Benefits of Equality

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INTRODUCTION

“If Trump is a symptom, what is the disease?” One often encounters this interesting question in alternative media articles. I think that at least part of the answer is “Excessive economic inequality”.

Hobson’s explanation of imperialism

The English economist and Fabian, John Atkinson Hobson (1858-1940), offered a famous explanation of the colonial era in his book Imperialism: A Study (1902). According to Hobson, the basic problem that led to colonial expansion was an excessively unequal distribution of incomes in the industrialized countries. The result of this unequal distribution was that neither the rich nor the poor could buy back the total output of their society. The incomes of the poor were insufficient, and rich were too few in number. The rich had finite needs, and tended to reinvest their money. As Hobson pointed out, reinvestment in new factories only made the situation worse by increasing output.

Hobson had been sent as a reporter by the Manchester Guardian to cover the Second Boer War. His experiences had convinced him that colonial wars have an economic motive. Such wars are fought, he believed, to facilitate investment of the excess money of the rich in African or Asian plantations and mines, and to make possible the overseas sale of excess manufactured goods. Hobson believed imperialism to be immoral, since it entails suffering both among colonial peoples and among the poor of the industrial nations. The cure that he recommended was a more equal distribution of incomes in the manufacturing countries.

Interestingly, TED Talks (ideas worth spreading) was recently under fire from many progressive groups for censoring a short talk by the adventure capitalist, Nick Hanauer, entitled “Income Inequality”. In this talk, Hanauer said exactly the same thing as John Hobson, but he applied the ideas, not to colonialism, but to current unemployment in the United States. Hanauer said that the rich are unable to consume the products of society because they are too few in number. To make an economy work, demand must be increased, and for this to happen, the distribution of incomes must become much more equal than it is today in the United States.

TED has now posted Hanauer’s talk, and the interested reader can find another wonderful TED talk dealing with the same issues from the standpoint of health and social problems. In a splendid lecture entitled How economic inequality harms societies, Richard Wilkinson demonstrates that there is almost no correlation between gross national product and a number of indicators of the quality of life, such as physical health, mental health, drug abuse, education, imprisonment, obesity, social mobility, trust, violence, teenage pregnancies and child well-being. On the other hand he offers comprehensive statistical evidence that these indicators are strongly correlated with the degree of inequality within countries, the outcomes being uniformly much better in nations where income is more equally distributed.

Warren Buffet famously remarked, “There’s class warfare, all right. But it’s my class, the rich class, that’s making war, and we’re winning.” However, the evidence presented by Hobson, Hanauer and Wilkinson shows conclusively that no one wins in a society where inequality is too great, and everyone wins when incomes are more evenly distributed.

Extreme inequality today

Here are two quotations from a report by the Global Inequality organization:

“Inequality has been on the rise across the globe for several decades. Some countries have reduced the numbers of people living in extreme poverty. But economic gaps have continued to grow as the very richest amass unprecedented levels of wealth. Among industrial nations, the United States is by far the most top-heavy, with much greater shares of national wealth and income going to the richest 1 percent than any other country.”

“The world’s 10 richest billionaires, according to Forbes, own $745 billion in combined wealth, a sum greater than the total goods and services most nations produce on an annual basis. The globe is home to 2,208 billionaires, according to the 2018 Forbes ranking.”

Corporate oligarchs control governments and the mainstream media

Today, the world faces two existential threats, the threat of an all-destroying thermonuclear war, and the threat of uncontrollable catastrophic climate change. In the United States, and several other countries, immensely rich corporate oligarchies use money to control both the mass media and politics, and the result is that no action is taken to save the future of the earth for our children and grandchildren.

It is not surprising that the fossil fuel industry supports, on a vast scale, politicians and mass media that deny the reality of climate change. The amounts of money at stake are vast. If catastrophic climate change is to be avoided, coal, oil and natural gas “assets” worth trillions of dollars must be left in the ground. Giant fossil fuel corporations are desperately attempting to turn these “assets” into cash.

Our military-industrial complexes maintain the threat of thermonuclear war, as well as spemding vast amounts of government money that could alternatively be used for social programs or renewable energy infrastructure. A military-industrial complex involves a circular flow of money. The money flows like the electrical current in a dynamo, driving a diabolical machine. Money from immensely rich corporate oligarchs buys the votes of politicians and the propaganda of the mainstream media. Numbed by the propaganda, citizens allow the politicians to vote for obscenely bloated military budgets, which further enrich the corporate oligarchs, and the circular flow continues.

Excessive economic inequality is at the root of the decay of democracy and the drift towards neofacism in a number of countries. It is not a coincidence that the United States and Brazil, two of the countries where inequality is the greatest, now have governments characterized by racism, militarism, cruelty, mysogeny, decay of democracy and climate change denial.

Economic equality and climate action in Scandinavia

Senator Bernie Sanders, a popular reformist candidate for the US Presidency in 2016 and 2020, has said that he is a socialist. When asked to explain in detail what he meant by that, Sanders said that he believed that the US would benefit from having a social and economic system similar to those of Scandinavia.

The Green New Deal can simultaneously address the climate crisis and the problem of excessive economic inequality. In this context, it is interesting to look at the social and economic systems of the Scandinavian countries, Norway, Sweden, Finland, Denmark and Iceland. In these countries the contrast between the rich and poor has been very much reduced. It is almost true to say that poverty has been eliminated in these countries. At the same time, the Scandinavians have strong policies to address the climate emergency. Thus Scandinavian successes are a counter-argument to those who say that the Green New Deal cannot be put into practice.

Renewable energy in Denmark

Here are some excerpts from a recent report by the Danish Ministry of Energy, Utilities and Climate:

“Denmark’s success in transforming into a sustainable, green society is widely recognized. Denmark is at the forefront of numerous international initiatives and collaborative endeavors. In 2017, for the second consecutive year in a row, Denmark won the World Energy Council award for the world’s best energy system.”

“In 2017, Denmark achieved a world record of 43.4% power produced solely by wind turbines. Denmark can cover the largest share of its electricity production with green power from wind turbines. Denmark is also a European leader in the export of energy technology, as exports of energy equipment account for a larger share of total exports than in any other EU country.”

“The government has set ambitious goals that few other countries can match: At least 50% of Denmark’s energy needs must be covered by renewable energy by 2030. Coal must be completely phased out of the power supply by 2030. Moratorium on all exploration and drilling activities for oil, gas and shale gas on land and inland waters of Denmark. Denmark must be a low-emission society independent of fossil fuels in 2050.”

Eliminating excessive economic inequality increases happiness

For many years, the Scandinavian countries have ranked as the best places to live, according to the World Happiness Report. Perhaps these countries can serve as models, if we wish the future of human society to be a happy one. A step towards both happiness and sustainability must be the elimination of excessive economic inequality.

Read the entire book above or download it here.

We thank John Scales Avery, a renowned intellectual, EACPE board member, and theoretical chemist at the University of Copenhagen, for giving us permission to reproduce his latest book for EACPE.