The Paradoxes of Inequality

10 Oct

In the wake of the financial crisis, and the re-establishment of massive corporate profits during a vertiginous economic period, the issue of inequality has become increasingly prominent amongst critical thinkers. The recognition that the period of neoliberalism has been beneficial in a massively asymmetrical way to the richest is a powerful argument against the neoliberal dogma. Yet with countries like the UK disproportionately cutting government spending on the poor, it seems that the only thing changing is the ease with which the poorest can be attacked.

(h/t: Consider the Evidence)

In light of this, two recent pieces of research on inequality raise some interesting questions about the social understanding of inequality and about the nature of ‘conservativeness’ in America. The first piece from Michael Norton (Harvard Business School) and Dan Ariely (Duke University) undertook a random survey of Americans, seeking to find answers to two basic questions:

1)      What level of inequality do you think currently exists?

2)      What level of inequality would exist in an ideal society?

The authors mapped out the answers to these surveys, and presented them along with the inequality in actually existing capitalism. The results are intriguing – not only do people underestimate the level of inequality in society, but they level of equality they think an ideal society should have is surprisingly leftist (particularly for a conservative country such as modern America).

The first disconnect – between perceptions and reality of inequality – is perhaps unsurprising. There may be ideological covers for this disconnect, and there may be simple cognitive limits to it as well. For instance, various studies have shown that the primary determinant of happiness is relative wealth and not absolute wealth. People tend to be more aware of their close social network and their standing relative to it, rather than their relation to any sort of social totality. The result is that people systematically misperceive the social totality.

The second disconnect – between perceptions and the ideal – is much more interesting, and leads us to the next piece of research on inequality. Because if the ideal society of most Americans tends towards a quite leftist position, how do we explain the pervasiveness of the conservative position (and the rise of the Tea Party) within American politics?

According to Nathan Kelly (University of Tennessee) and Peter Enns (Cornell University), it is partly because – counterintuitively – increases in inequality lead to increasingly conservative political positions. As Mark Thoma relates:

Their first main finding: increases in inequality are associated with a conservative shift in mood and increasing opposition to welfare. (For more on why this would be true, see this paper (pdf) by Roland Benabou.)

Their second main finding: increases in inequality are associated with a conservative shift among both the wealthy and the poor.

One natural objection: perhaps some citizens, and especially poorer citizens, just do not realize that inequality has increased. But the third main finding contradicts this: over time, the poor are actually more likely to perceive increased inequality than do the wealthy.

Kelly and Enns explain this oddity by arguing for a form of ideological cover – the media may have been more prone to emphasize individualism during good economic times (that is, good for the richest). The poorest therefore have been led to believe that their social standing is their individual responsibility (one of the tenets of Mark Fisher’s capitalist realism). While this is likely partly true, it seems unlikely to be the full story. The surge of conservatism in the face of rising inequality (and the simultaneous belief in an egalitarian ideal) is an open paradox on the issue of inequality.

Of course, the giant elephant in the room with all this research is ‘class’. In neither of the two articles is there a single mention of the word. The great taboo term of America is not a profanity, but rather a political term. Without the concept of class, there is no suggestion of struggle between them, or a concerted effort to shape distributional conflicts in beneficial ways. There’s no sense of structural positions and what this entails for individuals. There’s no sense of systemic forms of exploitation. Even work by the former IMF employee Simon Johnson and James Kwak on the political economy of Wall Street ties the knot between class and political power tighter. If American political economy is going to move ahead, the phobia of class needs to be overcome and a sober look at how political and economic power have intertwined over the past 40 years needs to be undertaken.

On a final, more pragmatic level – there may be a warning in this research for the numerous rumblings of a ‘winter of discontent’ in the UK. Despite the clear-cut class struggle within America and the UK, leftists cannot assume the support of the public. (A visit to The Guardian’s CIF comments can make this abundantly clear as well.) The paradox of inequality may therefore be that in a situation primed for leftist intervention, it is the conservative tendency that nevertheless dominates.

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7 Responses to “The Paradoxes of Inequality”

  1. Douglas October 13, 2010 at 3:06 pm #

    There is one small point that might shed some light on this. It is the most conservative (Ayn Rand readers) that do not believe the banks should have been bailed out, and who believe that a massive redistibution of wealth from taxpayers to profiteering corporations has been engineered by a political class too detached from the concerns of the common man. It is hard to see how class, or even old fashioned distinctions between left and right really measure up in this debate. The real questions seem to me to reduce not to matters of inequality per se, but alienation. i.e., it is no longer useful to think of the alienation of labour within a capitalist mode of production, but about the alienation of citizens from the political economy altogether, and their general desire for a meaningful place within it. In this sense ‘class’ might actually be a source of status within a polity, hence the nostalgia for ‘working class protest’ in a context where it can only fail. The Tea Party (despite its incoherence and strangeness) can only be understood as fragment, or an aspect of this. Equally, the kind of inner-city squalor and drug dependency portrayed in The Wire (or on last night’s Newsnight report on Gary, Indiana), might be another fragment. Class as an analytical category – I think – has nothing to add to this.

