The
killing fields of inequality
What
is inequality
What
is the difference between a difference and an inequality? Basically
there are three. First, a difference may be horizontal, without
anything or anybody being higher or lower, better or worse, whereas
an inequality is always vertical or ranking. Secondly, differences
are matters of taste and/or of categorization only. An inequality,
on the other hand, is not just a categorization but something that
violates some moral norm of equality, among human beings. This does
not presuppose any norm of complete equality, only that the
difference is too big and/or has an undeserved direction, i.e., the
wrong people getting the best rewards. Thirdly, for a difference to
become an inequality it must also be abolishable. The bigger physical
prowess of an average 20-year-old compared to a 60-year-old is not
an inequality. But the different social life-chances of women as
compared to men, or of black working-class boys in comparison with
white bankers´ boys have come to be seen as inequalities. In one
sentence, Inequalities are avoidable, morally unjustified,
hierarchical differences.
There
are (at least) three fundamentally different kinds of inequality, and
they are all destructive of human lives and of human societies. There
is inequality of health and death, which we may call vital
inequality. True, we are all mortal and physically vulnerable, and in
some sense our life-tree is decided by some inscrutinable lottery.
However, hard evidence is piling up, that health and longevity are
distributed with a clearly visible social regularity. Children in
poor countries and poor classes die more often before the age of 1
and the age of 5 than children in rich countries and rich classes.
Low status people in Britain die more often before retirement age,
and if they survive have shorter lives of retirement than high status
people. A British former male bank or insurance employee, for
instance, has seven to eight more years of retirement life than a
former employee of Whitbread or Tesco.1Vital inequality, which we can
measure most easily by life expectancy and by survival rates, is
literally destroying millions of human lives in the world every year.
Existential
inequality hits you as a person. It restricts the freedom of action
of certain categories of persons, for instance of women in public
spaces and spheres, as in Victorian and Edwardian Britain and as in
many Asian and African, even Southern European countries today.
Existential inequality means denial of (equal) recognition and
respect, and is a potent generator of humiliations, of Blacks, of
(Amer-)Indians, of women in patriarchal societies, of poor
immigrants, of low castes, of stigmatized ethnic groups. But
existential inequality is not only blatant discrimination. As we
shall see below it also operates effectively through more subtle
status hierarchies.
Thirdly,
there is material or resource inequality, meaning that human actors
have verry different resources to draw upon. In order to get a grasp
of it, we had better distinguish two aspects here. One is access, to
education, to career tracks, to social contacts, so-.called “social
capital”. In conventional mainstream discussions, this aspect is
often referred to as “inequality of opportunity”. Secondly, there
is inequality of rewards, often referred to as inequality of outcome.
It is the most frequently used measure of inequality, the
distribution of income, sometimes also of wealth.
The
three kinds of inequality interact with, influence each other. But
they should be distinguished because they not only have different
types of effects, on human organisms, persons, and actors. They also
have different trajectories in modern times, which means that they
are governed by different causal mechanisms.
The
Production of Inequality
Inequality
can be produced in four basic ways. One we may call distantiation,
meaning that some people are running ahead and/or others falling
behind. Exclusion is a second mechanism, in which a barrier has been
erected making it impossible or at least more difficult for certain
categories to access a good life. Thirdly, hierarchisation means
that societies and organisations are constituted as ladders with some
people perched on top and others below, to a bottom. Finally, there
is exploitation, in which the riches of the rich, the rewards of the
privileged, derive from the toil and the subjection of the poor and
the disadvantaged.
The
historical importance of these mechanism in generating the
configuration of the modern world is still hotly disputed. Was it
primarily a product of North Atlantic nations forging ahead, by
scientific and industrial innovations? Was it rather an effect of
exclusion, for example, the British rule of India hindering Indian
industry to develop? Did the “modern world system” after 1500
spawn a world hierarchy of a core, a semi-periphery, and periphery?
Or was the rise of the West mainly driven by armed exploitation, by
the plunder of American metals, by plantation slavery, and by forced
and underpaid commodity production in the South? The debate remains
unfinished, both because of the ambiguity of the evidence – there
is empirical support for all four mechanisms, but how to weigh them
in relation to each other? – and because of the high moral
historical stakes involved.
