It could be said that mainstream economic research is confirming the left’s long-term critique of trickle-down economics. Three extensive pieces of research illustrate how the study of inequality has been mainstreamed. Thomas Piketty, in Capital in the Twenty-First Century, confirms that market-led growth deepens inequality and good redistributive policies improve growth. Tracing changes in inequality since 1921, Kate Pickett and Richard Wilkinson show that among the richest countries, it is the more unequal ones that do worse according to almost every quality of life indicator. Another important voice is the re-emergence of Keynesian arguments against inequality. In a more recent study Herr, Ruoff and Salas argue that financialisation is part of a neoliberal political project designed to increase the share of income going towards profits, thereby increasing inequality. Three broad conclusions can be drawn from these studies of inequality:
- First, levels of inequality were reduced between the 1920s and the early 1970s by the use of a series of policy instruments, such as progressive taxation and nationalisation. Also key were the growth and development of trade unions.
- Second, inequality has a negative affect on the quality of life, including life expectancy, levels of violence and other societal problems.
- Third, the growth in levels of inequality since the seventies is the result of a political project designed to increase the power of capital over labour. This is especially so of finance capital. This “neoliberal revolution” has not only increased the share of income going to profits. It has also weakened trade unions and eroded the institutional gains made by workers in advanced capitalist countries after the second world war.
Social policy as the panaceaThere has been widespread discussion in recent years of policy instruments such as conditional cash transfers, the basic income grant and increasing taxes on the rich, including a financial transaction tax on high frequency fines. But a number of debates remained unresolved. One is around social policy. Armando Barrientos and David Hulme suggest that a “quiet revolution” is taking place in social policy in the Global South. They argue that social protection is now better grounded in development theory. This is especially in an understanding of the factors preventing access to economic opportunity and leading to persistent poverty and vulnerability. The initially dominant conceptualisation of social protection as social risk management is being extended by approaches grounded in basic human need and capabilities. In practice, this has involved the:
… rapid up-scaling of programmes and policies that combine income transfers with basic services, employment guarantees or asset building.Many of these programmes and policies have been dismissed by the left as neo-liberal and tokenistic. The question raised by our research is whether, as Ferguson provocatively puts it:
Can we on the left do what the right has, in recent decades, done so successfully, that is, to develop new modes and mechanisms of government? And (perhaps more provocatively) are the neoliberal “arts of government” that have transformed the way that states work in so many places around the world inherently and necessarily conservative, or can they be put to different uses? To ask such questions requires us to be willing at least to imagine the possibility of a truly progressive politics that would also draw on governmental mechanisms that we have become used to terming “neoliberal”.The growing institutionalisation of social assistance as a right through intense political struggle is the story in India, Brazil and South Africa. James Ferguson suggests that this:
… redefines groups in poverty as citizens (social citizens). A deepening of democracy follows.These emerging welfare regimes of the South, what Ian Gough calls informal security regimes, rely on informal work as well as a variety of livelihood strategies such as street trading, the extended family, and the villages and communities within which they are embedded. But, these schemes merely temporarily alleviate the conditions of the poor; they do not enable the poor to escape poverty. Unlike the social assistance schemes in South Africa and India, the focus of Brazil’s Bolsa Familia programme is not on providing jobs for the unemployed poor. Instead, this scheme and its predecessors focus on a combination of income grant and means to enhance “human capital” development. This means-tested cash benefit is attached to certain conditions, mainly school attendance and health checks for children.