The question I shall try to answer in the following remarks is simple enough: How do social scientists and policy makers frame social inequality and how are policy responses shaped by these frames? Can we recognize a pattern of change that these frames and corresponding policies are undergoing? How is inequality of income, wealth, opportunities and life chances, ultimately political power, perceived, interpreted, framed and reframed within the politics and policies of advanced capitalist democracies? If what follows were not preliminary thoughts and speculations concerning this question, but a book manuscript based upon solid comparative research, its title could be: «A history of inequality discourses under democratic capitalism.»

I happen to believe that the American historian Daniel T. Rodgers (2011) is right when locating a sharp line of social, political and intellectual discontinuity in the mid-seventies of the 20th century. At that point in time, the trente glorieuse of postwar reconstruction had come to an end, as had the Vietnam War, the monetary regime of Bretton Woods and the age of cheap oil and the associated crises (which included the first cracks in the walls of state socialism in Poland in 1975, which could no longer be fixed by the «fraternal help» of the Soviet Union). The conflicts and realignments of political forces of that period gave rise to the age of Thatcher and Reagan. The mid-seventies appear to have been a watershed period in the OECD world and beyond. If that periodization of recent history makes sense, so that we can think of the last quarter of the 20th century as a new historical realm, we have reasons to believe that, apart from shifts in dominant economic policy doctrines, a basic reframing of discourses about inequality, poverty and social policy, too, began to emerge at that juncture.

Somewhat simplistically stated (and ignoring for the moment differences between countries and their welfare state regimes), my hypothesis is this: Before the historical divide, serious inequalities, namely those of income and wealth, educational opportunities, gender and (in the US) «race», were normatively framed as matters of injustice. Social injustices were seen as problems to be remedied by improving the socio-economic conditions and opportunities of categories of people affected by them through policy responses to their legitimate demands (such as the demand for the redemption of «social market economy,» which is the promise of «prosperity for all» or, in the U.S., of «equal opportunity» through the policy agenda of a «Great Society»). The means by which these demands were to be responded to were those of the «democratic class struggle» (Korpi 1983), namely party competition, elections, political representation, reformist policies of social democratic parties and organized labor. These institutional means were generally believed to provide effective «voice» and political power to the actual or potential losers of capitalist market economies and their largely pre-modern cultural legacies. Policy responses to perceived social demands, such as policies of redistribution, the expansion of union rights and social security systems, provided for input legitimacy under nearly universally shared normative premises of justice and progress, suggesting the permanence of a distributional positive-sum game.

My hypothesis suggests that this pattern, which had dominated the post-WW II era, came to an end in the OECD world after the mid-seventies, exactly at the time when, in 1975, a crisis discourse set in that warned about an excess of democratic participation and the looming overburdening of state budgets (Crozier, Huntington and Watanuki, 1975). What was the successor frame?

The new way of talking about inequality, poverty and social spending consisted in a shift from normative to functionalist categories, or from a discourse of recognized needs and legitimate demands to one that focuses on desired systemic consequences, mediated through fine-tuned rewards, sanctions and incentives, for the political economy, its stability and competitiveness. Advocacy of social policies shifted to a different frame. For instance, the existence and strategic practices of strong trade unions can be advocated as a means to achieve social justice by compensating for the inferior power position of workers in relation to their capitalist employers. It can also be advocated as a key component of a system of industrial relations that provides for a permanent wage pressure, which is deemed desirable for its stabilization effect upon demand, as well as a stimulus for the adoption by management of labor-saving technical change and rising productivity. Apart from considerations of distributive justice, it is simply deemed efficient to let labor become costly to employers. A similar reframing takes place when it comes to a shift from a part-time to a full-time schedule of elementary schools or the supply of daycare services for preschool children. These changes can be advocated in terms of compensating for educational inequalities between categories of children; they can also be advocated in terms of «setting free» the mothers of these children for gainful activities. Rising inequality can be framed as a problem of injustice; it can also be framed as an unproblematic phenomenon that is conducive to stimulating the ambition and work efforts of employees. Family policies are designed with a view to compensating for demographic imbalances, as are migration and refugee policies. The best thing one could say about the «old» kinds of social policies is that they were «progressive»; the new ones aspire to being appreciated for being «smart», or for living up to sophisticated standards of «good governance», doing what is «good for society» rather than what is demanded in the name of social justice and solidarity by social classes, age and gender categories or income groups.

