Academic journal article The Ecumenical Review

Inequality, Sustainability and the Greed Line: A Conceptual and Empirical Approach

Academic journal article The Ecumenical Review

Inequality, Sustainability and the Greed Line: A Conceptual and Empirical Approach

Article excerpt

There is enough in the world for everybody's need, but not enough for anybody's greed.

--Mahatma Gandhi

Empirically and conceptually, what is the "greed line"? The term is defined as the maximum ethically acceptable individual consumption in the current global economy. The current economy is simultaneously characterized by the social exclusion of a large proportion of the world population affected by poverty, a high level of national and international inequality, luxurious consumption accounting for a large share of global output, and the lack of environmental sustainability, which affects the fight of future generations to achieve adequate living conditions. We begin with an empirical analysis of poverty, inequality and sustainability at the global level, with some emphasis on the Latin American situation. Based on the empirical findings, we then present a theoretical discussion of the relationship between consumption, social welfare and sustainability, focused on the neoclassical theory and its critics. Finally, I offer a specific proposal on the definition, properties and relationships of the greed line.

Poverty, Inequality and Sustainability

There is no doubt that the global per capita income, which has reached 9,120 dollars, (1) is more than eight times higher than the poverty line, and could easily, with adequate social redistribution of wealth, enable the elimination of global poverty.

However, according to the most recent information from the World Bank, 2.6 billion people, or 40% of the world's population, are affected by poverty, including 1.4 billion people who are riving in conditions of extreme poverty. (2) The World Bank's estimates, based on a poverty line of two dollars purchasing power parity (PPP) per day, are regarded as conservative by several sources. According to the United Nations Development Programme (UNDP) Multidimensional Poverty Index, which notes several simultaneous deprivations in basic needs, 1.75 billion people, or one-third of the population in 104 developing countries, are poor.

Although poverty has declined since 1981, the greatest reduction took place in China. Advances in Latin America have been moderate, and Africa is suffering from serious stagnation. According to the UNDP, prospects for accomplishing the Millennium Development Goals, which include cutting extreme poverty in half (compared to its 1990 level) by 2015, are limited, apart from India and China.

Excluding those two countries, social inequality between countries in the world has grown, with an increase of the Gini coefficient (which measures the inequality of distribution, such as wealth) from 0.47 in 1980 to 0.52 in 2000. In addition, the proportion of per capita income of Africa and Latin America, compared to industrialized countries, consistently declined from 1980 to 2001. In sub-Saharan Africa, this figure declined from 3.3 to 1.9%; in Latin America, it shrank from 18 to 12.8%.

Increasing social inequality in the world has become more marked through globalization and the application of neo-liberal policies all over the world. (1)

In addition to the inequality between countries, there are great social differences between people in each country. According to UNDP, "within countries rising income inequality is the norm: more countries have a higher Gini coefficient now than in the 1980s. For each country where inequality has improved in the last 20-30 years, it has worsened in more than two." (4)

Latin American is regarded as the region with the greatest social inequality in the world, and the evidence shows that these inequalities have tended to grow in recent decades. The Gini coefficient of personal income has grown in Latin America from 0.48 in the 1970s to 0.52 in the 1990s.

The world distribution of personal wealth has recently been studied rigorously by WIDER. (5) Their study includes both the differences between countries and the inequality among people in each country. …

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