholarly communication as a whole.

Reclaiming the Commons

Researchers themselves also have a role to play in driving change. Before achieving tenure, they can carefully balance the need to publish in high-impact journals with efforts to also submit work to reputable, low-cost open-access venues whenever possible. They can advocate for transparency in peer review and promote discussions about reform within their institutions. After achieving tenure, researchers are in a stronger position to challenge the status quo more openly: by prioritizing low-cost open-access journals, participating in or founding new publishing initiatives, mentoring young researchers about their publishing choices, and pressuring academic societies and funding agencies to support open science principles.

And for those outside academia: this affects you too. As taxpayers, your tax money funds most of this research. You have a right to access it. You have a right to ask why the products of public investment are being locked away for private profit. You can support open-access legislation, pressure politicians to pressure funding agencies and universities to rethink publishing priorities, and back projects that are trying to do things differently. Journalists, educators, and policymakers can help raise awareness of the inequities in academic publishing. Ultimately, by demanding that publicly funded research remain publicly accessible, we can all help shift the system toward one that serves science and society, rather than private profit.

Knowledge as a public good

Academic publishing has become a system where the creators of new knowledge must pay to give it away, while the public, who funded the creation of this new knowledge, must pay again to read it. The costs are high, the profits concentrated, and the labor largely invisible.

If we believe that knowledge is a public good and not a luxury commodity, then we need to work towards a system that reflects that belief. That means rewarding the work that sustains it, reducing barriers to entry, and making the outputs of scholarship freely available to all.

The current structure is outdated. The incentives are misaligned. But the alternatives are no longer hypothetical. They’re real, viable, and already in motion.

All that remains is the will to choose them.

References:
Cost of publication in Nature https://www.nature.com/nature/for-authors/publishing-options

How publishers profit from article charges: https://direct.mit.edu/qss/article-pdf/4/4/778/2339495/qss_a_00272.pdf

How bad is it and how did we get here? https://www.theguardian.com/science/2017/jun/27/profitable-business-scientific-publishing-bad-for-science

How academic publishers profit from the publish-or-perish culture

https://www.ft.com/content/575f72a8-4eb2-4538-87a8-7652d67d499e

Academic publishers reap huge profits as libraries go broke

https://www.cbc.ca/news/science/academic-publishers-reap-huge-profits-as-libraries-go-broke-1.3111535

The political economy of academic publishing: On the commodification of a public good

https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0253226

Elsevier parent company reports 10% rise in profit, to £3.2bn

https://www.researchprofessionalnews.com/rr-news-world-2025-2-elsevier-parent-company-reports-10-rise-in-profit-to-3-2bn

Taylor & Francis revenues up 4.3% in 'strong trading performance'

https://www.thebookseller.com/news/taylor--francis-revenues-up-43-in-strong-trading-performance

Thomas Paine - Agrarian Justice

"... Having now gone through all the necessary calculations, and stated the particulars of the plan, I shall conclude with some observations. It is not charity but a right, not bounty but justice, that I am pleading for. The present state of civilization is as odious as it is unjust. It is absolutely the opposite of what it should be, and it is necessary that a revolution should be made in it. The contrast of affluence and wretchedness continually meeting and offending the eye, is like dead and living bodies chained together. Though I care as little about riches as any man, I am a friend to riches because they are capable of good.

I care not how affluent some may be, provided that none be miserable in consequence of it. But it is impossible to enjoy affluence with the felicity it is capable of being enjoyed, while so much misery is mingled in the scene. The sight of the misery, and the unpleasant sensations it suggests, which, though they may be suffocated cannot be extinguished, are a greater drawback upon the felicity of affluence than the proposed ten per cent upon property is worth. He that would not give the one to get rid of the other has no charity, even for himself.

There are, in every country, some magnificent charities established by individuals. It is, however, but little that any individual can do, when the whole extent of the misery to be relieved is considered. He may satisfy his conscience, but not his heart. He may give all that he has, and that all will relieve but little. It is only by organizing civilization upon such principles as to act like a system of pulleys, that the whole weight of misery can be removed.

...

In all great cases it is necessary to have a principle more universally active than charity; and, with respect to justice, it ought not to be left to the choice of detached individuals whether they will do justice or not. Considering, then, the plan on the ground of justice, it ought to be the act of the whole growing spontaneously out of the principles of the revolution, and the reputation of it ought to be national and not individual.

...

Separate an individual from society, and give him an island or a continent to possess, and he cannot acquire personal property. He cannot be rich. So inseparably are the means connected with the end, in all cases, that where the former do not exist the latter cannot be obtained. All accumulation, therefore, of personal property, beyond what a man's own hands produce, is derived to him by living in society; and he owes on every principle of justice, of gratitude, and of civilization, a part of that accumulation back again to society from whence the whole came.

...

When wealth and splendor, instead of fascinating the multitude, excite emotions of disgust; when, instead of drawing forth admiration, it is beheld as an insult on wretchedness; when the ostentatious appearance it makes serves to call the right of it in question, the case of property becomes critical, and it is only in a system of justice that the possessor can contemplate security.
To remove the danger, it is necessary to remove the antipathies, and this can only be done by making property productive of a national blessing, extending to every individual. When the riches of one man above another shall increase the national fund in the same proportion; when it shall be seen that the prosperity of that fund depends on the prosperity of individuals; when the more riches a man acquires, the better it shall for the general mass; it is then that antipathies will cease, and property be placed on the permanent basis of national interest and protection."
- Thomas Paine, 1795

Curb the banks? The government has propped them up at every opportunity

Source: the Guardian. Monday 24 January 2011 21.00 GMT
Author: George Monbiot

Here's the story of how Cameron and Osborne secretly tried and failed to kill tougher European rules on bankers' bonuses.

