Economic inequality is almost never harmless

April 25, 2019 (1052 words) :: (continued from day 113) The reason economic inequality is a problem is because it grants some undue power over others.
Tags: inequality

This post is day 115 of a personal challenge to write every day in 2019. See the other fragments, or sign up for my weekly newsletter.


Continued from day 113. Part 3 of a 3-part series that attempts to explain why economic inequality is bad.

Here’s a thought experiment. Imagine a world where no one is poor - everyone has a decent standard of life, and has all the material resources they need, etc - but economic inequality is high, because one person (a Jeff Bezos-type figure, say) has a lot of money, for unspecified reasons. Maybe he inherited it, maybe he collects rent from some product he built, maybe he “deserves it” as a reward for some unspecified “innovation”, but no matter, because no one complains. Economic inequality is high, but poverty is non-existent, so what’s the problem?

This seems to be the usual line from those who see inequality as natural/inevitable/defensible: conjure up a fantastical utopia where things are fine despite inequality being high, and chalk this up to inequality being fine a priori. The obvious rejoinder here is that this world is not the world we live in, and when leftists (and even non-leftists) complain about inequality, it’s not a complaint about inequality in the abstract. It’s a complaint about the current levels of inequality, we do not live in a world where there is no poverty. In fact, the typical socialist intrepretation is that some are rich precisely because of the poverty of others, even if this relationship is a general one, mediated capitalism’s various opaque mechanisms, and not always evident for every individual source of wealth.

And there’s another problem with the implausibility of this thought experiment: how is this world even achievable under capitalism? Capitalism’s key innovation is to get most people to work for other people because they would otherwise lack access to the means of survival (I wrote about this in a previous fragment), and if you decreased poverty to the point where no one actually has to work, because everything they need is freely available without having to subject themselves to the power of a boss, then it seems to me like you don’t have capitalism anymore. I personally think would be a great turn of events, but I suspect that people who defend inequality along these lines are also pro-capitalism, so maybe they have a different understanding of what capitalism is than I do.

In any case, this line of reasoning seems to misunderstand what economic inequality really means. Some forms of inequality are okay, if the resource that’s unequally distributed is not that important to everyone; it’s not a huge deal that some people have special Pokémon cards while others don’t, in the grand scheme of things. Whether or not you own a holographic Charizard is not a pivotal question in our economy today. What makes economic inequality fundamental is the fact that the economy is a way of apportioning access to and control over material resources. Money, as a proxy for this process of divvying up resources, then becomes a means of expressing social power, simply because it affects other (less wealthy) people’s ability to live their lives.

Consider the relationship between two people in an unequal power hierarchy: employee and boss; student and teacher; grad student and advisor. If the latter abuses their power, e.g. through sexual assault or making the former work harder than is reasonable, that’s generally considered a bad thing, because it’s an abuse of power. To prevent such a thing, we should limit the latter’s unchecked power by empowering the former to either hold them accountable, or to exit the relationship without any negative consequences (e.g., a bad recommendation, or not being able to graduate on time, or being unable to pay your bills).

Here’s the thing about extreme wealth: it is a means of wielding power over others. However, unlike the specific power of an employer over an employee, or teacher over a student, it’s an unspecific and highly dispersed form of power. Sometimes this power can be used for relatively innocuous ends, but when the distribution of this form of power is highly unequal (because some people cannot afford insulin, whereas others flit around in private jets between their various homes), then we’re veering into “abuse of power” territory.

What we have now is a world where some people can only have their base needs met through working for someone else - i.e., subjecting themselves to the power of another. Without mechanisms for holding the wealthy accountable for their exercise of power (through a legal or extra-legal system that holds them in check), while also allowing workers to exit if they are unhappy with their situation (through a strong social safety net), the result is the deeply unfair society we see today, where a few rich assholes have an ungodly amount of power over others. On the other hand, if we made these mechanisms robust enough, then extreme wealth would cease to have as much economic power, which would erode its claim to truly being “wealth” as we usually see it (having holographic Charizards doesn’t make you wealthy if nobody else wants them).

To sum up: extreme wealth disparities are bad because they permit unchecked power over others. For extreme wealth inequality to be morally justified, it would have to take place within a world where the means of subsistance are not privatised, and so not having money would not necessitate deprivation. But in such a case, if money were not the primary guarantor of access to resources, we wouldn’t really have capitalism anymore, and money would cease to be money in the current sense, because the pursuit of it would be less pressing. Accumulating money would just be a game, with no important (material) real-world consequences. (You could argue that this is, in fact, the case for the ultra-rich, but I propose that their financial games are only made possible by the ignored labour of those who are motivated by material concerns, and without whom the system would no longer function.)

The way I see it, extreme wealth is only moral if it coincides with a total lack of deprivation. If that’s not the case, then the goal should be to transform the economic landscape such that either 1) extreme wealth inequality is impossible, or 2) wealth inequality no longer has real-world effects. This would, of course, necessitate a new mode of production. It’s about time.


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