Inequality is the topic of at times fierce political struggles and long-standing ideological oppositions. Lefties and progressives tend to frame it as a problem, liberals and conservatives don’t. The former demand equality, the latter caution against it. The former think it is bad, historically recent and unjust, the latter claim it is good, eternal, and just, a result of meritocracy. However, also progressives at times believe inequality to be a conservative topic and many of the stories we tell each other appear to be paradoxical, unclear, and against much evidence. So what is inequality, and if it is this, is it bad? We combine philosophical ideas, historical and social theories with data from social research to approach an at times surprising and more complex answer. By Daniel Plenge
In the 28th month of life someone asked “What is this, life?”. Although that someone lives in a tribe of atheists, the next day the little human wanted to know “Who is God?”. In this spirit of puzzlement, curiosity, honest concern and experimentation the What-the-Fcuk series asks classic and current questions at the intersection of the real world and public as well as academic thought.
“The pieces are all there to create an entirely different world history.” (David Graeber and David Wengrow)
Formulated in this way our question may sound either strange or stupid, again. Especially in our time of what has been called an “inequality shock”, which is said to have forced even the Financial Times to consider a “new social contract”.
To most people it is clear what inequality is, and you will also quickly formulate your evaluation of the phenomenon. Bernie Sanders, for example, stated “inequality is one of the great moral, economic and political crises we face”.
There are only two issues here: on second sight and with a little detachment, more is unclear (and unknown) than one may think, and if we know what we think, it is not so clear whether our grounds are solid, as even the FT may have proven. Therefore, before we get to the juicy numbers of social research, we’ll combine some history with philosophy, hoping to be taking not much for granted.
What’s your corner?
If you stand close to one corner of the political spectrum next to Bernie, you may have no doubt that inequality is bad, and your politics is basically about reducing or erasing inequality. In your own words, your cause is mainly the cause of social justice.
If you stand close to the other corner, you may have no doubt that inequality is good, and your politics is basically about reducing obstacles to increasing inequality. Yours is mainly the cause of freedom.
Even social utopias are connected to both those words and standpoints. Get rid of equality or inequality and we are all finally free.
Children in 6th grade argue quite similarly as we do, and they certainly are not less clever than we are. They inherit parts of the contents of our brains anyway. Some of them quickly argue that inequality is inescapable and ahistorical, though perhaps from some moral perspective undesirable. If they were allowed to vote, they would vote conservative. The future liberals mention the failure of the everybody-has-the-same project in what is taken to be actually existing communism, where there supposedly was no private property, and they justify inequality by someone’s individual achievement: “This is not how people are”, they say. Others will argue that inequality is arbitrary, so it has to be corrected, as they may strengthen with the help of their family’s history. Here we find future social democrats or, what is more in their principled spirit, full-blooded socialists.
Without further context of information most of us have no time to glimpse at, the question may be answered as a multiple-choice test, the educational analogue of representative democracy, or as a question in a quickly evaporating poll. In a sense, although some parts here are apparently contradictory, you can only doff your intellectual hat shortly and quickly march on to more interesting stuff. It all smells a bit like truisms.
The impression remains if we switch to some ideas that are often associated. For some or many, inequality comes with heterogeneity and diversity, distinction, rank, status, and merit, opportunity, achievement and finally freedom and “autonomy. To them, those who are against inequality are also against all of this.
Others will associate equality spontaneously with justice, security, opportunity, rights, redistribution and also freedom and autonomy, which all sound positive. It becomes more interesting the moment we also mention exploitation, enclosure or prohibition, heteronomy, domination and the state in the former case and the state, enforcement, uniformity or the like in the latter, which sound more negative. As we see, associations may quickly overlap.
However, it all becomes more puzzling if we shake some of our moral, historical, political, and economic preconceptions.
For instance, not only neoliberals love inequality, also libertarian communists do so. Here the thing is called “individuality.” Although inequality is a signature feature of progressives, others who could be put in that camp imply that it’s the opposite:
“’Inequality’ is a way of framing social problems appropriate to technocratic reformers, the kind of people who assume from the outset that any real vision of social transformation has long since been taken off the political table.”
While some of those who argue the most for more equality today frequently say that inequality has always been there as long as humans or human society existed, another such claim is that inequality is a recent historical invention. Among rather well-known scholars, Kate Pickett and Richard Wilkinson write that societies with high inequality have been the exception, whereas Branko Milanovic writes that inequality “appreared as soon as human society was born, because distinction of power and wealth accompany all human societies.” Thomas Piketty still had to remind his audience that ideologues in the tradition of Wilfredo Pareto still believe that the level of inequality has been the same across human socio-cultural history.
Some confusions, contradictions, paradoxes
Even more confusion and paradoxes start to appear when we add some cultural narratives shared across the spectrum. We somehow tend to know that early-modern and medieval European societies were based on nested hierarchies, founded on unearned privileges granted from above and inherited at birth from the next layer in the hierarchy or, very high up, God. Achievement was nothing, birth everything, social mobility next to inexistant. We, for sure, are different.
And the contemporaries certainly knew more than we do:
“In fact, preindustrial Europeans (…) were well aware that their economies and societies were highly unequal, but they usually viewed this situation as acceptable, ‘natural’, and inherent, given God’s plans.”
Paradoxically, inequality had been so normal that its perception was next to impossible, so that, in a sense, they were in fact not that well aware. The word was never used in a socio-economic context before the modern era (pre 1500 CE). Also ”’equality’ did not describe the relationship between human beings” at all. Shorter: both these words were not applied in the context that is of interest to us when we discuss inequality.
As a consequence, inequality was no problem at all, and, if anything, it probably was judged to be good, the expression of order and a state of justice. If you believe that the use of words determines the world (‘constructivism’), you may want to claim that inequality is a modern invention.
But, then, the stasis of feudalism was famously overthrown. Before, man had discovered that he was created equal in Enlightenment philosophy, monumentalized in famous texts, such as the American Declaration of Independence (1776) or the French Declaration of the Rights of Man and of the Citizen (1789). Though women and people of color, in effect anyone who was not white, male and Christian, may at first have been forgotten to be embraced by (supposedly) “Western” moral and political universalism and the “pursuit of happiness” among equals (as protesters in the BLM-movement insisted in 2020), this was a wonderful weapon in fighting established hierarchies.
If we are by nature equal, then inequalities by birth are unreasonable or unjustifiable, and certainly a bad thing. Any reasonable person had to be in favor of their abolishment. Equality was also a wonderful tool for justifying new differences and hierarchies afterwards, namely inequalities.
Now, achievement or success was all, birth nothing, we are told. If we are born equal, then real-world inequalities are the result of ability and effort, not some elusive individual nature, divine plan or inherited power. Happiness is subjective, as Kant and the economists tell us ever since, so that inequalities are to be expected if it is freely chased. And isn’t inequality needed to motivate action (work) and instigate competition (commerce) to enable personal growth and societal progress (or vice versa), as the same dudes tell us ever since?
In a state of equality, there just wouldn’t be ‘incentives’ for innovation and risks, the result would be stasis and lack of mobility. Evidence, we are told: look at pre-modern feudalism or actually existing socialism. There was not much inequality because societies were poor to begin with.
