Liberal Approach to Inequality

Since the 1980s growing inequality has become a dominant political and economic issue. During the beginning of the present decade, the “Occupy Wall Street” movement was one of the major reactions against widening inequality. Prior to Francois Bourguignon’s book, there were two important books, The Price of Inequality: How Today’s Divided Society Endangers Our Future (2012) by Joseph Stiglitz and Capital in the Twenty-First Century (2014) by Thomas Piketty. These books have intensified the debate around inequality. The Globalisation of Inequality is another contribution to this great debate. In this book, Bourguignon is mainly concerned with the question of whether globalisation is a cause of inequality or not. “Is the globalisation that we see today sounding the death knell of equality? If it continues, will it destroy any hope of social justice?” (p 2) In order to address these questions, Bourguignon makes a distinction between inequality of standards of living between countries and standards of living within countries.

Regarding globalisation, Stiglitz (2012) pointed out that the problem, however, is not that globalisation is bad or wrong, but that governments are managing it so poorly; largely for the benefit of special interest groups. The interconnectedness of people, countries, and economies around the globe is a development that can be used to promote prosperity, so as to spread both greed and misery. The same is true for the market economy. The power of the market is enormous, but has no inherent moral character. Like Stiglitz, Bourguignon also agrees that the poor management of globalisation is one of the sole reasons behind widening inequality. Excessive inequality has negative effects on economic efficiency and individual welfare. More fundamentally, however, the exclusive appropriation of economic progress by small elite groups will, after a point of time, and beyond a specific threshold, necessarily undermine the stability of societies. If inequality keeps increasing, there is a point at which even a minor economic recession is likely to trigger major social disruptions.