Why We Can't Afford The Rich. Andrew Sayer (Policy Press, £15.99)

In Why We Can't Afford the Rich, Andrew Sayer shows how financial markets came to overshadow the traditional industrial economy, exacerbating the depth of the economic crisis and increasing the share of the rich in national wealth in the process.

Sayer defines the rich as "income extractors" rather than earners, as they get most of their revenue from their control of assets such as land, money, buildings and equipment which enable them to draw off value that others produce.

That is the case with rent. As Tom Paine said, man did not make the earth and rent is not a reward for the creation of something useful.

Only if the landlord improves the land or builds on it is any of his income earned.

Similarly, with interest - it is widely assumed that borrowing from banks or use of credit cards means borrowing existing money that other people have deposited in them.

In fact, the money that banks lend has been created by them. A touch on the computer puts a credit in a customer's account and the financial elite add to their massive unearned interest receipts.

The profit of capitalists is partly earned in so far as they organise and plan the work but otherwise it's unearned because it depends on their ownership of an existing asset, without a productive contribution.

Stocks and shares are seldom rewards for investment, as nearly all share deals are in existing shares - a purchaser buys an entitlement to a future stream of income from a company without making any real investment in it.

Until the end of the post-war boom, bank credit was regulated to keep interest rates down and building societies only lent out existing savings deposited with them.

Growth and stability were also maintained by restrictions on international movements of capital and by fixing of interest rates by governments. In the 1970s, rates of profits in the big companies began to fall, especially with the rise of east Asian producers. Increases in real wages slowed down and this slowed consumer demand.

The capitalist countries, faced by big trade deficits, ended restrictions on capital movements and credit creation, thus making it easier for financial institutions to pursue the best returns all over the world via speculative trading in stocks, bonds and currencies. Deregulation of their lending allowed banks to reduce their capital base and increase risk.

Many firms striving to get good returns on productive investment turned to "investment" in finance, providing returns based on interest, rent and speculation. In 2004, General Motors made 80 per cent of its profits from its financial division.

As a result of these developments, as well as the growth of outsourcing, inequalities widened in almost every industrialised country. Top salaries climbed high, as did income on share and capital gains. Taxes on the rich fell and benefits for low-income people were reduced. There were 53 British billionaires in 2010. Now there are 104.

Banks speculated and delivered value to their shareholders by borrowing money cheaply in money markets in order to make bigger "investments." They were seriously in trouble when risky ventures failed but fortunately they could rely on what Sayer calls "socialism for bankers," or rescue by governments.

Sayer's penetrating analysis of asset-based unearned income is a powerful case for socialism, supporting as he does land nationalisation and the creation of banks with the remit to lend for productive investment in ethical and environmentally sustainable business.

Well worth a read.