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The Political Origins of Inequality

Why a More Equal World is Better for Us All

The University of Chicago Press

The Political Forms of Inequality

Man is born free; and everywhere he is in chains. — Jean-Jacques Rousseau, The Social Contract

From the crisis in the eurozone to the US Congress shutting down, from food riots in Africa to Bangladesh's Rana Plaza caving in, our societies are more fractured and divided than ever before. And yet the problem is not that the world is falling apart. To the contrary, worlds we once thought separate are colliding. It is our ability to act in concert that is falling apart. It is this that needs restoring most of all.

We are not helped in this by the fact that our present language for making sense of the world has for some time now been corralled into a debate about economic globalisation on the one hand and development assistance on the other. Both vocabularies are rather less helpful than we are usually led to believe.

Globalisation and Development

That our lives are fundamentally shaped in relation to a global economy is hardly news any more. But the more the world is subject to "global forces", the less it seems that we know what to do about them. And not knowing where to begin, we have allowed our politicians and our captains of industry to locate the causes of the problem elsewhere. Yet this denies the fact that today's global economy was itself built on a rejection of the earlier, Keynesian international order, and at a quite specifiable moment, the 1970s, when countries like the United States, the United Kingdom, and France all made the conscious choice to uproot the earlier unspoken commitment to regulating economic affairs. That earlier commitment had been put in place precisely to avoid the market instability that had led to the Great Depression. But in the 1970s, the rich countries believed, and they were right, that their nations stood to gain more from the market volatility that would result if the safety catches were once again removed.

The modern era of globalisation was inaugurated on distinctly uneven terms, then. But our problems today are about more than just the chickens of imprudent wealth creation coming home to roost. And holding globalisation itself responsible for what is done in its name all too often diverts attention from the more specifiable policies and practices we should be focusing on.

Too many of those protesting around the world today, for example, have too little to say about the way that emerging powers like India and Brazil are redrawing the lines between the winners and losers of globalisation. They have too little to say about the fact that many of the world's poor are now found within the borders of those states, where their own countries' corporations exploit them just as effectively as the Americans or Europeans ever did. Indeed, no sooner do countries like India, China, and Russia gain the attention of international investors than do questions of poverty and injustice invariably seem to disappear from the agenda altogether: a fact for which those countries' own governments are usually only too grateful.

Globalisation is today routinely presented as if its myriad economic and cultural exchanges add up to some larger, visceral force of nature: an unstoppable slither of fibre-optic cables and digital flows of money. In this reading, world poverty is little more than the patchy earth this beast chooses to pass by on. We have become so used to hearing about the "forces of globalisation" that we no longer bother to question what those forces actually are or whether they might be organised more fairly.

Perhaps this is not surprising. Given the tepid wash of compacts and summitry that passes for international politics today, it is indeed tempting to assume that democratic politics — reasoned political debate and argument, for those no longer sure — has nothing to do or say about the state of the world. But in truth there is much that politics — even national and local politics — should have to say about what globalisation is and does. We just need to start posing the right questions — or empower the right people to ask them for us.

The difficulty of asking the right questions, but also the reluctance to do so, is one reason the field of international development has, for more than half a century, served as a proxy for international politics. Development purports to include the global poor, but it has tended to so in ways that incorporate them as victims rather than as citizens, much less as equal ones. In rich countries today it sometimes seems as if there are few things for which an individual human right has not somewhere been enshrined. Yet when it comes to the global poor, we immediately start talking in aggregate: the struggles and the triumphs of individual selves get buried beneath our cloying talk of those who live on less than a dollar a day (now $1.25, of course).

Such talk may be well intentioned, but it is also a part of the problem. It is politically easier to talk about increasing the proportion of the world's people who earn more than this magic figure than it is to point out that, for example, in 2012 the annual increase in the combined wealth of the richest one hundred billionaires alone was enough to lift everybody in the world above this line. It is politically easier to collect refugees together in camps that we then supply with blankets than it is to acknowledge that their problems are also our own.