Policies of distribution underwent a process of normative hollowing out. Instead, they were advocated and justified in terms of fine tuning incentives, managing the supply of labor and skills, providing for adequate (non-inflationary) levels of effective demand and built-in stabilizers. In short: The standard of goodness of a policy is not its conduciveness to a standard of justice but to criteria of balance and stability: architecture of fiscal balances and equilibria (growth, employment, monetary and fiscal stability, trade): the emphasis is on output legitimacy, the contribution social policies make to desirable states of the political economy as a system of interdependent institutions.

It may appear that the functionalist mode of addressing issues of inequality and social policy is the more promising one in a «post-ideological» context. Where widely shared notions of what is required by standards of justice, fairness, progress and solidarity are controversial and cannot be taken for granted, parsimony of policy makers concerning «rights» and «legitimate demands» seems advisable. They must content themselves with the demonstration that policies they propose are beneficial in their net-effect. Following this logic, the German Chancellor of the second half of the seventies, Helmut Schmidt, has spoken of the German economy being blessed by a «fourth» factor of production – codetermination, which, according to him, makes for harmonious labor relations, demotivates strikes and hence enhances industrial productivity. Another social democratic leader, his successor in the nineties, Gerhard Schröder, proclaimed that the distinction of right vs. left economic policy has become entirely obsolete and must be replaced by the only distinction that still matters: that between intelligent vs. non-intelligent policy.

After all, even policies whose initiators are inspired by egalitarian norms are often defended by claims concerning their favorable consequences: Downward fiscal redistribution is more easily advocated by claiming that it (up to a point) helps stabilize demand and stimulates growth, than by sermonizing about the intrinsic desirability of egalitarian social justice. This rule of thumb applies all the more in the context of the (quantitative and qualitative) secular decline of social democracy as a political force that is both distinctive in its programmatic stance as well as politically and electorally successful – a decline that seems to have accelerated after the demise of European state socialism after 1989.1

Yet the reverse side of the medal of functionalist advocacy is also evident. It is only some policies targeting some kinds of groups and social categories that can be advocated in terms of their favorable side effects for productivity, growth and employment, while others (the rise of child poverty in many OECD member states is a case in point, another one is the absorption of large numbers of unskilled refugees) are not easily addressed in «consequentialist» terms. In these cases, policy-making must be legitimated in terms of justified demands and political or moral obligations; desired incentive effects and their consequences are not enough to drive the making of social policies.

A second turning point in the postwar history of distributive policies and the discourses in which it is embedded occurred in the nineties: The rise of a discourse of futility and perverse effects, as analyzed by Albert O. Hirschman (1991) in his Rhetoric of Reaction. It is not only futile to manage stability, growth, employment, and overall social integration through social policy programs of distribution and social protection; attempts to do so are even largely counterproductive. The very idea of social protection and systemic security has become a mirage in a world where, after the end of the Cold War, the effective global supply of labor has doubled (due to a mass exodus from subsistence farm to factories and the other mass exodus of female labor force from households to employment in offices and service organizations). Borders have been opened so as to provide employers/investors with ample exit options by the use of which they can (and do!) censor distributive policies, while borders are also to some extent open to the entry of seekers of jobs and security. Taken together, these two consequences of «openness» make any public guarantee of social security self-defeating and illusory. In particular, if taxation and transfers are being used as means of policies of distribution, investors and employers will benefit from exploiting the opportunities provided to them by states being involved in two kinds of competition with each other: labor cost competition and tax competition. Social and fiscal policies remain a matter of competing nation states, while investors and employers (and to some extent skilled workers as well as low-paid service workers) become ever more mobile and «internationalist.» As a consequence, the rise of the neoliberal age of globalization spreads a sense of declining state capacity, bordering on ungovernability, to distribute through policy. Whatever we do (be it in the name of stability or even of justice) will backfire. Redistribution in the name of either justice or social stability has been rendered unaffordable, and there is nothing that can be done about inequality without risking severe negative repercussions.