But within the stories we tell us explicitly or implicitly, doesn’t then equality justify inequality, and inequality is a good thing? And which parts of our stories are at least close to being true?
What the fcuk is inequality?
That equality justifies inequality sounds paradoxical, but is much of what modern academics in social science and the humanities deal with and is at the heart of our political systems. The ecological anthropologist Alf Hornborg writes:
“Among the most obvious shortcomings of the current world order is its inclination to generate abysmal inequalities and ecologically disastrous patterns of consumption and resource use, and yet our mainstream discourse tends to represent these conditions merely as the deplorable but unavoidable side effects of progress.”
The idea has been for a century or more that the individual, social and ecological damages of (democratic or undemocratic) capitalism, among them inequality within nations or the world-system, will be compensated for some time in the future in some form or other by what is called either “progress” or “development”. If the ‘bottom’ gains, while at the same time the ‘top’ gains (perhaps dramatically more), who could have anything against this, since this means both equally gain? If the Global South, for example, ‘grows’ through international and free trade, who could object?
What we have here is also an innocent consensus that we usually call “liberalism” in a broad sense. In “liberal democracies”, we hear implicitly from across the political spectrum and academic principalities, as long as everybody has the same rights, inequality is no issue, perhaps adding that ‘dignity’ needs to be secured by the welfare-state for a minority of 10 to 40% of the population. If the poor today have more than the poor yesterday, who could object?
Even in rich Germany, dependent on the measure, almost 16% of the population are counted as poor, and according to numbers from social epidemiologist Michael Marmot, without government transfers the rate would have been above 30% in 2000, even before the neoliberal reform of the Orwellian ‘welfare’-state. Marmot also states that neither “centre-left” nor “centre-right” have done much against inequality because no one has seen it as a problem at all.
For short, economic and social inequality can be legitimated or compensated for by formal political equality (one person, one vote; all persons have the same formal rights) and prosperity, often another word from the lexicon of Newspeak for trickle-down economics. As we will see below, the reality has been trickling up. In 2017, this was commented on with remarkable openness:
One true part of the story about pre-modern ‘poverty’ is that what we call “economic growth” famously appears as a rather new or recognizable social phenomenon in the 18th century. In a pre-‘growth’ society (and a model world), for some to have more means someone takes more from someone who then has less or exploits them permanently. The moment the economic pie ‘grows’ not only the question of political legitimacy arises but the question who deserves what. Not accidentally, this is mirrored in the historical development of theories of value which mirror intellectual fights over distribution, from land (Physiocrats) to labour (Classical Political Economy) to subjective evaluations (Neoclassical Economics).
However, in the end, inequality doesn’t matter within the consensus if it is justified by the idea of a meritocracy in which everyone’s input into ‘the economic process’ is connected to what everyone gets, that unequal ‘productivity’ somehow causes and justifies unequal gains. Of course, the slogan of the campaign is: Treat unequals equally!
The need to justify inequalities becomes pressing the moment they are interpreted as problematic but are also believed to be inescapable. In modern thinking at least, equality is at the same time necessary to justify inequality as it tends to delegitimize it. Possibly not by accident, the term “inequality” in its social meaning was invented as late as the Early Modern Era and became only common political jargon after the 17th century, when inequality is claimed to have been rising for centuries. Think of the motto of the French Revolution: “Liberty. Fraternity. Equality.” The revolution is said to have almost invented the issue of equality, but it paradoxically had not yet much use for the word “inequality”. The time of inequality had come as late as the 19th century, when the so-called ‘social question’ and pauperism emerged.
The more recent narrative about inequality as a deplorable but inescapable side-effect of progress may be supplanted even more by a well-known though often implicit philosophy of history, similar to the economists’ barter myth, another walk in the imagined park of the deeper past. Here, progress is not recent but almost eternal, starting with history itself.
The supposed origin of inevitable inequality
In a tradition established by Jean-Jacques Rousseau already in 1755, we can imagine a time when there was no inequality. Supposedly, our hunter-gatherer ancestors lived in a heaven of equality, without any political hierarchies, social ranks and achieved or inherited status, or ‘economic’ inequalities, which sociologists tend to group as social classes.
To begin with, they were not merely poor but had no ‘economies’ whatsoever in a modern sense. They lived in small bands, grabbed what was needed, and ensured that nobody grabbed more to gain power over others. This is supposed to have been the state of human communities for 200 thousand years or more, and it is what egalitarians may emphasize.
But then, supposedly, the fall from grace happened, some 11.500 years ago in Southeast Asia, 10.000 years ago in China and South America, 9.000 years ago in Mexico and Europe, 7000 years ago in New Guinea, and 5000 years ago in South Asia, Africa and North America.
Agriculture was invented. Humans settled. Settlement comes with private property and the exclusion of all the others from the means of production to treasure up yields as a source for future ‘investment’, influence, and inheritance.
“Farming and storage make inequality possible, perhaps even likely, because they tend to undermine sharing norms, establish property rights and the coercion of labour, amplify intercommunal violence, and lead to increases in social scale.”
With more produce or ‘output’ it becomes possible to build and sustain huge human conglomerates that had to be governed: cities and politics. How do you want to govern huge cities in an egalitarian fashion, which now have a territory, so they may be taken to be similar to a state? Thus, you get political hierarchies that enforce laws and collect taxes, structured by the relation of power. Private property leads to some having more: inequality.
For better or worse, this all amounts to the birth of civilization, which also comes with historical marvels such as poetry and theatre, philosophy, science, technology, and beer. Without the former, we supposedly would not have the latter. At least as a trend or tendency, from then on, we are told, inequality was there and increased.
This is a grand story, what inegalitarians may focus on. The ‘birth’ of civilization may be easily combined with the great acceleration of the Industrial Revolution. It is a tragedy for egalitarians. If inequality had an origin in our deep past, with all the ‘progress’ or ‘evolution’ that has happened ever since, how could the wheel of time ever be turned back?
Some historians add the pessimistic observations that grand reductions of inequality have often only been the result of great catastrophes such as plagues and wars. The egalitarian now seems to be trapped in a moral dilemma: if (s)he wants to reduce inequality, the price may be human suffering on a grand scale. If inequality is bad at all, we should better tolerate it, because reducing or abolishing it is even worse.
However, at the intersection of the social sciences and contemporary ideology this is all controversial, nothing close to a truism. David Graeber, an anthropologist, and David Wengrow, an archaeologist, diagnose in relation to popular literature productions of academic celebrities the institutionalization of “a new age of cynicism, where inequality is considered not only natural but also a primordial feature of human society”, and the establishment of a “sense of hopelessness” by “mainstream social science”. This is in part achieved by re-telling the story of an “age of innocence”, a time where there was no inequality. Another part is what we will do below: endless number crunching.
According to them, there never has been a time where humans have lived as Rousseau’s innocent “savages”. From a scientific viewpoint: there is no evidence for something like this. While archaeologist have any evidence at all about human sociality and cultural complexity from just about 45.000 years ago, the emergence of genetically and anatomically modern humans is dated to roughly 200.000 years ago, and typically human behaviour patterns of social communication appear since 100.000 years ago in the archaeological record.
