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Ever since civilisations started establishing themselves on the planet, inequality, a phenomenon of unequal distributions of wealth, could be seen manifesting within these societies. In the early stages of civilisation, it is seen as who had more land, more livestock, and more of something, as it indicates that they had more “assets” than the other. However, these “assets” were not quantifiable as economic systems were not developed enough to quantify the value of these goods. As such, it was challenging to measure inequality. 

As time passed, societies started to develop, and political systems were implemented, such as having a governing body and implementing economic systems to encourage trade. With a foundation set, this catalysed the scientific development of humanity and brought about a question to the world leaders – how do we make our country flourish? – hence the birth of capitalism. 

Capitalism was a political and economic system designed to encourage innovation, promote consumption domestically and internationally, and create incentives for people to work. It would provide opportunities for individuals to start businesses and for markets to run with less government intervention. The birth of more businesses and industries resulted in a necessary workforce, which would be supplied by the people who, in turn, would receive wages. This system generated significant wealth that would later be channelled back to industrialising humanity, predominantly during the industrial revolution.

Now you may wonder, why are we having a history lesson about economics, humanity, and industrialisation? Inequality has existed for a long time, yet it is still a prevalent issue and one can say that it is getting worse compared to the start. Naturally, this gives inequality a negative connotation whenever it is brought up in the status quo. However, is there a world where inequality could be good or have good elements? Can it be solved? What caused the world to reach such a point? These are the questions that I ponder, and it all ties back to the system we have adopted in current economic – capitalism. 

Capitalism has developed to an extreme such that encouraging innovation has now backfired. Most markets are over-saturated and new businesses now commonly provide luxury goods or services as industries for non-luxury goods are dominated by large conglomerates. 

Luxury goods are a factor that explains why it is hard to solve inequality as, firstly, large corporations outsource labour to reduce their labour cost. Apple pays wages of less than $17 to $22 a day, and working conditions are harsh as workers are forced to stand until their legs are swollen. This is one example of a common practice businesses make that we all have probably heard of from the news, our parents, or our friends. Workers are not given much opportunity to escape the working class as they are not paid even enough to survive, yet they are being capitalised since they are better off with meagre wages than none. 

Secondly, consumers fall into the luxury trap as they purchase designer clothing that is marked up because of brand value or constant desire to update their iPhone or Samsung even though software and hardware updates are barely noticeable. This mentality continuously seeps wealth from the middle class to the rich and widens inequality daily. Conclusively, capitalism has evolved into a system that reinforces the wealth of the rich. 

Beyond that, the traditional notion that “if I want to earn money, I should start a business” also worsens inequality. Competitive industries have financial titans that use their overwhelming market share and resources to force competitors out of the market. New businesses that just started suffer significantly from this since they potentially face predatory pricing. Investing in starting a business requires large sums of resources. When most businesses cannot stay afloat, these business owners suffer huge losses alongside the business stakeholders. While one may argue that this is a risk that stakeholders take, the notion causes countless businesses to fall due to the financial power that large firms have. This power is fortified by the capitalistic system in place. 

With the given circumstances, it is nearly impossible to solve inequality. One would need to reform the political and economic systems to solve inequality. This would take away a portion of the industrial titans’ power which could disincentivise them from capitalising workers. However, the public attraction to luxury goods is deeply implanted within us; thus, changing it would be challenging and would take a significant period of time. This is a similar problem to the traditional notion of starting a business to earn money. Furthermore, solving the oversaturation of markets is difficult, resulting in markets remaining relentless and highly competitive. As such, even if we could reform our economic systems to reduce the power certain corporations hold, many other problems still need to be solved before we can solve inequality. 

As mentioned at the start, inequality has adopted a negative connotation, and our attempts to solve it are in hopes that everyone will be able to live a life out of poverty. But, have we ever considered if inequality could have positive elements? Inherently, inequality indicates the quality of something being unequal. As such, economic inequality doesn’t have to be seen as status quo, where the top 1% holds the majority of wealth compared to the other 99%. It can also be seen in a view where there is inequality, but everyone is above the poverty line. Even such, inequality possesses an incentive mechanism to work harder. 

Humans, for the most part, are greedy by nature, and inequality helps catalyse it to encourage us to work harder to achieve what we want. Inequality reveals the different lives that can be lived in other wealth classes and make us want to work towards it to some extent. This incentive is also a contributive mechanism to why capitalism can encourage workforce participation. Take a view of a communist society as an example; resources are divided among everyone indiscriminately to their contribution to society, and it is hard to create an incentive to work as the people who work more get as much as people who don’t work. This is a very watered-down example of how it might look in real life; however, the theory still applies as inequality contributes to creating incentives. 

While inequality will likely not be solved in the near future, efforts to support those in poverty are in place to mitigate the damages of uncontrolled capitalism. And although inequality is still going to be viewed through negative lenses, as it should be in the status quo, we should not overlook the benefits it may provide us if harnessed correctly in a practical political and economic system. 

Reference

• Is It Ethical to Own an iPhone? | Business News Daily