The answer of course is that investment banking salaries had freed themselves from the petty economic tyranny of “supply and demand” and were not being driven down by the over-supply of potential recruits.
As Jonathan Schlefer noted recently, “Markets do not determine income inequality. It is fundamentally a social decision.”
Now we have an argument going on between economists about automation and jobs. Keynes’ biographer, Robert Skidelsky, presents it here. It is not really an economic argument.
Keynes had got there first anyway:
[T]here is no country and no people, I think, who can look forward to the age of leisure and of abundance without a dread … To judge from the behaviour and the achievements of the wealthy classes to-day in any quarter of the world, the outlook is very depressing! For these are, so to speak, our advance guard-those who are spying out the promised land for the rest of us and pitching their camp there.
Keynes meant, of course, that wealthy people have to keep themselves occupied. They are the apex predators of pointlessness. For every Henry Cavendish, lavishing an inherited fortune on scientific research and the pursuit of knowledge, there were many more of his wealthy contemporaries spending their time and money breeding horses for the track. This is his “advance guard”.
Extreme wealth in the eighteenth century was a function of family, land and inheritance. The social processes that allowed such accumulations were complex, but the foundations of the Cavendish fortune were so secure that a Cavendish remains a billionaire and Britain’s wealthiest landowner.
The less occupying staying wealthy is, the more leisure they have. But problems arise when the social and legal underpinning of this wealth is called into question, as — for example — in the United States where the south’s agricultural economy was based on slavery.
The success of the market in combining complexity and custom to distribute rewards by a seemingly “invisible hand” also distributes penalties to those unable to take advantage of either. The mitigation for those penalties has been the welfare system.
But the reality of modern labour is that it is a “meaning providing” social institution, and that opportunities to act meaningfully within a corporation/institution are what most jobs provide. The problem of unemployment becomes not that one cannot survive (hard tough it may be), but that one is deprived of meaningful participation in society.
The problem of jobs becomes: How do we distribute meaning? And that is not just a social but a psychological and philosophical challenge for which we seem, as yet, ill-prepared.