Category: Economic Inequality

Interview with Renira Angeles on Politics, Inequality, and Executive Pay

~ jdubrow2000

Renira C. Angeles, who recently received her PhD in Political Science from Central European University (CEU), Hungary, has presented a paper co-authored with Achim Kemmerling, University of Erfurt, Germany, “How Redistributive Institutions Affect Pay Inequality and Heterogeneity among Top Managers,” at the Politics and Inequality conference held December 2018 in Warsaw, Poland.

Dr. Angeles applies quantitative research methods to understand the political causes and consequences of income inequality, especially at the high-end of the income ladder, as well as the consequences of parties’ economic policies.

Renira C. Angeles recently published the article, “The Politics of Top Executive Compensation in Advanced Democracies,” in Sociology Compass. In 2018, Dr. Angeles led a project on technology, inequality and education in the Norwegian Board of Technology, providing policy advice to the Norwegian Parliament.

We asked Dr. Angeles for an extended abstract of their Politics and Inequality conference paper and, via email, some questions about their research.

Extended Abstract

 The incredible rise of executive pay has received a lot of scholarly interest. Since the 1970s, generous bonus rewards for top executives have appeared more frequently. This trend has been more widespread in some democracies more than others. This paper asks, Why do some advanced democracies experience growth average CEO pay levels more so than others? We argue that a crucial problem in moderating these increases is the heterogeneity among top managers. In particular, inequality among top managers’ pay makes redistributive institutions, more so than other institutions, better suited to deal with rising pay. To empirically test our argument, we use a novel data set on executive pay across 17 OECD countries. We compare the effect of different institutional factors: corporate and personal income taxation, the unions’ bargaining power, and regulative attempts. We find that redistributive institutions of personal income tax and unions’ bargaining power is effective in moderating high labour wages, especially for very large firms as measured by their stock market value.

Interview with Renira Angeles

The research you presented at the Politics and Inequality conference was a co-authored paper (with Achim Kemmerling) on cross-national variation in the pay of top managers. How did you get interested in this topic? And how is this topic connected to other research that you are doing?

I’m interested in the multidimensionality of inequality and the different implications it has for democracies. I got interested in assessing CEO pay and inequality during my MA studies where I examined the politics of CEO pay in the largest Norwegian state-owned companies.  Looking into CEO pay does not tell us the whole story on the politics of inequality, but it can tell us a good deal about the economic fortunes of the working poor. Although we have firm research in redistributive politics, and theories of institutions and income inequality, we need specific theories that can tell us why average CEO pay differs across industrialized economies.

Further, I was interested in looking across Europe where redistributive institutions and policies in general exist to a greater extent than, say, the US.  This paper assesses the political causes of CEO pay, but that is just half of the story. My interest into this topic also evolved from the thought of the possible policy feedback that generous bonus schemes can generate.

In this paper, you use an original dataset. Please briefly describe these data and why they are well-suited for your research.

The data is collected from annual reports of firms. There are executive characteristics as well as industry and firm characteristics. It is well suited to my mission to assess redistributive institutions and policies because it is a record of the economic fortunes of top managers who – because money is a political resource – can also be significant political actors.

What surprised you most about your research on this topic?

I was surprised at how different redistributive institutions and policies are differently connected to pay. Perhaps most surprising is that we found a weak moderation effect of trade unions.

Imagine that you only have a minute or two to tell someone about your paper. What is the main message of your paper that you want people to remember?

Redistributive institutions and policies matter for CEO pay, but it is tax policies, rather than trade unions – along with anti-trust policies and investor protections — that matter most.

What’s the next step for your research?

There are currently three directions. One is looking further into how parties’ economic and financial policies influence CEO pay. The two other directions look at the political consequences. So, one paper project I am working on now is examining the relationship between party financing and CEO pay. I also want to examine further the relationship between voting behavior and CEO pay. I’m interested to see varieties on how these frequent and ongoing newspaper headlines on CEO pay affect voters’ belief that their voice matters.

Please list three of your recent favorite articles or books in the field of politics and inequality, and why you chose them.