It's bonus season, the time of year when bankers show us what they really believe. As soon as they get their money, they spend much of it on land and houses. They know that these are safer investments than the assets in which they trade. If they trash the economy again, they at least will survive.

This year the frenzy will be almost as bad as ever. But it could have been worse. Here is the story, revealed by a leaked document, of how our government covertly tried – and failed – to kill tougher European rules on bankers' bonuses, and how the chancellor of the exchequer appears to have misled parliament.

Before I explain what the government did, let me remind you of a few of the statements the Conservatives made about bonuses while in opposition. In February 2009, David Cameron announced: "Where the taxpayer owns a large stake in a bank, we are saying that no employee should be paid a bonus of over £2,000." Stephen Hester, the chief executive of RBS – 84% owned by the taxpayer – is now said to be lining up a bonus of around £2.5m.

In October 2009, George Osborne announced that he was calling on the Treasury to stop retail banks "paying out profits in significant cash bonuses. Full stop." Bob Diamond, the chief executive of Barclays, is due to make around £8m this year, half of which is likely to be cash.

In April 2010, a Tory policy paper observed: "News that bank bonuses this year are expected to total £7bn shows that Gordon Brown's claim to have ended the era of the big bonus was ridiculous." Bank bonuses in 2011 are expected to total £7bn.

A fortnight ago, a Downing Street spokesman admitted that the government would, after all, make no attempt to limit the size of bonuses. This much we knew. But what the leaked document shows is that even as the government claimed to be seeking strong international rules to curb the bonus frenzy, it was secretly lobbying to prevent them from being passed. The document is, or should be, big news, but so far it has been covered in just one place: Tribune magazine, where the freelance reporter Ben Fox broke the story.

As Cameron pointed out before he took office, the UK's bonus culture "encouraged short-term risk-taking instead of rewarding the long-term interests of shareholders and the public." This risk-taking helped cause the financial crash. The EU wanted to prevent it from happening again, by reducing the incentive to chase short-term gains. It hoped to update the Capital Requirements Directive, to ensure that bankers could take only a small part of their bonus as an immediate cash payment. The rest of the bonus would be a mixture of cash and shares, held over for up to five years. If, during that time, the bank did worse than expected, some of the promised money would be clawed back.

This would force bankers to think about the future as well as the present. The European draft proposed that no more than 30% of smaller bonuses and no more than 20% of larger ones could be paid upfront in cash. The British government had other ideas.

The leaked document, which was passed to a socialist-group MEP, lays out the UK Treasury's negotiating position. It reveals that "throughout the negotiation and implementation of the Directive, we have supported an interpretation that limits upfront cash to 40% of a total bonus". The European parliament's proposal – for a 20% limit – would, the UK claimed, "have a significant impact on the European financial services sector's international competitiveness." The Treasury, the document shows, also contested the plan to impose a minimum period for deferring the rest of the bonus payment. "Some may argue," the leaked document conceded, "that we are supporting a position that is less onerous on bank pay than other European legislators."

Under the heading "Line to take", the document proposed that the government should claim that it has "led the way in implementing G20 principles and doesn't believe that the EU should go further than what was agreed by the G20". It argued that "the only consistent option" is to drop the "minimum retention conditions". I'm publishing the leaked document in full on my website.

In December the UK proposals were defeated, and the tougher rules on bankers' bonuses were adopted by the European parliament. But here's the kicker. On 11 January 2011, the chancellor, George Osborne, made the following statement to the House of Commons. "… on 1 January this year we introduced the most stringent code of practice of any financial centre in the world. For the first time, there will be a strict limit on the amount of bonus payable in upfront cash. Also for the first time, there will be a requirement that 50% of bonuses be paid in shares or other non-cash instruments, which bank employees will not be allowed to sell on for an appropriate period."

In other words, Osborne is claiming credit for the very policies his government tried to squash. He is also wrong to claim that the UK's is the most stringent code of practice. It is in fact the minimum possible implementation of the EU directive (for example, under the UK interpretation, bonuses aren't classified as "large" until they reach £500,000). The rules are mandatory, and they came into force in all member states on 1 January. It seems to me that Osborne misled parliament.

As for the claim in the leaked document that the tougher rules would damage the sector's competitiveness, such restraints will do the opposite, as Cameron and Osborne both acknowledged while in opposition. They defend the banks against their bosses' greed.

The Treasury made the following statement when I asked if it had tried to water down the directive. "This accusation is wrong. The updated code is tougher than last year's … for the biggest risk-taking employees, the amount they can take upfront in cash has been halved from 40% to 20%." Yes, but what it failed to add is that this happened despite its best efforts. The deception continues.

The prime minister and the chancellor have been playing a double game. They claimed they wanted to tame the banks. In reality, they were protecting them. They never meant to address the economic polarisation of this country, or to check the incentives which caused the last crash. Their intention was always to pamper the rich and to make the poor pay for their follies. As the leaked document shows, the Conservatives are ready to risk the whole economy to help the filthy rich get richer.