Rather than addressing the thorny issues of distribution and social integration, political party elites seem to turn out of despair to «low cost» and thus fiscally harmless issues such as same-sex marriage and other issues of identity rather than interest. Hillary Clinton’s 2016 presidential campaign in the U.S. with its emphasis on group identity issues may be read as a case in point; the focus on such issues can help to strategically circumvent conflicts of interest and distribution. There is a clear trend in the development of party systems: While center right and center left parties converge in their policy agendas (and lose in terms of their joint share of the votes), new competitors from green, libertarian, faith-based, regionalist, ethno-nationalist, populist and various protest parties are on the rise in many capitalist democracies of the OECD world. Rightist populist parties gain attractiveness as they promise to restore social protection not through the conventional welfare state means of taxing and spending on transfers and social services, but through the building of fences which are intended to keep out foreign people and authorities, foreign goods and foreign gods. The outcome of this structurally necessitated retreat of political elites from both normative and functional concerns with distributive policies is neither justice nor stability, but a plain disaster wrapped in ever more obscene patterns of inequality of wealth, income, and opportunity.

The ideological core of the social contract of liberal societies and democratic capitalism has been the claim that risk and opportunity are evenly distributed across the social structure, so that for every individual the prudent use of opportunity and avoidance of risk results in outcomes for which he or she bears the sole responsibility. Instead, we see a development in which, as Albena Azmanova (2004) has argued, risk and opportunity are «unmixed», with parts of the population enjoying opportunity without major socio-economic risk while others, the precarious and marginalized, are exposed to risk without opportunity. The consequences of growing inequalities of income, protection and opportunity are influentially analyzed by social epidemiologists Wilkinson and Pickett (2009) in their book The Spirit Level. They demonstrate that highly unequal societies are «dysfunctional» societies – not only economically characterized by their large-scale waste of human capabilities through unemployment, inadequate skill formation, and deficient demand, but also socially disorganized through rising long-term unemployment, precariousness, poverty and insecurity. As Joseph Stiglitz (2012) has argued: Society pays dearly for inequality, as the latter also undermines actual and potential economic growth. Beyond that, highly unequal societies suffer also from conditions of Durkheimian «anomie,» the erosion of rules, as manifested in symptoms such as widespread drug use and a criminal drug economy, the spread of mental health problems, declining life expectancy of those most affected, obesity, declining educational performance, higher rates of teenage pregnancies, high levels of violence and imprisonment, and high rates of marital instability. The higher the level of economic inequality, the higher not just the suffering and deprivation inflicted upon economic losers, but also the higher the overall prevalence of these social pathologies.

Now comes the great puzzle: If more egalitarian policies of income distribution are so evidently «good for society», as seen in terms of the functionalist frame – why is it that these (largely Keynesian in a broad sense) policies are so unpopular at the elite level and even opposed at much of the mass level (as the defeat of so many Labor and social democratic parties in so many campaigns and countries clearly demonstrates)? Why does not each of us support policies that are demonstrably likely to benefit all of us? Why is not Paul Krugman the uncontested hero of policy elites all over the globe, or at least in the OECD world? Why do people distrust egalitarian policy proposals that rather should appeal to most of them? This apparent paradox or puzzle has been the subject of rightly influential recent books (such as those by Stiglitz, Piketty and Atkinson) which throw bright light on both the moral scandal and functional disaster of levels of inequality that prevail in the Anglo countries, with many countries of the European continent rapidly catching up. The Achilles heel of these analyses consists, as I see it, in their failure to address both the normative issues involved and the institutional premises and resources that would be needed for remedial policies. In a nutshell: Neither the motivational forces nor the institutional means are in place to realize national or even global policies of taxing and spending that the authors advocate. There is simply no global agency to implement a program of progressive overall taxation (as suggested by Piketty), nor is there, after the demise of social democracy as we knew it from Cold War times, any political agency committed to the creation of egalitarian institutional mechanisms.

