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17 Jan 2016

Inequality and Modernization: Why Equality Is Likely to Make a Comeback By Ronald Inglehart

During the past century, economic inequality in the developed world has traced a massive U-shaped curve—starting high, curving downward, then curving sharply back up again...[please, proceed to the full text of the article]

Original article: Foreign Affairs

Inequality and Modernization

Why Equality Is Likely to Make a Comeback

By Ronald Inglehart

During the past century, economic inequality in the developed world has traced a massive U-shaped curve—starting high, curving downward, then curving sharply back up again. In 1915, the richest one percent of Americans earned roughly 18 percent of all national income. Their share plummeted in the 1930s and remained below ten percent through the 1970s, but by 2007, it had risen to 24 percent. Looking at household wealth rather than income, the rise of inequality has been even greater, with the share owned by the top 0.1 percent increasing to 22 percent from nine percent three decades ago. In 2011, the top one percent of U.S. households controlled 40 percent of the nation’s entire wealth. And while the U.S. case may be extreme, it is far from unique: all but a few of the countries of the Organization for Economic Cooperation and Development for which data are available experienced rising income inequality (before taxes and transfers) during the period from 1980 to 2009.

The French economist Thomas Piketty has famously interpreted this data by arguing that a tendency toward economic inequality is an inherent feature of capitalism. He sees the middle decades of the twentieth century, during which inequality declined, as an exception to the rule, produced by essentially random shocks—the two world wars and the Great Depression—that led governments to adopt policies that redistributed income. Now that the influence of those shocks has receded, life is returning to normal, with economic and political power concentrated in the hands of an oligarchy.

Piketty’s work has been corrected on some details, but his claim that economic inequality is rising rapidly in most developed countries is clearly accurate. What most analyses of the subject miss, however, is the extent to which both the initial fall and the subsequent rise of inequality over the past century have been related to shifts in the balance of power between elites and masses, driven by the ongoing process of modernization.

In hunting-and-gathering societies, virtually everyone possessed the skills needed for political participation. Communication was by word of mouth, referring to things one knew of firsthand, and decision-making often occurred in village councils that included every adult male. Societies were relatively egalitarian.

The invention of agriculture gave rise to sedentary communities producing enough food to support elites with specialized military and communication skills. Literate administrators made it possible to coordinate large empires governing millions of people. This much larger scale of politics required specialized skills, including the ability to read and write. Word-of-mouth communication was no longer sufficient for political participation: messages had to be sent across great distances. Human memory was incapable of recording the tax base or military manpower of large numbers of districts: written records were needed. And personal loyalties were inadequate to hold together large empires: legitimating myths had to be propagated by religious or ideological specialists. This opened up a wide gap between a relatively skilled ruling class and the population as a whole, which consisted mainly of scattered, illiterate peasants who lacked the skills needed to cope with politics at a distance. And along with that gap, economic inequality increased dramatically.

This inequality was sustained throughout history and into the early capitalist era. At first, industrialization led to the ruthless exploitation of workers, with low wages, long workdays, no labor laws, and the suppression of union organizing. Eventually, however, the continuation of the Industrial Revolution narrowed the gap between elites and masses by redressing the balance of political skills. Urbanization brought people into close proximity; workers were concentrated in factories, facilitating communication; and the spread of mass literacy put them in touch with national politics, all of which led to social mobilization. In the late nineteenth century and early twentieth century, unions won the right to organize, enabling workers to bargain collectively. The expansion of the franchise gave ever more people the vote, and leftist political parties mobilized the working class to fight for its economic interests. The result was the election of governments that adopted various kinds of redistributive policies—progressive taxation, social insurance, and an expansive welfare state—that caused inequality to decline for most of the twentieth century.

The emergence of a postindustrial society, however, changed the game once again. The success of the modern welfare state made further redistribution seem less urgent. Noneconomic issues emerged that cut across class lines, with identity politics and environmentalism drawing some wealthier voters to the left, while cultural issues pushed many in the working class to the right. Globalization and deindustrialization undermined the strength of unions. And the information revolution helped establish a winner-take-all economy. Together these eroded the political base for redistributive policies, and as those policies fell out of favor, economic inequality rose once more.

Today, large economic gains are still being made in developed countries, but they are going primarily to those at the very top of the income distribution, whereas those lower down have seen their real incomes stagnate or even diminish. The rich, in turn, have used their privilege to shape policies that further increase the concentration of wealth, often against the wishes and interests of the middle and lower classes. The political scientist Martin Gilens, for example, has shown that the U.S. government responds so attentively to the preferences of the most affluent ten percent of the country’s citizens that “under most circumstances, the preferences of the vast majority of Americans appear to have essentially no impact on which policies the government does or doesn’t adopt.”