There are (scattered) burials and buildings (‘monuments’) that suggest the existence of ‘complex’ social life and hierarchies from 25.000, 16.000, 11.000, and 9000 years ago, that is, often way before the supposed emergence of ‘inequality’, and among people living as hunter-gatherers. Some grave goods necessitated thousands of hours of effort (or ‘work’), and the building of monuments required ‘complex’ forms of social organisation and coordination. Such grave goods can (in principle and in some instances) be interpreted as signs of individual achievments. When they are found in graves of children, they may be taken to be a sign of inherited (unearned) status. That some have acquired the capacity to bequeth social status to their offspring can be an indicator of permanent power.
However, their twist is not that humans have always had a tendency to, or preference for, hierarchy and inequality, but that the available sources and anthropological theory suggest that humans have always been capable of collectively envisioning and choosing their social arrangements, which becomes manifest in seasonal switches of community structure, drastic changes in the way of social life, for instance switching from a rigorous role system with power relations in the winter to an anarchic way of egalitarian life in the summer.
Recent archaeological evidence also suggests that the move to agriculture, with its supposed emergence of multiple inequalities, was never a once final and irreversible change, something like an instant agricultural revolution, but took thousands of years, was often reversed, just shortly tried, and not destined to lead to irreversible ‘inequality’ at all.
Thus, according to Graeber and Wengrow, there is no start of human ‘history’ or ‘civilization’ in either inequality and ‘complexity’ as one pole and equality and ‘simplicity’ as another pole of the spectrum of possibilities. What there was is the possibility of human groups to consciously choose among the spectrum of alternatives.
“Rather than idling in some primoridal innocence, until the genie of inequality was somehow uncorked, our prehistoric ancestors seem to have successfully opened and shut the bottle on a regular basis, confining inequality to ritual constume dramas, constructing gods and kingdoms as they did their monuments, then cheerfully disassembling them once again.”
If we take this type of historical imagination as a starting point, the first question is the philosophical one about what exactly we are talking about when we invoke ‘inequality’ because there is at least no grand historical story that hinders us to think about whatever possibilities there are – and to collectively choose among them. Until now, as you will have noticed, we left this intentionally open and unclear.
Ontology: Does inequality exist at all?
In a short aside, Graeber and Wengrow say that the question about the origin of inequality is founded on the assumption that “there is a thing called ‘inequality’”, and the counter-intuitive implication is that this is doubtful. It certainly sounds strange or even appalling to activists who fight ‘inequality’.
But it is, indeed, doubtful.
At least in the way the issue is mostly presented.
When you hear of inequality you will most probably directly think of income and wealth inequality (aka ‘economic’ inequality), as if this is the only issue, the ‘nature’ of inequality, also set in stone forever. If you open the World Inequality Database, you find only data on income and wealth, not, say, working hours, time spent with one’s children, or inequality in relation to this or that right, e.g. to adopt children.
It is almost trivial from a philosophical perspective, though quickly forgotten. Inequality is not so much a thing but a relation between properties of two things. As a consequence, and in principle, there are as many inequalities as types of properties (or features, characteristics) of a system (natural, human, social, technological, or mixed). The inequality may lie in having a property at all or not having it. The philosophical jargon doesn’t need to distract us here.
A human and a bird are both alive, but only the latter has wings. The inequality may also lie in having more or less of a property, as in weight, height, health, happiness, or even private property. It can be anything, for instance the purchase of pencils in a time period or of kilometers driven in a car, or the education – or something near enough – accumulated over some time period, usually measured by years of schooling. Some have the privilege (or, if you wish, legally enforced duty) to accumulate formal education while still far above 160 million children work for survival.
Inequality may furthermore lie in relations with others. For instance, one person may be employed to one employer, others to many under multiple specifications (like zero-hours contracts), some not at all, and some may be slaves, still officially some 40 million fellow humans; one person may be a subordinate or a superior of others; some are creditors, others debtors, some landlords, others renters, and so on. In a social context of ‘institutionalised institutions’, being the part of that institution (system) is also a relation. Some are members in many, some in none.
Trivially, income is not so much something one has but what one receives from someone or somewhere else, and the rich typically have many sources of income while ‘normal’ people have hardly more than one. The other side of income is exclusion from access, and having access to resources is also a relation people differ in, either for natural or social reasons.
Not to forget, consumption may be an isolated act, but purchasing is a social relation, resource extraction a relation between humans and natural systems, what Marx called the “human metabolism with nature.” Taxation is a relation between the state – represented by, or embodied in, bureaucrats and the police – and its citizens, and it is not necessarily equal.
A recurrent scandal is the revelation that billionaires effectively pay less in taxes than their secretaries, although the ideological ‘liberal’ consensus says that the ‘successful’ in the end also contribute the fair share of their wealth to the commonwealth.
The impossibility of absolute equality
The trouble is that, if you follow this path of philosophical reflection further, you find out that talk about inequality may end up in talking about everything and in effect nothing. Put generically, all things are unequal. If there would be no inequality between two things, they would be identical, the very same thing.
Think about it this way. If grandpa weren’t unequal with grandma, he would be her. If the USA were not unequal with China, every single of their properties would be the same. They would not only share their territory or a juridical system but would be totally identical. If there was no inequality, there would never have been evolution and speciation. The universe would be a block of an undifferentiated, structureless it.
There are a few morals here. Every worthwhile discussion about inequality has to at least specify the exact relation, the ‘properties’ involved. Claims about the ahistoricity of inequality – there always was inequality – are fairly trivial. The same holds for equality. If we would not be equal or similar in some respect, we would not be humans.
Such claims are almost always made with ideological intent. Neoliberals/libertarians frequently state that every move to reach equality in one respect, namely wealth or income, would lead on a slippery slope to total equality, which is absurd. When someone tells us that he wants to achieve more equality of income, it is highly likely that she doesn’t tell us which inequalities shall remain sacrosanct, which may be of more interest to some.
So, if someone insists to talk about (in)equality in one respect, ask yourself why (s)he doesn’t talk about (in)equality in another respect.
Contrary to the claims of eternity or irreversibility, and also in some clash with Graeber and Wengrow, the economic anthropologist Jason Hickel recently tweeted that a study had found that inequality could find an end (even without economic growth), while the economist Richard Wolff believes a democratic economy “might finally end social inequality”. What this can only mean is that inequality shall be reduced or eliminated in some respects that are important to someone or some group, given some usually implicit and unclear background philosophy.
This is in part a systemist interpretation of what Greaber and Wengrow mean by questioning whether there is something called ‘inequality’. A second part is hidden in our further question whether some such inequality is good, bad or neutral. If, in a sense, there is no such thing as inequality without further specification, it also doesn’t make sense to evaluate it.
Granted. This, again, is a truism. But many tradeoffs between different inequalities are imaginable, debatable, and realisable. What is important is to some degree a cultural choice.