In
this context, however, we shall look into how recent inequalities are
being produced. How much is due to exploitation? Vital inequality is
not driven by exploitation directly, the health of the healthy is not
based upon the disease and death of others. There is a path from the
exploitation of workers in risky and unhealthy jobs for profit to
inequality of health and life expectancy. Mining in South Africa,
China, and the Ukraine, and, more generally, factory work in the
“Special Economic Zones” all over the world are notorious. But it
is a small part of the picture. Chinese men have the same life
expectancy as Poles, and live eight years longer than less
industrialized Indians.
The
widespread West Asian notion, very strong in Chechnya, Kurdistan, and
Afghanistan, that a man´s honour depends on the subordination and
seclusion of his sisters, his wife (or wives), and his mother is a
form of existential exploitation. But exploitative patriarchy has
been on radical retreat in the world as a whole in the last three
decades, even if occasionally hitting back, as in Afghanistan from
the anti-Communist jihad in the l980s and on.
If
you are not convinced of the labour theory of value, it is difficult
to say how much economic inequality is due to capitalist
exploitation. The drastic increase of income inequality in China
recently, now much larger than in India or in Russia, is clearly in
important part due to capitalist use of cheap labour. But the
increasing gap between Africa and the rest of the world is not caused
by Africa being increasingly exploited. Nor is much of the widening
gap between rich and poor in the US and the UK explainable by an
increasing exploitation of workers, although the massive US influx of
cheap immigrant labour has generated a polarized labour market and
the return of a servants´ class, or “service class” serving a
so-called “creative class”2.
Summing
up, exploitation, the most repulsive generator of inequality, is a
significant feature of today´s world, but it is not the major force.
Hierarchies
have been objects of attack by management gurus for quite some time,
and many organisations have been flattened. Historically, rights of
subordinates have been strengthened, including rights of collective
representation, in continental European public and private
management, more widely in educational establishments. But the
countervailing powers of trade unions are generally declining.
The
main point, however, is that even when organisational pyramids are
flattened, organisations and societies at large are permeated by
subtle hierarchies of social status. Through their unequal allocation
of recognition and respect, through their different degrees of
freedom to act, and through their effects of hierarchies of
self-respect and self-.confidence, these social status hierarchies
appear to be a major reason behind persistent inequalities of health
and life expectancy. Social hierarchies produce existential
inequality which in turn have serious psycho-somatic consequences.
While
in the course of the twentieth century there was a substantial income
equalization in the developed countries, including the UK, class
differentials of life expectancy have widened, particularly among
men. In l910-12 an unskilled manual worker in England & Wales had
a 61% bigger risk of dying at the age of 20 to 44 than a professional
man. In l991-93 the extra risk of early adult death had risen to
186%. For a semiskilled worker the extra mortality risk was 6 per
cent before World War I and 76 per cent in the early l990s.3 The
hardest and heaviest evidence for the lethal effects of status
hierarchies is probably Sir Michael Marmot´s study of 18,000
Whitehall civil servants for decades from l967. The risk of early
death followed closely the office hierarchy. When age, smoking, blood
pressure, cholesterol concentration, and some other factors had been
controlled for, those at the bottom died from coronary heart disease
50% more often than those at the top, during the 25 years of study. 4
Barriers
of exclusion have been lowered generally in the world. This goes for
the exclusion of women from public space, from labour markets, and
career ladders. Racism has become universally discredited, and the
dismantling of South African apartheid, and the elections of a Dalit
(ex-untouchable) state Prime Minister in India and an Afro-American
President of USA are important landmarks. “First Nations” of the
Americas are finally being included into the national polities, and
recently getting their democratically deserved central place in
Bolivia. The late 20th century return to the mass migration a hundred
years before also means more inclusion.
Regaining
national sovereignty after World War II ended the exclusion of China
and India from possibilities of development. Between l913 and l950
the rate of economic growth in China and India was about zero. But
between l950 and l973, Chinese growth was 4.9% a year, and India´s
3.5%.5 In recent decades, access to the US market has been a major
engine of East Asian growth and of global equalisation.
Though
lowered, exclusion is a major feature of contemporary world, divided
into exclusive nation-states each with its specific rights for
citizens only. There are also other excluding processes at work, such
as the American cotton protectionism, hitting poor countries of the
African savannah. In the current crisis, beneath the taboo on
“protectionism” national exclusivism is becoming more marked, as
“British jobs for British workers” and “Buy American”.
