The Global Economy’s “Impeccable Logic”
Ever since the Occupy movement coined the terms “the 1%” and “the 99%” to point out disparities of wealth and power, the gap between rich and poor has received a lot of attention. In his highly-regarded 2014 book,Capital in the Twenty-first Century, for example, Thomas Piketty’s central thesis is that wealth inequality is bound to increase in modern capitalist economies. This was underscored by a recent Oxfam report, which tells us that the world’s 85 richest people now have as much wealth as the poorest 3.5 billion; that the richest 1 percent will own more than half the world’s wealth by next year; and that in the US, the wealthiest one percent captured 95 percent of income growth since 2009, leaving the bottom 90 percent even poorer. (1) There’s more, but you get the idea.
Statistics like these have led to widespread questioning of the moral underpinnings of the global economy. But does morality have any place in conventional economic thinking? While the overseers of the global economy are beginning to see problems with the wealth gap, it’s for reasons that are neither moral nor ethical, but purely practical: extreme inequality, they fear, might threaten the continuance of the system itself. Christine Lagarde, Managing Director of the IMF, worries that “excessive inequality is not good for sustainable growth [sic]”(2), while billionaire and self-described plutocrat Nick Hanauer is even more concerned: “if we don’t do something to fix the glaring inequities in our society, the pitchforks will come for us.” (3)
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