Inequality and capital
ESOn4022: Inequality and Society


Inequality of Wealth
•Individual level (organizations, states)
•Artificial phenomenon, not „natural“, not moral
•Consists of income from labour + capital (+ their interaction)
•Legitimization – personal effort vs. Inheritance, meritocracy vs. Plutocracy
•What is the relative importance of inequality of income from labour vs. from capital? How has it
changed?
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Logic of Inequality
•Traditional societies – negative correlation between capital and income from labour
•Modern societies - positive correlation between capital and income from labour
•Income from labour more important (2/3 – 3/4 of national income)
•Rise of patrimonial middle class/fell of the share of top class – transformation of the
distribution conflict (decline of the society based on inheritance of capital)
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Evolution of inequality
•Inequality of income from capital always bigger
•May be reduced via public policies (two world wars)
•Rise since 1970´s and 1980´s
•What mechanisms are in play? Inherited wealth – cumulative effects / different effects on wage in
different settings
•Which social class is dominant? Which one is lower, middle, upper?
•Top centile – large groups with power
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Income inequalities



Merit vs. inheritance



Economic flow of inheritances and gifts



Wealth concentration



Merit-based billionaires?



What is the problem?



Inherited wealth



Inequality and its discontents
•Very high inequality closer to that of labour income inequality
•Too high wealth concentration – revolution
•Depends on the legitimation of the system + repression
•Two ways to inequal society (may coexist): Society of rentiers vs. Society of superheroes
•Globalization cleavage (winners x losers of globalization), Great Recession protests, OWS...
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