The
Paradox of Distance
Finally,
there is the mechanism of distantiation, and here we are facing a
paradox of our times. In a territorial sense, distances have shrunk
enormously. Electronic communication and satellite transmission make
it possible for the whole world to watch the Olympics or the Obama
inauguration at the same time, and for friends in, say China and
Argentina or Mozambique and Canada to talk to each other on the
phone. By email you can communicate with colleagues in Italy –
hardly possible in last days of Italian pre-electronic mail – as well
as in Bangladesh. Existential distances, between “races” or
ethnicities and between men and women, have also decreased, as we
noticed above. On the other hand, income and vital distances are
increasing, in the world and inside many, if not all, countries.
In
the first half of the l970s, the distance in life expectancy at birth
between sub-Saharan Africa and High income countries was 25.5 years,
thirty years later it was thirty years.6 In the UK the life-length
gap between the rich and the poor is increasing by 0.15years annually
since the l980s.7 Within metropolitan Glasgow the gap is 28 years of
life between males in Calton and in Lenzie, larger than that between
UK and Africa in the l970s. Glaswegians of Calton have actually a
shorter life than Australian Aborigines. 8 Capitalist Russia, and the
rest of the former Soviet Union are also falling behind in life
prospects. In the early l970s, of Communist “stagnation”, the
life expectancy gap to the High income countries was 2.5 years, in
the mid-2000s it is almost fifteen years.6
Incomewise,
in l973 GDP per capita in sub-Saharan Africa was about eight per cent
of American one, while only five per cent in 2005, measured in terms
of domestic purchasing power.9 In the US, the share of total
household income appropriated by the richest one per cent was eight
per cent in l980 and seventeen per cent in 2000. In the UK the
richest per cent leapt from receiving six per cent of all income in
l980 to taking about 12.5 per cent in 2000.10 In l997-98 the income
after tax at the 99th percentile in the UK – i.e., at the threshold
to the richest 1 per cent – was 10.2 times bigger than that of the
10th percentile, i.e., at the top of the poorest ten per cent of the
population. In 2006-7 that gap had widened to 12.8 times.11
The
gap between corporate executive pay and average workers´ pay is now
much wider than in pre-modern times. In 1688 British Baronets had an
annual income about 100 times higher than that of labourers and
out-servants and 230 times that of cottagers and paupers. In 2007/8
chief executives of the top FTSE 100 companies received a
remuneration 141 times higher than the median income of all full-time
employees in the UK, and 236 times more than people in “sales and
customer service occupations”.12
Another
angle from which to view the new economic distance is the current
world distribution of wealth. Last year, before the bubble burst,
Forbes magazine (March 2008) listed 1125 billionaires in the world.
Together they owned then $4.4 trillion. That was almost the whole
national income of 128 million Japanese or a third of that of 302
million Americans.
Distantiation
is the main road to increasing inequality today. It is the most
subtle of mechanisms, the one most difficult to pin down morally and
politically. Though its effects are highly visible in ostentatious
consumption, it operates more through stealth than through assailable
principles or blatant violations of human rights. Now, distantiation
is a mechanism or a channel of inequality, it is not a causal force.
So what drives it?
Before
going into that, it should be underlined that only exceptionally
distantiation is a product of particularly hard work or high merit.
In fact, it is mainly governed by windows of opportunity and networks
of contact, alternatively by bad pre-given odds and social isolation.
Global
vital distances have grown because some countries have fallen behind.
Sub-Saharan Africa has seen its life expectancy drop because of AIDS,
which for reasons still not fully understood – although clearly
related long-distance migration, sexual promiscuity, and poverty –
has hit Africa harder than any other area of the planet. Russia and
the former Soviet Union are victims of a ruthless restoration of
capitalism, causing massive unemployment, economic insecurity,
impoverishment, and existential humiliation. The leading British
epidemiologist Sir Michael Marmot, who has worked on Russia, has
estimated the death toll of capitalist restoration in the l990s to
about four million.13
Inside
rich countries, such as the UK, the growing life expectancy gap seems
to be more an outcome of the privileged moving ahead, perhaps more
open to healthy lifestyle campaigns, and always under less
existential stress. It should be kept in mind, though, that the
Whitehall study showed that the inverted status hierarchy of
premature death persisted after controls for smoking, cholesterol,
and other lifestyle indicators.
