Should We Care About Inequality?

Since Occupy Wall Street, “inequality” has emerged as a central theme of progressive politics. Is that a good thing?

Poverty and Wealth by William Powell Frith, 1888. Sotheby's New York / Wikimedia

Following the sensational success of Thomas Piketty’s Capital in the Twenty-First Century, with no less than 2.5 million copies of the book sold worldwide, inequality is now widely perceived, to quote Bernie Sanders, as “the great moral issue of our time.” Clearly the shift is part of a wider transformation of American and European politics in the wake the 2008 crash that has turned the “1%” into an object of increasing attention. Marx’s Capital is now a bestseller in the “free enterprise” section of the Kindle store, Jacobin is considered a respectable place to be published, and socialism no longer looks like a failed rock band trying to climb on stage when the “party” is already over. On the contrary, if we are to believe Gloria Steinem, a Bernie Sanders rally is now the “place to be,” even “for the girls.”

On closer scrutiny, however, it’s not entirely clear how well our current interest in inequality (especially income inequality) rhymes with Marx’s own theory, or the ideas that dominated social-policy debates in decades following the Second World War. In fact, one could even argue that our current focus on income and wealth inequality, while crucial to any progressive agenda, also misses some of the most important aspects of the nineteenth-century critique of capitalism. At that time, “income inequality” was an elusive and at best ancillary term. In fact, the “monetization” of inequality is actually a relatively recent way of seeing the world — and, aside from its obvious strengths, it is also a way of seeing that, as the historian Pedro Ramos Pinto noted, has considerably “narrowed” the way we think about social justice.

The Lost Word in Capital

There may be no better way to gauge this difference than simply by looking at one of socialism’s classics itself: Capital. As surprising as it may seem, the term “inequality” per se was never a crucial category for Marx — or for nineteenth-century socialists, for that matter. Interestingly, the word itself, depending on the translation, appears fewer than five times in Marx’s voluminous masterpiece.

Our own conception of inequality, as something measured by the dispersion of income and wealth among individuals rather than between factors of production, such as labor and capital, became widespread only decades after Marx’s death in 1883. As Branko Milanovic argued, for a long time, if you assumed that “all workers are at subsistence, all capitalists rich, and all landlords even richer,” it simply did not make sense to think about inequality at an inter-individual level. No thinker until the late nineteenth century had ever thought to rank every single individual by total income to measure its distribution. For them, differences between classes, rather than between individuals, were what mattered. Only with the work of the Italian sociologist Vilfredo Pareto (later a fascist sympathizer) did proper tools to measure inequality as we know it today really emerge.

Obviously, Marx thought capitalism was a system that allocated society’s resources in a dramatically unequal fashion. In chapter 25 of Capital, where he deals with the “law of capitalist accumulation,” the philosopher famously wrote that the “accumulation of wealth at one pole” is “at the same time accumulation of misery, agony of toil slavery, ignorance, brutality, mental degradation, at the opposite pole.” Along the same lines, Marx thought that capitalism could only exist in a society where “two very different kinds of commodity-possessors must come face to face and into contact”; on the one hand the owners of the “means of production” and “subsistence,” and on the other, “free laborers,” those who have only “their own labor power” to sell. In other words, capitalism presupposes “the complete separation of the laborers from all property in the means by which they can realize their labour.” From that perspective, capitalism itself, for Marx, was built on a primordial inequality in access to property, achieved through a violent expropriation that he famously called “primitive accumulation.”

Even here, however, Marx still thought of inequality in terms of classes that were produced by capitalism, rather than in individual terms. For Marx, it seems, the problem was not exactly how income was distributed among people but how capitalism itself tended inherently toward the immiseration of workers and the production of “a relatively redundant population of laborers.” In that sense, as Samuel Moyn has observed, it is quite clear that Marx never really embraced any conception of “distributional equality” because, within capitalism, it would always be “hostage to class rule.” Rather, he tried to imagine a post-market society. Of course, Marx’s ideal never fully came into existence in Western Europe or the United States, but his analysis of the causes of inequality, rooted in a rich literature of nineteenth-century thinkers and economists like Eugène Buret or Charles Fourier, would prove an enduring influence on how to think about inequality, well beyond the circle of self-proclaimed Marxists.

