There is too much inequality in many countries, with no lessening of inequality among those rich countries that have the wherewithal to reverse this trend. The New York Times recently carried a ground-breaking series on inequality called The Great Divide where Stiglitz observed that inequality is not inevitable (1); he showed an increasingly growing gap between the rich and poor where CEOs in the U.S. carry home an average paycheck of 295 times that of an ordinary worker, a greater ratio than previously without a proportionate rise in productivity.

Stiglitz further argued that the laws of economics are irrelevant to explaining the rise in inequality. He cited Finland, Norway and Sweden with as much or even more per capita incomes than the U.S., but they have more equality. He argued that after the U.S. won the Cold War, there was no feasible competitor to capitalism, the U.S. economic model; and so with practically no competition to capitalism, the U.S. did not have to demonstrate that capitalism had to deliver the goods to most Americans. Under such conditions, many Americans suffered as victims of economic and social deprivation. The end result has been exclusion and the promotion of inequality.

[box type=”shadow” align=”alignright” ] “In essence, increases in inequality strengthen capitalism. I must add, too, that not only rich countries hatch and promote inequality; poor countries are equally guilty. A country is guilty of increasing inequality, if that country does not formulate policies, programmess, and projects to alleviate the sufferings of the poor and vulnerable. The answer to reducing inequality lies not with capitalism. Therefore, there is now need to seek out other ways to reduce inequality, and, perhaps, Marxist thinking may be a good place to start.”[/box]
Money controls the U.S. political system, and this money translates into political inequality that, in turn, produces the gap between the rich and poor, Stiglitz added; he noted that policies and politics, not capitalism per se, are what would explain the increasing gap between the rich and poor. But Piketty’s book (2) places the growing inequality in the hands of capitalism.
In last week’s Perspectives, I cited Pope Francis’ description of capitalism as ”a new tyranny,” asking global leaders to remove poverty and growing inequality, noting that: “As long as the problems of the poor are not radically resolved by rejecting the absolute autonomy of markets and financial speculation and by attacking the structural causes of inequality, no solution will be found for the world’s problems or, for that matter, to any problems” (3).
Capitalism as an economic model increases inequality to create the haves and the have nots, and Piketty’s book is the latest study to make this claim. But while Piketty’s work shows the inequality that capitalism creates, it does not address the root causes of the problems of inequality (4).
In fact, capitalism cannot overcome its many flaws, as long as it continues to increase inequality among people (4). In essence, increases in inequality strengthen capitalism. I must add, too, that not only rich countries hatch and promote inequality; poor countries are equally guilty. A country is guilty of increasing inequality, if that country does not formulate policies, programmess, and projects to alleviate the sufferings of the poor and vulnerable. The answer to reducing inequality lies not with capitalism. Therefore, there is now need to seek out other ways to reduce inequality, and, perhaps, Marxist thinking may be a good place to start.

References:
1. Stiglitz JE. Inequality is not inevitable 2014 [cited 2014 July 12]. Available from: http://opinionator.blogs.nytimes.com/2014/06/27/inequality-is-not-inevitable/?_php=true&_type=blogs&_r=0.
2.Piketty T. Capital in the Twenty-first Century: Harvard University Press; 2014.
3. Francis P. Apostolic Exhortation Evangelii Gaudium of the Holy Father Francis to the Bishops, Clergy, Consecrated Persons and the Lay Faithful on the Proclomation of the Gospel in Today’s World (Rome. Vatican Press Rome; 2013
4. Mapping a new economy [cited 2014 July 12, 2014]. Available from: http://chronicle.com/article/Mapping-a-New-Economy/146433/.
Written By Dr. Prem Misir