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Sujato's Questions (1): is wealth just inequality in drag?

We tend to think of wealth as an absolute: someone “has” a million dollars. Someone else does not. In this way of thinking, the fact of inequality is a mere side-effect, a regrettable symptom of a specific set of economic conditions. And it can be redressed by changing those conditions, eg. by tax.

But wealth has no real absolute value. It is only relative to what you can buy.

Say I have a dollar, and I want to buy a sandwich. Lucky me, there’s one for a dollar. But the guy next to me has two dollars. Guess who gets to eat today!

To put the same thing another way: the only difference between a world where everyone has a billion dollars and a world where everyone has one dollar is where you point the decimal point. That’s it, that’s literally the only change.

What makes a billionaire rich is not that they can enjoy relaxing on a beach. Seals do that, and they have nothing. What makes them rich is that they can stop poor people from enjoying the same beach. That is at it heart the benefit of wealth: to exclude others from the earth’s resources.

So this is my question: can we reduce wealth to inequality? Is the having of wealth simply a polite way of talking about how many others have been deprived of wealth?

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Money was invented as a way to compel a population to support an army:

You (the King) give your army some tokens with your face on it, and then you require each peasant in your country to return N tokens to you next year (today we call this “taxes”). How do they collect tokens? By performing services for the army of course, in exchange for them. And if they can’t collect enough? You enslave them. [Citation: Debt: The First Five Thousand Years by Graeber]

So, the other part is labor: the ability to pressure someone into doing something for you.

In addition to wealth (greed), the powerful can also motivate labor through violence (hatred) and mythology (delusion). But, if we become incoercible by such things…

Homage to the Blessed One who taught the way to supreme sanctuary from all bondage! :pray::grin:

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Are you asking if reducing overall wealth also reduces economic inequality? How are you defining wealth? Is it material, financial, or social?

How you define wealth allows us to address whether reducing it allows us to re-balance the power dynamics of the society.

You could argue that being wealth is having power. If we look at different societies and how they perceive “wealth” and ways that it has been defined and re-defined over the course of modern history we can see the importance of power dynamics in defining wealth. Karl Marx is a famous example for how he framed power dynamics as a socio-economic struggle of the haves vs have-nots. In the feudal system it would be the landlords vs peasants/landless. This struggle is still seen in parts of Africa and Asia where land access is a serious problem for food security, but these are still capitalistic systems. According to Marx you also get the idea this power shifted from landowning to capital wealth, shifting the haves vs have-nots to those who control capital to those who don’t. This is common inequality that we see in late-stage capitalism with rising inequality in terms of incomes, this outcome was also predicted by Adam Smith. While the rampant consumerism that is typical of our society was encouraged by Rostow in 1959 in his work The Stages of Economic Growth that describes how capitalism will grow and benefit society.

However this doesn’t always work out as intended. Neo-liberal beliefs in the 1980s that economic growth requires inequality showed mixed success. Middle income societies such as those in Latin America had a better time improving national growth and income per capita from restructuring while Africa had negative results that either hurt their economies or did nothing to improve them Rapely discusses this in his book Understanding Development in chapter 4, “Neoclassical Reform in Practice”. You also have reactions to the Neo-liberal reforms and victory of capatlistic ideas in the decolonization movement that sought to remove the influence of Western thought and bolster the voices of those who are not normally heard, because it is believed that the stronger economies had an unfair say in the global world order and how they should develop socio-economically. Arturo Escobar makes this point of a strong power imbalance in his work Encountering Development: The Making and Unmaking of the Third World. Edward Said also made points about control the social narrative in his study of Orientalism which also highlights a power imbalance of society due to the economic and military strength of the West over those who lack “civilization” because they lack industrialization and science. I could go on about how wealth and power are closely tied, and also include how narrowly defining wealth can be problematic for equitable growth in societies (see Lewis, David. (2005): Anthropology and development: the uneasy relationship [online]. London: LSE Research Online, http://eprints.lse.ac.uk/archive/00000253), but that would probably get to be too much here.

Most discussions of power imbalances include wealth but go beyond that idea. Addressing the challenges of power imbalances is heavily influential in Critical Social Theory.

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:slight_smile: Some guys with two dollars will suggest, even argue, with the seller that the price “should” be two dollars, or maybe three. (And some might then buy sandwiches, preferring to give them then have them sold at a price affordable to all.) Greed for wealth might not exist without greed for differential status. For some, I think, it’s only ok for everyone to have worthwhile work, if status is not equal; gotta have winners and losers.

… or do? Financial wealth seems often seems to come bundled with so much other privilege and access and favors. Access you sometimes cannot buy, at any price.