Nobelist J.Stiglitz discusses U.S. Stimulus & Greece's Debt Crisis

The risk of Greece sinking

The Guardian - 14 Feb 2010. Article by Will Hutton

British schadenfreude has reached new heights of delicious self-indulgence. There is feverish market speculation that Greece will default on its debt, leave the euro and create a eurozone crisis as other members are pushed by the markets into following. It just proves that the euro is and was a disaster, the thinking goes. Thank God Britain did not join, runs the chorus from right to left, proving once again how wise the sceptics were and how foolish were those (like Will Hutton) who urged entry. Gordon Brown was careful as he answered questions before the European Summit last week to say Greece was an issue only for members of the euro. Britain would stay on the sidelines – gloriously uninvolved and independent from any possible expensive bail out. He was a financial Neville Chamberlain. I half expected him to come back in a twin-engine de Havilland proudly waving a paper – no bailouts and no euro membership in our time.

However, Greece and Germany are not far-away countries of which we know little. Our interdependence is a growing economic and political reality. Britain owns a fifth of Greek bonds; if Greece defaults, the write-offs will impact on our banking system as severely as any other in Europe. We also have no interest in Greece triggering a wave of exits from the euro and the 1930s-style competitive devaluations that will follow. Those dreaming of the free-market utopia of floating exchange rates should be careful for what they wish. By now you might hope there might be just a grain of suspicion about the manias and panics of free financial markets. Hope in vain.

It is worth engaging in a thought experiment. Any monetary regime in Europe has to deal with the reality of living alongside the world's most successful and, until China pipped it in 2009, largest exporter – ­Germany. Either there is the hard deutschmark, a world reserve currency second only to the dollar, against which the rest of Europe consistently devalues, or the euro. Up against the deutschmark, Greece would certainly be devaluing now – but so would Ireland, Portugal, Spain, Italy, Belgium, Austria, Holland and probably France. When the financial crisis struck most of them would have been in a similar, if less acute position to Iceland. There would have been a flight from their money markets to Frankfurt and New York. Who thinks Greece, Belgium, Ireland and Austria would not have had an unstoppable bank run? Or could have survived it? There would have been no co-ordination within a world reserve currency zone to bail out stricken banking systems. There would have been no enjoying 1% euro interest rates. No capacity to increase government borrowing to weather the crisis. Europe would have had a bank-run induced slump – and the contagion would have hit Britain hard. It would, simply, have been a variant of 1931.

Or there is what we have. The euro has been a brilliant shock absorber. Icelandic politicians were as eurosceptic as our know-nothing political class – until disaster struck. Faced with the Hobson's choice of permanent economic stagnation, or adjustment within the euro zone and some light at the end of the tunnel, they have plumped for the latter. It is one of the reasons Greece will fight so hard to stay inside the euro; life is even more intolerable outside. If Greece leaves, its new independent currency will collapse; its interest rates will soar; its public debts will become unfinanceable; it really will default on its debt as it has so frequently in the past. It will slide back into being a failed state – with a military coup one all too possible response to the crisis.

It faces no choice but to reform. Greece has been so plundered by its super-rich elite of bankers and ship owners, so fully bought into the conservative doctrine that taxation is a form of coercion akin to slavery, that in key respects it is not a functioning state. The shadow, non tax-paying part of its economy is 30% of the total. Most middle-class professionals – lawyers, accountants and surgeons – insist on being paid in cash to avoid tax. Uncollected tax runs at 13.6% of national output per year – more than the deficit. The civil service is over-manned and corrupt. Everyone mercilessly tries to profit at someone else's expense. Of course Greece falsified its finances for qualification for entry to the euro zone. In this culture you tell the truth only to family. Revealingly, Mr Papandreou is the third member of his family to become prime minister.

There is no national consensus over what constitutes a just distribution of reward and obligation. As a result, its institutions don't function – as the European Commission team assembled at the behest of EU heads of states, backed by officials from the IMF, will soon discover. They will forensically examine how tax is not collected, how pensions are used as patronage and how statistics are rigged – and find a mess. Yet they and the Greek government will have to be careful. There is a mood in Greece ready to reform; witness the proposals to lift the pension age to 63. But if the elite is allowed to go free while the rest of society suffers, there will be revolt from below. Offend norms of fairness and societies risk disintegration and violence – something British politicians might ponder as they compete with visions of public sector wage freezes while ­allowing private sector salaries at the top to grow explosively.

This adjustment is an imperative – but so are two more. Germany's reluctance to offer an unconditional bailout to Greece is more than understandable, and the European deal – some support but only after reform has been shown to be implemented – is within its terms fair enough. Greece's problem is as much political as economic. But if Greece cannot devalue, and if there are social limits to how much it can lower wages, it needs some leeway somewhere . It needs more buoyant markets for Greek goods in the rest of the EU, and in Germany in particular. Chancellor Merkel wants it every which way. She wants no bailouts, a strong euro and Germany to carry on being an export machine. All three are not possible. ­Germany must boost its demand at home and loosen its purse strings if Greece– and the other weak states – are ever going to get out of trouble.

