You can look at global inequality in two ways. Is it simply a matter of uneven income distribution, or is it more about the underlying political inequalities of power – of participation, opportunity, voice?
The first point of view, focused on the economics of inequality, inevitably comes up with an economic solution: that of income redistribution. But if you examine the political side of the problem, it starts to become more complicated. While the economics of inequality must be grasped, any effective solutions also need to tackle the political roots of the problem.
Structural economic inequalities in the global system are real and have effects on the lives of millions of people. The poorest are often denied access to the technological advances that could help to lift them out of poverty, and the savings made by ever-more efficient technology are more likely passed onto the shareholder or CEO than the worker. At the same time trade systems often are stacked against the interests of the poorest regions, due often to geographic isolation from global markets and the absence of investments in modern communications infrastructure. Beyond geography, many groups remain excluded from opportunity — the largest of them all being women, who make up the majority of low-paid workers around the world. And at the other end of the scale, the wealth of the richest continues to grow: An Oxfam report this month found that just 62 people own the same amount of wealth as the entire bottom half of the world’s population.
When I was at the UN, the challenge seemed to be to widen formal political participation. As head of the UN Development Programme, I made democratic participation a top development priority. But the challenge of ensuring political inclusion is very different today than to what it seemed even 10 years ago. Access to global markets and fast-paced technological change has meant that many companies have created massive wealth for their leaders — Microsoft and Facebook, and the extraordinary wealth of Bill Gates and Mark Zuckerberg, being two of the most famous examples. But alongside these legitimate and well-publicized fortunes comes the darker and more secretive side of globalization. The continued reliance of economies on minerals and commodities, combined with an inconsistent international financial architecture, has led to huge levels of corruption, often impacting the developing countries that need the money most. One estimate suggests that untaxed wealth held in secretive offshore accounts costs African countries $14 billion a year in lost tax revenues.
Looking forward, the relative rise of corporate power and wealth at the expense of that of government seems likely to continue. Only business can mobilize the scale of financial resources and innovation required to tackle the challenges of generating the growth and means to sustain a world of 9 billion by mid-century.
The risk is that this may increase “political inequality” if we don’t start now to frame a vision of responsible and inclusive business that respects the rules of weak states as much as strong and demonstrates responsibility toward relatively powerless stakeholders, such as local employees or consumers.
A strong global private sector — and indeed, a strong local one — remains the fundamental platform of global growth. But as inequalities — such as squeezed middle-class earnings — grow, so does the public questioning of the balance of corporate versus government power. It’s as evident on the hustings of Iowa as much as on the bustling streets of cities in Africa and Asia. Modern inequality needs a political response.
Note: Wellesley College will host a panel discussion on Sunday on global inquality. Panel members include former Secretary of State Madeleine Albright; Christine Lagarde, managing director of the International Monetary Fund; Sri Mulyani Indrawati, managing director and chief operating officer of the World Bank; and Mark Malloch-Brown. The event is free and open to the public
Mark Malloch-Brown was UN deputy secretary general and chief of staff under Kofi Annan.