Consider the term inequality. It refers to the condition of being unequal, unfair, imbalanced. These terms themselves are quite ambiguous and can convey different meanings based on the context. For instance, when two children play a game and one cheats, the other might exclaim, ‘Hey, that’s unfair!‘ meaning ‘that’s against the rules‘. When dividing a cake into two smaller pieces, and they are split unevenly, they are unequal, not the same. However, matters become more complex when discussing significant issues beyond a child cheating or cutting a smaller piece of cake than desired.
Inequalities are prevalent today. We encounter them daily— in shops, schools, workplaces, or while walking or driving. They are embedded in our economic system, an integral part of the global economy. For one to have, another must lack. Yet this is a simplistic explanation, which sometimes obscures the problem rather than clarifying it.
From an economic perspective, there are three primary inequalities: income inequalities, wealth inequalities, and inequalities of opportunity. All are linked to an individual’s economic engagement. For example, income inequalities involve differences in earnings over time. Wealth inequalities pertain to pre-owned assets like real estate. Inequalities of opportunity relate to differing opportunities due to societal or socio-economic factors such as age, gender, background, or location.
These economic inequalities are entwined with economic issues. More concerning is that they seem to enhance the growth of our economic system. Like economic growth, economic inequalities are crucial for developing the world economy. Cynically speaking, for one to prosper, another must suffer. But how did we reach this point? Inequalities, as we know them today, have not always existed.
Inequality is not uniform everywhere. While we often discuss inequalities within countries, we rarely consider the world as a whole. Understandably, a high-income country and a low-income country are incommensurable. Such comparisons yield little constructive outcomes. Can’t compare apples to oranges, as they fundamentally differ.
But are they? Both are tree-grown fruits, sweet or sour, rich in vitamins and minerals. Both originate from roughly the same areas—modern-day Kazakhstan for apples, and Northern India and Western China for oranges. So, they can be compared broadly. Yet, specific characteristics differ. Oranges are not consumed with their peel, apples have less vitamin C but more fiber, etc. Similarly, comparing high-income and low-income countries depends on the goal of the comparison. Depending on the aim, a high-income country can be compared to a low-income one. Thus, each comparison can yield different outcomes, especially when the differences in comparison are understood.
Even comparing high and low-income countries only highlights current developments. More crucially, we need to understand why inequalities exist to address them. The central question in comprehending inequalities is, ‘How did they come into existence?’
The current world economic system developed over a long time, filled with extraction, exploitation, subjugation, and the creation of inequalities. With the rise of colonialism, economic expansion outweighed individual well-being. The domination of colonized peoples by colonizers fueled economic expansion that lasted for centuries. Resource extraction in colonized regions underdeveloped indigenous populations, hindering their integration into a hierarchical world economy. The end of colonialism led to economic neo-imperialism, positioning former colonizers atop the world economic hierarchy as they attempted to “fix” former colonies’ politico-economic conditions.
In summary, today’s economic inequalities result from centuries of active under-development starting with colonialism. This created a divide between Global North and Global South, and other purely geo-political divisions used today. Such usage is problematic as it perpetuates old norms and structures of exploitation and inequality. However, explaining these complexities requires more than simplistic terms like income inequality.
In this segment of Hidden from the Economy, I will explore the issue of inequalities. Not just wealth inequalities, the Gini Index, or other politically and economically sensitive concepts. I will present the broader picture of current inequality development—how they evolved to today’s state from an economic inequality perspective? And, how should they be addressed? Or should they be addressed at all? Are they a necessary component of the development we strive for? Are they steps to achieve well-being for everyone? These questions and more will be addressed in upcoming articles, starting with the history of inequalities. Sustainable solutions are possible once the root problem is understood.
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