There are so many definitions of inequality but I think it boils down to two different individuals having two different opportunity sets in life. This opportunity is of course a function of income, but it’s also a function of human capabilities – and we've learnt that this relates to the neighborhood you’re born into, and the networks of cultural capital you have. So it’s obviously very complicated, but what it boils down to is having different opportunity sets in life.
I think what is happening in social science --very broadly speaking--is that there’s a conceptual shift with this mainstreaming of the idea of inequality. We used to talk about poverty and unemployment before we had this radical popularisation of the concept of inequality with the work of Piketty and others. So what is the difference? I think inequality is different in that it includes the idea of a relation. So the notion of inequality is suggesting that there’s a kind of predatory relationship between people and social groups.
I think this concept of inequality contains three important presumptions. The first is that inequality is not some kind of original or natural condition. Inequality, as it’s seen and understood right now, is the outcome of a process. So, by contrast, poverty could be considered as sort of natural or default human condition in the absence of development.
Secondly the idea that inequality contains the presumption that there’s something morally suspect about this. So it’s a normative problem, and I think that’s because our political discourse about development and in the developed countries has somehow normatively valorised the idea of inequality. By using inequality in this way, we’re saying that there’s something wrong with it.
And then the third thing is the assumption that inequality, in the way were thinking about it right now, is a political and institutional effect. The presumption in economics is that the market is a leveler. But then we say, “look at all this unbelievable inequality!” Then the question is: Is the market not doing its job and is actually producing this kind of inequality? So then, we direct our attention to political institutions and other kinds of institutions.
Well, of course, it can be measured in terms of income, or assets. But there are some societies where it’s much harder to get data. Take the Middle East, for example, where you’re relying on household surveys to get data: the wealthiest 1% don’t respond to these surveys. So you’re actually missing an important group here, and probably under representing inequality! Similarly, asset ownership data is really hard to come by, real estate and other things like this, which is where the super-rich stick their money – and these aren't included in income measures either. So that’s another side of inequality that we’re missing.
But another point on identifying inequality is that people are perceiving inequality to be on the rise, they perceive social mobility prospects to be lower. It’s obviously not just a perception thing: wages have stagnated, quality of education has dropped, there are few jobs, and so forth. But if you look at the Middle East, we can see from the World Values Survey that people perceive their prospects to be declining. Take Egypt’s middle class, in the early 2000s they classified themselves as upper income, but by the late 2000s they started classifying themselves as lower income. In a region like the Middle East, where they don’t have very articulated welfare systems -- pensions, unemployment insurance -- so your biggest ticket out of instability is a public sector job – and there’s stagnation there, and the private sector is not rising to replace those jobs. So, identifying inequality is also social mobility prospects.
This is a good question, and now there’s a much bigger conversation happening about the way inequality has been politicised in the global north and south, and the difference between the two. We’ve got the data, but I think it’s still misleading because it only deals with on dimension: the money metric. It’s about Gini coefficients, and ignores a whole set of social inequalities. It also presumes that equality is about who has more than someone else. I’m not convinced by that.
I think the most damaging forms of inequality can’t be seen like that, for example, how much we consume, our education opportunities, or health outcomes. I actually agree with Charles Tilly, and a range of feminist scholars, who say that inequality is a relational phenomenon: relations between people and their wider institutional, or structural context. You might be really annoyed that I have an iPad, when you don’t, but you’d be really annoyed if I had got it through means where I abused my status. Or imagine that my children get jobs because I work in a particular organisation that gives them internships, when your children can’t. So it’s misuse of power and status that generate unequal relations, an uneven playing field.
So we know inequality when we see it, but the data only shows part of it. We need better theoretical methods of understanding how those inequalities relate to power and status.
There are always unequal outcomes in society, even in the rare cases where there are equal opportunities and equal capabilities. And there are many kinds of inequality. But in modern, monetized economies, income inequality is a good summary measure for all kinds of social inequalities. For good and for bad, money is how we value people and their contributions to society. All monetary economies are unequal, meaning that some people's contributions to society are valued more highly that other people's. They become even more unequal when people save (or to use a less positive word: "hoard") money to pass on to their children to give them an unearned head start in life.
Well, when one of two conditions are satisfied. The first one involves explicit rules or regulations that deny opportunities to people. So, a good example would be South African Apartheid. One group is denied privileges that are made available to others, and that’s inequality. Inequality is the desired result and it's actually what you observe.
The second condition, somewhat more subtle, is when you observe opportunities that are in principle available to everyone, but some people are taking advantage of them and others are not. That signals that one group does not have the skills, or the organizational capacity to take advantage of the opportunities. Something is missing. An example from the United States illustrates this second condition: private universities accept applications from everyone, but they get disproportionately very few applications from very poor people away from the two coasts – the east and the west coast.
The reason is that guidance counselors available to people that go to schools on the east coast, are not available at schools that people go to in poorer areas. They don’t come from families that have a history of going to college and so on, and therefore they don’t apply in the first place, even if they do somehow apply they don’t know how to write essays that will please the guidance counselors and so on. So, they end up not going to the college, perpetuating inequalities. So these are the two conditions.