And there is a last reform. The financial markets invented toxic credit default swaps (CDS) – allegedly insurance against bond default which the markets could buy and sell – in the deregulatory mania of the last decade. But England banned trading insurance policies in which nobody took responsibility for paying insurance as the worst form of financial depravity in the 18th century. Now the practice is back as "innovation", except we know after Lehmans that the contracts are as worthless as they were under George I. However, hedge funds love them because they are such a juicy tool with which to speculate. It has been the CDS market that has prompted such a rapid confidence collapse in Greece. As they currently work, they should be banned.

The struggle to reform Greece and find a system of economic governance to make the euro work is all of Europe's battle, notwithstanding Gordon Brown at his evasive worst. If it is lost, we all go down. Western societies were served an awesome warning of the risks contemporary civilisation is running by allowing the rich to make the rules and ignore their obligations. If fairness is put at the heart of the reform programme – both within Greece and between Germany and the rest of Europe – there is a sporting chance of success. If not, the next decade could be very unpleasant indeed.

London Mayor Says 9,000 Bankers May Quit City Over Bonus Tax

Jan. 11 (Bloomberg) -- London Mayor Boris Johnson said that as many as 9,000 bankers may leave the U.K. capital’s financial district as a result of a 50 percent tax on bonuses announced last month.

Amen and good riddance.
Admittedly it would be much better if there was general consensus for the formation of an international regulatory agency and a thorough crackdown on tax-havens but since there is little chance of that happening anytime in the forseeable future (which is a practical way of addressing the problem), I'll settle for the bankers exodus while extending my heartfelt apologies to my friends that work in the City. Yes, let them leave and try their luck elsewhere. Meanwhile the world will softly slumber until the next crisis looms ominously in the horizon.

Millions of people worldwide lost their jobs and had their livelihoods compromised owing to the extravagances, short-sightedness, irresponsible behaviour (and, yes, incompetence) of a large part of Wall Street and the City. Governments worldwide rushed to prop the decaying structure -using public money- by buying off toxic debt and keeping the patient on life-support.

One would expect that the opportunity would be seized by the world governments to bring some order in the house but it seems pretty certain now that this unprecedented chance has been squandered.

Anyone who wandered the streets of the City of London in 2007 and 2008, the (g)olden days of yonder, will know of the references herein. You say you want to use my tax money to keep the bonus culture (and the associated decadent structures that go with it) thriving? Disgraceful.

Socialism has failed. Now capitalism is bankrupt. So what comes next?

by Eric Hobsbaum
The Guardian - 10 Apr 2009
The 20th century is well behind us, but we have not yet learned to live in the 21st, or at least to think in a way that fits it. That should not be as difficult as it seems, because the basic idea that dominated economics and politics in the last century has patently disappeared down the plughole of history. This was the way of thinking about modern industrial economies, or for that matter any economies, in terms of two mutually exclusive opposites: capitalism or socialism.

We have lived through two practical attempts to realise these in their pure form: the centrally state-planned economies of the Soviet type and the totally unrestricted and uncontrolled free-market capitalist economy. The first broke down in the 1980s, and the European communist political systems with it. The second is breaking down before our eyes in the greatest crisis of global capitalism since the 1930s. In some ways it is a greater crisis than in the 1930s, because the globalisation of the economy was not then as far advanced as it is today, and the crisis did not affect the planned economy of the Soviet Union. We don't yet know how grave and lasting the consequences of the present world crisis will be, but they certainly mark the end of the sort of free-market capitalism that captured the world and its governments in the years since Margaret Thatcher and President Reagan.

Impotence therefore faces both those who believe in what amounts to a pure, stateless, market capitalism, a sort of international bourgeois anarchism, and those who believe in a planned socialism uncontaminated by private profit-seeking. Both are bankrupt. The future, like the present and the past, belongs to mixed economies in which public and private are braided together in one way or another. But how? That is the problem for everybody today, but especially for people on the left.

Nobody seriously thinks of returning to the socialist systems of the Soviet type - not only because of their political faults, but also because of the increasing sluggishness and inefficiency of their economies - though this should not lead us to underestimate their impressive social and educational achievements. On the other hand, until the global free market imploded last year, even the social-democratic or other moderate left parties in the rich countries of northern capitalism and Australasia had committed themselves more and more to the success of free-market capitalism. Indeed, between the fall of the USSR and now I can think of no such party or leader denouncing capitalism as unacceptable. None were more committed to it than New Labour. In their economic policies both Tony Blair and (until October 2008) Gordon Brown could be described without real exaggeration as Thatcher in trousers. The same is true of the Democratic party in the US.

The basic Labour idea since the 1950s was that socialism was unnecessary, because a capitalist system could be relied on to flourish and to generate more wealth than any other. All socialists had to do was to ensure its equitable distribution. But since the 1970s the accelerating surge of globalisation made it more and more difficult and fatally undermined the traditional basis of the Labour party's, and indeed any social-democratic party's, support and policies. Many in the 1980s agreed that if the ship of Labour was not to founder, which was a real possibility at the time, it would have to be refitted.

But it was not refitted. Under the impact of what it saw as the Thatcherite economic revival, New Labour since 1997 swallowed the ideology, or rather the theology, of global free-market fundamentalism whole. Britain deregulated its markets, sold its industries to the highest bidder, stopped making things to export (unlike Germany, France and Switzerland) and put its money on becoming the global centre of financial services and therefore a paradise for zillionaire money-launderers. That is why the impact of the world crisis on the pound and the British economy today is likely to be more catastrophic than on any other major western economy - and full recovery may well be harder.