This is one reason "emergency" has for some time now been just another word for "business as usual" for most of the rich-country-controlled organisations that ultimately do little more than simply manage the expectations of the world's poor. International organisations like the World Bank and the International Monetary Fund may be free of the Realpolitik and ideological self-interest that determined the international aid agenda during the Cold War. But in place of the overtly politicised aid of before, there is now almost no desire to set the problem of global injustice within any overt discussion of politics at all.

Meanwhile corporations, philanthropists, and unelected non-governmental organisations proceed to fill the gap with a constant deluge of poverty reduction "innovations". Too infrequently do those in positions of authority stop to reflect that this is not how today's rich countries developed, that we in fact did what we usually insist today's poorer countries don't do (such as protecting national industries behind tariff barriers). But it is not enough to cheer on the poor from poverty to power either, since poverty is a product of power. More than that, poverty is power — a form of power that some wield over others. What the development industry has yet to fully come to terms with is the simple fact that it is our development that often stands in the way of their development.

There is a lot of talk within international organisations, for example, involving buzzwords like "protection" and "resilience". But it isn't always clear to whose better ends such words are being put, or at times what they even mean. Of course, many of those working in these organisations would be the first to say so — but then they need to push back at what they are being told to do. What is the vision of Britain's minister for international development, we might ask? According to the aid expert Jonathan Glennie, "No one asks and no one cares; her job is to manage an aid portfolio apolitically."

Glennie is right. Western governments and NGOs, along with many of the poorer governments they preach to, have increasingly come to favour the sweet pill of technocratic solutions focused on managing the symptoms (spinning the results when needed) to tackling the underlying problems head-on. They have learned to avoid the latter like the plague, in fact, because taking on those problems would demand that we make transparent the political choices inherent in today's uneven world order and have those be subject to public scrutiny. In truth this has long been "the challenge of world poverty", as the Swedish development economist and Nobel Prize winner Gunnar Myrdal put it nearly half a century ago. Yet it jars with almost everything we are told about global poverty today.

So too do the facts of uneven global development. Stock-in-trade images of a bottom-billion world of landlocked nations mired in poverty traps or floundering at the foot of a development ladder are confounded by the fact that a great many people have been lifted out of poverty in recent decades: almost 1 billion between 1990 and 2010. All this is to be praised (though we should recall that it was China, not the Millennium Development Goals, which did most to contribute to the reduction). But it remains the case that after "lifting" out of poverty, these people simply join a great many more whose problems are only marginally less acute. The structural causes of impoverishment and uneven development, meanwhile, which is to say the world's presently highly unfair ways of wealth, not only remain intact but go on largely unspoken of as well. There was little talk within the context of the MDGs about the no less remarkable fact that the global 1% saw its collective real income rise by 60% during the same period.

Many experts insist on telling us still what the poor need to do to get richer, to become a little more like us: they speak accordingly not just of development ladders, but of "aspirant" and "climber" classes. Yet it seems that the poor are not found any more quite where these experts are looking for them. Their problems are certainly not what we are told to imagine. And it is far from clear, at the end of the day, that how to become like us is what keeps them up at night. Take a step back and it is in fact the geography and not the overall burden of poverty that is changing. Moreover, that geography is changing in such a way as to increase the future significance of inequality — by shifting it to middle-income countries, for example.

All these changes have put the traditional development arguments of both the left and the right out of joint. On the right, calls to end aid altogether are increasingly common, especially now that austerity bites in the rich countries too, and aid seems like a luxury of the past. It may be true that poorly executed aid programmes become a crutch for local, unproductive elites, but cutting the aid lifeline altogether has no more humanity about it than when the British did this to their own poor in 1834 (throwing out the existing aid-in-wages system overnight, thereby "freeing" people to take responsibility for themselves). On the left, it is more common to single out Western corporations and the "shock doctors" of free-market economics.