“Does Financialization Increase Inequality in Post-Industrial Political Economies?” by Evelyne Huber, Petrova Bilyana, and John D Stephens. The article was presented at a Glasgow conference. It is a cross-national analysis on how different aspects of financialization affect different income levels. I really enjoyed this one because it is one of the first attempts to (1) assess what aspects of financialization matters to income groups (e.g. household debts versus shareholder governance) and (2) assess the strength of relationship between these policies and income groups.  This is information that tells us something about the leverage of voters and political elites in financial politics.

A second one I have to mention is “The Wealth Elasticity of Political Contributions by the Forbes 400” by Bonica and Rosenthal (2018). It is related to their 2013 paper together with McCarty and Poole; Why hasn’t democracy slowed rising inequality?  The paper is an empirical study that finds a significantly high elasticity between wealth and political contribution in the US.

Also, Martin Höpner and Achim Goerres’ 2014 paper, “Polarizers or Landscape Groomers? An Empirical Analysis of Party Donations by the 100 Largest German Companies in 1984-2005.” This is a great article because it brings forth evidence from a European context on money and power of wealthy corporations.

What’s an older article or book in the field of politics and inequality that you like, and why?

I would mention Karl Polanyi’s The Great Transformation (1944). I like his book because of the historical analysis, but also because the problems he highlights from 20th century economies are still core issues in the political economy today. Much of his analysis on the consequences of the lack of counter-movements, i.e. the backlash of globalization, is relevant to the juncture in which the 21st century democracy now finds itself. If checks and balances are weak (i.e. institutions promoting democracy and political inequality) – which is often the case in democracies with very high economic inequality  — market forces will ultimately demolish the workers, money, and land that it relies on.

The interview was conducted via email by Joshua K. Dubrow, who also edited this piece, including the embedding of web links. This work was funded by the National Science Centre, Poland (2016/23/B/HS6/03916).

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Interview with Gwangeun Choi on Economic and Political Inequality in Cross-national Perspective

~ jdubrow2000

Gwangeun Choi presented the paper, “The Link between Economic and Political Inequality in Cross-National Perspective” at the Politics and Inequality conference held in Warsaw, Poland in December 2018.

Dr. Choi recently received a PhD in Government at the University of Essex in the UK. His research interests are in the areas of democracy, quality of democracy, political inequality, economic inequality, perceived inequality, redistributive preferences, redistribution, and universal basic income. His latest article, “Revisiting the Redistribution Hypothesis with Perceived Inequality and Redistributive Preferences” appeared at the European Journal of Political Economy (2019).

We asked Gwangeun Choi for an extended abstract of his Politics and Inequality conference paper and, via email, some questions about his research. We are thankful for his positive and detailed response.

Extended Abstract by Gwangeun Choi

It is widely believed that there exists a debilitating feedback cycle linking economic and political inequality. However, there has been a lack of empirical evidence about this association, particularly, in cross-national comparative research. It is largely because cross-national measures of political inequality are underdeveloped. To fill this gap, this study introduces the Political Inequality Index (PII) and the Political Power Inequality Index (PPII). The PII is composed of the two dimensions: participation and representation, which are based on the reconceptualization of political inequality from the perspective of a middle-range conception. The PPII comes from the indicators that measure the distribution of political power across socioeconomic position, social group, and gender, which the Varieties of Democracy provides. This inquiry then investigates the two-way causal relationship between economic and political inequality. In the first causal direction, net income inequality is used as a proxy for economic inequality, while in the reverse causal linkage political inequality is supposed to influence market income inequality and redistribution separately, as income inequality is considered as an outcome of the two different distributive stages. In doing so, both causal directions between economic and political inequality are integrated into a unified framework. With respect to estimation techniques, a system GMM estimator for a dynamic panel data model, which is an increasingly popular estimation method, is mainly used to address the issue of endogeneity. The findings show that net income inequality does not significantly affect political inequality and that political inequality appears to have little impact on market income inequality, while political inequality seems to contribute to economic inequality by influencing redistribution in a negative direction.

Interview with Gwangeun Choi

The research you presented at the Politics and Inequality conference was on the relationship between political inequality and economic inequality in cross-national perspective. How did you get interested in this topic? And how is this topic connected to other research that you are doing?

