Economic inequality

WindsorStar.com – Business
May 18, 2011.    By Lloyd Brown-John, The Windsor Star

Karl Marx, infamously argued that economic inequality created a three-class system, -upper, middle and lower, or proletariat. Further, he argued that economic inequality inevitably led to revolutionary class conflict.

Marx argued that the middle class would disappear, a few being absorbed into the upper class while the remainder drifted to lower class proletariat. Thereafter, Marx theorized, the lower class would rise, engage in class warfare with the upper class, eliminate them and then would emerge rule by the people or an establishment of things.

Marx described religion as an opiate for controlling lower classes. Perversion of Marxist theory in ruthless dictatorships often is argued as a basis for considering Marxist theory irrelevant.

Yet, there are hints now beginning to emerge that while Marx and his establishment of things was vague, implications of class divergence still may be a portent of future conflict. Thus, while Karl Marx may be passe, the essential class structure which provokes class conflict may not be entirely far from a looming reality.

The Washington, D.C. thinktank Economic Policy Institute conducted an analysis of the ratios of average incomes of America’s rich and bottom 90 per cent of the population. The analysis covered the period 1980 to 2006.

In that 26-year time span, the ECI found that the top one per cent of earners had incomes 10 times more than earnings for the remaining population in 1980. However, this had doubled to 20 times over the remaining population by 2006.

And, the top 0.1 per cent rose from 20 times earnings in 1980 to almost 80 times earnings by 2006.

Inequality may be increasing at a dramatic pace in the United States of America and, although comparable data is not available, probably at a reduced pace in Canada.

One common measure of inequality employed is an economic scale called the Gini coefficient, named after an Italian statistician who published his mathematical formula in 1912. The Gini coefficient ranges from zero (everyone has the same income) to one (one person alone has all income). Thus the Gini coefficient is a measure of income distribution. Most countries range between 0.25 to 0.6. The closer a country approaches one, the wider the gap in income distribution.

Sweden has the lowest coefficient -about 0.25; Canada -about 0.30; United States -about 0.40; Albania and Zimbabwe -about 0.60.

Over the past decade, while Brazil’s coefficient has declined from 0.60 to 0.55, that of the U.S. has increased from about 0.38 in the mid-1980s to about 0.40 today.

Arguably, while Marx assigned religion as a mass opiate thereby keeping lower-income people morally satisfied with their dismal existence -religion offering promise of a better afterlife -we might today find that same opiate available as mass-produced sports entertainment, although the afterlife may be nothing more than a tailgate party or sports bar.

And as incomes diverge, potential for violence increases. Indeed, violence levels are much higher in societies with widespread poverty and significantly wide income distribution.

A question: Is it possible that widespread income discrepancies could lead to political instability in democracies?

The recent ideological split resulting from Canada’s federal election suggests the possibility.

Marx might yet return to haunt us.

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1 Comment

  1. obviously, it is possible that widespread income discrepancies could lead to political instability in democracies.

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