Because advantages tend to be cumulative, with those born into more prosperous families receiving better nutrition and health care, more intellectual stimulation and better education, and more social capital for use in later life, there is an enduring tendency for the rich to get richer and the poor to be left behind. The extent to which this tendency prevails, however, depends on a country’s political leaders and political institutions, which in turn tend to reflect the political pressures emerging from mobilized popular forces in the political system at large. The extent to which inequality increases or decreases, in other words, is ultimately a political question.

Today the conflict is no longer between the working class and the middle class; it is between a tiny elite and the great majority of citizens. This means that the crucial questions for future politics in the developed world will be how and when that majority develops a sense of common interest. The more current trends continue, the more pressure will build up to tackle inequality once again. The signs of such a stirring are already visible, and in time, the practical consequences will be as well.

NOT ABOUT THE MONEY

For the first two-thirds of the twentieth century, working-class voters in developed countries tended to support parties of the left, and middle- and upper-class voters tended to support parties of the right. With partisan affiliation roughly correlating with social class, scholars found, unsurprisingly, that governments tended to pursue policies that reflected the economic interests of their sociopolitical constituencies.


As the century continued, however, both the nature of the economy and the attitudes and behaviors of the public changed. An industrial society gave way to a postindustrial one, and generations raised with high levels of economic and physical security during their formative years displayed a “postmaterialist” mindset, putting greater emphasis on autonomy and self-expression. As postmaterialists became more numerous in the population, they brought new issues into politics, leading to a decline in class conflict and a rise in political polarization based on noneconomic issues (such as environmentalism, gender equality, abortion, and immigration).

This stimulated a reaction in which segments of the working class moved to the right, reaffirming traditional values that seemed to be under attack. Moreover, large immigration flows, especially from low-income countries with different languages, cultures, and religions, changed the ethnic makeup of advanced industrial societies. The rise of religious fundamentalism in the United States and xenophobic populist movements in western European countries represents a reaction against rapid cultural changes that seem to be eroding basic social values and customs—something particularly alarming to the less secure groups in those countries.

All of this has greatly stressed existing party systems, which were established in an era when economic issues were dominant and the working class was the main base of support for sociopolitical change. Today, the most heated issues tend to be noneconomic, and support for change comes increasingly from postmaterialists, largely of middle-class origin. Traditional political polarization centered on differing views about economic redistribution, with workers’ parties on the left and conservative parties on the right. The emergence of changing values and new issues gave rise to a second dimension of partisan polarization, with postmaterialist parties at one pole and authoritarian and xenophobic parties at the opposite pole.

The classic economic issues did not disappear. But their relative prominence declined to such an extent that by the late 1980s, noneconomic issues had become more prominent than economic issues in Western political parties’ campaign platforms. A long-standing truism of political sociology is that working-class voters tend to support the parties of the left and middle-class voters those of the right. This was an accurate description of reality around 1950, but the tendency has grown steadily weaker. The rise of postmaterialist issues tends to neutralize class-based political polarization. The social basis of support for the left has increasingly come from the middle class, even as a substantial share of the working class has shifted its support to the right.

In fact, by the 1990s, social-class voting in most democracies was less than half as strong as it was a generation earlier. In the United States, it had fallen so low that there was virtually no room for further decline. Income and education had become much weaker indicators of the American public’s political preferences than religiosity or one’s stand on abortion or same-sex marriage: by wide margins, those who opposed abortion and same-sex marriage supported the Republican presidential candidate over the Democratic candidate. The electorate had shifted from class-based polarization toward value-based polarization.

THE MACHINE AGE

In 1860, the majority of the U.S. work force was employed in agriculture. By 2014, less than two percent was employed there, with modern agricultural technology enabling a tiny share of the population to produce even more food than before. With the transition to an industrial society, jobs in the agricultural sector virtually disappeared, but this didn’t result in widespread unemployment and poverty, because there was a massive rise in industrial employment. By the twenty-first century, automation and outsourcing had reduced the ranks of industrial workers to 15 percent of the work force—but this too did not result in widespread unemployment and poverty, because the loss of industrial jobs was offset by a dramatic rise in service-sector jobs, which now make up about 80 percent of the U.S. work force.

Within the service sector, there are some jobs that are integrally related to what has been called “the knowledge economy”—defined by the scholars Walter Powell and Kaisa Snellman as “production and services based on knowledge-intensive activities that contribute to the accelerated pace of technical and scientific advance.” Because of its economic significance, the knowledge economy is worth breaking out as a separate category from the rest of the service sector; it is represented by what can be termed “the high-tech sector,” which includes everyone employed in the information, finance, insurance, professional, scientific, and technical services categories of the economy.

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The full text is available in the Foreign Affairs (January/ February, 2016)


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