I first became interested in a concept ‘political equality’ while I was doing research on the quality of democracy. In my framework designed to conceptualize and measure the level of democracy, political equality was one of the three core principles of democracy. Thus, it was easy for me to construct a new measure of political inequality, building on this framework. The next step was to investigate the reciprocal relationship between economic inequality and political inequality, as I realized that there is a lack of empirical evidence on this linkage although no one seems to doubt the widespread belief of the vicious cycle between economic and political inequality.

What is most challenging about measuring political inequality, and why?

I think that the most challenging part is to provide convincing theoretical arguments on the conceptualization of political inequality. Measuring the quality of democracy is also faced with the same issue. My study on democracy and political inequality and several other studies attempting to measure them with relatively thick concepts reached a consensus in excluding both minimalist and maximalist approaches. However, this does not guarantee that the majority of scholars agree with a specific middle-range concept of democracy or political inequality. This is therefore a more pressing issue than a range of measurement problems.

What surprised you most about your research on political and economic inequalities?

What surprised me most is the consistent findings of the paper I presented across the different measures of political inequality that are based on a middle-range approach: Political Inequality Index (PII) and Political Power Inequality Index (PPII). I reported the results at the conference that political inequality significantly reduces the level of redistribution, not market income inequality, while the effect of net income inequality on political inequality is not significant. After the conference, I got to know that the dataset of the Democracy Matrix directed by Hans-Joachim Lauth has become publicly available since last December. The Democracy Matrix is also based on a middle-range conception of democracy, and political equality is one of its three principles. I constructed another measure of political inequality right away from the aggregate index of political equality in this dataset and redid the main analysis of the paper with this new measure. Surprisingly, the results strongly support the main findings of the inquiry.

Imagine that you only have a minute or two to tell someone about your paper. What is the main message of your paper that you want people to remember?

The main findings of my paper should be interpreted with caution⸺that net income inequality does not significantly affect political inequality, while political inequality contributes to economic inequality by influencing redistribution rather than market income inequality. First, the concept of political equality in my paper focuses on securing an equal opportunity by encouraging political participation and making a more representative political system, not guaranteeing equal political outcomes.

Second, addressing either economic inequality or political inequality, not both of them, is incomplete, irrespective of to what extent they are associated, as economic inequality and political inequality are ubiquitous and troublesome in the modern world. Last, the finding that enhancing political equality in terms of participation and representation has clear limitations in influencing market income inequality leads us to pay more attention to other political efforts beyond enhancing redistributive policies, given that both market conditioning policies and redistributive policies are important to redress economic disparities that may influence politics in myriad ways.

What’s the next step for your research on this topic?

The empirical analysis of the current paper could not directly test the theories of political inequality discussed in the literature so far. For instance, to examine the elite theory, we need to exactly define the elite and measure their disproportionate political influence, but there is no such measure currently available. As Jeff Manza argues, contemporary theories of political inequality, such as elite and oligarchic theories, power resources theories, and globalization models, do not present a satisfactory explanation for the causes and consequences of political inequality, and they are also faced with many cases that contradict the theories. Therefore, theory building in the study of political inequality is pressing although it is a challenging task. Further investigation of the channels of influence between economic and political inequality, using various research methods beyond macro-level analysis, will open up an avenue for that.

Please list two of your recent favorite articles or books in the field of politics and inequality, and why you chose them.

I’d like to list Unequal and Unrepresented: Political Inequality and the People’s Voice in the New Gilded Age (Schlozman, Brady, and Verba, 2018) as one of the books I recommend. I would say that this book is a newly published classic as it is a brief summary or a synthesis of their earlier works, Voice and Equality (1995) and The Unheavenly Chorus (2012), as well as an updated empirical research with recent data reflecting the new political and economic landscape. Another one is the completely revised and updated second edition of Unequal Democracy: The Political Economy of the New Gilded Age (Bartels, 2018). The two books seem to be complimentary to each other in the sense that the former focuses on political voice, while the latter addresses political responsiveness. Reading these books may give readers something more than that: the whole picture of political inequality and critical thinking towards different views on political inequality.

What’s an older article or book in the field of politics and inequality that you like, and why?

