Globalization and Transformations of Social Inequality

Ulrike Schuerkens

• Publisher: Taylor & Francis
• Year: 2010
• Print ISBN: 9780415874823
• eBook ISBN: 9781136954061
• Edition: 1
• Topic: Economia
• Subtopic: Economia politica

Social inequality is a worldwide phenomenon. Globalization has exacerbated and alleviated inequality over the past twenty-five years. This volume offers analytical and comparative insights from current case studies of social inequality in more than ten countries within all the major regions of the world. Contributors provide an assessment of the overall social globalization phenomenon in the global world as well as an outlook of transformations of global social inequality in the future. This book will be a timely addition for students and scholars of globalization studies, social inequality, sociology, and cultural and social anthropology.

Part I
Theoretical and Empirical Introduction

Globalization and Transformations of Social Inequality

1
Introduction

Theoretical and Empirical Introduction: Globalization and Transformations of Social Inequality

Ulrike Schuerkens

During the past several years, a number of publications have discussed the link between globalization and inequality. According to these scholars, there seems to be a relative consensus that within-nation inequality has increased almost everywhere in the last 20 years. According to Milanovic and Dollar international inequality has decreased since the end of the 1970s if one includes China and India (Held and Kaya 2007: 5–6). If one excludes China and India, the tendency is that international income inequality has increased, because of the fact that the high impact of China and India with more than one fifth of the world population can change this relation. Nevertheless, global income inequality between nations is very high today according to the Gini index: around 62 to 66 (Held and Kaya 2007: 5). The gap between the richest and the poorest has been very high since the 1980s. According to Held and Kaya (6): “the world Gini coefficient is at a level (…) that now exceeds all but two (Namibia and Lesotho) of the most unequal countries by several points.” Such a high-income Gini within nations should mean for individual countries that governments would find it too destabilizing, as populations may protest. Yet, on an international level, there are rarely social movements to be expected. Instead, on the top level, elites react currently to this high Gini by trying to change global governance in international institutions (e.g., Doha Development Round or the G20), and on the bottom level, political groups influenced by fundamentalist movements attack tourists, expatriates, and symbols of globalization.

In addition, wage inequality has increased in the global era so that from 1981, at the beginning of neo-liberal globalization, we can find that inequality within countries rose “as a global pattern” (Galbraith 2008). As a result, in some countries, public policy tackled the distribution of income and wealth so that extreme poverty could sometimes be removed. Wade (2007) mentions one of the suggested reasons for this policy: “Inequality not only spurs social troubles but it is also likely to be bad for the economy” (7). If one considers that the poor actually suffer from health problems, lack of education, lack of participation in decision-making, in short, they lack life-chances, it may thus be appropriate to consider policies at global, national, and local levels and no longer to defend the neo-liberal credo that the market alone should determine income and wealth. This book develops these theoretical and empirical links by presenting research on transformations of social inequality in a global era and by questioning the supposed positive influence of the market on social inequality.

The different chapters tackle topics that contribute to transformations of social inequality in our global world. They show that there are multiple possibilities actually used by politicians, and linked to important social and economic structures of the global era that contribute to these changes. Most of the chapters demonstrate that individual countries, political elites, and civil society possess instruments and can use policies to criticize and change social inequalities that may be judged unjustified and that disadvantage particular groups. The focus on these instruments influencing inequality, such as labor unions, social policy measures, migrants’ remittances, urban governance, etc. permits us to underline that there are numerous mechanisms to change unequal situations and that concrete outcomes depend on power relations in a particular state and are thus eminently political decisions. The global financial crisis of 2008–09 made obvious the importance and necessity of political actors in the post-neo-liberal economy. Even banks and enterprises that some months ago would have excluded political interventions in what they called the free market have defended the position that the market alone cannot—and perhaps never could—regulate in a satisfying manner groups and their divergent interests. The state and political elites accountable to their electorates have thus set in motion activities as responsible actors that defend the interests of the citizens of their country. In this sense, this crisis seems to be an opportunity for the future of our global world insofar as new–old actors have reappeared who try to readjust their respective tasks and their contributions to the creative becoming of our global world.

In fact, there are two theoretical approaches to inequality. Individualists favor rational choice theory and empirical research on inequality and are linked to a measurement camp consisting in governments and international organizations such as the World Bank and the International Monetary Fund. Politicians can also often be located in this field. Most of the literature on poverty was for the last 30 years characterized by this approach that changed only some ten years ago to include other, more qualitative, poverty indicators.