The Capitalist War Against Equality

After the Second World War, if the question of equality mattered for policymakers and thinkers, none of them really separated it from the question of the market. Not because it was a secondary issue for them — quite the opposite. Rather, it was simply due to the fact that “inequality” was rarely thought of independently from the question of what role the market would be given in society.

This understanding was hardly new. Already in 1841, when the French journalist and economist Eugène Buret wrote one of the first general analyses of the causes of poverty within the rising industrial order, he famously argued that “if misery exists,” it progresses “at the same pace as wealth”; it grows “under the influence of the same causes.” For him, it was clear that an economic order where the principle of “laissez-faire” was dominant shaped a society in which “the extreme freedom of the rich and the strong” is paid at the cost of the “servitude of the poor and the weak.” His book, entitled De la misère des classes laborieuses en Angleterre et en France, would become extremely influential, advocating the creation of “fair institutions” that would seek to limit the principle of laissez-faire and put an end to what he called the “hopeless” and “cruel” “theory of work as a commodity.”

It would therefore be quite unsurprising, more than a century later, to read the British sociologist T.H. Marshall arguing that “basic equality” can’t be “created and preserved without invading the freedom of the competitive market.” For Marshall, who never was a Marxist — though unlike Keynes or Beveridge he was a member of the Labour Party — it was clear even throughout the twentieth century that “citizenship and the capitalist class system have been at war.”

The discrediting of nineteenth-century economic liberalism was so profound that the idea of equality was always embedded within a larger framework of a post-laissez-faire world. Therefore, the institutions that constituted the basis of our modern welfare states were, from their very inception, in fact committed to limiting the sphere of the market in order to produce a more egalitarian society. Under that framework, to quote Steven Fraser, what was then understood as the “labor question” meant “not only to permanently alter the relationship between labor and capital, but in so doing to eliminate the immorality of exploitation, the social inequality and antagonism fostered by great aggregations of wealth, the threat to democratic politics represented by overbearing corporate power and pelf, and even the causes of global and imperialist war.”

Saving Man’s Soul

The problem identified by Fraser — extending the question of inequality beyond monetary concerns — also had a deeply moral and political dimension. For a significant number of the progressive thinkers who had experienced the social dislocations provoked by the birth of a “market society” in the nineteenth century, creating institutions designed to limit it was also a way to preserve a truly democratic order and some fundamental human values.

As the historian Tim Rogan notes in The Moral Economists, it was only very recently that “concerns about inequality” took central stage in arguments against capitalism. In fact, he contends, “for most of the nineteenth and twentieth centuries” what mattered most for figures like Polanyi, R.H. Tawney or even E.P. Thompson was capitalism’s “moral or spiritual desolation.” To these thinkers, the totalized laissez-faire society had not only removed the allocation of wealth and resources from political deliberation but also altered the nature of social transactions as such. The expansion of the economic sphere had “broken” all relations and ties not conducted in the terms of the “naked self-interest” of “cash payment” and “drowned”, as Marx once wrote, “the most heavenly ecstasies of religious fervor … in the icy water of egotistical calculation.”

Even the experience of time, as shown in the writings of E.P. Thompson, underwent a profound change. Rather than time “going by,” as in pre-capitalist economies, it is now “spent” and can therefore be “wasted.” Working hours not only increased considerably — more than doubling compared to the peasants of the Middle Ages — but the standard of living would also, at first, deteriorate with the great exodus to the urban centers where the work force was piling up in infamous conditions. Finally, in order to increase productivity the quality of work itself that would deteriorate considerably: Taylorization transformed man into a simple “accessory to the machine,” as in Charlie Chaplin’s Modern Times, where his entire body is subjected to the temporality of the factory for comic effect.

Whether it concerned production, work, or human relations more generally, “market society,” as Polanyi argued, was seen as a threat to democratic politics by letting the market shape the social order rather than the other way around. More than a mere rhetorical trick, this political and “moral critique” profoundly impacted policymakers and thinkers; the welfare state had to be more than a simple tool for redistribution.

It was for this precise reason that thinkers like Richard Titmuss could argue that the aim of a European welfare state would be to inculcate and preserve the so-called “Dunkirk spirit.” The rescue of thousands of British soldiers from the French coast in May–June 1940 by a flotilla of hundreds of civilian ships had a tremendous impact on the British people. Titmuss, a British social scientist and founder of the study of “social policy,” saw in this “spirit” the seeds of an upcoming “generous society.” As he wrote in the summer of 1940, with Dunkirk, “the mood of the people changed and, in sympathetic response, values changed as well. If dangers were to be shared, then resources should also be shared.”