Although this is pure speculations, I wonder whether people would care about income and wealth inequality at all if they were secure and broadly free to pursue their ends without fearing anything. How many people would care about the stocks or golden socks someone owns? I guess many wouldn’t at all and that many currently don’t. However, perhaps or even probably a state of society in which something close would be realized for all would also be such a state in which gross inequalities would not exist because simply no one would have the power to accumulate them.
But this is far away from our world. Here is a fairly uncontroversial example of bad or deadly inequality. According to UNICEF, these days globally more than 1.42 billion people live in areas with high or extremely high water vulnerability. In Eastern and Southern Africa 58% of children have difficulties accessing sufficient water every day, in West and Central Africa 31%, in South Asia 25%, and the Middle East 23%. Other figures state that 2.3 billion people “continue to lack access to safely managed drinking water”, while 4.2 billion live without safely managed sanitation, 2 billion don’t have a decent toilet, and 3 billion lack basic handwashing facilities before and within a global pandemic.
In a different context, this has been called a “water poverty crisis”. The context here is the supposedly richest country in the world, where there are “more than two-fifths of residents in some cities living in neighbourhoods with unaffordable bills.”
Why is this beyond question relevant and furthermore bad? Because water is a valuable thing for all humans because it satisfies a basic need. The pandemic is also said to have revealed again what many knew before. Three billion people have no access to healthcare and 75% of all workers worldwide have no social security such as unemployment benefits or sick pay.
This June, it was claimed that 41 million people are teetering on the edge of starvation and that the World Food Programme needs $6 billion dollars “to provide 139 million people this year with life-saving food and nutritional assistance” – a ridiculous amount of money, in any respect. In Ethiopia, 5 million people are currently in need of food aid, and hundreds of thousands are starving.
What is social inequality?
This should have shown that not everything is as clear as we think when we think about inequality. Furthermore, our academic and media coverage of inequality is seldomly about individuals as such. It is about society at large: ‘social inequality.’
Though it is absurd to say every inequality is social, given that inequality is a relation, social inequality involves at minimum two persons. But social (or societal) inequality is also something slightly different. It is, in the ideal, a unifying measure of all inequalities of some property among all members of a social unit at a time, a comparison of all individuals within a society with each other. What is in the end compared here are societies as social wholes, not persons.
What is then presented are various indicators of this overall level of inequality of a society (e.g. the Gini index or shares of the top and bottom 20%). For not so long, also international or global inequality is an issue. Since the financial crisis of 2008 (and Piketty’s bestseller) we all stumble across such figures. If we read that social inequality increased or decreased, this is what is at stake. If you wanted to, you could read about it every day since early 2020. Normally, such data come up somewhen in the middle of a news broadcast to be forgotten after it.
As always in the sciences, the experts discuss lots of measurement issues. But what is also easily overlooked is that a Gini index could in principle have the same value in rather different socio-cultural ‘economic’ regimes, so it certainly provides a limited picture, though this is equally true of anything else. For instance, and in principle, a fascist capitalist country, a feudal monarchy and a neoliberal order could have the same Ginis, or a slaveowner society as the USA in the 19th century and the USA today.
Furthermore, no index of monetary income and wealth distribution measures the difference in emotional state and wellbeing between a renter under the threat of eviction and a landlord (institutional or individual) trying to cash in within a pandemic, or between the employee facing unemployment and the employer expecting a reduction in profits.
After this word of caution, we are ready for some numbers.
The (not so) juicy numbers
The Gini index gives you a value of 0 when total equality is reached (all individuals have the same of something) and 1 when one individual has everything. They range from 0.25 to 0.63 for income inequality. If the whole human world-system is taken into account, not individual countries, it is about 0.75. The world as a whole is more unequal than any of its national parts.
It was estimated that the world had a Gini value for income of 0.50 in 1820, 0.61 in 1910, 0.64 in 1950, and 0.66 in 1992. Note that the unit measured usually is a currency.
In the US, the Gini for income is 0.37, for wealth it is 0.85. In supposedly more egalitarian Norway, they are 0.25 for income but similar 0.80 for wealth. The German Gini for wealth inequality is 0.81, which is also a country often described as more egalitarian.
For the Roman Empire a Gini was estimated to lie somewhere above 0.4 for income. In Florence of the Late Middle Ages the Gini for wealth is said to have been in the area of 0.78 to 0.85, and 67% of income went to the richest 5% of the population. In the German city Augsburg, part of the Holy Roman Empire, it was 0,66 for wealth in 1498 and hit a record with 0,89 in 1604. In Amsterdam in 1742 it was 0.69. In the USA, the Gini for income distribution increased from 0.44 in 1774 to 0.51 in 1860.
According to Branko Milanovic, the Gini values for socialist countries had been in the rage of the upper 0.20s and lower 0.30s and “are some of the lowest values registered after the end of WWII when measurement of inequality became standard in most countries in the world.” After the collapse of the Soviet Union, inequality doubled in Russia. So much for historical impressions.
Probably an impression shared by non-specialist consumers of such figures is that the question inevitably turns up what this exactly tells us. And what it does not. At least one thing remains in recent times: the trend tends to be a rise in national inequalities.
That we are (mostly) informed about income or wealth often has an ideological taste because it is a selection. Basically, it can be used to cloth inequality in a morally neutral and apolitical language, at best suited for technocratic tinkering, as Graeber and Wengrow rightfully content above.
Tacitly, this framing also suggests that there is no problem of inequality of rights any longer, or political equality broadly conceived, nationally or internationally. But it is everywhere. In the United States within the recent heat wave, 12-year-old children were picking fruits in the fields. How is that possible?
“Due to racist labor laws dating back to the 1930s—agricultural workers in the United States have long been excluded from many of the rights and benefits that protect workers in the United States, such as minimum wage laws and overtime pay. Agricultural workers—with the exception of those in a few states—are also exempt from union rights and child labor laws. These exemptions have created a work environment that few U.S. citizens are willing to endure, and these jobs have long been filled by migrant workers.”
Again, we need a minimal amount of jargon here to see more clearly how philosophy can be helpful in our “Age of Deception” (Michael Hudson), how inequality talk can be ideologically shaded from the start.
Ontology again: Two types of relation
We can distinguish two types of relation, and we call them intrinsic relations (or bonding relations) and extrinsic relations (or non-bonding relations). My belly’s being bigger than yours is an extrinsic relation, as is my relation of living some x kilometers away from you, or that I’m older or younger than you. The idea is that it does change neither you nor me that we are in, or merely have, these relations. They don’t bond us together in any respect.
Causal relations and many a social relation is internal or bonding. They make a difference. If you are my boss and fire me, you do not only change the state of my brain but you also expel me from an institution. You can do it because you have power over me (within the system), which is a bond. The same holds in different ways for something like creditor-debtor relations or solidarity and friendship, or marriage. People in such relations behave differently than they would if they were not related in such a way.
What is at the center of inequality-talk, income, wealth and at times consumption, are all external (non-bonding) relations.
For short, in principle you can talk about inequality as if people would never meet each other and interact within highly unequal social relations of power and influence. You can compare the income and wealth of different nations without asking whether the wealth of one is due to the poverty of the other.
