Overview
What is inequality?
Inequality describes both measurable allocations of resources and concrete human experiences of marginalisation, oppression and disrespect. “Inequality is said to exist when there is a difference in the distribution of a resource (such as income) or outcome (such as mortality or educational achievement) across groups of people or places (for example, by socioeconomic group or by gender).”(1)
In the field of economics, inequality is primarily approached from a monetary perspective. Socioeconomic approaches present a broader understanding of inequality.
Göran Therborn (2013) offers a helpful distinction between three forms of inequality: resource inequality, (e.g. monetary inequalities, carbon inequality) vital inequalities (e.g. inequalities in health status, life expectancy) and existential equality (based on equality of opportunity and participation in a comprehensive sense, i.e. the absence of discrimination, stigmatisation and oppression such as racism, sexism, casteism or slavery).
Inequality describes a social phenomenon, not a natural characteristic. As socioeconomic analysis points out, inequalities are created and driven by social institutions (2) and caused by power relations.
The trend: growing global inequality
Around the year 1500 the major world regions China, India and Europe were equal in terms of per capita material production. With the rise of colonialism, the “Great Divergence” (3) between these world regions began to unfold and has set the path for centuries of growing global inequality, from colonialism to imperialism to the current divide of the Global North and the Global South.
Also in the last decades, most of the growing wealth went to those who were already very wealthy. Since 1995 the poorest half of the population together only captured 2% of the global wealth growth, while the richest 1% captured 38% of the total wealth growth.
Income and wealth inequality within countries and regions
While incomes are distributed quite equally in nations like Czech Republic, Iceland and Norway, the United Kingdom, the United States and Chile have very unequal income distributions. Comparing world regions, income inequality is the lowest in Europe, and the highest in the Middle East. In nearly all countries, income inequality within countries has increased in the last decades, however, at different paces.
Wealth is in most cases distributed more unequally than income. Since the 1970s wealth inequality rose within most countries and on a global scale. Over the last decades, neoliberal globalisation has shifted power relations and led to a diminishing share of labour income as well as to increased inequality between different types of jobs. Another shift of power balance has taken place between private and public institutions through privatisation of public assets, reducing the possibilities to counter inequality through public programs. (4)
Carbon inequality
The (unequal) growth of wealth and the rise of material living standards over the last 200 years came hand in hand with an exponentially increasing use of biocapacity and particularly greenhouse gas emissions (5). Today we are in the midst of a human-made climate crisis and of the sixth great mass extinction. The unequal responsibility for carbon emissions is an important form of resource inequality: the richer a country or an individual, the higher the use of physical resources that lead to carbon emissions. Historically, countries of the Global North are responsible for 92% of all excess carbon emissions emitted worldwide (6). Currently the richest 1% of the world’s population emits more than twice the combined share of the poorest 50%.
What can be done about inequality?
On a national level, welfare regimes can reduce inequality. The liberal welfare regime dominates in Anglo-Saxon countries such as the US, UK and Australia. It is a “residual” welfare state focusing on those who cannot take care of themselves in the market economy: the sick, people with special needs, the elderly, the unemployed. This regime holds that everyone else should care for themselves. The middle classes try to remain independent from welfare benefits – private solutions such as private schools, private pensions and private health insurance emerge.
The conservative welfare regime dominates in continental Europe in countries such as Germany, Austria and France. Access to a large part of the social security benefits is linked to participation in the labour market and/or citizenship. This creates a welfare state for “insiders” and non-insured “outsiders”. The social democratic welfare regime dominates in Scandinavia. It guarantees universal social rights and provides well-developed public social infrastructures, education, health, care and decent housing for all.
While these traditional welfare state types have (in all their differences) focused on social issues, 21st century welfare states need to provide new answers that integrate equality with carbon budgets. So far, the social achievements of welfare regimes were built on the use of an unsustainable share of global biocapacity, at the cost of other world regions and future generations.
Tackling inequality in times of climate crisis means that equality needs to be achieved without transgressing the planet’s limits. This requires new answers for socio-ecological welfare regimes. While monetary policies can effectively alleviate existential needs and strengthen individual self-determination, they are not sufficient.
To tackle the climate crisis structures that enable everyone to meet their needs with low resource consumption are vital. Sustainably provided public transport and affordable access to sustainable energy, water, housing, health, care and education help to limit the importance of money and consumption in meeting needs. Social-ecological infrastructures encompass much of what individuals cannot afford with money: from greenery in the street and libraries to public swimming pools.
Affordable socio-ecological infrastructures can provide security, offer space for individual lifestyles, strengthen social cohesion and create resource-saving structures. In the 21st century equality means that an ecological way of living is neither a privilege nor a sign of poverty, but simply becomes a routine, a new normal. Ultimately, it is a question of democratic deliberation what social protection floor should be provided for everyone in the light of a finite carbon budget. Reducing inequality is vital if all people are supposed to live a good life in times of reducing carbon emissions drastically.