Generationally. Yeah, and I think craving for wealth is a way to madness, and thinking about wealth is quite disenchanting. In a good way.

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No, I’m not talking about lessening the quantity of wealth (which will be in a separate question!), but about whether wealth is nothing other than inequality.

I’m mainly thinking of financial wealth.

Isn’t it “motivate”? :wink:

Which brings us to:

This reframes the same point in a different way: inequality is just as fundamental to power as it is to wealth.

They are certainly tightly linked, aren’t they? I suspect that as basic needs are satisfied, excess rapidly generates differentials of power and property. In nascent form, I’m thinking of the Big Man and potlatch, for example.

Obviously not all inequality and differentiation is bad. People are different and have different interests and talents. It’s a question of moderation and balance.

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I haven’t seen anything that indicates that capping personal financial wealth reduces inequality. Halting monopolies and monopsonies does improve the economic outcome for those involved in the industries that have more choice, and does redistribute some of the wealth from the groups (sometimes a single family) that control them down the value chain. Trying to implement that strategy is very tricky and the best methods to make the value chain more equitable varies from economy to economy.

Perhaps there is no such thing as ‘equality’ … just a fancy concept, not existing in nature :slight_smile:

So rather than focus on equality (of whatever thing), one could focus on ethical living - a moral and meritorious life. ie the process not the outcome.

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Yes, you’re in the right direction. Note that the flows also occur through time with the advent of contractual debt enforceable by law.

So not only accumulation leads to a majority being deprived now for the sake of a minority but also perpetuates that through the future, both between individuals and between organisations like companies and countries.

Note that another important aspect of all this is that it helps differentiating stock from flow.

In ancient times, with use of scarce things like gold and gemstones as way to measure and preserve tradeable value, wealth was all about stocks, inventories of such things.

For example a successful trader would make extraordinary gains until his chest was full. Once he had ‘enough’ he could then live for the rest of his life consuming that wealth - this is somehow recorded in the suttas as a typical way of pursuing and making use of prosperity. Similarly, successful kings would accumulate wealth via taxes and/or waging war.

And as per @Khemarato.bhikkhu’s quote in the process of doing so these kings had to give away some of that via coinage to gather enough young men to pursue the path of war for accumulation.

Nowadays, with the use of fiat currency/money for measuring exchange value, the largest wealths are more a function of flow than of stock.

For example, the most valuable businesses and the most wealthy nations in the world are considered such for the overall higher amount of currency flowing (or anticipated to flow) in average through its balance sheets or the economies.

And this is where the danger lies. For things to keep spinning at the top the flows need to keep rising in volume and speed but that does not happen consistently across all different sectors and income brackets.

And the more things spin at the top the more is accumulated, creating a massive mountain of ‘idle savings’ mirrored by what the media usually calls debt crises.

These mountains of idle savings usually fail to fulfill the function we are told to believe wealth and prosperity has, which is to allow for a most efficient recycling of surpluses.

This deceiving narrative is usually summarized in the usual fallacies of ‘making the cake rise before it can be split’ or nonsense like tricke-down economics.

Unsurprisingly, a system so dependent on a high frequency and high volume turnover to keep the greediest satiated is now about to experience a global crisis as people are asked to stay at home for 3-6 months.

It has been more than 10 years since I was declared an economist and I have ever since dedicated a lot of my time to think about these maters. And I simply don’t see a way to fix it without fundamentally change and reset the way this whole thing work.

And to some extent, the livelihood model symbolized by the robes bhikkhus and bhikkhunis wear is in my view the most effective way of rebelling against all this. Personal property is reduced to handful of items. Communal property is virtually non tradeable/exchangeable outside the Sangha. Consumption is reduced the bare minimum representing the lowest burden possible on everyone else and the door is always open to those ready and genuinely sick of all the madness going “here outside”.

P.S.: On the topic of wealth and it’s counterpart (debt) I suggest checking the following:

Yanis Varoufakis: Yes, the capitalist system is broken | National Post

Yanis Varoufakis: How I became an erratic Marxist | News | The Guardian

Yanis Varoufakis: "There is no such thing as a debt crisis" - OECD ObserverThere_is_no_such_thing_as_a_debt_crisis.html

Anti-Capitalist Politics in the Time of COVID-19

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From an early Buddhist perspective, excessive inequality seems to be connected to a decline in ethical leadership or the ethics of an entire society, for example, see the Cakkavatti-Sīhanāda Sutta. When a small few begin to hoard wealth for themselves, the fabric of society begins to break down as the basic net of trust and social connections become severed among the various classes.