Thus, tacitly talk of power and politics, the total arrangement of the social fabric, is pushed to the margin of inequality-talk. This is also part of the ‘liberal’ consensus. Inequality is economic inequality in a narrow sense. If at all, you may increase a tax here or there or motivate people to join a union, but more, that is other inequalities, shall not be contested, such as gender, race, and class, because contesting them may lead to overall societal change, since such inequalities are founded on power asymmetries.
Systems are held together and reproduced by bonding (internal) relations, not external similarities.
This is why a counterfactual thought-experiment made recently in Time magazine is interesting but limited. The authors estimated what incomes different groups in the by now economically highly unequal USA would have had in 2018 if the overall distribution of 1975 would still prevail today, that is, if today’s bigger cake would be distributed in the way its smaller predecessor was at the end of the (supposed) Golden Age of American capitalism.
The authors are aware of this, but this kind of nostalgia hides that in this scenario either nothing else would change in 2018 or we would need to return to the overall state of (world) society in 1975, including its overall social relations. What in any case no such thought experiment tells us is what overall social arrangement people would choose or invent if the power relations (and inequalities of power) would be tackled that drive the mechanisms that reproduce and widen today’s inequalities in the first place.
The inequality crisis and Covid
What Covid-19 has drastically shown beyond the borders of the academic citadel and specialized journalism is that this discourse overall is a fraud and in favor of the ruling classes. “What turns a natural phenomenon into a disaster is the nature of society,” wrote Michael Marmot before the onset of this crisis. Covid-19 revealed more than anything in recent times the multidimensional and systemic character of social inequality and that ‘the nature of society’ systematically disadvantages some large groups.
Not only do some people receive more income while others also have no wealth whatsoever, they also get less respect, endure worse working conditions, are allowed less social security, epidemiological safety, opportunities for status changes, and overall control over their lives; as a consequence, they have less of a say in society, politics, and ‘the economy’, are less healthy, and die earlier. They may be essential in supply chains but are the last asked in command chains, that is, unequally free.
For a long time, it has been a popular myth that the bosses are stressed so much that they risk their health for the rest, what in turn justifies their incomes. Research over decades has shown the direct opposite. Employees down in the ranks are, on average, more stressed and as a result more sick, which results in comparatively higher numbers of deaths.
There is even a more striking pattern: Wherever your position is in a hierarchy, those above you, even if yours is the second rank below the top, are healthier and those below unhealthier. For short, those in managerial positions live longer, because a lack of freedom and an uncontrolled workload kills (statistically), independent from extreme poverty or deprivation. Compare the Amazon picker with Bezos.
Money also matters. Statistically, the richer you are the longer you live. High effort without reward is more stressful than high effort with high rewards.
Since the neoliberal turn, the working poor are back also in “the West”. Approximately 14 million people in the UK are poor. At the onset of the pandemic, it was quickly but just for a short while noticed that even in the supposedly rich ‘West’ huge shares of the population of equals cannot get over the month without their regular income. 21 million Germans cannot afford sudden expenses of €1000, which is another expression for structural insecurity. 40% of US-American adults cannot afford sudden expenses of $400. A third of UK citizens had less than €700 (£600). Also many of those employed suffer from chronic stress due to job insecurity, which makes sick.
These are inequalities of health and death. They exist within every country and within the world, although the latter is not that much hidden from Westerners‘ brains. Whereas the deceptive average life expectancy of the world in 2012 was 70 years, the spread was from 46 years in Sierra Leone to 84 in Japan. These are infuriating numbers for humanists. What you will probably not expect is that similar gaps are to be found in Western European cities.
In one part of Glasgow, Scotland, around the turn of the millennium, the life expectancy for men was 54. Just a few kilometers away in the same city life expectancy was 82. In the City of Baltimore, USA, life expectancy for a boy grown up in one neighborhood is 63, in another it is 83. For Washington it has been claimed that life expectancy rises (or declines) by 1,5 years for every mile you travel with the Metro. In London, it is said to drop by a year with every station you pass.
These are probably extreme cases. Still, in the USA, white men live on average 4.7 years longer than Black Americans, women 3.3. According to another number taken from Kate Pickett, the difference in life-expectancy in England and Wales between the richest and the poorest areas is 7,5 years. Others mention a difference of 9 years between the most fortunate and the disadvantaged.
Ask how much governments cared about the health of (parts of) the population before Covid and you will have a good indicator for how much they cared within the pandemic.
As the economist Richard Wolff wrote pointedly: “Pandemic capitalism distributes death in inverse proportion to wealth and income.” A report by Oxfam from January said the pandemic “has hurt people living in poverty far harder than the rich and has had particularly severe effects on women, Black people, Afro-descendants, Indigenous Peoples, and historically marginalised and oppressed communities around the world.” In the UK, workers in insecure jobs were twice as likely to die from Covid than others, and such insecure jobs are more likely to be the occupations of women, disabled, blacks and Asians. Frontline workers in hospitals are for the most part women. Their total share of hospital personnel is 77% in the USA. The patters are similar elsewhere.
Inequality in working and living conditions translates into health, and health to death, often with the intermediaries of ethnicity and gender. In the pandemic, it is not so much the ‘nature’ of society but the past of multidimensional inequality that determines its outcome. In relation to the USA and the UK it was claimed:
“The disturbing truth is that the excessive COVID-19 deaths in the U.K. and the U.S. occurred despite considerable relief spending, because of deep and long-standing flaws in British and American economic, health, and social policies. These structural flaws were evident, well before SARS-CoV-2 arrived, in stagnating longevity – and also in chronically widening gaps in mortality across social classes, ethnic groups, and geography. The health emergency is reinforcing these long-standing economic and health inequities, often driven by racial disparities in housing, income and wealth, employment, and social and political rights. In the U.S. COVID-19 deaths, hospitalizations and cases have disproportionately affected Black, Latino and Indigenous people, who carry a greater burden of chronic diseases from living in disinvested communities with poor food options and poisoned air quality and have less access to health care.”
The hidden or explicit strategy of herd immunity in both countries at the beginning has aptly been called “epidemiological neoliberalism”, which in effect means the (so-called) ‘bottom’ shall quietly die for the ‘top’, and can then be blamed individually for not self-isolating within a bullshit job. Of course, those with little income and bad working conditions were also the first to lose their jobs.
Interconnected and multidimensional inequality is revealed in many areas, small and large.
For instance, living in some neighborhood rather than another may be different because in some areas in the USA there are on average 15 % less trees than in others, and the temperature is on average 1.5°C hotter. Some have 30% less trees and are 4°C hotter, on average. Those neighborhoods with less trees and higher temperatures are those of low-income citizens. The authors of an article call it “tree cover and temperature inequality”, but of relevance is the resulting inequality in wellbeing. Within the recent heat waves this is even of special importance and a case for central urban planning and climate justice.
David Graeber summarized what the pandemic has shown us by saying that those in essential jobs who do the “care work that keeps us alive are overtaxed, underpaid, and daily humiliated.” While the so-called middle class was bored but safe at home and clicked “order”, the pickers at Amazon hurried through the warehouses trying to avoid penalty points and infections, while delivery drivers had to piss into bottles in order to avoid breaks.