However, the new order was not just about simple redistribution, but about creating democratic institutions to abolish what Beveridge called the five “giant evils” (want, ignorance, disease, squalor, and idleness) and promoting solidarity beyond the context of war. The welfare state was therefore supposed to offer not only a powerful tool for egalitarianism, but also the promise of a radically new society, closing the chapter of the horrors of the war and of nineteenth-century exploitation.

A New Form of Property

The “Dunkirk Spirit” bestowed on the state a tremendous role in guaranteeing fundamental social rights to its population (rights to health care, to education, to work, and so on). A growing share of wages were now socialized to finance large-scale protection schemes and high tax rates were imposed on the wealthiest members of society, with the revenues allocated to creating public services that would constitute a new “social property.” This notion, in use in France by the end of the nineteenth century, was seen as the solution to the dangers of civil war threatening a society where only property owners were granted full citizenship. As shown by the French sociologist Robert Castel, the aim was to build, alongside existing “private” property, a form of “social” property, which would render “available to non-owners a type of resources that is not the direct possession of a private patrimony, but a right of access to collective goods and services which have a social purpose.”

As Castel argued, one of the most original aspects of these new institutions of social protection and public service was that “this form of ownership is not constituted and does not circulate in the context of market exchanges.” It was also subject to democratic rule. In a sense, then, it’s important to understand welfare state institutions as an extension of the democratic imperative, making the physical reproduction of individuals a matter of political choice. It made it possible to decide collectively what kind of humanity society would create.

Of course, the labor-centered orientation of these new institutions relied essentially on the unpaid labor of women as domestic workers in households sustained by the “Fordist family wage.” Consequently, to various degrees depending on the country, it shaped a model of citizenship with significant exclusionary features for women or the immigrant labor force. However, in contrast to nineteenth-century poor relief systems, this new categorical architecture was, importantly, to be organized against the market rather than acting upon its margins. More importantly, demands and struggles for its effective universalization intensified in the decades following the war, slowly extending its benefits to a larger part of the population.

This perspective would gradually grow in Europe (and to a lesser extent the United States) and constitute the basis of what T.H. Marshall called a “social citizenship.” These institutions, he thought, would not have as their purpose to simply “abate the obvious nuisance of destitution in the lowest ranks of society,” but assumed “the guise of action modifying the whole pattern of social inequality.” “It is no longer content to raise the floor-level in the basement of the social edifice,” he continued, “leaving the superstructure as it was. It has begun to remodel the whole building.” Such a new understanding of the role of the state was promoted throughout the world.

In 1944, the Declaration of Philadelphia, which restated the objectives of the International Labour Organization, declared that “labor is not a commodity” and that “the extension of social security” was a fundamental aim. By 1946, the constitution of the World Health Organization mentioned the “highest attainable level of health as a right,” and by the late fifties, the Swedish economist and Nobel Prize winner Gunnar Myrdal was calling for the establishment of a “Welfare World.” As Samuel Moyn argues in his most recent book, while decolonization continued apace, “the new states born of the struggle against empire tended to dream bigger when it came to their own national welfare, invoking egalitarian ideals.” Postcolonial leaders like Jawaharlal Nehru, Kwame Nkrumah, or Leopold Sedar Senghor were committed to building the promise of welfare beyond the borders of the imperial world.

While hardly spared from criticism, the ideal of the universalization of these institutions remained dominant until the mid-sixties. The commitment to equality was therefore strongly embedded within the more general framework of “social rights” and citizenship rather through the sole lens of income distribution.

However, with the advent of the so-called “affluent society” and the excessive illusions it sustained concerning the shared benefits of growth slowly set aside inequality as a political issue. In his 1958 bestseller The Affluent Society even John K. Galbraith noted the “evident … decline of interest in inequality as an economic issue.” The stunning increase in production had, he thought, functioned as “alternative to redistribution.” What was going to capture public attention by the early sixties was rather the remaining poverty “within affluence.” This surge of concern for poverty would not, however, revive nineteenth-century commitments against the market. Rather, it would radically reshape ideas about social justice. The big issue was no longer inequality, but poverty alone.

