Arguing for Economic Inequality

In a previous installment, I took up the easy task of debunking arguments for inequality having to do with various personal characteristics. Today I want to take up the somewhat more challenging arguments for economic inequality. 

First, we have to acknowledge that vast disparities in wealth have been with us since the neolithic revolution, albeit to varying degrees in different times and places. That might lead some people to conclude that inequality is just inevitable, so why even bother? I can easily counter that as an error of induction. While complex societies have generally been unequal, the form that inequality took and the way in which it was maintained has varied markedly. European feudalism no longer exists, and indeed ranks of nobility are reduced to largely meaningless labels almost everywhere. Some of the Arab states are still family-owned kingdoms but that just reinforces the point. Inequality in Saudi Arabia takes a very different from than it does in the U.S. So the fact that inequality has been with us for a long time doesn't prove anything, except that it's been a feature of many different societies that few people would want to see restored or adopted.

So the arguments for economic inequality that we encounter are specific to our own system of capitalism. Capitalism emerged in concert with the technological revolution that followed on the Enlightenment. Land ownership was no longer the primary basis of wealth and there were now a whole lot of opportunities to make money by investing in technology. I won't go into this history in more detail but obviously that's where we are now. In the past people got rich by investing in railroads and oil wells and steel mills and motor vehicle factories. Those still exist of course but the real growth opportunities are in information and communication technology. The point is that the vast increase in material output and societal wealth that took off around 1800 has happened under capitalism.

That makes a lot of people think that capitalism is a really good system. The Communist parties of the Soviet Union and China promised both economic growth and equality, but delivered much less economic dynamism than capitalism and no equality either. In many people's minds, this sets up an inescapable dichotomy. You can have capitalism or you can have communism. That seems an easy choice. But is there really no alternative?

All of this is to set up the discussion I will undertake next time.