Capitalism, Money and Inequality in the World

Abstract

There is little doubt that, in the last hundred years or so, progress has been made in lifting more people out of extreme poverty. Yet, considerable economic inequalities both within and between nations persists and, as recent work has shown, if the rate of return on capital surpasses the rate of growth, inherited wealth will grow faster than earned wealth. Together, these inequalities contribute to radically different life chances for people around the world. For some it means multiple mansions, private jets, hundred-foot yachts and access to life-saving technologies, while for a substantial portion of humanity it means a daily struggle just to survive or maintain a livelihood. However, why this radical inequality exists is not altogether clear and is much debated in the academic literature and popular press. Moreover, some view economic inequality as natural and beneficial since it is reasoned that the less well-off will want to emulate the wealthy and thus work harder to achieve their goals. However, is gross inequality rooted in human nature or is it the result of certain ways of organizing society and certain policy choices regarding the human economy? While it cannot possibly canvass the enormous literature on capitalism, money and inequality, this chapter will suggest that it is the latter by considering the important relationship between capitalism and money to explain the persistence of economic inequality in our world. The chapter also asks what can be done to lessen global economic inequalities once we gain a deeper appreciation of the relationship between capitalism, money and inequality. I will argue that it is too often forgotten that, while economic growth over the last three centuries has lifted many people out of extreme poverty, that capitalism is primarily an economic, monetary and accounting system whose very aim is to generate income and wealth inequality, not level the economic playing field. To explore this argument and examine potential solutions to lessening financial inequality, this chapter is divided into three main sections. In the first section, the chapter provides an explanation for the historical rise of capitalism, what constitutes capitalism as a specific politico–economic system and how economically unequal our world is today. In the second part of this chapter, a theoretical analysis of how we might consider the relationship between capitalism, money and inequality is developed. In the final section, the chapter explores what is to be done about economic inequality from both mainstream and radical perspectives and argues that there are indeed some plausible public policy initiatives that would work towards achieving objective 10 of the Sustainable Development Goals (SDGs).