The Rise of Inequality and Its Contested Meanings

The disposition to admire, and almost to worship, the rich and the powerful, and to despise, or, at least, to neglect persons of poor and mean condition is the great and most universal cause of the corruption of our moral sentiments.
Adam SMITH, Scottish Political Economist (1723–1790)

Inequality is complex and multifaceted. It depends on a series of global processes, technological innovations, economic growth and political choices. Inequality is eminently cross-sectional as it spans issues of class, gender, age, ethnicity, sexual orientation, and religion. Like a thousand-headed hydra, inequality finds expression in inequitable access to health, food, air, water, education and security but frequently takes on more subtle, sublimated forms of discrimination hiding in plain sight such as mental prejudice or administrative antipathy.

Inequality is relative, contingent on its terms of comparison, and subjective. It depends on culturally and psychologically mediated perceptions and discourses. Narratives about “imagined meritocracies” or attitudes towards the importance and nature of work, for instance, impact social expectations as to who deserves to be rich or not.

Inequality, finally, is noxious. It results in stifled economic growth, political tensions and worsening social indicators, including rising infant mortality, obesity, crime rates, drug abuse, and lower life expectancy. Inequality directly threatens democracy, as it erodes the middle classes, increases social polarisation and fuels political mistrust, constituting a favourable breeding ground for illiberal or populist movements.

The Persistent Nature of Inequality

Historically, inequality has been the norm. While tribal systems knew relatively flat, isomorphic societal structures, civilisation brought forth more hierarchical societies based on administrative apparatuses and complex divisions of labour. The Enlightenment revolutionised humanity’s approach to inequality through its all-out attack on social prejudice and privilege and bold claim that all human beings are equal. The French Revolution heralded equal political rights for all and the massive surpluses generated by the Industrial Revolution enabled more ambitious schemes of social redistribution. This trend culminated in an exceptional decline in inequality in the second half of the twentieth century, mostly in the West, through progressive fiscality and ambitious social programmes. After the oil shocks in the late 1970s and the ensuing neoliberal pushback, however, the collective utopia of the welfare state faltered and inequality started to rise again.

As Thomas Piketty and others have argued, and contrary to the predictions of classic equilibrium models, the natural tendency for inequality in capitalist societies — if remained unchecked — is to rise, with income and wealth concentrating in the upper percentiles of the population. As Marx had anticipated, in the long run capital yields by far exceed general economic growth and labour compensation.

While inequality between countries has declined due to incomes rising faster in developing countries – with North Americans, however, still earning 16 times more on average than sub-Saharan Africans^[1] – the income gap within countries has now reached levels last seen in the early twentieth century. Developed countries such as the United States, Britain, Australia, Canada, large parts of Europe, China and Japan have been most affected. The richest 10% in OECD countries now earn 10 times more than the poorest 10%.^[2] Looking at wealth inequality, the situation is even more dramatic. In 2018, the 26 richest people in the world held as much wealth as the poorer half of the global population (3.8 billion people)^[3] and seven of the world’s richest people saw their fortunes increase by over 50% in the wake of the COVID crisis^[4]. As a consequence, a new class of globally connected superrich has emerged, deriving their wealth not just from land, property and government bonds, as previously, but also from prodigious executive salaries and “super-bonuses”.

The Drivers of Inequality

The causes driving inequality are multiple. Aside from structural megatrends such as globalisation, climate change and urbanisation, a key factor is the growing financialisation of the economy. We are indeed witnessing a “return of capital”^[5] as the rich benefit from the sheer scale of their investments as well as privileged access to information, expertise and investment opportunities. Assisted by an “income defence industry”,^[6] the rich have proven remarkably resourceful in concealing their assets in overseas tax havens (an estimated 8% of global wealth in 2013).^[7] Money begetting money, inequalities of income are a function of prior inequalities of wealth, as the rich benefit from privileged access to elite education and exclusive networks. Finally, the superrich have grown less inclined to make social and fiscal concessions, feeling less beholden to national frameworks and less immediately threatened by socialist upheavals than during the Cold War.^[8]

Inequality has also risen because of the fall from grace of the welfare state and, more broadly, of social democracy. Trade unions have seen their clout continuously diminishing, ultimately proving powerless to prevent the systematic atomisation of the workforce into endlessly malleable (or “agile”) and interchangeable units. Over the past decades, workers writ large have seen their rights unremittingly eroding, their real wages falling and their status mercilessly fragilised by the neoliberal grinding machine. In 2013, about a third of total OECD employment was in “non-standard” jobs characterised by unpredictability and precariousness, a trend that the ongoing digital revolution is unlikely to reverse any time soon.^[9]

From Equality to Identity

Three discourses have intersected and confronted each other over the issue of inequality, as on top of the worsening social divide additional fault lines have opened or hardened along logics of race, gender, ethnicity and religion: the first defends equality, the second equity and the third identity.on top of the worsening social divide additional fault lines have opened or hardened along logics of race, gender, ethnicity and religion 

The modern discourse of equality has its roots in the Enlightenment’s struggle to end the discriminations and privileges of the Ancien Régime, when inequality still was the natural order of things. It found expression both in a liberal branch defending equality before the law and individual freedom and in a socialist branch defending socio-economic policies of redistribution and social mobility. Its basic tenet is to equalise economic differences while maximising private freedom. The movement in favour of equality culminated in the twentieth century but, currently, it has little wind in its sails.

