Economic Inequality is Intrinsically Bad

by Tim Sommers

In Democracy in America (1848), Alexis de Tocqueville concluded from his travels in the United States that “The particular and predominating fact peculiar to” this democratic age “is equality of conditions, and the chief passion which stirs men at such times is the love of this same equality.”  Indeed, “The gradual progress of equality,” he wrote, “is something fated. The main features of this progress are the following: it is universal and permanent, it is daily passing beyond human control, and every event and every man helps it along….”

If this is at all accurate, it seems fair to say that our conditions, and our ambitions, regarding human equality, are much diminished. But I want to draw attention to just one specific point de Tocqueville highlights.

Equality, the relevant kind of equality for him, is “equality of conditions”. It’s not abstract moral equality or equality limited to political decision making or equality of opportunity or (as contemporary philosophers say) equality in the distribution of some underlying abstraction like utility, access to advantage, or primary goods. Democracy, and the democratic spirit, called on and depended on, for de Tocqueville, a certain level of real, actual, surface-level equality. The love of equality, that he is both drawn to and repelled by – with “a kind of religious dread” – is just ordinary equality, not some philosophical surrogate.

If you ask someone at a random about equality or inequality in the United States today, they will very likely assume you mean economic inequality. This is partly because economic inequality has gotten more attention recently, but it is mostly because, if you ask people to think about whether the conditions of their life are equal or unequal to the conditions of others’ lives, the first thing many will think about is money.

Yet, at the precise moment Thomas Piketty’s groundbreaking work on economic inequality was drawing new attention to the shocking level of economic inequality that characterizes our new gilded age, philosopher Harry Frankfurt thought it imperative to insist that “Insofar as economic inequality is undesirable…this is not because it is as such morally objectionable. As such, it is not morally objectionable.” Rather, he said, “from a moral point of view economic inequality does not matter very much”.

Unfortunately, many other philosophers writing about economic inequality also deny that it is bad in and of itself. Instead, they insist that substantial economic inequalities are bad because, and where, they have bad effects.

I believe this view is a mistake.

I believe that substantial economic inequality is intrinsically bad. I believe that the impulse to deny this comes from mischaracterizing, or misunderstanding, the meaning of money, income, and wealth. In a society mediated via money, money is social power. Too large a gap between those who have the most money and those who have the least makes liberal democracy impossible – not because an unequal distribution of money leads to inequalities social power, but because inequalities in money are inequalities in social power.

Money is not a good. Money is abstract. Money is relational. And, for the most part, money does not exist. At least not as a physical thing or a sort of good (as in ‘goods and services’). Only 8% of the money in the world has any concrete physical form at all. The rest is just record keeping. These days most of it exists only digitally. Even if you could physically locate the server that stored some particular bit of “money”, you would have not found the money. Money is an abstraction. Arguably, money is the record of a debt. It’s a marker that marks how much buying power we all have relative to each other. But we needn’t go into the fundamental meaning of money. All I need for the argument here is that money mediates the social relations that constitute social power.

Let’s distinguish between money, income, and wealth. Start with money. What is money for? You can buy things with it. Whatever money you have, all other things being equal, marks the amount of purchasing power you have “earned” as against the competing power of the government, all the citizens of your country, and increasingly the world. To oversimplify, when you buy a physical good, you offer money you acquired through some other social interactions to take social control, and socially sanction determinate use of, this thing created by the efforts of others, usually through socially coordinated action. Or if you purchase a service, you acquire the right via the use of money obtained in prior social interactions to have certain others do what you would have them do. Spending money is exercising social power – even if it’s not the only kind of social power. Inequalities in money are inequalities in our power to gain or lose control objects and demand actions from other – or respond to demands from others to do certain things. It’s not that money measures or expresses that power. The socially, violently enforced meaning of money is that it is power. If substantial inequalities in social power are problematic, then substantial monetary inequalities are problematic, because substantial inequalities in money are substantial inequalities is social power.

What about income? Income comes mostly in the form of money. Even where income does not consist directly in money – say, in a case where a business executive is offered stock, or the right to buy stock, as part of their compensation – it normally amounts to money. The value that the stock has to its possessor, as in our example, is usually about the value it has as money and not about the possessor’s interest in the underlying business entity. Income is just money arising out of an extended relation rather than a single transaction.

What about wealth? Most wealth is stored money – potential rather than kinetic social power. Whether it is an investment in a hedge fund, property, or even owning a percentage of some other persons compensation for their services, the value of most wealth is monetary.

All of us want to have some things, however. And some of your wealth, say your house, may serve as an investment, but also be valuable to you as your home, which is something you just want to have. Some kinds of wealth are not just stored money.

But since almost all wealth is convertible to money it still represents potential, unequal social power. And even when that power is not exercised by wealth being used as money, or when it is stored in things that people also want for their own sake, it’s still power. The fact that wealth can be passed down, for example, is a  reflection of the fact that even if the things it is stored in are valuable in themselves, they also represent projectible social power.

So, wealth and income are basically money, and money is social power. Why are substantial inequalities in social power are bad? Because they undermine liberal democracy. As de Tocqueville recognized political democracy, requires some degree of social democracy, which in turn  requires some equality of condition.

Political scientists like to study how money affects individual elections or influences our democratically elected representatives. Which, of course, it does. ( But democracy doesn’t reduce to voting. As an earlier generation of political scientists recognized, what matters most is not particulate elections, but who sets the agenda (including, but not limited to, who can move the Overton window). There’s only so much inequality in social power that a democracy, by definition, can survive.

Economic inequality also undermines the liberal part of liberal democracy. Liberals believe that everyone is entitled to certain liberties, rights, and freedoms. These rights are usually conceived of as largely negatively. The first amendment protects the right not to be interfered with in your expression, originally by the federal government, later by the states as well. But it doesn’t guarantee any affirmative right, for example, of access to your own streaming-service. But liberals from FDR to John Rawls have recognized that these liberties are meaningless without some access to the resources needed to take advantage of them. Any plausible liberal view acknowledges that without access to some level of resources, relative to the resources that others have, formal, negative rights are useless, meaningless. Hence, liberalism depends on everyone having at least some resources. It follows that both (1) the mere fact of not having a certain minimal amount of money and/or (2) having a small enough share relative to what others have, undermines the basic liberties.

If this view of money, income, and wealth is too extreme, here’s a watered-down version. Everybody needs a certain amount of money to survive, more if they want to live well. Almost everyone desires some costly luxuries. But, at a certain point, well before you are a billionaire, the only use that you can possibly have for more money is not more luxury, it’s more social power.

There are 621 billionaires in the U.S. All by himself, Jeff Bezos the CEO of Amazon is worth almost 200 billion dollars. Overall, the top 1% control more wealth than the bottom 80%. I think it’s possible that if we had a King and a more equal distribution of income, the average person would have more social power than they do now.

So, much for progress.

[for David Graeber…always in your debt…]