You may say that's all over now. We're free to return to the mixed economy. The old toolbox of Labour is available again - everything up to nationalisation - so let's just go and use the tools once again, which Labour should never have put away. But that suggests we know what to do with them. We don't. For one thing, we don't know how to overcome the present crisis. None of the world's governments, central banks or international financial institutions know: they are all like a blind man trying to get out of a maze by tapping the walls with different kinds of sticks in the hope of finding the way out. For another, we underestimate how addicted governments and decision-makers still are to the free-market snorts that have made them feel so good for decades. Have we really got away from the assumption that private profit-making enterprise is always a better, because more efficient, way of doing things? That business organisation and accountancy should be the model even for public service, education and research? That the growing chasm between the super-rich and the rest doesn't matter that much, so long as everybody else (except the minority of the poor) is getting a bit better off? That what a country needs is under all circumstances maximum economic growth and commercial competitiveness? I don't think so.

But a progressive policy needs more than just a bigger break with the economic and moral assumptions of the past 30 years. It needs a return to the conviction that economic growth and the affluence it brings is a means and not an end. The end is what it does to the lives, life-chances and hopes of people. Look at London. Of course it matters to all of us that London's economy flourishes. But the test of the enormous wealth generated in patches of the capital is not that it contributed 20%-30% to Britain's GDP but how it affects the lives of the millions who live and work there. What kind of lives are available to them? Can they afford to live there? If they can't, it is not compensation that London is also a paradise for the ultra-rich. Can they get decently paid jobs or jobs at all? If they can't, don't brag about all those Michelin-starred restaurants and their self-dramatising chefs. Or schooling for children? Inadequate schools are not offset by the fact that London universities could field a football team of Nobel prize winners.

The test of a progressive policy is not private but public, not just rising income and consumption for individuals, but widening the opportunities and what Amartya Sen calls the "capabilities" of all through collective action. But that means, it must mean, public non-profit initiative, even if only in redistributing private accumulation. Public decisions aimed at collective social improvement from which all human lives should gain. That is the basis of progressive policy - not maximising economic growth and personal incomes. Nowhere will this be more important than in tackling the greatest problem facing us this century, the environmental crisis. Whatever ideological logo we choose for it, it will mean a major shift away from the free market and towards public action, a bigger shift than the British government has yet envisaged. And, given the acuteness of the economic crisis, probably a fairly rapid shift. Time is not on our side.

Despite the worst global recession in decades, executive pay keeps rising

source: The Guardian

Executives at Britain's top companies saw their basic salaries leap 10% last year, despite the onset of the worst global recession in decades, in which their companies lost almost a third of their value amid a record decline in the FTSE.

The Guardian's annual survey of boardroom pay reveals that the full- and part-time directors of the FTSE 100, the premier league of British business, shared between them more than £1bn.

Bonus payouts were lower, but the basic salary hikes were more than three times the 3.1% average pay rise for ordinary workers in the private sector. The big rise in directors' basic pay – more than double the rate of inflation last year – came as many of their companies were imposing pay freezes on staff and starting huge redundancy programmes to slash costs.

The Guardian data also shows that a coterie of elite bosses at the helm of multinational corporations are seeing their overall pay packets soar ever higher. The 10 most highly paid executives earned a combined £170m last year – up from £140m in 2007. Five years ago, the top 10 banked some £70m.

The Liberal Democrat Treasury spokesman, Vince Cable, said: "The Guardian's analysis shows the breathtaking cynicism involved in a lot of executive pay deals, which are unrelated to either personal or corporate performance and involve people who are very well off helping themselves to larger salaries when private sector wages in many companies are being cut."

The stealth increases in basic pay took much of the sting out of falls in bonuses tied to the performances of their companies. Overall pay for directors of FTSE companies, including bonuses, fell by an average of 5%.

The average chief executive of a blue-chip company now earns a basic salary of £791,000. However, adding bonus payments, share awards and the value of perks ranging from cars and drivers to school fees and dental work, the average pay package rises dramatically. Nearly a quarter of FTSE chief executives received total 2008 pay packages in excess of £5m, and 22 directors now have basic salaries of more than £1m.

The survey is likely to spark renewed calls for shareholders to take a tougher line to control boardroom pay. Earlier this year, City minister Lord Myners accused shareholders of behaving like "absentee landlords".

In the wake of the banking crisis, there has been a wave of shareholder revolts over directors' remuneration. But even if investors vote against over-generous boardroom payouts, companies are not obliged to take their views into account.

Some of the City's biggest and most influential shareholders are also part of the problem – their bosses are among those raking in multimillion-pound salaries. Michael McLintock, a director of Prudential and the boss of its investment arm, which holds big stakes in thousands of companies, was last year paid £6.6m – putting him among the 25 best-paid bosses in the UK.

Brendan Barber, general secretary of the TUC, said: "The recession has done nothing to stop the gap between top directors and the rest of their staff getting wider every year.

"It is even more offensive when the Institute of Directors has called for spending cuts that would hit pensioners, the poor and low-paid public sector staff. We've already had the 1980s-style recession, it looks depressingly like we are going back to 1980s greed-is-good politics, too."

The highest paid boss last year was Bart Becht, the chief executive of Reckitt Benckiser, whose brands include Harpic, Veet and Strepsils. He was rewarded with £36.8m in pay, bonuses, perks and share incentive schemes. Becht, 53, has been a regular feature in the upper echelons of the annual survey for several years, earning more than £80m during the last three years.

