In post globalization era where world has turned into a global village, almost all of us are aware of the fact that there exist a huge income inequality all over the world. Rich classes are getting richer and poor are getting poorer which proves that developed economies are growing at the cost of developing ones. This trend of unequal growth is not just growing but growing at an increasing rate and unfortunately this trend is seems not to be changing anywhere in near future.
Causes of Income Inequality
I am sure you have been through different books, journals, articles, interviews and speeches of various scholars and leaders all over the world, providing you with their vision and arguments about income inequality. But this article provides you with more generalist and simplistic vision of persisting economic inequality which does not require any knowledge of economics at all and theories which we will develop in this article can also be applied to other field of social science as well.
Income inequality is not just a consequence of improper functioning of economic agents but it also consists some wider and even bigger dimensions. One can not expect to solve this complex problem assuming it has only economic dimension and hence limit their area of study to the sphere of economics only. It is wide and more complex in nature which require a substantial amount of attention of other field of social science to understand the complete picture.
For a long period of time it has been believed that income inequality is the outcome of concentration of wealth which arises out of improper functioning of capitalist economy. Since then, governments all over the world added an anti-capitalist dimension in their functioning. Government through their taxation and expenditure policies tries redistribute the wealth. They collect wealth from sufficient classes through their taxation policies and channelized to underprivileged classes through various welfare schemes so as to promote economic equality.
However in reality concentration of wealth is the most dominating economic factor and there exist several other equally dominating factors as well. Income inequality is not just the result of improper functioning economic agents but it also exist in the intersection of other forms of inequality. Manipulating policies or loopholes in policies of government, slow administration and judicial system, social injustice and discrimination are equally responsible for economic inequality which demands equal attention. In simple words, in order to understand income inequality we require a more integrated and interdisciplinary approach as the problem is more than just an economic phenomenon.
Origin of Inequality
Any form of inequality does not exist independently, but it is the outcome of several other persisting imbalances in the society. Inequality arising out of any reason in any sphere of society will also affect all the other spheres of social life. For instance the backward classes in India are being subjected to discrimination and social injustice and this type of social discrimination is also reflected in their economic status.
It is to be noted that even though different forms of inequality might have numerous diverse impact, but their origin have some central homogeneous reasons. Any form of inequality whether social, political or economic arises out of two factors.
- Lack of choice and
- Lack of opportunity.
Lack of Choice
When individuals in any society do not have adequate options to choose from, then they are forced to be dependent on these limited options. If the available choices are not competing for advancement, then it leads to concentration of decision-making power in the society, which in turn leads to exploitation and causes inequality to rise. For instance, imagine a market with only few limited producers selling a homogeneous product to a large number of consumers. If these producers are more organized than competing in nature then they have a exploitative power over the economy. They can raise the market price collectively and consumers with limited options will be forced to buy at higher prices. The higher profit of these limited producers reduces the affordability of all the consumers and leads the society towards economic inequality. This argument is somewhat general version of concentration of wealth and this result can also be applied to political as well as social spheres. we in fact can see several real world instances such as political parties in opposition, telecom corporations in India, US in global world, Oil Exporting countries and so on.
Lack of Opportunity
In order to combat limited choices and dependency as a source of inequality, society must allow its individuals to develop their potentials. Individuals when able to realize their potential will induce competition and provide more choices to society. For individuals to develop their potential, they must be provided with adequate and fair opportunities. However this is only the necessary condition and require sufficiency. For instance, despite having reserved seats in universities for SC and ST classes, there still exist a lack of representation of these students in college education which in turn affects their level of skill development and condition in labor markets. It can clearly be seen that individuals even after being provided with opportunities might not able to develop their potential. It is therefore equally important for the people to be able to access and exploit the opportunities provided to them.
The underprivileged classes of a society especially in India has to go through a lot of struggle before they could exploit the provided opportunities and this struggle does not end here, it continues throughout the process until they realize their potential. For instance small farmers has to go through Zamindars, women through sexism, successful startups through big corporation and so on. The nexus of sufficient classes use every possible unfair practices from influencing government policies to isolating individuals in a society, to maintain their decision-making power by eliminating competition. These are mostly non economic factors leading to income inequality.
So far we have discussed about the forms, causes and origin of inequality in a society. We in this section will talk about equality. But before we proceed further we must know and establish practical expectations about equality.
Equality and inequality in general are flip sides of the same coin. Existence of one means absence of other. In simple world equality and inequality can not exist all together and to achieve equality we must to eliminate inequality. However one should not expect to have absolute equality in the society, as society runs on imbalances. For instance in order to function smoothly, an economy in this modern world require division of labor and division of labor can only be sustained if there is some degree of hierarchy in the society. Therefore we can not expect to establish absolute equality but we should try to minimize the degree of imbalance before it become inhuman.
At this stage you may wonder on what basis and to what extent these imbalances should exist. Imbalances should exist only on the basis of human capabilities or merit and it should not exist beyond the extent where it affects the accessibility of the individuals to provided opportunities. Any imbalance beyond this stage will be considered as inequality. For instance if imbalances in income affects one’s accessibility to education then this imbalance can not acceptable and considered to be constraint which need to be eliminated.
Combating Inequality in India
Remember India did not became golden by following Keynes Or Smith.
The central argument of the article is that income inequality is not just the outcome of improper functioning of an economy but a collective outcome of persisting imbalances in all the spheres of society which demands more integrated approach, beyond economics. Since income inequality is not just an economic phenomenon, therefore it needs to be treated in general with all other form of inequality. States policies seems to be inadequate to address this problem, therefore society as a whole needs to combat this problem. In the battle against inequality, religious philosophies and practices along with moral development could proved to be an ideal weapon.
Message to Readers
Reverse form of discrimination ie. where the backward classes dominates sufficient classes by the abuse of state provided advantage and opportunities, is not specifically mentioned here. Vote Bank politics is also one of the most dominating political factors for social equality is here again not specifically mention. These are to be understood in the form of challenges in access to opportunities and struggle while developing potential.