As far as the normative grammar employed in these discourses is concerned, there are three (and only three, as David Miller [2001] has argued) personae that can lay claim to benefits resulting from policies of redistribution: the poor who base their claims on need, workers and other categories of economic actors who base their claims on desert and contributions (or the «market justice» of being entitled to whatever rewards market transactions yield) and, finally, the citizen who is justly entitled to whatever the political community (the citizenry as a whole, as represented by legislative bodies), accords to him or her as a matter of statutory right.

Distribution according to need requires that claimants pass a triple test with its often discriminatory and stigmatizing effects. (a) Are they really poor – or do they just pretend and are in a condition (such as ownership of property or savings) that does not qualify them for receiving transfers? Or must their claim of being in «need» be rejected as overly demanding? (b) Are they deserving poor – or is their poverty due to reproachably «irresponsible» behavior or negative personality features such as work-shyness which should not be encouraged by being rewarded? (c) Are they our poor and thus have a legitimate claim to poverty-alleviating transfers paid for by «our» political community and the tax revenues it generates – or can they denied public benefits «here» because there are others (such as parents or adult children) who need to step in before public authorities provide relief? (The institutional sphere where this logic of (recognized) need prevails is that of «social assistance» or «welfare» (in the American sense) or «Fürsorge» and «Hilfe» in German). Here, we see a clear trend in the OECD world from welfare to workfare, or from assistance to «activating» labor market integration, often paralleled by the creation of a low wage sector as in Earned Income Tax Credit (EITC) or the German Hartz IV schemes.

Second, distribution according to desert depends on an opaque and fluctuating mix of associational collective action and the market power deriving from it (e.g. strength and relative bargaining power of unions, fluctuation of supply and demand in labor and other markets), and legal regulation (such as minimum wages). The logic is that some rule of proportionality applies between what an economic agent does (or has done in the past) and the claims s/he is entitled to make. The corresponding institutional sphere is that of social insurance to which you contribute and from which you claim benefits in some legally defined proportion to your contributions. The logic that prevails here is a productivist market logic: What you get is a function of what you do.

Third, distribution according to rights is entirely a matter of the legal and institutional traditions (“hergebrachte Grundsätze», «standesgemäße Lebensführung») and the constellation of political forces and prevailing fiscal conditions. Distribution – the answer to the question who gets what and in which form (in money, in kind) is contingent on either citizenship status plus fine-grained additional specifications (being married, having dependent children in the household, being employed by the state, being a university student, etc.). Here, the logic of distribution is based upon statutory economic rights which are not conditional on contributions; here, the provision of monetary transfers and access to services and public facilities is granted on the basis of citizenship and partly even to non-citizens such as refugees, asylum seekers or foreign tourists (in most countries foreign tourists have a legal claim to police protection and normally even to emergency medical care).

Any issue of redistribution can be framed as an issue of taking from A and giving to B, with A and B standing for more or less specific social categories (such as labor vs. capital, the young vs. the elderly and retired, families vs. childless households, advanced vs. backward regions, taxpayers vs. entitled claimants, male vs. female gender categories, and so forth). The trends of development of these axes of redistribution are by no means uniform. For example, as French economist Francois Bourgignon (2015) has shown in a recent book, inequality is shrinking between nations while it is growing within nations. The plurality of distributive dimensions generates the thorny second order problem of which inequalities deserve to be addressed first, and for what reasons. Redistributive policies are probably easier to design and implement in the context of an overall positive sum game of primary distribution as opposed to a zero or negative sum game (which is what we have experienced since the outbreak of the economic crisis in 2008 and which is widely predicted to stay with us, in the form of «secular stagnation», for the foreseeable future). The politically relevant difference is that between diminishing the gains of A vs. inflicting an absolute loss on A; in the latter case, political resistance to redistribution is likely to be greater than in the former.