The highest paid woman was Cynthia Carroll, the head of the mining giant Anglo American. The vast multinational also owns a big stake in the De Beers diamond business. Carroll, a 52-year-old American, earned a basic salary of more than £1m last year, but benefits, bonus payments and share awards took her total payout to nearly £4m. She was also paid another £93,000 sitting on the board of BP.

The glass ceiling, however, appears to be almost entirely intact. Just one in 15 boardroom seats are occupied by women – and most of those are non-executive, part-time directors. Only 22 women hold full-time executive director positions, involved in the day-to-day running of the business.

The best-paid boardroom last year was that of Tullow Oil, a London-based oil exploration business, where 11 directors picked up a total of £59m. Most of their gains came from share options, as they cashed in on a share price that had soared along with the oil price. The directors made much more from their cheap share handouts than the rest of the 470-strong workforce were paid in the year.

Despite the credit crunch, the best-paid employees are still those working for City-based firms. The average pay at money broker ICAP, which employs 4,330 staff, was more than £200,000. Hedge fund group Man had the second best-paid staff. Its 1,776 employees were paid a total of £353m in 2008 – an average £198,000 each. Five years ago the Guardian survey showed that the average salary at Man was £100,000. The chief executives of those two companies also feature among the highest-paid FTSE 100 chiefs. Man boss Stanley Fink, who has now stepped down, received £15m last year, while ICAP's Michael Spencer received nearly £7m.

At the other end of the spectrum, the worst-paid staff are those working in the retail and leisure sectors and for mining companies.

UK Pay Scales: How earnings compare (2008 data)

1. £0 to £10,000:
Cleaners, hairdressers, some agricultural labourers, people on benefits, fast food restaurant staff, school cooks, fine artists, holiday representatives, swimming pool attendants, broadcasting/film runners.

2. £10,001 to £20,000:
Manual workers, sewer cleaners, call centre staff, mortuary assistants, farmers, electronic assembly line workers, nursery and care workers, imams, Army privates, bus drivers, checkout staff, landscape designers, fishermen, charity fundraisers, junior civil servants, local government administrators, soil scientists, florists, counsellors, air cabin crew, miners

3. £20,001 to £30,000:
Junior MI5 officers, rabbis, vicars, social workers, NHS nurses, naval cooks, electricians, carpenters, binmen, international aid workers, health service managers, media buyers, plant breeders, textile designers, museum administrators, lorry drivers, map makers, journalists.

4. £30,001 to £40,000:
Newly qualified RAF pilots, London Tube drivers, some television presenters, London police officers, pole dancers, sandwich shop managers, bishops, London cab drivers, vets, paramedics, architects, diplomats, timber merchants, trading standards officers, zookeepers, probation officers, opticians, literary agents, immigration officers.

5. £40,001 to £50,000:
Air traffic controllers, solicitors, RAF Flight Lieutenants, theatre managers, office managers, foresters, engineers, TV producers.

6. £50,001 to £75,000:
Marketing and senior managers, senior police officers, commercial airline pilots, Royal Navy captains, education administrators, top PAs, fashion designers, town planners, MPs, senior social workers, tax inspectors, medical sales representatives.

7. £75,001 to £100,000:
Senior managers, senior civil servants, Army brigadiers, secondary school heads, celebrity stylists, some plumbers, advertising executives, senior PRs, distribution managers, accountants.

8. £100,001 to £500,000:
GPs, High Court judges, Prime Minister, business whizzkids, Cabinet ministers, Chief of Defence Staff, Commissioner of the Metropolitan Police, chief executives, senior company secretaries, NHS chief executives, private psychotherapists, financial advisers, quarry managers.

9. £500,001 to £1,000,000:
Director General of the BBC, heads of larger companies, including the managing director of Arsenal, and the chief executive of Sainsbury's (Justin King).

10. Over £1,000,000:
Chief executives of the UK's biggest firms, celebrities, footballers, bestselling authors, football managers, senior solicitors, investment bankers.

(see a detailed breakdown of salaries)

And here are the Tax scales in the UK (again based on 2008 data):

Starting Rate 10% 0 - 2,230

Basic Rate 22% 2,231 - 34,600

Higher Rate 40% Over 34,600

Why Socialism? By Albert Einstein

Perhaps lesser known are his intellectual positions on political issues. This is an essay he published back in '49 supporting the development of a robust socialist system.

"We shall require a substantially new manner of thinking if mankind is to survive."

Why Socialism?
By Albert Einstein

From Monthly Review, New York, May, 1949.

Is it advisable for one who is not an expert on economic and social issues to express views on the subject of socialism? I believe for a number of reasons that it is.

Let us first consider the question from the point of view of scientific knowledge. It might appear that there are no essential methodological differences between astronomy and economics: scientists in both fields attempt to discover laws of general acceptability for a circumscribed group of phenomena in order to make the interconnection of these phenomena as clearly understandable as possible. But in reality such methodological differences do exist. The discovery of general laws in the field of economics is made difficult by the circumstance that observed economic phenomena are often affected by many factors which are very hard to evaluate separately. In addition, the experience which has accumulated since the beginning of the so-called civilized period of human history has—as is well known—been largely influenced and limited by causes which are by no means exclusively economic in nature. For example, most of the major states of history owed their existence to conquest. The conquering peoples established themselves, legally and economically, as the privileged class of the conquered country. They seized for themselves a monopoly of the land ownership and appointed a priesthood from among their own ranks. The priests, in control of education, made the class division of society into a permanent institution and created a system of values by which the people were thenceforth, to a large extent unconsciously, guided in their social behavior.