The
global income gap increase is again mainly an effect of Africa
falling behind. But here the reasons are more obscure and contested
than in the case of mortality. The politically fragmented,
logistically weakly connected, disease-ridden continent without any
strong proto-industrial traditions has been severely handicapped from
the start, heavily dependent on international commodity markets
outside its control. The disruption of its political traditions by
colonial partitions-turned-nation-states has provided the ground
floor for a widely dysfunctional national politics. The
impoverishment of the former Soviet Union and the late 20th century
crisis decades in Latin America have also added to the global income
picture.
Intra-national
income gap widening, on the contrary, is driven mainly from the top.
In the US, but not in the UK, the soaring of the highest incomes in
the last decade was accompanied by a slow decline of the income of
the poorest fifth of the population. That the top is running ahead
rather than the poor falling behind means that Asian and other
low-wage competition is a minor component. Interestingly, the U-turn
of income inequality is primarily an Anglo-Saxon phenomenon, most
pronounced in the US, but also marked in Canada, UK, Australia, and
New Zealand. It is not a modern times fatality, as it has not been
followed in Germany, France, Netherlands, and Switzerland.14
What
has driven the enormous widening of economic distances among people
in the last decades? There seem to be two major processes at work.
One
is the extension of solvent markets, which has increased both the
pool of rewards and the competition for star talent. The lifting of
controls on capital movements in the l980s, the expansion of
transnational investment, and the emergence of a global executive and
professional market have catapulted a small business elite upwards,
surfing on soaring stock markets. A similar phenomenon has occurred
in sports and entertainment, which is increasingly referred to in
apologetics of inequality, Commercial television and satellite
broadcasting have transformed the economics of sports and of
entertainment in general. Hugely expanded audiences widen the
visibility and attraction of stars, augment the remuneration pool,
and increase profits. Entertainment capitalism and stardom need each
other, symbiotically.
The
second process is an autonomisation of financial capitalism from what
is still called “the real economy”. In the last ten years this
has turned capitalist finance into a gigantic gambling casino,
trading in currencies, “securities”, and “derivatives”. The
amount of nominal money involved has become astronomical. In early
March 2009 the Asian Development Bank estimated that by then the
value of financial assets in the world could have fallen in the
current crisis by $50,000bn,15 which is equal to the total value of
the world product in 2007. But as long as the balloon was ascending
the losers were few, and unless you were caught doing something
outright illegal you could be sure that you would be handsomely
rewarded even if you lost. The bonus culture was rewarding immediate
expansion, and never bothered with losses afterwards.
It
is noteworthy, that at the same time as finance distanced itself from
the rest of the economy, it moved closer to, admittedly very
relative, left-of-centre politics in the US and the UK. In the final
stages of the latest US Presidential campaign the conservative
columnist David Brooks noticed sadly in the New York Times, that
investment bankers were 2:1 for Obama. In the UK, the Blair-Brown
governments have been happily surrounded by sympathetic City bankers.
What do the high gamblers and the New Democrats and New Labour have
in common? A common contempt of industrial society, with its
workingclass collectivism and its bourgeois values of work, thrift,
and respectability?
Inequality,
so what?
OK,
inequality is a fact, and increasing, so what? Does it matter if
David Beckham earns much more than you do ?, as Tony Blair once
implied as a reason for leaving income inequality untouched.
Inequality
is a violation of human rights, and to invoke celebrity pay is just
to throw smoke into your eyes. Few people are likely to argue, that a
society which cuts 28 years of life of the people in the most
disadvantaged neighbourhood (Glasgow Calton) from those of the most
privileged ones (Glasgow Lenzie, London Kensington and Chelsea) is a
decent society. Is it a vindication of the superiority of capitalism
that male life expectancy in capitalist Russia is seventeen years
shorter than in Cuba16? Social status hierarchies are literally
lethal. Why should the lowest rungs of Whitehall have a four times
higher probability of dying before retirement age than the top rungs?