Never has been more clearly debunked what a gross myth it is that “our democracies” are based on an “achievment principle”, as Piketty still contended. It is not so much a democratic principle but an socio-economic philosophical myth. First of all, there is no measure of such “achievement” or “merit” or “productivity” of individuals in a scientific sense. Second, what is usually presented are just rationalizations of the positions of the self-declared elites (income and certificates).
The inequality of states also contributed and contributes to the outcomes. Rich countries could spend twice as much as middle-income countries on pandemic relief and furlough schemes to protect (some of their) citizens from the virus and/or unemployment. Middle-income countries paid again twice as much as low-income countries.
On social media you could watch Ecuadorians dying on the streets and burning corpses just there in April 2020. The same happened elsewhere. When it happened in India in 2021, it was called “murderous social inequality”. The bodies were burned by people from the lowest castes.
While the virus especially chased those with less money, the vaccines quickly chased those with much money. Blair Fix has visualized this with animated graphs. Where GDP per capita is high, the rollout is, as it would have been expected, comparatively rapid. David Wallace-Wells already called the result “the coronavirus’s colonial period, in which the world’s thriving rich regard the dying of its poor with a smug indifference”, because being vaccinated, they already planned their next overseas vacation. This is health inequality combined with vaccine inequality based on economic inequality and inequality of power:
Historical trajectories of global inequality
Not only is technological knowledge about vaccines in most cases monopolised as intellectual property in the Global North, which is as such an inequality. Productive capacity is more generally also controlled by Northern corporations. More broadly, the “productive capacity” in what some call our Second Globalisation is still to a large extent dependent on that in the First Globalisation in the 19th century, i.e. colonial times.
This recent episode is just one aspect of what we could call the global history of multidimensional inequality. As scholars have repeatedly shown, international commerce is highly asymmetric (or unequal) and has been for centuries. This means that a lot more embodied labor, land, materials, and energy moves via ‘free trade’ from one region on the globe to the other than backwards. Basically, one region satisfies its material consumption disproportionally by consuming human life-time and resources from elsewhere within the world-system.
A handy example comes from the 19th century. In 1850, an exchange of £1000 worth of cotton manufactures for £1000 worth of raw colonial cotton was an echange of 14.233 hours of British labour for 20.874 hours of labour elsewhere, and the use of one hectare of British land for the use of 58.6 hectares elsewhere.
Recent examples are the land needed in the South to grow soy to feed livestock in the North, palm oil plantations feeding into fast food production, and cheap (and putatively enforced) labour in solar industries in China ending up greening energy systems in the North.
Obviously, this asymmetry is obscured by money and its “ideology of reciprocity” (Alf Hornborg). According to this thinkin, every ‘free’ exchange is equal if one party hands over the amount of money agreed upon as the price of the commodity. In the language of value it would be said that both parties exchange work and stuff of equal value:
Therefore, the textbook-worldview of economics does not comprise unequal exchange, and power.
Whether in international trade or on the national deregulated labor market, according to this thinking, what one gets is fair and just, and who thinks he doesn’t should simply not make the bargain. For critics, this obscures unequal relations of power.
Something similar often holds for us individual consumers pursuing the “imperial mode of living” when we imagine that the things we buy are just materializations of the metaphysical property of value we pay a just price for, not quite often embodiments of lifetime and natural resources based on exploitative or at least highly unequal relations.
According to Alf Hornborg and his co-workers, the core regions of the capitalist world-system – the USA, the EU, and Japan – appropriated in the year 2007 alone some 12.6 gigatons of raw material equivalents, 34 exajoules of embodied energy, 5.6 million square kilometers of embodied land, and 247 million person-year equivalents of embodied labor.”
The EU alone imported land-use of 3.1 million km2 in 2007. This amounts to the whole territory of India. The EU alone imported stuff that embodied 120 million more embodied person-year equivalents of labor than it exported, which means that 120 million people more worked for its consumption in that year than EU-citizens for exports.
For 2015, Hornborg and colleagues estimate 10.1 billion tons of embodied raw material equivalents and 182 million person-years of embodied labour. These are said to amount to 50 % of consumption of materials in high-income nations and 28% in the case of embodied labour.
In other words, consumerism and economic growth in the North depend on exploitation and resource extraction in the South, which is also used for the accumulation of productive capacity (‘capital’) in the North, while much of the ecological burden is dumpend on the South.
Scholars who estimate the employment footprint of nations call net importers of human working time “master countries” and net exporters “servant countries.” For instance, one of the champions in this respect, Switzerland, uses four times its own labour force elsewhere for its consumption at home, and while top wages flow between countries of the Global North, embodied work flows from South to North.
It would be interesting to have such a labour footprint for individuals, because there can be no clearer indicator of the inequality of power than the exertion of this power in consuming human lifetime. Though probably hard to measure, such an indicator would tell us, for instance, how many lives low, middle and high income Europeans consume, and this could be a measure of justice and injustice, because the question would be why a person is allowed to consume in the aggregate more than one human life. It may tell us something about our societies that we have apps to calculate our carbon footprint but not our labour footprint.
In a similar vein, Branko Milanovic tried to calculate the “economic power” of historically rich people by assessing the amount of average-income work that could in principle be bought just with the yearly income of the superwealthy, not touching wealth itself. For example, Bill Gates could buy 75.000 Americans in 2005, the Mexican Carlos Slim 440000 Mexicans in 2009.
This may remind us that money is, in the end, just a claim on other people and their effort, and a source of power if they cannot escape.
The economic anthropologist Jason Hickel and his co-workers tried to compute the counterfactual “value” transferred from South to North when material stuff moves, i.e. they tried to compare the real world of (‘free’) trade with a scenario of “fair-trade” in monetary terms. The assumption is that prices generally and wages specifically are artificially low in the Global South, they are “artefacts of historical and contemporary forces that depress the cost of labour and resources in the South”. They are artificially high in the North, for instance, due to the fact that 97% of the patents are owned there.
According to their numbers, in 2017 alone, 2.2 trillion dollars were thus channeled into the pockets of the Global North. Over the period between 1960 to 2017 the number is 62 trillion. To this picture we would have to add the monetary outflows from the South due to international debt-service, which dwarf what is paid as development aid in the other direction, and that reasonable poverty numbers are still at over 4 billion humans.
If you are born in the Global North, and you are therefore quite lucky to live in the structurally rich part of the world, there are two perspectives from which you can see it.
The theory of unequal exhange says you should thank your great ancestors for having structurally exploited vast parts of the world and humanity’s population, and your current compatriots for keeping on doing it. The liberal consensus tells us, often in passing, e.g., that we “are thus lucky beneficiaries of centuries of intensive investment by those who came before us”, thereby also hiding that ‘we’ don’t exist but are a highly unequal aggregate of citizens of highly unequal countries.
While ‘we’ and our heroic ancestry were busy at that, ‘we’ also polluted the planet and its atmosphere in highly unequal ways.
Inequality of pollution and destruction
It is well known by now that GDP strongly correlates with CO2 emissions and material footprints. As a consequence, ‘wealthy’ countries carry the large amount of responsibility for the climate emergency and the threat of biodiversity collapse.
