Inequalities: A New Approach?

This report suggests a new approach to inequalities and social progress. This comes from reading many chapters and since these texts are long, and the synthesis will not be written soon, let me explain why I have the impression of an interesting "big picture" story emerging from these hundreds of pages. (Note: it is actually easy to browse chapters on the platform, so please check for yourself if you agree with my reading!)
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The International Panel on Social Progress (IPSP), in which I am involved, has just released the first draft of its report on "Rethinking Society for the 21st Century" for public review and put up an online platform collecting comments , as well as opinion surveys. Everyone is invited to participate.

This report suggests a new approach to inequalities and social progress. This comes from reading many chapters and since these texts are long, and the synthesis will not be written soon, let me explain why I have the impression of an interesting "big picture" story emerging from these hundreds of pages. (Note: it is actually easy to browse chapters on the platform, so please check for yourself if you agree with my reading!)

The report has, in fact, adopted a conventional structure with a first part devoted to socio-economic transformations (isn't the economy in the driving seat of society?), a second part about the political issues (democracy is struggling, but it remains the Holy Grail), and a third part about cultural and societal issues (even if this is not the intention of the panel members, observers sometimes perceive this as meaning that the social bond is just the frost on the cake).

This division of society into three spheres (economic, political, social) is very standard and remains pervasive in recent sociological work (such as the excellent Envisioning Real Utopias by Erik Wright).

Many studies of social issues nowadays tend to focus on inequalities, primarily in the distribution of economic resources (wealth, income), as in Piketty's Capital in the 21st Century or Atkinson's Inequality, and link these inequalities to other dimensions such as health (life expectancy gaps across social groups, in particular), as in Deaton's Great Escape, and worrisome evolutions in the political system (business interests and wealthy people become ever more influential in politics, disenfranchised electorates are seduced by demagogues), as in Stiglitz's Price of Inequality. They point to vicious circles in which economic and political inequalities tend to reinforce each other. They also sometimes mention social rifts between ethnic groups and cultures, in particular when studying how politicians use these to raise their electoral success, as in Roemer, Lee and Van der Straeten's Racism, Xenophobia, and Distribution. But these analyses keep the conventional three-sphere vision of society, with resources, power and status being the business of each sphere separately. They look for political fixes, i.e., governmental actions, to problems occurring in the economic (e.g., taxation) and the social sphere (e.g., education and linguistic policy).

Yet, the draft texts in each of the three parts of the IPSP report challenge this conventional view of the nuts and bolts of society. In every part one meets the important role played by four dimensions: power, resources, information and status. Perhaps a new paradigm is emerging here.

Take the economic sphere. Yes, it deals with resources primarily, but it is also full of power relations, as well as information and status issues, because economic activities of production and consumption generally take place in institutions that involve authority and governance relations between agents. The main institutions instantiating this observation are the corporation and the household, both the object of chapters in the IPSP report. In the corporation, decisions of investment, labor organization, and distribution of revenues, are shaped by power structures and a complex pattern of information sharing. Moreover, as emphasized in the IPSP chapter on the future of work, work remains the central part of life that defines social status for many citizens, thereby giving a key importance to their status in the corporation itself. Reforming the governance structure of the corporation would have tremendous economic and social consequences, reshaping the distribution of wages and profits, the status of citizens, and their degree of control over their lives as well as their power over others.

Similarly, the family is a key institution in which the production of human capital takes place, via education and consumption, and an important part of inequalities in lifetime success originate in the family when individuals are young or even when they are still in the womb, as the work on epigenetics shows. Gender roles are crystalized in the family and in the corporation, and prejudices about genders, sexual orientation, races and national origins play out in these institutions at least as much as in the marketplace.

In addition to resources, power and status, information also plays a strategic role. The education of children (another chapter in the report) is a matter of giving them the information that enables them to adapt to a variety of situations later in life. Similarly, the circulation of information in the corporation and the family is a key aspect of the distribution of power, but is worth distinguishing, since fights for obtaining information are often critical in making a form of soft power ride on the efficacy of transparency. For instance, leaks about offshore accounts play an important role in exposing the corruption of elites and undermining their rosy discourse about the good management of resources in the globalized economy. Within firms, leaks about layoff plans sometimes disrupt the outsourcing strategic choices. Secrecy is important to illegal activities, but also to morally illegitimate but legal activities that the elites engage in in order to enhance and preserve their undue privileges. Whistleblowers take very serious risks since their action is on the borderline of legality while often doing a great service to society.

Reducing all economic activities to a matter of production, allocation and distribution of resources is like taking a picture of the Eiffel tower (Paris) in which only the first floor appears.

What about the political sphere? Since it is not the only locus of power, as we have just seen, one should wonder about its boundaries. There are political processes in corporations whose primary function is economic, and such organizations have systems of sanctions against recalcitrant subjects that, except for jail, resemble the legal force of government. Symmetrically, resources play an important role in the political sphere, especially through the funding of political parties and electoral campaigns. In the United States, the personhood status of corporations gives them, as interpreted by the Supreme Court, a right to free speech understood as a right to pour money into the political battle. As a consequence business organizations and corporations become key political players, as described in the IPSP chapters on the political process. Economic organizations are so dependent on government policy that they devote a lot of resources to influencing policy.

