Does Capitalism Inevitably Produce Inequalities?

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https://www.commondreams.org/view/2014/07/02-2


Protesters involved with Occupy San Francisco in October of 2011. (Photo: flickr / cc / Glenn Halog)

In a recent New York Times op-ed article, Nobel Prize-winning economist Joseph Stiglitz theorized that capitalism does not inevitably produce inequalities in wealth. Instead, he argued, today’s inequalities result from policy decisions made by politicians on all sorts of matters that affect people’s income: the tax structure that favors the rich, the bailout of the banks during the Great Recession, subsidies for rich farmers, cutting of food stamps, etc. In fact, he concluded, today there are no “truly fundamental laws of capitalism.” Thanks to democracy, people can steer the economy in a variety of directions and no single outcome is inevitable.

In their 2010 book, “Winner-Take-All Politics: How Washington Made the Rich Richer – and Turned Its Back on the Middle Class,” Yale Professor Jacob Hacker and U.C. Berkeley Professor Paul Pierson would seem to add additional support to Stiglitz’s conclusion. As reported by Bob Herbert in The New York Times, they argued that “the economic struggles of the middle and working classes in the U.S. since the late-1970s were not primarily the result of globalization and technological changes but rather a long series of policy changes in government that overwhelmingly favored the rich.”

Although there is certainly significant substance to Stiglitz’s argument – policy decisions can have profound impacts on economic outcomes – nevertheless capitalism is far more responsible for economic inequality because of its inherent nature and its extended reach in the area of policy decisions than Stiglitz is willing to concede.

To begin with, in capitalist society it is much easier to make money if you already have money, and much more difficult if you are poor. So, for example, a rich person can buy up a number of foreclosed houses and rent them out to desperate tenants at ridiculously high rates. Then, each time rent is paid, the landlord becomes richer and the tenant becomes poorer, and inequalities in wealth grow.