“[T]he world’s top 10% of income earners are responsible for between 25 and 43% of environmental impact. In contrast, the world’s bottom 10% income earners exert only around 3-5% of environmental impact.”
The richest 10% of the population, comprising some 630 million people, have caused 52% of carbon emissions since 1990, on average 23 tons, and the richest 1% emits 100 times more than the poorest half (3.5 billion people), namely 74 tons on average. The average US-citizen emitted 15 tons of CO2 in 2018, average EU-citizens 8 tons, while the global average is 5 tons. The average of 20 billionaires is at manifestly criminal 8,190 tons. The bottom 50% consume 0.7 tons, and they are located in the Global South. The fair and sustainable share is believed to be somewhere between 2 and 2.5 tons per human head.
Before you celebrate your innocence, if you read this text and you consider yourself or your household a member of the middle class, the chances are high that you are among the 10%, which starts at $35,000 per year. The richest 1% earn above $100.000, some 60 million.
Based on the assumption that the earth’s atmosphere is a common good that should be shared equally among all humans, again Jason Hickel estimated that only 8% of the reponsibility for climate breakdown goes to the Global South. The rest goes to the Global North (USA, Canada, Europe, Israel, Australia, New Zealand, and Japan; see also here).
“Just as many of these countries have relied on the appropriation of labour and resources from the Global South for their own economic growth, they have also relied on the appropriation of global atmospheric commons, with consequences that harm the Global South disproportionately.”
Finally, we are ready for that part of the huge problematic that is usually focused on, especially since Covid – and even more numbers.
Wealth and income inequality
War profiteers are usually not respected that much. As regards pandemic profiteers, we cannot yet be certain, but some have been enraged by the recent gains in billionaire wealth. Whereas societal inequality is often an abstract and ungraspable concept – what is the story a Gini tells? –, here personalisation makes it catchy.
While many of the poorer are getting poorer, the richer keep getting richer. When the data for the whole year 2020 were not even complete, it had been estimated that Elon Musk’s financial wealth increased by $348 million per day or $14.5 million every hour. The distribution of only the increases in his wealth among 331 million US-Americans would have put $383 in everyone’s pocket. Only ten US-individuals own $1.042 trillion. Given that such increases in financial wealth are not taken to be income, they are also tax free.
What is here called “wealth” is anything that could in principle be turned into cash by selling it, and such gains in wealth are the result of rising prices of assets, especially company shares. These are not riches (useful stuff) someone could actually enjoy. However, had anyone pooled the gains in (nominal) financial wealth of all US billionaires in 2020 and distributed them within the US-population, everybody would have received $3.900, a family of four more than $15.000.
From 2006 to 2018, 87% of the increase in US wealth of $13.871 trillion went to the top 10%, 60% to the top 1%. 32.669 individuals got 23%. The latter are the 0.01%. The bottom 90% received 13% of the wealth gains, a minority of 290 million people.
These are the numbers for the lightpost of the free world and democratic capitalism, one of the extremes. But did you ever wonder how many millionaires there are? Globally, their number is estimated at 56.1 million, and within the Covid year of 2020 their number increased by 5.2 million.
Already in 2016, Oxfam published a report with the title “The Economy of the 1%”. The recent spike is just accellerating a trend. In 2015, just 62 individuals had the same wealth as 3.6 billion people, half the human population. 2010 it needed 388 rich individuals to get the wealth of the bottom half. Within 5 years, the wealth of those 62 people increased by 44%, while the wealth of the bottom 3.6 billion fell by 41%. But what do such numbers tell us exactly?
What about the distribution of wealth increases?
If you cut the population in 10 income groups, in an egalitarian perspective it woul be expected that from the bottom 10% to the top 10% at least the increases are distributed equally, while the stocks in wealth remain unequally distributed. Globally, 46% of the increase went to the top 10%, the bottom 10% received 0.6 %. The top 1% of the world population received more income growth than the bottom 50% of the population.
In different countries the picture is certainly slightly different. But even the Ginis of wealth above have told us that supposedly egalitarian Scandinavian countries are as unequal as the more neoliberal USA and UK in relation to wealth. In Germany, the richest 1% owns 35% of all assets. The top 10% own 66% of everything. The Gini of wealth distribution is 0.81. If you wish to check above, this is similar to late medieval Florence.
For the reason indicated above, such exercises might be quite silly. Anyway, all of this could be summarized by claiming that we have long entered the Age of Neofeudalism. The only trouble is that in its medieval heyday feudalism might turn out to have been more egalitarian.
Not surprisingly, what holds for wealth holds for income. The richest 1% grab almost a quarter of global GDP. This is said to be equivalent to the GDP-‘income’ of 169 countries. The richest 5% receive 46% of global GDP.
Moreover, to focus on individuals or households is not enough because individuals are not the only, perhaps not even the primary, holders of wealth and power within societies. The means of material production and finance are equally unequally distributed.
“It’s big capital (finance and business) that control the investment, employment and financial decisions of the world. A dominant core of 147 firms through interlocking stakes in others together control 40% of the wealth in the global network according to the Swiss Institute of Technology. A total of 737 companies control 80% of it all. This is the inequality that matters for the functioning of capitalism – the concentrated power of capital.“
Only a tiny number of 100 corporations are also claimed to have caused 70% of all CO2 emissions since 1988. That is one reason why actually existing democratic capitalism can hardly handle climate change.
Also the contemporary national levels of income inequality have induced interesting comparisons. If they weren’t disturbing they might even appear hilarious.
For the UK, it has been estimated that the bosses of ‘top’ British companies “will have made more money by teatime on Wednesday [in the first week of the year] than the average UK worker will earn in the entire year”. According to one estimate, a typical CEO now earns 120 times as much as a typical worker, from 50 times around 2000 and 20 times at the time of the neoliberal counterrevolution.
“The typical McDonald’s worker would have to labor more than three millennia to make as much as the McDonald’s CEO made last year. McDonald’s is an outlier, but even more average figures are astounding. At most major corporations, typical workers still have to labor over three centuries to make as much as their CEO makes in a year.”
In Germany, you can count through every working adult with one of your two hands. Every time you reach your thumb you hit on a person in a low-income job (21.7%). The post-tax income share of the German top 10% is above 30 % and steadily increasing, while the share of the bottom 50% tends to fall.
Meritocracy: To everyone the fair share?
We could pile up such data for every single country and in more detail. The result would be even more of a loss of overview. The question, then, is: Is such inequality justifiable and just? Technically, we would need some explicit philosophies of justice at this point and specific data to feed into them. But the numbers provide a clear picture anyway.
Oxfam said in plain words what probably many think who are not profiteers of the rigged system and its structures, and who are not economists:
“It would be perverse to argue that the contributions of 62 individual billionaires are worth the same as those of 3.6 billion other people. It is unimaginable that the CEO of a tobacco company in India is as productive as 439 of his employees combined, or that the owner of a UK clothing retailer can produce the same as more than 2,000 garment workers. But the gap between the richest and the rest continues to grow.”
In fact, this is not less absurd than stating that medieval feudalism was installed by God itself.