The Turn to “Poverty”

When Michael Harrington published what would become his most popular book, The Other America, in March 1962, its purpose was essentially to contest the premises of postwar social policies and categorizations. For Harrington, whose book sold more than a million copies, America’s poor had “missed the social and political gains of the 1930s.” Welfare state programs, he claimed, were no longer the solution but rather part of the problem. Against the dominant view of the time, he thought the postwar institutions of welfare, minimum wages, labor laws, or unions were not designed for the poor and even contributed to their “rejection.” His “other” America was “beyond the welfare state.”

What was at first a statistical account of the persistence of poverty in “abundant” America published in a 1959 issue of Commentary rapidly became a more profound criticism of how poverty had been conceptualized since the nineteenth century. The idea popularized by the book was that “poverty” was now a “specific” condition, detached from the questions of labor, inequality, or the market. This argument was rather new, since in the 1950s nobody really imagined the “poor” as a group of citizens with its own dynamic. Echoing the work of anthropologist Oscar Lewis, Harrington argued that being poor was like being “an internal alien, to grow up in a culture that is radically different from the one that dominates society.” It was, he thought, “the most important analytic point” of the book.

In that sense, the issue of poverty, as it emerged in the early 1960s, would prove qualitatively different from the way it was posed in the nineteenth century. It appeared, above all, not as intrinsically, but rather extrinsically linked to the older divide of the capital-labor relationship.

The question of poverty was decoupled from the question of exploitation. It is no accident that the words “exploitation,” “market,” “socialism,” or even “inequality” barely appear in Harrington’s book — a clear break from nineteenth-century thinkers who never dissociated these questions. But, of course, if the poor constitute a group that “forms a distinct system,” that group also represents a specific problem. Now, as Dwight Macdonald argued in his seminal 1963 review of the book, “inequality of wealth is not necessarily a major social problem per se”; “poverty is.” For McDonald it was clear that the main concern was now to “provide a floor,” and not a system like Social Security that, he thought, simply perpetuated “the inequalities” keeping “the poor forever poor.”

By the early 1970s, in both the US and Europe, the spectacular emergence of the “poverty issue” would strongly encourage a vision of social justice focused on a monetary conception of poverty. Indeed, the focus on the establishment of a “floor” below which nobody could fall rapidly pushed aside any discussion of building ceilings or reducing market dependency. Guaranteed income proposals and negative-income-tax programs became widely popular among policymakers and political parties across the political spectrum, as a way to finally fight poverty while shedding any emphasis on large macroeconomic interventionism and complicated welfare schemes.

There was a flourishing of debates in this period about definitions of poverty and “needs,” opening the way for ambitious programs to measure and compare poverty levels around the planet. In France, the civil servant Lionel Stoléru, who had studied Milton Friedman’s idea of a negative income tax at the Brookings Institution in the early 1970s, offered an apt summary of this shift. In his view, a focus on “poverty” was the only reasonable social policy within a free market system. If we followed a policy that tended to reduce inequality we would inevitably affect “the heart of the dynamism of the market economy.” A program directed specifically against poverty, on the other hand, as argued by Friedman himself, “while operating through the market” would “not distort the market or impede its functioning,” as did Keynesian programs.

In this new conception of social justice, preserving market and price mechanisms was a central concern. If markets created an undesirable outcome, like poor housing, the solution had to be restricted to cash transfers rather than public services (social housing) or state regulations (rent control). As Friedman argued at a time when he still admitted to having “strong egalitarian leanings,” what people “ordinarily attributed to poor housing” and therefore to the market, is “really the social costs of poverty.” The general principle, then, was to rely completely on the “use [of] the price system for distribution of goods” and, when necessary, to “achieve changes in the distribution of income.”

Poverty, Worldwide

At the global level, this “free market compatible” vision of poverty was enthusiastically diffused through international institutions. One of the central architects of this evolution was Robert McNamara. Secretary of Defense under Kennedy and Johnson, he was appointed head of the World Bank in 1968, after playing a decisive role in the escalation of the Vietnam War.

While president of the institution, McNamara articulated an anti-poverty strategy that significantly differed from previous visions. In his view, poverty could be an integral part of the Bank’s strategy if it focused not in redistribution per se, but rather on “helping the poor to reach their productive potential.” “Social justice was globalized and minimized,” Moyn argues, favoring the establishment of a floor under which “no one is allowed to sink,” yet in strong opposition to the egalitarian narratives of postcolonial leaders.