    • Roberto October 13, 2010 at 10:29 pm #

      I am afraid I do not agree with your comment, Douglas. If this crisis has demonstrated something, to date, is the analytical relevance of the concept of class in understanding the evolution of the global political economy, and of domestic political economies within it. Then, we may both agree that this relevance has not brought any resurgence – yet – of organised class politics, but this I think is a rather different issue.

      The shift that you propose for supposedly broadening our focus – from inequality to alienation – is very problematic too, as it obfuscates the relevance of one’s own social condition within a given structure, which weighs immensely on the form of her alienation. Even existentialist philosophers such as Kierkegaard or Heidegger suffered from forms of alienation, and devoted much of their time to try and unravel their foundations. Yet it is not this type of alienation that meaningful economic policies – and better political economies – are meant to be addressing.

      In this respect, I argue that the concept of social class still retains a key role. In that it allows to take account of the fragments that you mention (populist pulsions and drug abuse in the new ghettos) and many more, and tries to frame them through a holistic approach, that need not lead to a holistic explanation.

      Finally, the wave of protests across Europe – disjointed and parochial as they may be – are still very much “working class protests”. A new working class, certainly, not made up exclusively by industrial workers, but a working class nonetheless.

      • Douglas October 14, 2010 at 1:18 am #

        No need to be afraid Roberto. Disagreement comes naturally to me. But I’m still at a loss to understand what class offers an analysis of the contemporary situation. If there really was such a notion as class that meant anything to anybody, I think they would reach for it with both hands. I suggest that these ‘working class protests’ that you say are happening all over Europe are nothing of the kind. They have the outward form of working class protests, but are merely distributional struggles over an increasing pile of unwanted debts and unpaid bills. (I have yet to see real protests erupting in Germany for example, where they actually still have a large amount of industrial workers). Working class struggle used to be framed around capturing a greater share of the surplus generated by the very working class who struggled for it. Protests by recipients of intergenerational transfer payments are merely protests for the right to burden their own children with the costs of a lifestyle they have simply not earned. Bringing the country to a standstill could – once upon a time – be a successful strategy employed by collectivised labour. But when the country is effectively already at a standstill, then its purpose is mere narcissism. The anger is genuine, and is a consequence of being lied to, but those lies were told to win power when people were only prepared to listen to lies. I don’t think the situation is hopeless, but I don’t think resorting to the language of class represents anything other than digging a deeper hole than we are already in.

  2. Roberto October 14, 2010 at 11:52 am #

    It seems to me that your apparently neat analysis suffers from two problems. In the first place, the dichotomy between today’s distributional struggles and yesterday’s struggles for “capturing a greater share of the surplus generated by the working class” is a false one in my view. Particularly because yesterday’s struggles obtained exactly those “intergenerational transfer payments” that are currectly under attack. More generally, the move you propose from class to generational struggle seems to be both slippery and deeply unfair. Slippery because it wants to exclude an integral part of the process of capital accumulation (labour) from primitive (re)accumulation – your distributional struggles – while keeping the other one in, and as the main beneficiary in the form of financial capital. Deeply unfair because it imposes a sense of moral responsibility over weaker social groups on the part of those whose sense of moral responsiblity was at least questionable in the lead-up to this situation. But here I am afraid we would fall back on the issue of who is to blame for the crisis, where our divergences would be hard to bridge.

    Secondly, in a political economy that has increasingly become global, speaking of national solutions to the crisis makes much less sense than in the past. I think you will concur that, among the factors of production, as land to date cannot move, capital has considerably increased its mobility vis-à-vis labour. Setting our eyes exclusively on the national accounts hides this key condition, and the implication that follows from it that the only way out is a broader and radical change in the global political economy. Where class – as an analytical and hopefully a political category – still has a significant role to play.

  3. Douglas October 14, 2010 at 1:50 pm #

    Clearly if we lived in a properly globalised economy, then there might be a different set of transformational possibilities. But protests in Spain, will not stop Spain going bust. And the day Chinese and Brazilian workers down tools for their Spanish brethren is still a little over the horizon I feel. Equally, I think differentiating between the collective moral responsibilities of different social groups is problematic. People have moral responsibilities – in particular, political leaders have political responsibilities, classes do not. Debates about the responsibility for this crisis do matter very greatly, and I don’t excuse what you call ‘capital’, I just think movements of capital are effects of macro-economic and regulatory decisions rather than quasi-agential processes. And in any event, as far as I’m concerned the fish always stinks from the head. Bad policies, produce bad outcomes. Lastly, you are right to question the relationship between national decision making and political outcomes, but the problems occur at a national level, even if their inspiration emerges from the cosy salons of Davos.

    PS, Am I right in assuming that you think burdening the economy with debt that our children won’t pay off in their lifetimes was a triumph of ‘working class protest’? Something of a Pyrric victory if so, I would say.


  1. The Ethics of Austerity « The Disorder Of Things - October 20, 2010

    [...] fortunes of capitalism seem to have improved rapidly. Nick and Roberto have already examined the paradox that worsening inequality has led to a retrenchment of the policies that caused it and highlighted the political reassertion [...]

  2. Austerity, USA « The Disorder Of Things - January 7, 2011

    [...] My co-bloggers have already raises this question: Nick highlighted the tendency of electorates to shift to the right when inequality is on the rise, and Roberto examined the connections between neo-liberal entrenchment and the political weakness [...]

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