The Inequality Crisis: The three options
The everyday operations of our economies produce the goods and services that keep us alive and enable us to enjoy life. But that is not the only way that those operations effect our lives; they also effect societies and ecosystems. The inequality crisis, which threatens our societies, and the climate crisis, which threatens both our societies and our species are, no less than production, brought about directly by everyday operations within our economies.
However for two hundred years the economics profession has in the main excluded from its study of economies two of their three categories of primary effects. And given the profession’s influence, this exclusion of societal and ecological effects has promoted intellectual invisibility of these two categories thus helping to bring about both crises.
Compared to the Climate Crisis, which although only recently acknowledged has been in the making for more than a century and a half, the Inequality Crisis is young. The massive redistribution of income and wealth which created it began in the 1970s, but until 2014 that redistribution was rarely mentioned (other than within journals outside the neoclassical mainstream). Although there is still a long way to go, Thomas Piketty’s Capital in the Twenty-First Century changed that. Many intellectuals took notice. Literally within months of the book’s publication it became socially acceptable, even for economists, to talk about the growing inequality and the long-term upward redistribution of income and wealth.
Meanwhile, effects of that redistribution have become increasingly manifest, so much so that even in time of pandemic they make the daily news. In democracies it seems that the more extreme the upward redistribution becomes the more politically aggressive the ultrarich become. And when they capture politic- al parties and then, as in the US, rule and reshape their countries’ institutions, a moral vacuum emerges wherein the victims of the redistribution seek vulnerable groups to scapegoat, and a populism of the pre-fascist variety takes hold.
But income and wealth distributions, unlike gravitational forces, result not from the natural order but from human decisions. And the general direction of those decisions now needs to become part of open public discussion. Regarding income and wealth distributions, human society has three basic options:
- Continue the upward redistribution,
- Maintain the current distribution,
- Reverse the recent redistribution.
If you favour Option 1, you may not want to read my book The Inequality Crisis and you will want to discourage others from reading it. Why? Because all its papers offer insights into how Options 2 and 3 could be realized, and all are ultimately committed to empiric- ism rather than to axiomatics. But this project is only part of a beginning. On its topic of economic inequality, many papers and books that are both truth- seeking and sincerely in the spirit of goodwill towards humanity are now urgently needed.
Edward Fullbrook is founder and editor of the Real-World Economic Review, and is founder and executive director of the World Economics Association.