Every now and then, somebody lets the fat cat out of the bag. In January, it was the turn of Chris O’Shea, the chief executive of Centrica (the owners of British Gas), to say the unsayable about executive pay. His £4.5m pay package was “impossible to justify”, he said, “so there’s no point in trying to do that”. In 2016, there was a “Please, sir, I want some less” moment, when the then CEO of the Co-Op Group, Richard Pennycook, sought a 60% cut in his pay package as, he argued, his job had got simpler after a restructuring.

But such episodes are unusual, and are often drowned out by the collective tutting and teeth-sucking of the top executive class. These admissions cause embarrassment and are not the story the business elite want to tell.

Right now, in fact, pleas for even bigger and better pay packages are being heard in the City. Julia Hoggett, the CEO of the London Stock Exchange, has said that CEOs are getting paid at levels that are “significantly below global benchmarks”. She fears an exodus of businesses and executives who feel greater rewards will be found elsewhere, especially in the US, where top CEOs’ pay is on average about three times the level to be found at FTSE 100 companies. The High Pay Centre reports that, in 2022, the UK’s top CEOs were paid an average of £4.4m, while the equivalent US figure was then £13.1m ($16.7m).

There is nervousness in the Square Mile about the “delisting” of UK-based businesses, although whether this is primarily about the pay packets on offer or has more to do with the sluggish post-Brexit business environment is an open question.

Certainly, Hoggett’s boss, David Schwimmer, overall head of the London Stock Exchange Group, is worried. “If London has an ambition to be a globally leading financial centre and to attract world-class companies, that means it has to attract world-class talent,” he said recently on the subject of executive pay. (His personal anxieties may be eased should LSEG shareholders approve a proposed 76% pay rise for him, from £6.25m to £11m, in the coming weeks.)

These are the conventional, self-serving arguments we have regularly heard from the highest-paid people. We need top talent, the bosses say – people like me. If you don’t pay us enough we will leave to work abroad or for private equity firms, where we will be paid more. This generous form of validation, offered to CEOs by themselves, does not always take into account the performance of the businesses they supposedly lead. Talent is not universal nor evenly distributed. But “benchmarks” can be useful to anyone looking to jack up their pay.

Isn’t all this jockeying for position, the gaming of supply and (perceived) demand, just the free market and its participants at work, doing their thing? A Nobel laureate economist has just given this simplistic notion a massive kick in an article written for that subversive anti-capitalist outfit, the International Monetary Fund.

In his recent piece Rethinking my economics, Angus Deaton, emeritus professor at Princeton, criticised his profession for underestimating how important power relationships are to economic outcomes. “Without an analysis of power, it is hard to understand inequality or much else in modern capitalism,” he wrote.

A focus on efficiency at the expense of a discussion of equity means that “when efficiency comes with upward redistribution – frequently though not inevitably – our recommendations become little more than a licence for plunder”. In the end, Prof Deaton added, “social justice became subservient to markets”.

We might also ask: is the US really the model we should be emulating? As Alison Taylor from New York University’s Stern School of Business writes in a new book, Higher Ground – how business can do the right thing in a turbulent world: “CEO pay packages keep growing more extreme, even in companies that trumpet corporate social responsibility.” And, she adds, while US philanthropic gifts are impressive, “philanthropy is no long-term solution for intractable societal problems such as rising inequality or tax avoidance”.

Lastly, what do the workers make of all this? Pre-Covid, in fact as long ago as 2015, a survey of 1,000 employees for the HR trade body the CIPD found that about 60% believed CEO pay levels in the UK demotivate employees, while 71% agreed that CEO pay levels in the UK are generally too high. More than half (55%) said the high level of CEO pay in the UK is bad for companies’ reputations. I don’t suppose these numbers would look any better in the middle of today’s cost of living crisis.

So there we have it. In “global Britain”, we have low pay for the masses, flat productivity, widespread economic inactivity, disenchantment and low morale. And the CEOs’ solution? Pay us more! That will fix it.

• Stefan Stern is co-author of Myths of Management and the former director of the High Pay Centre