On the other side, sociologists, political economists, and some social anthropologists can be found who favor a structural approach. Often, their findings are supported by non-governmental organizations, civil society, trade unions, and left political parties. These structuralists argue that one should not only look for obvious empirical findings on inequality, but research should focus on social structures that trigger unequal relations. Thus, measurements and dynamic societal fields that distribute life-chances in an unequal manner are to be looked at. Structuralists underline that poverty results from an unfair distribution of resources and not only from a lack of resources. According to them, inequality can be found in the fields of class, gender, race, ethnicity, caste, etc. This approach has focused on socioeconomic processes that have maintained and reproduced the particular structural aspects of inequality.

In order to give some figures, the United Nations Development Program (2005: 55) assessed data from 73 countries and “estimated that 53 countries (containing 80 percent of the world’s population) experienced rising inequality. A narrowing of inequality occurred in only nine countries (containing 4 percent of the world’s population)” (3). The UNDP had already found in 2003 (282–285) that “the world’s three most egalitarian countries (with scores under 25 [Gini, US]) are Japan, Denmark, and Hungary. The most unequal (with scores over 60) are Brazil, Nicaragua, Botswana, Swaziland, Central African Republic, and Sierra Leone. In egalitarian Japan, the poorest 20 percent of the population receive 10.6 percent of income, while the richest 20 percent receive 35.7 percent. This contrasts with Brazil and Botswana where the poorest 20 percent receive just over two percent and the richest 20 percent account for over 70 percent of income (UNDP 2005: 56).” (3)

Regarding absolute poverty, one can find that the number of people living on less than $1 a day in the world declined since 1980 by 375 million people (Dollar 2007: 74). According to Chen and Ravallion (2004), this ratio diminished from 40.4 percent of the population in developing countries in 1981, to 21.1 percent in 2001. The authors continue: “(T)he decline in $2 a day poverty incidence was not as great, from 66.7 percent to 52.9 percent, over the same period” (81). Indeed, about half of the world’s population has to make a living with less than US$ 2 a day. In Sub-Saharan Africa, the number of the very poor increased from 164 million to 316 million (about 47 percent of the population) (Dollar 2007: 84). Two thirds of the very poor continue to live in Asia. Nevertheless, the ongoing economic growth in this continent may change the picture so that poverty may be increasingly concentrated in the African continent. According to the director of the International Labor Organization, Juan Somavia, the number of people all over the world who gain less than US$ 1 a day, may increase by 40 million due to the current crises; the number of the “working poor” with US$ 2 a day, who were at the end of 2007 about 1.3 billion people, may even increase by 100 million people (Frankfurter Allgemeine Zeitung, October 21, 2008). One year later, the vice-president of the World Bank, Yifu Lin announced the number of 1.4 billion people living on less than US$ 1.25 a day (Figaro, October 20, 2009). Almost half of the world population—over 3 billion people—lives today (2009) on less than US$ 2.50 a day.¹

Regarding wealth and according to Neederveen Pieterse (2004: 4): “The richest 20 percent of the world’s population accounted for 70 percent of income in 1960. By 1991 this share increased to 85 percent. Meanwhile the bottom 20 percent declined from 2.3 percent to 1.4 percent. The ratio between the richest and poorest increased from 30:1 to 60:1 (Pieterse 2004: 61). By the end of the millennium, the wealthiest 5 percent of the world’s population earned 114 times as much as the poorest 5 percent and the top 1 percent earned the equivalent of the bottom 57 percent (UNDP 2003: 39). The 200 largest US fortunes exceeded the income of 43 percent of the world’s population, or the entire wealth of over a billion Chinese.” This unequal distribution of wealth may generate an understanding that there is something wrong with the neo-liberal agreement on the economy. The idea of this book stems from these findings.

