Dugger, William M., Journal of Economic Issues
Definition and Plan of Attack
Inequality is the systematic division of the members of a society into separate groups for the benefit of one group at the harm of the other. I call members of the benefited group the top dogs and members of the harmed group the underdogs. The five systems of inequality I deal with here are racism, sexism, classism, jingoism, and anti-Semitism. The treatment of inequality in conventional economics is wrong and causes much grief. Contrary to conventional economics, inequality is not a social investment in future productivity. Inequality is a vice, not a virtue.
After clearing away the underbrush, I will discuss the following characteristics of inequality: (1) redistribution is not the solution; (2) inequality is pathological; (3) inequality is cumulative; (4) inequality is social; (5) inequality is supported by myth; and (6) laissez faire toward inequality is impossible.
Clearing away the Underbrush
The underbrush: the incorrect belief that income inequality is a form of social investment is held by the privileged rich and by conventional economists. The rich just know that it is true. If not rich, conventional economists are taught it during years of undergraduate and graduate training. Perhaps many enter their training with a strong propensity to believe it. Be that as it may, during years of formal training, conventional economists learn to make the right assumptions and investigate the right relations. They do not investigate whether inequality reduces the abilities of the underdogs. They assume that inequality causes the rich to finance capital accumulation out of their savings. Conventional economists learn not to investigate the Keynesian insight that the saving of the rich does not finance investment. They also learn not to investigate whether the saving of the rich actually comes from the sacrifices of the poor. Walter C. Neale, having not learned these things, takes a trip through the conventional saving thicket and concludes, among other things, that he has learned that
the attribution of saving [who does it] is ideological. It serves to justify the increase in the assets of the winners. That some qualify to be savers . . . and that some do not qualify . . . is a consequence of the way our system distributes property, the power to spend, and the power to acquire assets [Neale 1991, 1166; parenthetical statement added].
Inequality is systematic, not haphazard. Each system of inequality selects people for separation into groups of top dogs and underdogs. These groupings are not products of spontaneous social order (invisible hand) or individual choice, but of collective action. Each system of inequality requires a different set of collective actions. Specific collective actions are required to create and maintain a system of racial inequality. Race laws must be established, adjudicated, and enforced. Separate and unequal institutions must be established and justified. These systematic collective actions to put down one race and raise up another one are costly. A different, but partially overlapping, set of collective actions is required to create and maintain a system of class inequality. These actions focus on establishing, allocating, justifying, and protecting property rights. These collective actions are costly. Another set of different but partially overlapping collective actions is required to create and maintain a system of gender inequality. They establish, enforce, and justify the roles of family members, the reproductive rights of men and reproductive duties of women, and the various privileges of men and exposures of women. These actions are costly. Specific collective actions are required to create and maintain a system of national inequality. Armies, navies, air forces, border patrols, and intelligence agencies must be established and supported. Wars must be waged. These collective actions are costly. Another set of collective actions is required to create and maintain a system of religious inequality. …