But historic tradition is, so to speak, of yesterday; nowhere have we really overcome what Thorstein Veblen called "the predatory phase" of human development. The observable economic facts belong to that phase and even such laws as we can derive from them are not applicable to other phases. Since the real purpose of socialism is precisely to overcome and advance beyond the predatory phase of human development, economic science in its present state can throw little light on the socialist society of the future.

Second, socialism is directed towards a social-ethical end. Science, however, cannot create ends and, even less, instill them in human beings; science, at most, can supply the means by which to attain certain ends. But the ends themselves are conceived by personalities with lofty ethical ideals and—if these ends are not stillborn, but vital and vigorous—are adopted and carried forward by those many human beings who, half unconsciously, determine the slow evolution of society.

For these reasons, we should be on our guard not to overestimate science and scientific methods when it is a question of human problems; and we should not assume that experts are the only ones who have a right to express themselves on questions affecting the organization of society.

Innumerable voices have been asserting for some time now that human society is passing through a crisis, that its stability has been gravely shattered. It is characteristic of such a situation that individuals feel indifferent or even hostile toward the group, small or large, to which they belong. In order to illustrate my meaning, let me record here a personal experience. I recently discussed with an intelligent and well-disposed man the threat of another war, which in my opinion would seriously endanger the existence of mankind, and I remarked that only a supra-national organization would offer protection from that danger. Thereupon my visitor, very calmly and coolly, said to me: "Why are you so deeply opposed to the disappearance of the human race?"

I am sure that as little as a century ago no one would have so lightly made a statement of this kind. It is the statement of a man who has striven in vain to attain an equilibrium within himself and has more or less lost hope of succeeding. It is the expression of a painful solitude and isolation from which so many people are suffering in these days. What is the cause? Is there a way out?

It is easy to raise such questions, but difficult to answer them with any degree of assurance. I must try, however, as best I can, although I am very conscious of the fact that our feelings and strivings are often contradictory and obscure and that they cannot be expressed in easy and simple formulas.

Man is, at one and the same time, a solitary being and a social being. As a solitary being, he attempts to protect his own existence and that of those who are closest to him, to satisfy his personal desires, and to develop his innate abilities. As a social being, he seeks to gain the recognition and affection of his fellow human beings, to share in their pleasures, to comfort them in their sorrows, and to improve their conditions of life. Only the existence of these varied, frequently conflicting, strivings accounts for the special character of a man, and their specific combination determines the extent to which an individual can achieve an inner equilibrium and can contribute to the well-being of society. It is quite possible that the relative strength of these two drives is, in the main, fixed by inheritance. But the personality that finally emerges is largely formed by the environment in which a man happens to find himself during his development, by the structure of the society in which he grows up, by the tradition of that society, and by its appraisal of particular types of behavior. The abstract concept "society" means to the individual human being the sum total of his direct and indirect relations to his contemporaries and to all the people of earlier generations. The individual is able to think, feel, strive, and work by himself; but he depends so much upon society—in his physical, intellectual, and emotional existence—that it is impossible to think of him, or to understand him, outside the framework of society. It is "society" which provides man with food, clothing, a home, the tools of work, language, the forms of thought, and most of the content of thought; his life is made possible through the labor and the accomplishments of the many millions past and present who are all hidden behind the small word “society.”

It is evident, therefore, that the dependence of the individual upon society is a fact of nature which cannot be abolished—just as in the case of ants and bees. However, while the whole life process of ants and bees is fixed down to the smallest detail by rigid, hereditary instincts, the social pattern and interrelationships of human beings are very variable and susceptible to change. Memory, the capacity to make new combinations, the gift of oral communication have made possible developments among human being which are not dictated by biological necessities. Such developments manifest themselves in traditions, institutions, and organizations; in literature; in scientific and engineering accomplishments; in works of art. This explains how it happens that, in a certain sense, man can influence his life through his own conduct, and that in this process conscious thinking and wanting can play a part.

Man acquires at birth, through heredity, a biological constitution which we must consider fixed and unalterable, including the natural urges which are characteristic of the human species. In addition, during his lifetime, he acquires a cultural constitution which he adopts from society through communication and through many other types of influences. It is this cultural constitution which, with the passage of time, is subject to change and which determines to a very large extent the relationship between the individual and society. Modern anthropology has taught us, through comparative investigation of so-called primitive cultures, that the social behavior of human beings may differ greatly, depending upon prevailing cultural patterns and the types of organization which predominate in society. It is on this that those who are striving to improve the lot of man may ground their hopes: human beings are not condemned, because of their biological constitution, to annihilate each other or to be at the mercy of a cruel, self-inflicted fate.

If we ask ourselves how the structure of society and the cultural attitude of man should be changed in order to make human life as satisfying as possible, we should constantly be conscious of the fact that there are certain conditions which we are unable to modify. As mentioned before, the biological nature of man is, for all practical purposes, not subject to change. Furthermore, technological and demographic developments of the last few centuries have created conditions which are here to stay. In relatively densely settled populations with the goods which are indispensable to their continued existence, an extreme division of labor and a highly-centralized productive apparatus are absolutely necessary. The time—which, looking back, seems so idyllic—is gone forever when individuals or relatively small groups could be completely self-sufficient. It is only a slight exaggeration to say that mankind constitutes even now a planetary community of production and consumption.

