This collective work brought together 22 of the most recognized American and French teachers and researchers on the subject of economic and social inequalities in the world.
In the first part, the authors show their adherence to the thesis of Polyani (author of the bestseller “The Great Transformation”), according to which “the market economy is insufficiently anchored in society”. They question certain principles of the neo-liberal economy, in particular by challenging Friedman’s “trickle-down” theory, according to which market efficiency creates value for all actors in society. They denounce the silence of neo-liberals, inspired by the theories of Friedman and Hayek, on the often hidden negative externalities in the more or less long term, which are generated by the absence of market regulation. They express the views currently shared by post-Keynesian democrats in response to the ultra-liberal measures taken under the new US presidency. They take up the arguments initiated by Stiglitz, Milosevic and Piketty* by extending them to all forms of inequality, be they economic, social, political or cultural. They identify the issues, trends and synergies, showing that these arguments have been developed – with varying degrees of success – by left-wing populist movements in Western countries. One of the interests of the book is therefore that it reveals the strengths but also the weaknesses of the reasoning developed by the American left parties.
The second part, entitled “The New Light on the Facts”, highlights the 40-year decline of the labor market in favor of the capital market, and the decline in wages in favor of dividends and capital gains, due to a double movement of globalization of markets for goods and services (unfavorable to workers because of industrial relocations) and financialization of the world economy (favorable to large fortunes). The exponential growth in executive compensation (driven by increasingly sophisticated engineering combining salaries, bonuses, stock options, executive pensions, etc.) was stimulated by the soaring stock market (due to an increasingly “short-term” management) and real estate prices (fueled by unbridled money creation), which benefited the wealthiest assets.
In the third part, entitled “Policy Issues. Labor Markets, Education, Taxation, and Intellectual Property”, the researchers identify the political decisions and regulatory provisions that have directly affected the distribution of income and wealth in the United States, including those that have led to a stagnation of wages over the past 30 years, despite an increase in productivity in industry and services. The authors analyze the impact of the action of teachers’ unions on school results and find that this de-unionization has penalized teachers and students from disadvantaged neighborhoods and their access to employment. On another note, the authors argue that industrial and intellectual property rights, as well as certain employment aids, create near-monopoly situations and real rents (especially in the finance, health and digital sectors), which benefit the dominant shareholders of companies, who constitute half of American billionaires. During the 2007-2010 crisis, public funds allocated to banks and insurers thus mainly benefited the richest 1%.
In the fourth part, devoted to “political contexts and future prospects”, the researchers analyze the evolution of discourse on income inequality. They observe that these perceptions vary from one country to another because of their socio-cultural disparities. In some countries, such as France, discourses on the “social divide” may have encouraged various forms of discrimination without generating more social justice. The latest surveys show that the rising cost of higher education is making the debt of children from the most modest families increasingly unbearable and is depriving the nation of talent. The authors advocate the establishment of a federal employment guarantee upon graduation and baby-trusts to finance education at the lowest cost.
Rudiger L. von Arnim is a professor of economics at the University of Utah and Joseph E. Stiglitz is a professor at Columbia University and a Nobel Prize winner in economics.
* see other columns on this blog.
note by Jean-Jacques Pluchart