The mainstream idea, famously spread by neoliberals/libertarians of all shades, is that everyone’s ‘productivity’ is fairly remunerated by the market if only the latter is free. Although human abilities are distributed fairly equally, ‘productivity’ somehow is not. However, the only (pseudo-)measure of ‘productivity’ of individuals (who are engaging in heterogenous tasks) is their income. At times, this is also called the “value” of a person.
According to such a view, people who produce nothing, but gain huge incomes in financial industries or the FIRE sector (Finance, Insurance, Real Estate), that is those who were once called the rentier class and after Covid inessential, are the most ‘productive’ of all. Also American billionaires typically become rich in financial industries, via monopolies or through exploitation, allowed and organized by the democratic state.
Somewhat surprisingly, many people seem to believe it. Bichler and Nitzan report a poll from 2012 in which half the respondents stated that the rich deserve their wealth. At other times it is reported that only 13% of the people believe CEO-pay is justified, while 63% of CEOs believe it is.
To the contrary, after 2009 the New Economics Foundation tried to estimate the social, environmental and economic value of six different jobs, some of them we meanwhile call “essential work” (hospital cleaner, recycling plant workers, childcare workers), which are low-paid, and bullshit jobs (City bankers, advertising executives, tax accountants), all with huge salaries. They tried to estimate monetary returns per monetary input, which is similar to discounting environmental and social destruction from national GDP-accounts. Although such counterfactual numbers are always a little dubious, the results anticipated what Covid made a common experience and provde a legitimate contrast. As Kate Pickett writes:
“The low-paid jobs generated £7-12 of benefits to society for every £1 paid out in wages, while the high-paid roles destroyed £7-47 of social value for every £1 in value they generated (the tax accountants were the worst offenders).”
If not the wages themselves are the measure but contributions to society, the former are often highly illegitimate or extremely dubious.
Back to wealth and its relation to income.
According to Thomas Piketty, of those born between 1970 and 1980, 12% of the population inherit what the average worker of the bottom 50% earn in a life-time. The latter are also those who inherit practically nothing. He calls this inequality “disturbing”. In France around 2010, almost 70% of the wealth are not due to work (and achievement) but to inheritance, with a rising tendency. A third of all income in Britain is gained by pure ownership, not work, via rents, dividends, and interest. The most common process of wealth increases is asset price inflation due to operation by private and central banks.
Branko Milanovic argued in relation to the global picture that up to 60% of income are predictable simply by the place you are born, which is true due to the grossly unequal distribution worldwide. Another 20% could be predicted based on the income of one’s parents. If there would be data for gender, race or ethnicity, he estimates that the numbers would go up even further in some cases.
However, if we are optimistic, then statistically merely 20% of one’s income is due to something close to achievement, not historical accident. The biggest share is what he calls “the citizenship premium.” No wonder that there is no movement in the West that wants to undo unequal international exchange. The economists Laurie Macfarlane writes:
“Someone that is born in the UK will earn more than someone born in Sub-Saharan Africa, even if they perform exactly the same labour. Why? Because one was lucky enough to be born in a powerful country with a legacy of imperialism that has rigged the rules of the global economy in its favour.”
Internationally, it’s power, stupid!
Ironically, also these numbers suggest that the income distribution in the modern world-system and its parts is to a large extent set at birth and that many parts of the above-mentioned narratives we tell each other are simply deceptive myths.
In the same direction, where economic inequality is high, social mobility is lower, contrary to what our mainstream ideology implies, that overall equality ties people to the social status of their ancestors. The same holds for innovation. Where economic inequality is lower, more patents are granted than where it is higher. Gross inequality is not necessary for technological innovation, not to mention social innovation.
Let’s finish this section with a quiz.
What does common sense most likely infer from merely seeing such a representation of a social hierarchy as the one below? Most likely, that the person in red earns more than anyone else in the hierarchy, and that income decreases with rank within the hierarchy and power over people, i.e. subordinates. This is what heterodox economist Blair Fix argues in relation to the economic atom of the national and international economy, the corporation. Again, it’s power, stupid! The higher the rank, and the bigger the corporation, the higher the income. Income is to a large extant explained by power over people, not productivity in ‚production‘.
Bad, after all
We already hypothesized that it doesn’t make much sense to talk about inequality per se or to evaluate such inequality. There is no single, overall measure of something called “inequality” and no way to evaluate what is thus measured. However, it has been a question whether inequality as such is bad or whether the problem is merely poverty, as the liberal consensus states or implies, supported by some semi-famous philosophers. Two issues we can mention quickly.
First of all, poverty in high-income nations is indistinguishable from something called ‘mere’ inequality, often defined as 60% of a country’s median income. Second, without an explicit value system such questions can neither be posed nor answered, and usually we don’t consciously command something like this. But if we forget about that for a second and buy that the values implied in the statements below are unproblematic, then all the research conducted and summarized by Kate Pickett, Richard Wilkinson, and others, has shown that overall inequality is overall bad, not only poverty or even absolute poverty:
- Where economic inequality is higher, overall life expectancy tends to be lower.
- Where economic inequality is higher, all income groups are on average less healthy.
- Where economic inequality is higher, social mobility tends to be lower (and real, not formal, opportunities unequal).
- Where economic inequality is higher, working hours tend to be higher.
- Where economic inequality is higher, there is more status anxiety, status competition, and therefore, consumerism.
- Where economic inequality is higher, real educational achievement tends to be lower.
- Where economic inequality is higher, indicators for child wellbeing tend to be lower.
- Where economic inequality is higher, also gender inequalities across health, education, labour market participation, representation, and pay are higher.
- Where economic inequality is higher, more people are mentally sick.
- Where inequality is higher, more people tend to be obese.
- Where economic inequality is higher, citizens trust each other less.
- Where economic inequality is higher, more people are incarcerated.
- Where economic inequality is higher, its citizens trust the sciences less.
- Where economic inequality is higher, less innovation tends to happen (measured by patents granted per capita).
- Where economic inequality is higher in professional sports teams, the teams tend to perform worse than teams with less inequality.
- Where economic inequality is higher, governments pay less in development aid.
And we can add, probably among others:
- Where economic inequality is higher, more people suffer and die within social emergencies such as pandemics.
Social epidemiology also suggests that inequality as such is an issue because all income groups profit in health in more equal countries, not just the poor. The trouble is that what holds for aggregates doesn’t necessarily hold for individuals, who may swap a further increase in their health for relative power over other people with less health, and aggregates are not in charge.
Poverty is a form of inequality that deprives people of the satisfaction of basic needs and legitimate desires, and this deprivation within countries and the world-system is unnecessary, preventable, and as such a moral crime. It is a policy choice by (democratic) governments. Concrete measures notwithstanding (for example, Basic Income, Job Guarantee, Universal Basic Services, inheritance for all, maximum wage, debt jubilees, carbon credits, local currencies, integral democracy), within the ‘rich’ countries the finance minister can abolish poverty with a keystroke. In the world-system, the whole global political system and economy would need to be reorganized.
Again, the topic below the surface of so-called ‘inequality’ is the inequality of power: What the fcuk is that?
© Daniel Plenge
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