What if equality and growth were compatible?
How one economist could change egalitarian distributive justice forever
An interesting article in the Santa Fe Reporter last week on an economist whose work has major implications for theories of economic distributive justice. Samuel Bowles of the Santa Fe Institute, a research institution dedicated to the study of complexity, is one of the leading economists in a movement challenging the assumptions of the Milton Friedman/Chicago School of free-market economics.
According to the Chicago School, distributive inequality is an inevitable consequence of economic growth. Bowles challenges this notion, claiming that while the theories of the Chicago School may work in ideal models, in the real world the story is much different. The Chicago School assumes an economy that is efficiently organized. But in reality, economies are actually quite inefficient, those with greater inequality, Bowles contends, particularly so. Instead of the distribution of wealth being dependent on economic growth, economic growth is dependent on the distribution of wealth.
According to Bowles, inequality reduces efficiency (and thus economic growth) by breeding conflict: those who have less want more. This threat to those who have more causes them to prioritize the protection of the system and, physically, the distribution they command. Thus, those with more redirect resources from productive activity to order-keeping activity — what Bowles calls “guard labor.” Bowles has found that in unequal societies, a surprisingly large portion of work hours are spent on this guard labor - either jobs dedicated entirely to law enforcement and public security or time spent in other jobs “imposing work discipline.”
In a 2004 University of Massachusetts Amherst paper and a 2007 paper in the Economists’ Voice, Bowles and co-author Arjun Jayadev found that an astonishing one-quarter of American work hours are spent doing guard labor. That is one-quarter of American work hours are not spent in activities that contribute directly to economic growth. The paper found a direct correlation between inequality levels and the ratio of guard labor to productive labor in the economies of U.S. states and countries around the world. In other words, greater levels of inequality meant a larger portion of the labor force was working as guard labor. Since hours spent on guard labor directly takes a way from hours that could be spent on productive activities, it decreases economic efficiency. It follows that greater inequality means lower levels of economic growth.
As Bowles summarizes, while traditionally it is thought that “inequality just grease[s] the wheels of progress”, it is, in fact, “sand in the wheels.”
If Bowles is correct, his findings could have drastic implications for egalitarian political philosophers, who have long struggled with the apparent tension between equality and economic growth.
From the perspective of public acceptance, the “equality is incompatible with growth” argument has probably dealt the greatest blow to egalitarian efforts to promote distributive equality. Accepting the basis of the critique (incompatibility), egalitarians have had to make the nearly impossible argument that equality is the ultimate good, meaning that a distribution of 1-1-1 (that is 1 unit each to three people) is better than a distribution of 3-2-1. Others have tried to find happy middle grounds (though they would never say that this is what they are doing). John Rawls’ difference principle, for example, says inequalities are unjustified, except when they make the group that is worst-off better than they would otherwise be; in other words, except when they promote growth that benefits the worst-off. Thus for Rawls, 3-2-1 is not better than 1-1-1, but 100-2-2 is — hardly egalitarian, many would argue. If Bowles is right, then, while the difference principle would still technically hold for Rawlsians, it would ultimately be unnecessary. For it would be equality, not inequality, that would maximize the position of the worst-off.
Obviously, more economic research is necessary to determine whether Bowles is right, but if he is, it would have major implications for both theories of egalitarian distributive justice and the debate between egalitarians and libertarians.
-Marc
Photo by Flickr user Unlisted Sightings used under a Creative Commons Attribution license.
Related posts:
- Financial transparency and distributive justice
- Genius and self-respect
- What is equality?
- Jerry Cohen
- Nordic self-respect
Comments
Leave a Reply
-
Follow us on Twitter