The degree of inequalities and the perceived urgency of policy responses are undergoing rapid and sometimes quite surprising change. For instance, a recent OECD study on age-specific poverty rates found dramatic changes in OECD countries over the last 30 years: The poverty rates of people above the age of 75 were almost halved, those between 66 and 75 dropped considerably while every age category below retirement age showed an increase of their poverty rates, most steeply the category of labor market entrants of age 18 to 25:

Households with children and youth were hit particularly hard during the crisis. Between 2007 and 2010, average relative income poverty in OECD countries rose from 12.8 to 13.4% among children (0–18) and from 12.2 to 13.8% among youth (18–25). Meanwhile, relative income poverty fell from 15.1 to 12.5% among the elderly. This pattern confirms the trends described in previous OECD studies, with youth and children replacing the elderly as the group at greater risk of income poverty across the OECD countries.2

Distributive policies thus seem to privilege certain frontlines of inequality and neglect others, probably following tactical considerations of electoral politics as well as the ease with which groups can build associations and thus political power. The elderly tend to be winners in this distributional game, be it because they become more numerous and thus electorally more potent in aging societies, be it because they manage to form a coalition with members of the cohorts in the middle who know that they will be old one day themselves (while never young again) and thus self-interested by anticipation in the well-being of the elderly. At the same time, social policy analysts such as Gösta Esping-Andersen (2002) have argued for a long time that what is needed is not money transfers for the old but services and infrastructure investments for the young, be they directed at families or educational institutions.

But note that there is only a subset of overall inequalities that can conceivably be healed through policies of distribution. To be sure, the need resulting from income poverty and even wealth poverty can be compensated for through policies stipulating claims to monetary transfers. The now widely discussed phenomena of «education poverty» or «health poverty», even «transportation poverty» or «day care poverty» can be dealt with through distributive policies of service provision. But some causes of inequality and deprivation of life chances and the human suffering resulting from it cannot, by their very nature, be compensated for through monetary transfers or the provision of services, or only to a quite limited extent. Think of people who suffer from congenital handicaps, think of people born in the wrong place (be it a very poor society such as Guinea Bissau, be it a deeply divided society along racist or sectarian lines where someone is born on the «wrong» side of such divides; or think of people suffering from the consequences of «bad luck» that they experience, say, in conflictual family relations, their occupational life, or as the victims of accidents, cf. Wolff & de-Shalit, 2009). Even most consistent egalitarian redistributive policies, that is to say, are severely limited in their capacity to heal inequalities in human suffering vs. human happiness through distributive measures.

Given (a) all these diverse front lines of distributional challenges and the inherent limitations and contextual constraints affecting policies of distribution in a low growth environment and given (b) the priority ruling political elites must attach to economic «competitiveness» (which redistributive measures allegedly undermine), and given (c) the deep normative contestation over the operational meaning of the idea of distributive «justice» (which has led someone like Lord Dahrendorf, in a lecture he gave close to the end of his life at the Science Center Berlin, to suggest that the term «social justice» be categorically dropped from the conceptual apparatus of the social sciences) – egalitarian doctrines and redistributive projects have lost much of their political appeal and purchasing power.

In debates among normative political theorists, there are many unresolved issues. First, the normative principle of equality oscillates between a rather uncontroversial «liberal» reading emphasizing equality before the law and equality of democratic rights of citizenship (including the right to fight for egalitarian outcomes of the politics of associations and legislative decisions) vs. a traditional «leftist» or social democratic reading that emphasizes the need of achieving «more equal» distributional outcomes through compressing hierarchies of income and wealth. Second, a closer look at the political economy of the now defunct state socialist regimes reveals an unreconciled dualism of what is meant by socio-economic equality. On the one hand, there are strong motives of an «upward-looking» and arguably envy-driven egalitarianism that is opposed, often with authoritarian implications, to wealth and privilege (except for that enjoyed by members of the nomenklatura): Nobody should be allowed to do significantly better than «us». This is motivationally and politically very different from a «downward-looking» egalitarianism which is driven by a sense of compassion and solidarity: Nobody should be allowed to be in a much worse situation compared to «us». Thirdly, it is not clear whether socioeconomic equality is to be understood as an ultimate value in itself or as an instrumental variable, assuming that more equality is to be valued as a means towards the ultimate end of freedom (from want and fear of insecurity) and the full use of the «capabilities» (Sen, 2001) of citizens and human beings.