But both of those are merely acting in line with what international rules allow them to do. And those rules are set either by governments, which are voted for by people like us, or by companies, which respond to what their shareholders (including your pension plan and mine) demand. It is not just capital that matters, then, but the social structures and norms that justify and enable the accumulation of it. At the very beginning of the capitalist age, the division of economies into national units engaged in a zero-sum struggle was seen by Adam Smith and his contemporaries as a basic political root of inequality. Today we should look to the division of liberty itself into rights that can be "profitably" met by the market and freedoms which cannot.

Yet if the twin vocabularies of globalisation and development prevent us from seeing this, it is worth noting that such rhetoric is more recent than we sometimes recall. In the post-communist triumphalism of the 1990s — the first of two decades "consumed by locusts", as the historian Tony Judt put it — we ceded far too much control in the West to whomever and whatever seemed to promise us the greatest growth in our gross domestic product. In the second of those decades — the one that began on the morning of September 11, 2001 — we spent most of our time simply avoiding the consequences of our earlier naïveté, blaming poverty and the poor for the chaotic and disordered places we had ourselves created but now feared the next terrorist threat might come from.

But poverty is not simply the product of a "lack" of development or sufficient quantities of trade or materials to trade with. It is the product of uneven (and in many cases unfair) rules and the ability of some societies to manage such scant regulations as currently exist to their own short-term benefit. It is a problem of past political choices that have built up over time and the leverage this grants some people over others. It is central to the organisation of capitalism as a system and so central to the production of wealth.

Global wealth is likewise not just a measure of the value of a few people's "holdings" so much as a claim of entitlement to the running of the system itself. There is no reason to expect the geography of poverty and wealth to remain the same over time: just think of all the factories now lying deserted in Philadelphia and the pits that have closed in Yorkshire or the Rhine, as against the money that pours in to found construction booms in places like Dubai. But there is every reason to expect that when wealth is left to its own devices, the basic structure of inequality is destined to be perpetuated.

It is abundantly clear today, then, that the whole language of globalisation and development has been left behind by the facts of an unequal world, and left behind by the times. So too, unfortunately, have the slum dwellers of Caracas and Mumbai and São Paulo, while their compatriots drive, helicopter, and even funiculaire right past them on the way to work. What we need today are fewer platitudes about the benefits of a flat-world economy, a little less insistence that we can end global poverty in our lifetime, and a bit more recognition of the actual political and historical ways in which the lives of rich and poor are enmeshed.

There is a growing awareness of this today. But there is nothing like a clear enough appreciation of why addressing global inequality matters, either for ending the worst of the poverty that blights our world or for safeguarding the future of those of us who are, for now at least, somewhat better off.

Economic Growth and Political Inequality

Exactly why this matters begins to become clear when we look at the history of national GDP growth around the world over the past two centuries. One of the first things that immediately becomes clear is that the problem of uneven development is not primarily a problem of poverty in the first instance. It is a problem that began with the enrichment of some parts of the globe at the expense of others under colonialism.

The "primitive innocence" that early modern Europe projected onto the cultures it encountered at the fringes of its ornate yet tentative maps of discovery was always a backhanded compliment. It merely served to confirm Western "modernity" in its sophistication. Meanwhile, Europe worked hard to create and manage markets among and between those parts of the world it controlled. In order to accumulate the wealth it needed to prove its own superiority, the British traded opium from Patna for tea leaves from China to ensure that both of those economies kept producing the tribute to which imperial London was growing accustomed.

This had little to do with "free trade". In India the British East India Company forced workers into the production of opium (actively undermining a previously thriving, transoceanic textile industry). In China gunboats were used to complete the sale there (all in the name of British shareholder value). Similar tactics were applied right across the colonial world. Settler populations in the United States and New Zealand received state support to corral, reserve, or otherwise prise local indigenous populations off their land. In southern Africa a nascent, European-financed mining industry did the same to local populations there, this time through the levers of colonial-state policies of war and taxation.

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Excerpted from The Political Origins of Inequality by Simon Reid-Henry. Copyright © 2015 The University of Chicago. Excerpted by permission of The University of Chicago Press.
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