The Power Elite (1956) by American sociologist C. Wright Mills is one of the great classics for social scientists, but its profound insights can also shed new light on contemporary democracies in which political and economic inequality has been growing. In 2006, G. William Domhoff, a successor to Millsian elite theory, said, “Mills looks even better than he did 50 years ago.” Many advanced democracies as well as the United States appear to be dominated by an elite ownership class that monopolizes political and economic power. The growing importance of the asset economy since 1970’s and its accompanying politics require us to rediscover and reinterpret the elite theory in revealing the mechanisms of the interplay between political inequality and economic inequality.

The interview was conducted via email by Joshua K. Dubrow, who also edited this piece, including the embedding of web links. This work was funded by the National Science Centre, Poland (2016/23/B/HS6/03916).

Be sure to read:

Choi, Gwangeun. “Revisiting the redistribution hypothesis with perceived inequality and redistributive preferences.” European Journal of Political Economy 58 (2019): 220-244.

Choi, Gwangeun. “Conceptualizing and Measuring Political Inequality in a Cross-National Perspective.” Comparative Sociology 20, no. 1 (2021): 1-44.

Interview with Constantin Manuel Bosancianu on Party–Voter Ideological Congruence and Socioeconomic Biases in Representation

~ jdubrow2000

Constantin Manuel Bosancianu, of WZB Berlin Social Science Center, Germany, presented the paper, “Party–Voter Ideological Congruence and Socio-Economic Biases in Representation: OECD over the Past 5 Decades” at the Politics and Inequality conference held in Warsaw, Poland in December 2018.

Constantin Manuel Bosancianu is a postdoctoral researcher in the “Institutions and Political Inequality” unit at the Berlin Social Science Center (WZB). He focuses on the intersection of political economy and electoral behavior: how to measure political inequalities between citizens of both developed and developing countries, and what the linkages between political and economic inequalities are. Dr. Bosancianu received his PhD in 2007 from the Central European University, Budapest, with a dissertation on how the dynamics of party ideological shifts, economic inequality, and individual political participation unfold over time. He is interested in statistics, data visualization, and the history of Leftist parties. In the past, Dr. Bosancianu taught or assisted with teaching methods courses at the European Consortium for Political Research (ECPR) Winter and Summer Methods Schools, University of Heidelberg or University of Gießen, with a focus on regression analysis, R, Bayesian analysis, and multilevel modelling.

We asked Constantin Manuel Bosancianu for an extended abstract of his Politics and Inequality conference paper and, via email, some questions about his research. We are thankful for his positive and detailed response.

Extended Abstract

Disparities in political representation between socio-economic groups, if perpetuated over time, can lead to growing disenchantment with the political process, dropout from political life, and even the appearance of new political movements that challenge representative institutions (Taggart, 2002). Starting with the early investigations of Gilens (2005, 2009, 2012) for the US context, a series of analyses have found disparities in political representation across a larger number of consolidated democracies (Elsässer, Hense, & Schäfer, 2018; Giger, Rosset, & Bernauer, 2012; Peters & Ensink, 2015; Rosset, Giger, & Bernauer, 2013; Rosset, 2013). Despite the consistent results, we continue to have very limited knowledge about the causes and mechanisms for these disparities.

This analysis probes into this issue. By relying on an original data set of merged voter studies in 30 OECD countries, going as far back in time as the 1960s and 70s, I compute a measure of ideological congruence between voters and political parties. Called the Earth Mover’s Distance (Lupu, Selios, & Warner, 2017), it is based on citizens’ self-placement on a standard Left-Right axis, as well as their placement of parties on the same scale (Powell Jr., 2009). By relying on voters’ perceptions of parties rather than legislator self-placements (Lupu & Warner, 2018), my data overcomes the potential flaw of different understandings of “Left” and “Right” between people and political elites. This measure of congruence is then used to ascertain: (1) if representation gaps between voters at the opposite end of the socio-economic spectrum are found in my sample, and (2) whether the gaps in representation are associated with a demand-side characteristic (disparities in political participation between the same socio-economic groups) or a supply-side factor (party ideological changes over time).