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I think there are two questions here: how big the pie is, and how the pie is divided. The pie (the total sum of goods and services) is the real total wealth, and depends on peoples productivity (if everyone stopped working there would hardly be any real wealth, except from fruits and veggies growing in wild nature).
Financial wealth (money and credit) is what allows people to have access to real wealth (those goods and services). I once a read a definition of money (perhaps a bit idealistic) that said ‘money is a scorekeeping system for unreturned favours’. Meaning that if a plumber carries out a job, unless they are paid by barter (or they do it out of generosity) they receive money that will allow them to have access to some goods or services in the future when they need.
So my understanding is that we want the pie to be large enough for people to have their fundamental needs met (and for this we need a system that motivates people in general to be productive) and then we want the pie to be divided fairly.

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I remember having often feeling that wealth=access to exclusive property or experiences when I used to be a (poor) student in the UK. But I haven’t thought about it in this way for a long time now; perhpas this association between wealth and exclusion is something that happens more in the anglosaxon world. I don’t know.

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The truth is that the pie has been big enough for a long time now. :sweat_smile:

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yes probably. The trouble is that people don’t want to divide it fairly. In capitalist countries you have inequality between the common people and those owning the means of production; in communist countries you have inequality between the common people and those running the state.

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100% agree this is the case but I suspect something is conditioning people to that delusional choice…

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I agree 100% too. Unless one is enlightened, they will be driven by greed to some extent. It does not matter whether the system is capitalism or communism, or even I dare say whether you are a lay person or a monastic (what I mean is that I think it’s more a question of how pure one’s mind is, than about the external circumstances).

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In context of rebirth and considering anicca dukkha and anatta, “having” even these seems not-really so.

Yes. It is relative to buying power. I personally can’t imagine a life in which I don’t have to worry about losing my home because of an interruption of income that lasts too long. Or one in which I have to really consider whether or not it’s wise to spend over $100 on something like a new tablet. Buying a laptop or a computer is a major decision that could have consequences months later because it broke a carefully balanced juggling act of financial survival.

But the real inequality to me enters the picture when we consider how each person obtains the wealth they have. Being a little gear in a 24/7/365-running industrial machine is a far different experience of life than being someone who earns an income through investments or real estate.

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Right, yes. The new model pioneered by Amazon was to prioritize flow over stock, so you can just lose more and more money so long as you get bigger market share. Uber has taken it to the next level: they not only have no profit, but no path to profit. The entire business model depends on the invention of driverless cars and getting rid of their workforce.

Indeed!

Yes, indeed. Ethics is fundamental, more fundamental than economics. Wealth serves human needs, not the other way around.

Right. And if I understand it correctly, there is a negative relation between excessive inequality and productivity. Up to a point, wealth motivates productivity, but it soon flips, due to laziness and corruption, and most importantly, the fact that the system is designed to manufacture wealth from wealth. So there is in fact a negative motivation, to avoid or suppress innovation and improvements in productivity, because that will upset the current distribution of wealth.

In cases where new innovations bring genuine change—I’m thinking of the tech innovators of the nineties and noughts—innovation rapidly falls off. Can anyone think of a genuine innovation made by Apple, Microsoft, Google, Facebook, or Amazon in the last ten years? It’s all basically iteration, and where innovation happens, it’s via acquisition, upon which the innovation stops again.

Google is a great example. They had one great innovation: search pages ranked by the number of links. They monetized this with AdWords, which gave them a bucket of cash, and they started investing in all kinds of cool things. They built Gmail, and we loved them! Lots of space and no spam! But from then on it was pretty much all acquisitions: Youtube was a feisty anti-Google startup; Chrome was derived from Safari, itself derived from KDE; Chrome OS is from Gentoo Linux; Android also an acquired Linux derivative. Google started a whole bunch of exciting moonshot projects, like a space elevator, an immortality project, and solving climate change, but they pretty much all failed. Now they are just an ad company whose income is almost entirely dependent on the innovation they made two decades ago…

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I am coming very late to this thread!

One point that comes to mind:
In the ancient world, usually nothing was in drag, the link between wealth and inequality (in the sense of people having different ranks, importance or status in society) was upfront and explicit.

For example, in many legal systems, e.g. the Irish Brehon Laws (and in other similar systems in Europe), crime was usually punished by fines. If you killed a person you and your family were fined (this happened even before there was even money). The amount you paid depended on the rank of the person (from 3 cows for a lowly peasant up to 50 for some important lord or king). Your fine could be doubled if it was murder as opposed to manslaughter. There was a finely gradated system according to rank (killing a poet or bard of higher rank meant more cows :slight_smile: etc. ). Similar setups existed elsewhere, e.g. the weregild system in Germany.