By the eighties, McNamara’s approach had spread to other international institutions. The OECD, for example, called for an end to the extension of social programs and avoiding making equality “an end in itself,” since it should only be considered “a tool to struggle against poverty.” By the nineties, the UN, which in 1996 decreed the first international year for the eradication of poverty, was also very careful to frame its anti-poverty agenda within the larger aim of creating a “growth-friendly economic environment.” What that meant, as stated in the recommendations of the 1996 World Summit for Social Development, was the establishment of “a stable macroeconomic policy framework … which will include controlling inflation, liberalizing trade, promoting agricultural production, freeing prices of agricultural products, encouraging the rural sector, removing constraints on labor markets such as restrictions on labor mobility and ensuring that subsidy systems benefit the needy.”

In reality, the implementation of these “anti-poverty” policies was often accompanied by “structural adjustment” plans and calls for the privatization of public services that had been seen, just decades before, as a crucial dimension of a fairer society. Social justice would henceforth be conceived not as a form of protection against the inequalities generated by the free play of the market but as an intervention aimed at enabling everyone to be part of it. The fight against poverty has thus functioned mainly as a policy for the management of mounting inequalities, rather than trying to limit those inequalities themselves. Unsurprisingly, then, it became the privileged social policy of our contemporary neoliberal era.

In that perspective, what has happened in the 1970s was more than a simple side-lining of considerations related to income inequality. The very basis of how we thought about it was profoundly affected. With the rise of a targeted concern for “poverty,” criticism of the market progressively disappeared as an inherent part of our vision of social justice.

Inequality, Rediscovered?

This long disappearance of inequality as a central concern came to an end during Occupy Wall Street with the striking use of the data collected and “stylized” over the previous years by scholars like Tony Atkinson, Thomas Piketty, or Emmanuel Saez. Indeed, the extent of inequality itself had long been known, yet, as Atossa Araxia Abrahamian recently pointed out, it “wasn’t keeping a lot of scholars up at night.”

The success of the “99%” slogan changed the mood and captured the public imagination, creating the conditions for our current fascination with inequality. However, as argued by Ramos Pinto, this success did not signal a rupture with the focus on quantitative and economic aspects of inequality. On the contrary, while inequality represents an improvement over the previous focus on poverty, it stills narrows our horizon to “personal attributes” and their “relation to the potential for income mobility” rather than looking at more political categories and relations. The discussion remains stuck, looking at “the effect, rather than searching for causes.”

The question we face, then, becomes how should we care about inequality? Indeed, depending on how we think about it, the solutions we could imagine might be very different. If we stick to a vision confined to the effects, and therefore one that is focused on strict income inequality, we might increase equality by reducing the gap between rich and poor.

However, this could perfectly well be done without affecting the market itself — the point being to enhance market opportunities for everyone, to enable people to make the most of it. The only difference now is that the rich won’t be able to spend millions of dollars on solid-gold toilets. This would certainly offer a better world, but still one where we all depend on the market to purchase the goods we need or desire; a world where the economic game is still ruthless but where none of us would fear material deprivation. Not exactly the “Dunkirk Spirit.” This is a world that, in fact, none of the nineteenth-century socialist thinkers ever would have imagined because of their strong belief that inequality was a problem of laissez faire.

This world would differ enormously from one where equality was reached mainly through the decommodification and democratization of goods like health care, education, public transportation, energy, and so on — a world that, by socializing and guaranteeing access to the most important aspects of our existence, would reduce market dependence and therefore attack the source that created inequality in the first place. For a long time, this project had not been seen as outrageously utopian, even by the most moderate reformers. To the contrary, for most of them progressive politics was not only about improving the material condition of workers but, more importantly, about providing the promise of a more democratic and humane society. And it was no doubt this promising vision of the future that in December 1942 motived thousands of people to queue in the cold to buy the copies of the dry and technical document known as the “Beveridge Report,” with sales reaching no less than 635,000 copies.

One might wonder, of course, why we should ask for more than reducing income inequality at a time when even this modest aim seems impossible to reach. Yet, in the aftermath of the “end of history,” ideological boldness has made a stunning comeback — mostly in right-wing and xenophobic guise. Amid this dramatic shift, the Left may have to transcend its narrow commitment to income equality, and promote a bolder vision of a world beyond market utopianism. The power of “big ideas” is that they do not aim to simply redistribute some cards, but to profoundly alter the rules of the game. “A revolutionary moment in the world’s history,” Beveridge noted, is “a time for revolutions, not for patching.”