I have now reached the point where I may indicate briefly what to me constitutes the essence of the crisis of our time. It concerns the relationship of the individual to society. The individual has become more conscious than ever of his dependence upon society. But he does not experience this dependence as a positive asset, as an organic tie, as a protective force, but rather as a threat to his natural rights, or even to his economic existence. Moreover, his position in society is such that the egotistical drives of his make-up are constantly being accentuated, while his social drives, which are by nature weaker, progressively deteriorate. All human beings, whatever their position in society, are suffering from this process of deterioration. Unknowingly prisoners of their own egotism, they feel insecure, lonely, and deprived of the naive, simple, and unsophisticated enjoyment of life. Man can find meaning in life, short and perilous as it is, only through devoting himself to society.

The economic anarchy of capitalist society as it exists today is, in my opinion, the real source of the evil. We see before us a huge community of producers the members of which are unceasingly striving to deprive each other of the fruits of their collective labor—not by force, but on the whole in faithful compliance with legally established rules. In this respect, it is important to realize that the means of production—that is to say, the entire productive capacity that is needed for producing consumer goods as well as additional capital goods—may legally be, and for the most part are, the private property of individuals.

For the sake of simplicity, in the discussion that follows I shall call “workers” all those who do not share in the ownership of the means of production—although this does not quite correspond to the customary use of the term. The owner of the means of production is in a position to purchase the labor power of the worker. By using the means of production, the worker produces new goods which become the property of the capitalist. The essential point about this process is the relation between what the worker produces and what he is paid, both measured in terms of real value. Insofar as the labor contract is “free,” what the worker receives is determined not by the real value of the goods he produces, but by his minimum needs and by the capitalists' requirements for labor power in relation to the number of workers competing for jobs. It is important to understand that even in theory the payment of the worker is not determined by the value of his product.

Private capital tends to become concentrated in few hands, partly because of competition among the capitalists, and partly because technological development and the increasing division of labor encourage the formation of larger units of production at the expense of smaller ones. The result of these developments is an oligarchy of private capital the enormous power of which cannot be effectively checked even by a democratically organized political society. This is true since the members of legislative bodies are selected by political parties, largely financed or otherwise influenced by private capitalists who, for all practical purposes, separate the electorate from the legislature. The consequence is that the representatives of the people do not in fact sufficiently protect the interests of the underprivileged sections of the population. Moreover, under existing conditions, private capitalists inevitably control, directly or indirectly, the main sources of information (press, radio, education). It is thus extremely difficult, and indeed in most cases quite impossible, for the individual citizen to come to objective conclusions and to make intelligent use of his political rights.

The situation prevailing in an economy based on the private ownership of capital is thus characterized by two main principles: first, means of production (capital) are privately owned and the owners dispose of them as they see fit; second, the labor contract is free. Of course, there is no such thing as a pure capitalist society in this sense. In particular, it should be noted that the workers, through long and bitter political struggles, have succeeded in securing a somewhat improved form of the “free labor contract” for certain categories of workers. But taken as a whole, the present day economy does not differ much from “pure” capitalism.

Production is carried on for profit, not for use. There is no provision that all those able and willing to work will always be in a position to find employment; an “army of unemployed” almost always exists. The worker is constantly in fear of losing his job. Since unemployed and poorly paid workers do not provide a profitable market, the production of consumers' goods is restricted, and great hardship is the consequence. Technological progress frequently results in more unemployment rather than in an easing of the burden of work for all. The profit motive, in conjunction with competition among capitalists, is responsible for an instability in the accumulation and utilization of capital which leads to increasingly severe depressions. Unlimited competition leads to a huge waste of labor, and to that crippling of the social consciousness of individuals which I mentioned before.

This crippling of individuals I consider the worst evil of capitalism. Our whole educational system suffers from this evil. An exaggerated competitive attitude is inculcated into the student, who is trained to worship acquisitive success as a preparation for his future career.

I am convinced there is only one way to eliminate these grave evils, namely through the establishment of a socialist economy, accompanied by an educational system which would be oriented toward social goals. In such an economy, the means of production are owned by society itself and are utilized in a planned fashion. A planned economy, which adjusts production to the needs of the community, would distribute the work to be done among all those able to work and would guarantee a livelihood to every man, woman, and child. The education of the individual, in addition to promoting his own innate abilities, would attempt to develop in him a sense of responsibility for his fellow men in place of the glorification of power and success in our present society.

Nevertheless, it is necessary to remember that a planned economy is not yet socialism. A planned economy as such may be accompanied by the complete enslavement of the individual. The achievement of socialism requires the solution of some extremely difficult socio-political problems: how is it possible, in view of the far-reaching centralization of political and economic power, to prevent bureaucracy from becoming all-powerful and overweening? How can the rights of the individual be protected and therewith a democratic counterweight to the power of bureaucracy be assured?

Clarity about the aims and problems of socialism is of greatest significance in our age of transition. Since, under present circumstances, free and unhindered discussion of these problems has come under a powerful taboo, I consider the foundation of this magazine to be an important public service.