If the latter of these alternative readings of egalitarian ideas is what we are (and I think: we should be) talking about, egalitarian ideals seem to overshoot the intended goal. In other word, if freedom from want and fear, the material preconditions of freedom and the full development of capabilities is what we are looking for, the strictly equal distribution of resources (such as income, wealth, educational outcomes etc.) is not only unrealistic, but first of all not even needed for the achievement of freedom (and arguably sometimes even antithetical to it because of its inherent authoritarian temptations).

Both more realistic in terms of feasibility and less dangerous in terms of violations of freedom is the single most important philosophical competitor to egalitarianism, namely the «sufficiency approach» laid out in a famous paper by Harry Frankfurt (1987); it is also embraced by some proponents of basic income schemes. In a nutshell, this approach to distributional justice suggests that every member of society should be endowed with the minimum volume of material resources that is necessary for his or her freedom and development, not just for physical subsistence. To simplify: Everybody should be allowed to be as rich and wealthy as he or she manages to become (to the extent that wealth is not achieved or used in «exploitative» ways that limit the freedom of others, as they are unfairly taken advantage of!), provided that nobody lacks the minimum resources needed to secure the preconditions of his or her freedom. It is not inequality as such that is to be addressed by policies of distribution nor the wealth of the wealthy as such (obscene though it often looks) but, more precisely, the fact that a vast and still growing number of citizens are being pushed below that floor of sufficiency on the guarantee of which their material freedom depends, and for the guarantee of which (parts of) the wealth of the wealthy, to be extracted through sharply progressive levels of taxation, will be an indispensable resource. Financial resources thus extracted are arguably not most wisely used for the redistribution of income and wealth to individual recipients. To a greater part they must be used to finance the equalization of life chances through the public provision of education and health services, as well as of housing and social security.

Yet the idea of the welfare state as the provider of fairly distributed life chances seems, in today’s context of low growth rates, high factor mobility, tax competition between states, public sector indebtedness, increased pressures of migration and the enhanced censuring power of investors in a globalized economy, to be an idea that is both heroic as a vision and unaffordable as a strategy. But that does not need to be the final word. For the vast majority of policy makers is fully aware (or otherwise can be easily convinced) of the fact that the future of the economy, society and polity of democratic capitalism is dependent upon the quality and far-sightedness of present-day social policies. The insight that social policies no longer provide compensation for risks that result from the past of individuals but are rather forces that shape, for the better or worse, the collective future has given rise, first in the work of social scientists such as Anthony Giddens (1998) and Gösta Esping-Andersen (2002) and in the work of policy intellectuals such as the former EU-Commissioner Laszlo Andor,3 to the paradigm of social policy as social investment. The productivity and adaptability to technical change of the labor force of the future clearly depends on the quality of today’s educational institutions, from kindergarten to universities. So does the degree and further development of income inequality and the prospects of social mobility. Social exclusion and poverty can be prevented through today’s policies of labor market integration and the regulation of labor markets, and today’s family policies and regulations of the work-life-balance will determine demographic developments and the affordability of public pension systems. The «ever closer» integration of the European Union depends on the investment in policies that allow for increased redistribution across the borders of nation states. At the same time, the social investment perspective remains sufficiently open as to the normative content of what counts as a «return» on the investment provided for by specific policies. One of these «returns» may even be said to consist in the restoration of trust and confidence in the institutions of democratic welfare states as they demonstrate their capacity to accomplish a measure of collective «fate control» that is sensitive to standards of justice.

About the article

This is a revised manuscript of a lecture presented at the University of Bergen, April 29, 2016.

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