The interdependence between corporations and governments is making the distinction between partnership, lobbying and corruption difficult to delineate (see the chapter on corporations for reform proposals on this topic). There is a direct telephone line between CEOs and key politicians and, as noted in the IPSP report, there is an interesting contrast between the diversity of national policies, which proves that policy-makers have considerable leeway in their policy choices, and the overly modest policy initiatives that seem to excessively internalize the threat of capital flight and of financial market sanctions in case policies diverge from serving business interests.

An illustration of this paradox can be found in the figure below, which describes corporate tax rates in OECD countries in 2000 and 2016. Two facts are striking. First, corporate taxes have been reduced in most countries, reflecting the race to the bottom that policy-makers are engaged in. But at the same time, the great diversity of rates proves that capital is not simply flying fluidly to the place with lowest tax rate; indeed, as recalled in the IPSP chapter on social trends, studies show that there are many other determinants of a good investment context, including a well trained workforce and good public infrastructure served by solid government institutions.2016-09-26-1474882697-374278-Corporatetax.jpg(Source: OECD)

It is as if the fact that policy-makers spend more time talking to business representatives than to other civil society actors distorted their view of what is good for society and what policies are reasonable and feasible. The political sphere has become a subsidiary of the economic sphere, with an obsession for the health of the economy in actual policy-making and a flurry of diversions about other issues in the public discourse (e.g., race, gay marriage, terrorism) masking the impossibility to have real debates about the economy.

This paralysis of policy has dramatic consequences on the political sphere, since voters do not understand why changing politicians in charge does not entail any significant change in social and economic policy. As a consequence, they frantically swerve to the extremes of the political spectrum and demagogues that promise to give power "back to the people" find a receptive ear in the public (the chapter on inequality and democracy analyzes populism).

Beyond power and resources, what about information and status in politics? The importance of status is quite obvious. The participation of minorities is a crucial issue in several countries, either in relation of actual participation by disadvantaged groups, or in relation to enfranchising immigrants to vote in local elections, or in access to elected offices. Gender and sexual orientation issues also remain a real battle when it comes to access to elected positions.

The role of information is less obvious but no less important. Secrecy and manipulation are important ingredients of the political game, and whistleblowers are no less important in politics than in economic affairs. If the lie about Iraqi weapons of mass destruction had been exposed early enough, the second gulf war would not have taken place. If more information was available about what is actually going on in the big powers' interventions abroad, they would probably be less lethal.

Less spectacular but no less important, the level of information of the ordinary voter is an essential parameter determining the quality of the electoral process. The fact that many voters are misinformed about important scientific (e.g., the climate), economic (e.g., public debt) and political issues (e.g., the action of the European institutions) undermines the value of popular vote. As many chapters of the IPSP report stress, political theorists have recently come to emphasize deliberation as a central aspect of the political process, alongside the distribution of power and the selection of a good voting and decision procedure. Democracy has an epistemic dimension in addition to its practical dimension. In this context, the role of the media, both traditional and new, is ever more important. And, guess what? The chapter on the media in the IPSP report highlights the importance of not just resources but also governance of the media, and pushes the idea that it is crucial for minorities to have access not just to information but also to the production of information.

Let us finally turn to the so-called social sphere. What happens in families, religious groups, civil society organizations such as NGOs is obviously a mix of power, resources, information and status. The quality of life in the activities that these various circles and institutions organize depends very much on these four ingredients. The IPSP report makes very interesting remarks about religion (the topic of a chapter and of a section in the chapter on inequality and democracy), suggesting that socio-economic issues can be the occasion of fruitful partnerships between the state and religious institutions and communities, while problematic traditions that entrench inequalities of power and status (e.g., between genders or castes or ethnic groups) in religious organizations may warrant some intervention.

Does this make a new and interesting paradigm? Consider this. Instead of seeking social progress in deepening democracy in the political sphere and reducing inequalities in the economic sphere, while protecting minorities in the social sphere, what about seeking social progress through a thorough critical examination of the unequal distribution of power, resources, information and status in all human institutions and activities?

Perhaps the key problems of resources in the economy and status in society, as well as power in politics, can actually be addressed in part by reforming governance structures in the corporation; the key problems of democracy can additionally be dealt with by reforming the funding of political activities and the business model as well as the governance of the media; the key problems of status can also be addressed by redefining the mission of education toward a greater focus on civic capacities; perhaps institutions such as the family and religions, which play a central role in shaping status for genders, should be submitted to public debates and public policies meant to encourage them to rethink their traditions.

The traditional three-sphere vision of society is a recipe for entrenching power, information and status inequalities in the economic sphere, entrenching economic and informational inequalities in the political sphere, and entrenching all sorts of unfair treatments in the social sphere, that spill over economic and political hardship. The quest for economic fairness, democratic governance, transparency and knowledge, and equal dignity, should pervade all institutions and all organizations. Virtuous circles in this quest, due to the interaction between institutions and between the four dimensions of power, resources, information and status, suggest that any effort in one place on one dimension is bound to help in other places or dimensions.

But no dimension or institution should escape scrutiny. The recent decades have seen a retreat of welfare policies and worker organizations and a flourishing of minority, gender and sexual orientation movement initiatives. While the latter must be welcome, they should not appear as a substitute for more traditional social issues. There is even a sobering view of progress according to which the political problem has been solved in the 18th century, the economic problem in the 19th century, and the social problem in the 20th century, leaving only cultural issues for the 21st century.

The impression that nothing can really be done to improve socio-economic problems is the big mystification of our time. Restricting attention to fighting unemployment, tuning tax policy and granting symbolic recognition to low status groups is starkly insufficient. A lot can be done, but it requires looking at the relevant dimensions in the relevant institutions.

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