The acceptance that inequality is an intrinsic characteristic of the market economy is as dangerous as it is mistaken

Capitalists would be crazy to ignore inequality

BY TIM MORGAN

Tim Morgan explains why supporters of capitalism should welcome the debate over inequality – and must never allow it to appear synonymous with unfairness.

Ever since the publication of Capital in the 21st Century, prominent supporters of capitalism have rivalled each other in their denunciations of Thomas Piketty’s egalitarian thesis. In so doing, they have fallen head-long into a trap that will delight the enemies of the market economy, who surely desire nothing more than a self-acceptance that capitalism is synonymous with inequality.

The assertion, or even the acceptance, that inequality is an intrinsic characteristic of the market economy is as dangerous as it is mistaken. Those of us who favour popular capitalism need to engage with the egalitarian argument, demonstrating that neither history nor logic supports a connection between capitalism and inequality. Rather, capitalism is the most tried-and-tested beneficiary of the majority. Inequality results not from too much capitalism, but from too little.

Inequality in human societies long pre-dates the market economy. Virtually all pre-feudal systems were grotesquely unequal, and many endorsed slavery. Feudalism enshrined inequality in custom and law. In more recent times, Communist regimes in Russia and China have presided over extremes of inequality.

Inequality runs like a sine-wave through human history. Today’s defenders of inequality should note that, whenever a system becomes too closely associated with inequity, its downfall becomes inevitable.

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