Rank and resources were also tied up closely. The ranking system was somewhat flexible in the Irish case. If a person had the resources of a lord, then in many legal senses he would be treated as one, and after three generations, his heirs would officially get that title. There was also the possibility of losing a rank if one didn’t have the resources that went with it. Similarly, in Ancient Rome, you had to have sufficient wealth to belong to the Senatorial or Equestrian rank (there was a regular census to make sure families did actually still have these resources). Resources often also meant sufficient allies, powerful clients or patrons (web of influence). Status/wealth was more than just about cows or money.

So, in earlier times, this was often all very upfront.

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Recent works by people like Thomas Piketty, e.g. his best-selling Capital in the Twenty-First Century also seem relevant.

IMO it’s good for a society if inequality is kept fairly limited. I suppose we have to mention Karl Marx too. There were some good intentions and a lot of interesting thinking there. I’m not sure, though, that so relentlessly viewing humans in terms of class and economic interests is so healthy. Some of the idealism also when badly wrong when put into practice. I suppose also that sometimes religion can indeed be used as “an opium of the people”! :slight_smile:

Piketty does set out a fairly plausible thesis though. Democracy does seem to have some ability to curb inequality. However, it may not be that strong. 19th century USA and Europe were very unequal places (the so-called “Gilded Age” in the US). Piketty argues that the easiest way to gain wealth in this period was to inherit it or marry into it (that the returns on capital in the long-term would be greater than build up from income or growth in the economy). It was rather a closed shop which tended to concentrate wealth.

Then there were the catastrophic wealth destroying (and levelling events) of the Great Depression, followed by the Second World War. I suppose the US then had what is considered one of its greatest Presidents, Franklin D. Roosevelt who (as well as his actions in the World War II) very skilfully put together a programme and political coalition of disparate political interests in his New Deal. I think in the long term this promoted a lot of economic equality in the US. In one form or another, this lasted until about the 1970s. In terms of wealth, there was a lot more equality in the decades after the war.

This held in Europe also. Another factor was the Cold War. I suppose the Allies and their governments looked nervously looked at the Soviet Union and feared various countries in Europe might elect communist parties. I think there were deliberate efforts to ensure a reasonable quality of life for citizens to try to prevent that (the Marshall Plan was probably not purely altruistic :slight_smile: ).

The US also rather effectively kept check on corporate power in this period (companies that were too big got broken up through Anti-Trust Laws). Even from a free market perspective, breaking up strangling monopolies can be good for an economy. If corporations are allowed to have too much power, then this tends not to happen. Laws protecting workers were also reasonably strong even in the US.

However, this has started to gradually all change since about the 1980s (starting from Thatcher and Reagan). Inequality has increased in Europe and particularly the US since that period. Many of the remaining elements of the earlier New Deal have been undone (plus financial rules brought in after the crash that led to the Great Depression). Worker’s right have been weakened. In the US, effective income for the lower half of the workforce (those without college degrees) has basically been stagnant in real terms for about 30 years. Only the income of the top 2 or 3% has significantly increased (and by a lot too actually). Employment has gotten more precarious.

There have been darker sides to globalization. Benefits from that have flowed to the top few percent of income earners but not to most people (inequality within Western countries has been trending upwards). Democratic controls on multinational companies that span many countries, I suppose, are more difficult. There has been a tendency by governments to to cede powers to often remote international bodies. I think that reached its zenith in the negotations to TTIP . That deal would have resulted in quasi-courts allowing corporations o take national governments to court and fine them if not abiding by the agreement.

The US political system in recent decades does seem a lot more dominated by corporations (increasingly to an unhealthy extent). Some court cases have removed from restrictions on corporate donations.

I rather view Trump more as a symptom of some of these issues than a cause (or, even less likely, a solution :wink: ).

I suppose what Piketty worries about is that this period of relative wealth equality was more an aberration than a norm for democracy/capitalism. He presented some evidence that in several respects we were heading more back in the direction of the 19th Century Gilded Age with increasing inequality.

Hopefully, that’s not the case. However, IMO Western society has been heading somewhat in that direction in recent decades. And even in purely economic terms, that may not be a good thing.

The whole interaction between political systems/democracy and capitalism/wealth/inequality is an interesting one. There seems to be, to some extent, an ability for voters to curb some of the worst aspects of capitalism. Then again when I look at some of the more extreme inequality in places like South America, I do wonder. Voters often appear to be quite happy to have (often the system probably encourages them to believe in ) a certain level of inequality (sometimes quite a substantial level too). However, the amount of power our current democratic systems give to people can be relatively limited (the ability to choose between two rather similar parties or politicians every few years).

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