Sorry, there’s been a gap between my last blog and this. I’ve been busy working for a living and also starting to prepare a paper for an upcoming conference of non-mainstream economists – more on that in the future. I’ll try to make more regular entries from now on. There’s a lot of blog items I’m piling up!
But let’s start with inequality. In my book, The Great Recession (available from Lulu.com http://www.lulu.com/product/paperback/the-great-recession/6079458)), I refer to one of the major features of capitalism – the inequality of income and wealth. It’s not just that capitalism suffers from slumps in economic activity at regular intervals that destroy jobs and people’s livelihoods and waste investment and production. Even in the ‘good times’ of boom, capitalism generates inequality in the incomes earned by people during capitalist production and in the wealth owned and controlled through the means of production under capitalism.
This inequality is exhibited between rich and poor countries and within countries. In my book, I cite several devastating studies that reveal the extent of these inequalities both globally and within the richer countries like the US and the UK (see chapters 16 and 21), where the data are most freely available. And see the posts in this blog (Inequality in Britain, 28 January and Unfair society, unhealthy lives, 11 February)
The gist of it, by the way, is that the differentials of wealth and income are very large and have hardly altered (except for the worse) since the days of Karl Marx sitting in the British Museum in the 1850s. Democracy, economic growth, better health and more schooling under capitalism in the last 150 years have not altered the huge relative advantage that the rich have in life (both in its length and its quality) over the middle and poor sections of society.
In my book, there is one chapter (21) that deals with a speech by Ben Bernanke, the current head of the US Federal Reserve, in which he recognises that there are inequalities of wealth and income in the US. He explains that this is basically down to education; with equality of educational opportunities for all, inequalities of outcome in income; health, life expectancy etc can be reduced, Bernanke says.
Well, here is yet another piece of research that throws a heavy bucket of cold water over Bernanke’s espousal of the American dream of equal opportunity. The OECD has published a report called Going for Growth (http://www.oecd.org/dataoecd/17/42/44566315.pdf), in which OECD researchers look at whether opportunities for a better and prosperous life improve over generations – in other words, on average, will you do better than your parents and will your children do better than you? Can we move up or down the social ladder with ease under capitalism?
What does the OECD find? First, that a young person’s educational attainment, future earnings and life expectancy depend more than anything else on whether that youngster was born into a rich or poor family. The ability to improve on your parents’ status and wealth if they are poor is very low in France, Italy, the UK or the US (it’s slightly better in the Nordic countries, Australia and Canada).
The OECD finds that the more your parents earn or own, the better the children will do. This matters much more than the school that kids go to or the job opportunities there are in their area – indeed, children’s chances of going to a good school or college or their future earnings depend most on their parents’ status.
This situation has persisted over generations unchanged. Capitalism generates inequality and different outcomes for people’s lives on the basis of wealth and income and still overwhelms the effects of improved and progressive education and better health.