Mainstream economic analysis has rested on the general assumption that increased production and consumption will improve people’s well-being.
At first sight, this expectation seems reasonable, particularly in countries where material poverty is widespread. Consider, for example, the following statement from A.C. Pigou, a rather conservative man who was Professor of Economics at Cambridge University before J.M. Keynes:
The complicated analyses which economists endeavour to carry through are not mere gymnastic. They are instruments for the betterment of human life. The misery and squalor that surrounds us, the injurious luxury of some families, the terrible uncertainty overshadowing many families of the poor – these are evils too plain to be ignored. By the knowledge that our science seeks it is possible that they may be restrained. Out of the darkness light! (Pigou 1928: preface; emphasis added)
Pigou is to be lauded for making explicit the social purpose of economic analysis, as well as for this uncharacteristic literary flourish. Although written in England nearly 90 years ago, his views may be seen to have continuing relevance to poorer countries, indeed to all situations where basic material needs remain unmet.
Reasoning of this sort can readily explain why economic growth is usually assumed to be the principal means for lifting people above conditions of poverty and its attendant ‘misery and squalor’. The problem in practice is that the real world experience has turned out rather differently.
Many of the difficulties of poorer nations remain in spite of, or perhaps because of, the nature of the economic growth that has taken place. Meanwhile, the more developed nations are bedevilled by persistence of poverty amidst affluence.
Perhaps there is something to be said for picking up the passing reference in Pigou’s statement to the ‘injurious luxury of some families’ and putting the question of distributional inequality higher on the agenda.
This article presents a case for making a more equal distribution of income and wealth central to political economy, development and social progress. It posits that poverty and affluence are two sides of the same coin, and that, therefore, the redress of poverty requires equivalent attention to the wealthy and to the structural factors responsible for the rich-poor divide.
The article’s four main sections pose fundamental questions about economic inequality: ‘what forms does it take?’, ‘why does it persist?’, ‘why does it matter?’ and ‘what is to be done?’
Economic inequalities are multi-dimensional: they can be regarded from the viewpoints of class, race, gender and space, for example. Which of these aspects is given primary attention usually reflects the predisposition of the analyst (whether to highlight sources of class exploitation, to challenge racism or gender discrimination, or to plan for less divided cities, for example).
The analytical frames established in the social sciences also have a major impact on what is deemed worthy of investigation or simply on what is seen. A neoclassical economic viewpoint, focussing on individuals being rewarded according to their personal productivity, contrasts sharply with political economic perspectives that highlight the lop-sided power-plays responsible for exploitation, discrimination and other forms of social injustice.
Perhaps a relatively neutral starting point is appropriate. For this purpose, we can briefly review the data on economic inequalities according to three spatial scales: international, intra-national and global.
Read the full article at:Journal of Australian Political Economy
Stilwell, Frank, 'Out of the darkness', Evatt Journal, Vol.16, No.1, February 2017.<https://evatt.org.au/out-of-the-darkness>