A Critical Perspective on Economic Inequality

A Critical Perspective on Economic Inequality

Here are some of my initial thoughts on what distinguishes a critical view of economic inequality — a view that the idea of class may help illuminate but which also may be described by a more robust vision of equality.

The problem of economic inequality involves a) conflict b) comprehensive inequities c) power and privilege, not just natural costs d) collective action and institutions e) coercion. f) change and context . My list here is drawn in part from a book aimed at alternative perspectives for teaching economics, put out by the Economic Affairs Bureau of Dollars & Sense Magazine: Randy Albelda, Robert W. Drago, Steven Shulman, Unlevel Playing Fields: Understanding Wage Inequality and Discrimination (2nd Ed. 2004), Chapter 6 The Basics of Political Economy. That Chapter identifies “The Four C’s of Political Economy” [the term the authors use to distinguish a progressive, critical economic vision from neoclassical orthodoxy]. Their Four C’s are Context, Collective Behavior, Conflicting Interests and Change. The term “Political Economy” is helpful because it identifies Economics as fundamentally political; recognizing that the fundmantal distinguishing flaw of neoclassical economics is that it identifies Economics as essentially or ideally separate from politics. However, this term is not as useful for current US legal scholarship, where the dominant use of “political economy” is to describe a right-wing approach to political theory that uses neoclassical economics to analyze government decisionmaking.

a) conflict

Dominant frameworks (liberal, neoliberal, conservative) present economic issues as problems of implementing or balancing widely-shared principles for determining public interests: growth, redistribution, aggregate welfare, fairness, opportunity, etc. OR these frameworks present economic issues as problems of technical dilemmas about how to achieve one or more unproblematic principles of public interest (calculating costs versus benefits; overcoming market failures).

In contrast, critical economic analysis (“political economy” or “class”) suggests economic problems involve not just conflicts between principles for promoting public values, but conflicts of interest, ideology, and identity. For instance, “free trade” is not just about “growth,” or “markets” but about gain for capital owners; support for free trade among academics involves presumptively not just scientific calculation but cultural and class pressure (see Jeff Faux, The Global Class War); and economics is always a political project, involving contested values and ideas, not just a technical inquiry or about transcendent principles.

b) comprehensive inequities

The problem of economic inequality is not just a problem of an impoverished group of “losers” left out of the mainstream, but of flaws in the mainstream itself. It is not just a problem of “undeveloped” nations, but of development; in the U.S. as well as beyond. The problems of poverty and insecurity limit most even in the middle class. The flaws even jeopardize many at the top, at least in the long run (e.g., severe inequality may hurt some of the rich because it leads to high crime, war, or to worse health outcomes overall; starvation of public infrastructure, crime and destruction of environment may initially be overcome by private wealth and power, but eventually will be extremely costly even for the rich and powerful).

c) power and privilege

The problem of economic inequality is not just that some lose, but that some win unjustly — and that “winning” is often more elusive, complex, costly or unstable than it may first appear. Law, politics, and governments intervene not just at the margins to “redistribute” to the “losers”, but are essential to producing the gains of the “winners.” Success comes not just from rational choice, random luck or careful calculation, but from selective public support and penalty. Addressing economic problems requires focusing on the winners’ privileges, not just on the suffering or failings of the losers.

d) collective action and institutions

The economy is not an aggregate of individual transactions in a “free market” — not even as an ideal — but instead is comprised of complex collective organizations and institutionalized constraints, production, and protection. The current US economy, for example, is dominated by corporations, which are collectives enabling cooperative, concerted action by capital owners, produced and maintained by complex legal and government “intervention.” Indeed, every aspect of exchange in a market, real or ideal, is regulated and produced by institutionalized policies resulting from contestable political negotiations that might logically be structured differently: consider the details of contract law, property law, criminal law, tax law (for instance). So-called “market” approaches that emphasize individual risk, competition, and choice always inevitably involve comprehensive cooperation, constraint and collective decisionmaking as well.

e) coercion not choice

Finally, economics — “free” markets — are always embedded in and inextricable from a system of violence, however much individuals may appear to be making “free” choices. Property has its origins in force, and is backed up by selective control of force. The force that determines and maintains existing property arrangements is by no means the product of principled, unproblematic consensus, widely shared values or individual merit. The extent to which violence permeates current economies deserves far more attention: in addition to the history of colonization, slavery, and oppressive governments in shaping current economic distribution, consider the contempary role of the military in international trade and multi-national corporate profit-making; the impact of family violence; harassment and bodily injury in the workplace; the role of a fundamentally unfair criminal justice system in the US.

f) Context and change

Economic inequality must be analyzed not as a matter of formal, abstract calculations or concepts, but as a particular product of history — situated in time, place, and perspective.

It is dynamic — subject to change, tied to changing historical contexts. Empirical data matters: so-called “free trade” policies should be evaluated based not just on economic theory, but on close studies of what actually is happening on the ground in particular nations. But empirical data itself must be treated as contextual, contingent and subject to change: mathematical, formal studies of macro”costs” or micro-level studies for formal individual decisionmaking are of little value unless situated in historical contexts.

Power is not just an exogenous mysterious given, but a changeable, dynamic, product of institutions, policies, contexts as subject to analysis as “economics” — indeed, inextricable from what is treated as “economics.”

 

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