The richest country on earth, the most unequal of the rich countries,
USA, has the third highest rate of relative poverty among the 30
OECD countries, after Mexico and Turkey. Relative poverty means an
exclusion from many parts of the social and cultural life of your
society. The poorest tenth of the US population has an income well
below the OECD average, lower than the poorest tenth in Greece.17
The
turn of capitalist finance into a huge global casino is what created
the current economic crisis, putting hundreds of thousands out of
employment and demanding billions of pounds of taxpayers´ money. In
the South the world crisis is bringing more poverty, hunger, and
death. This effect of run-off distantiation is no longer defensible
by referring to fans´ infatuation and indulgence with their stars.
The
stretch of social distance diminishes social cohesion, which in turn
means more collective problems, like crime and violence, and less
resources for solving all kinds of collective problems, from
national identity to climate change. Western Europe, east of the
British Isles, west of Poland, and north of the Alps is still the
world´s least inegalitarian area. For an experience of the full
power of inequalities, you should look at the violence and the fear
of most South African and Latin American cities.
What
Is to Be Done?
While
explicitly refusing the mantle of the politician or the prophet,
there are a few things an expatriate scholar might venture to say.
Global
inequality is to a large extent class and intra-state ethnic
inequality, although in overall world statistics inter-national
demarcations still have the upper hand in income inequality. Class
and ethnicity are crucial. While overall income inequality is still
governed by nation-state divisions, class and ethnic demarcations are
cutting through them. We learnt above that intra-Glasgow inequality
of life expectancy in the 2000s superseded the gap between the UK and
sub-Saharan Africa in the l970s. The inter-national ratio between the
richest nations, with 10% of world population, and the poorest
countries was 39 in 2005. Between the classes of Brazil the 10/10
ratio was 48, in Chile 40, and in South Africa 33.18 “Globalization”
is no convincing excuse of inequality. Global equalisation requires
that the popular, disadvantaged forces of the inegalitarian countries
are strengthened.
Corresponding
to the mechanisms of inequality there are mechanisms of equality,
already tried. Opposite to distantiation there is rapprochement,
whether by catching up or by compensating handicaps. China and India
are catching up after regaining national sovereignty around l950, a
crucial break of half a century of stagnation, arguably more epochal
than the turn to state-guided capitalism in China from l978 and to
capitalist liberalisation in India from around l990. Inside
countries, affirmative action in favour of scheduled castes and
tribes in India, in favour of women from South Asia to the North
Atlantic, and of Afro-Americans in the US have been significant in
reducing inequalities.
Inclusion
has brought women into public space and labour markets in many parts
of the globe. Recently it has changed the Creole coloniality of some
of the Amerindian republics of Latin America, mainly Bolivia and
Ecuador. Defeats have been suffered in Guatemala – where the
indigenous peoples are very fragmented -, Peru, and elsewhere. But
the issue of how to include the “First Nations” into the polity
of the 21st century remains on the agenda, from Chile to Canada. The
European Union has recently included an impoverished Eastern Europe
into its area of prosperity.
In
retrospect, the managerial de-hierarchisation from the l980s turns
out to have been, in income, more a polarisation between top and
bottom, cutting out the middle, than a measure of equalisation. Gains
from post-hierarchical informalisation should be expected, but hard
evidence seems to be unavailable.
Redistribution
and recompensation are powerful tools. Denamrk and Sweden are the
least income unequal countries of the world.19Both are heavily
dependent on the world market, merchandise export making up 35% of
Danish Gross National Income and 40% of Swedish, as compared to 17%
of the UK. The Danish welfare state spends 28% of GDPon social
expenditure, the Swedish 31%, and the UK 20%.20 (OECD 2006 ..l.)
Marketeers will then ask, is this equality and generosity sustainable
on the world market?
The
irrefutable answer is yes. For many years, the Davos World Economic
Forum Global Competitiveness Reports have put the Scandinavian
countries at the very top, the USA and Switzerland. In the 2006-2008
editions Denmark was ranked no . 3 in global competitiveness, with
Sweden as no. 4 in 2007-8. New Labour Britain was no. 9, down from
no.2 in 2006-7.21
While
these composite rankings should always be taken by a serious
observer´s pinch of salt, the success of the Nordic welfare states,
with Finland on rung 6 and oil-rich Norway on 16 among 131 countries,
on a world capitalist list, certainly does mean that generous,
relatively egalitarian welfare states are neither utopias nor
protected enclaves, but highly competitive participants in the world
market.
Soundings (London) April 2009