To introduce an understanding of longue durée (Braudel) social inequality, some short remarks on the historical becoming of global social inequality may be of interest. According to Milanovic, who studied long-run historical income statistics, international inequality was rising between 1820 and 1870 (Milanovic 2007: 29). Inequality was also on the rise from 1870 to 1913, although the inter-war period from 1913 to 1938 saw a decline, perhaps stabilization. From 1938 to 1952, inequality rose again. The reason for this was that some rich countries (US, Australia, Argentina, and New Zealand) improved their particular development but most of the rest lost out. Inequality among nations measured by the Gini remained from 1952 to 1978 at the same level. This period corresponded for the richer countries to the Golden Age of economic improvement and for the less developed countries to policies of import substitution and a strong role of the state. Starting around the end of the 1970s, neo-liberal policy led to a sharp increase of inequality. The Thatcher and Reagan rules in Great Britain and the US were at the origin of this trend that has continued ever since, including the recent financial crisis.

Considering current regional inequality, one finds China and India pulled ahead, South America declined, and Africa’s situation still worsened. It seems even that we can begin to speak of an “Africanization of poverty,” as Milanovic wrote (2007: 33). Another interesting figure is that the share of the total global income received by the 5 percent (10 percent) of the wealthiest people in the world represents 33 percent (50 percent); for the bottom 5 percent (10 percent), this share means 0.2 percent (0.7 percent) of the global income received by the poorest people in the world (Milanovic 2007: 39). These figures show the very unequal distribution of global income in our world currently.

Another possibility to measure inequality is to evoke the position of people from different countries in the global income distribution. According to Milanovic, “the poorest Frenchmen are actually richer than 72 percent of people in the world” (41). And he continues: “Even the richest 5 percent of people in rural India are poorer than the poorest 5 percent of people in France” (41). In policy terms, transfers from the rich countries to the poor countries should thus reach the poor if one considers the relative importance of this link.

The question if global inequality matters has been widely discussed. There are commentators who put forward that the idea is too abstract and that there is no world government interested in a decline of inequality. Yet, if one considers that globalization increases people’s knowledge of each other and lets them discover income differences, e.g., in television entertainment and during holidays, one can argue that global inequality matters. As September 11th has shown, poverty and inequality elsewhere affect people in the North more than some decades ago. With high global inequality levels, the richer world may choose the solution of becoming a fortress and closing its borders to the poor. But as European and US migration policies have shown, this is almost impossible in the face of illegal migrants arriving at the seaside of the Mediterranean countries or at the deserts of Mexico. Thus, global financial transfers, and not only remittances sent by migrants, may be necessary in order to create a global safety net similar to that built on a national level by Western European countries confronted with internal socio-economic inequality at the beginning of the twentieth century. Yet, the financial crisis of the second half of 2008 and the first half of 2009 may change the development policy of the geographic North and the richer countries as the new programs of high financial assistance to the banks decided by Western governments in order to limit the negative outcomes of the crisis on financial institutions and the economy may mean that global assistance programs from the North to the South will be reduced.

POLICY AND INEQUALITY

Liberals still consider inequality as a necessary condition in an economy based on a market where competitiveness, innovation, and effort seem to depend on income inequality. According to them, public policy should not worry insofar as income inequality seems to be a result of processes linked to the market. As long as the liberal order isn’t threatened by popular movements, inequality doesn’t matter according to liberals. But this argument can be challenged as the following findings demonstrate.

The consequences of income inequality on other variables outlined by extensive research are clear. According to Wade (2007: 115), “higher income inequality within countries goes with: (1) higher poverty (…); (2) higher unemployment; (3) higher crime; (4) lower average health; (5) weaker property rights; (6) more skewed access to public services (…); and (7) slower transitions to democratic regimes, and more fragile democracies.”

According to this scholar, the possible impact of “inequality at the national level supports the normative conclusion that income inequality above moderate levels should be reduced via public policy” (118). What is interesting here is that Wade suggests that “economic growth during the 1990s—and presumably the 1980s as well—has benefited mainly two categories of people: those in the upper half of the income distribution of the high-income states, and those who have made it into the swelling ranks of China’s middle class” (124). According to Wade, those who are responsible for the perpetuation of the neo-liberal economic model belong to the upper-strata groups who live in the high-income states. Yet, a change has recently been introduced insofar as Northern governments consider that state actions in the economy are necessary in order to avoid financial crashes. For the time bei...

Table of contents

• Routledge Advances in Sociology
• Contents
• Tables
• Figures
• Preface
• Part I Theoretical and Empirical Introduction
• Part II Changing Dimensions of Social Inequality in a Global World
• Part III Redistributive Mechanisms and Social Policies Tackling Social Inequality
• Part IV Regional Case Studies on Globalization and Social Inequality
• Contributors
• Index