The proponents of the equity paradigm form an offshoot of the equality paradigm but deplore its blindness towards religion, gender and ethnicity and its failure to live up to its promises. Women, indeed, typically still bear the brunt of poverty, violence and inequality, and racial and sexual minorities continue to face systemic discrimination. Accordingly, the proponents of the equity paradigm claim that for equality to materialise women and minorities first need to gain equal access to opportunity through positive discrimination and other support mechanisms.

The proponents of the identity paradigm, finally, argue that the equality (and/or equity) discourse is fallacious, vain and hypocritical at best, noxious at worst, as it is, precisely, the biased impetus towards equality itself that continues to sustain and worsen prejudice and discrimination. Accordingly, they have given up on the idea of equality altogether, dismissing it as an imperialistic, universal construct devised by white (male) elites to buttress their domination over society. From such a perspective, the priority is no longer to fight for equal access to rights, equal opportunities or more just social distribution but to defend specific groups and their own sets of exclusive interests and rights – often with an ambition to repair historical griefs and wrongs.

Future Prospects of Inequality

The risk for the identitarians is to ontologise difference through the development of a myriad of micro-imperialisms and hypertrophied micro-identities breeding and perpetuating new logics of fragmentation, exclusion, polarisation, righteousness and vengeance. Politically, this could play into the hands of an inherently conservative rationale essentialising inequality as pre-ordained and postulating it as the new (old) normal, or what used to be called the Great Chain of Being. In the sheer limbo of endless postmodern differentiation, indeed, individual identity (or subjectivity) will presumably not be worth much. New strongmen are likely to take over and devise collective projects of their own, conjuring up the old (xenophobic) demons of ascriptive identity.

Inequality, however, is not inevitable as it depends on political choices. Inequality, however, is not inevitable as it depends on political choices. In the context of a looming recession in the wake of the COVID crisis, turning a blind eye to inequality would prove disastrous. A wealth of measures has been suggested as to how inequality could be kept in check, including a global wealth tax and wealth registry, more progressive tax regimes and better tax compliance, stronger protection of workers’ rights and safety nets (or basic universal income), the bridling of oligopolistic or monopolistic powers, the upending of the narrative of “deregulation”, tighter controls on the financing of political parties, better integration of immigrants in political decision making and more inclusive education systems.

More generally, what is needed is a renewed impetus for more consensual and inclusive social change to avoid the fragmentation and polarisation that will likely play into the hands of illiberals and other advocates of bio and power politics. Instead of the current dialogue of the deaf, a more productive exchange between proponents of equality (and equity) and those of identity is needed. This will require squaring the circle again by devising new ways of reconciling equality and diversity, redistribution and recognition. The answer may lie not in renouncing culture altogether – as Rousseau inferred in his Second Discourse – nor in ontologising difference as professed by identitarians (and racists), nor in its erasure as suggested by universalists (which ultimately proves utopian and counterproductive), but rather in fostering its fruitful interplay, dialogue and exchange.

^[1] UN, “Inequality – Bridging the Divide”.
^[2] Brian Keeley, Income Inequality: The Gap between Rich and Poor, OECD Insights (Paris: OECD Publishing, 2015).
^[3] UN, “Inequality – Bridging the Divide”.
^[4] Hiatt Woods, “How Billionaires Saw Their Net Worth Increase by Half a Trillion Dollars during the Pandemic”, BusinessInsider, 30 October 2020.
^[5] Mike Savage, “An Interview with Thomas Piketty, Paris 8th July 2015” (Working Paper 1, International Inequalities Institute, LSE, 2015).
^[6] Jeffrey A. Winters, “Civil Oligarchies”, chap. 5 in Oligarchy (Cambridge: Cambridge University Press, 2011), 208–74.
^[7] Gabriel Zucman, “The Missing wealth of Nations: Are Europe and the U.S. Net Debtors or Net Creditors?”, Quarterly Journal of Economics 128, no. 3 (2013) 1321–64.
^[8] Matias López and Joshua K. Dubrow, 2020, “Politics and Inequality in Comparative Perspective: A Research Agenda”, American Behavioral Scientist 64, no. 9 (2020): 1199–210.
^[9] Brian Keeley, Income Inequality.