Preliminary findings do little to dispel the mystery surrounding the causes of unequal representation for poorer citizens, though they conclusively establish that such a gap exists. They furthermore establish that overall quality of representation is associated with disparities in participation: contexts where turnout between income groups is more unequal have worse overall representation of income groups. However, even when relying on a measure of participation disparities generated from individual-level data, no clear association exists between disparities in political voice and gaps in representation between income groups. Neither do party-system dynamics appear to explain the disparity in ideological convergence between income groups. Though inconclusive, the findings confirm those of Lupu and Warner (2018) and will hopefully spur the focus on additional mechanisms to explain the relative disadvantage in representation that poorer citizens are faced with.

Interview with Constantin Manuel Bosancianu

The research you presented at the Politics and Inequality conference was on party–voter congruence. How did you get interested in this topic? And is this topic connected to other research that you are doing?

The interest in political representation, for which party-voter ideological congruence is one proxy, came about through my focus on understanding how to measure the facets of political inequality between individuals and groups. For the past few years I have been interested in disparities in political voice between individuals and groups—aspects such as turnout, non-electoral participation, or political efficacy. These are shaped by individual resource endowments, which naturally generate inequalities in voice. This is only part of the story, though. Another part is how disparities in voice and political influence are shaped by systemic features pertaining to, say, the electoral system or party system configurations. Some of Orit Kedar’s work is an excellent example of this, as is that of Karen L. Jusko. My own attempts refer to another feature of the system: the distribution of parties along a Left–Right ideological dimension.

Continue reading “Interview with Constantin Manuel Bosancianu on Party–Voter Ideological Congruence and Socioeconomic Biases in Representation” →

Interview with Jan Falkowski on Political Power and Land Inequality in Poland

~ jdubrow2000

Jan Falkowski, of the University of Warsaw, Poland, recently presented a paper, “Do Political and Economic Inequalities Go Together? Mayors’ Turnover, Elite Families and the Distribution of Agricultural Land” at the Politics and Inequality conference held in Warsaw, Poland.

Jan Falkowski is an Assistant Professor with the University of Warsaw, Faculty of Economic Sciences, Chair of Political Economy. His primary research interests are in the impact of institutions and politics on economic processes, and the reciprocal influence of economic conditions on institutional environment and political life. His paper, “Promoting Change or Preserving the Status Quo? The Consequences of Dominating Local Politics By Agricultural Interests” was published in Land Use Policy (2017), and his paper with Grażyna Bukowska  and Piotr Wójcik, “The Political Power of Large‐Scale Farmers and Land Inequality: Some Evidence from Poland,” was just published by Sociologia Ruralis (2018).

Interview with Jan Falkowski

The research you presented at the Politics and Inequality conference was on the economic impact of the distribution of political power. How did you get interested in this topic? And how is this topic connected to other research that you are doing?

The interlinkage between  political and economic power has always been of interest to me. Looking at the connection between political and economic inequalities seemed to me as a natural consequence of studying the former relationship since the distribution of power and the distribution of resources (be it political or economic) are closely related.

In this paper, you use an original dataset. Please briefly describe these data and why they are well-suited for your research.

Measuring economic inequality poses some difficulties as people are typically not so willing to share with others detailed information on how much wealth they have. We needed therefore to overcome this problem or, at least, to try to do so. We discovered that it should be possible to achieve this goal by looking at a specific, but coherent, part of the population, namely farmers. What we do in the paper is we take advantage of the fact that in Poland the information on those who received agricultural subsidies is public. So it is possible to gather, at the individual level, the information on how much money a given person received in the form of the so-called direct payments. In the system that Poland uses to subsidize farmers, direct payments are granted to farmers based on a national flat rate per eligible hectare, and – contrary to what we observe in many other EU Member States – they do not depend on the historical reference period. Thus, the distribution of direct payments at the municipality level can serve as a good approximation of land use distribution. This, in turn, can be used to measure the distribution of wealth.  Obviously, the shortcoming is that it can serve as a good approximation of wealth distribution only in rural areas, in which the dependence on agriculture as a source of living is high. In the paper we collate these data with the data on mayors’ turnover which we use as an approximation of political inequality.

 What surprised you most about your research on political power distribution?

The first surprise was to observe that, even though we have good theories describing potential determinants of the distribution of political power or the theories predicting various consequences that the distribution of political power may bring about, actual evidence (especially the quantitative one) on these issues is sparse. The second surprise was that the distribution of political power can have many different impacts also in areas which we typically do not associate so much with the way in which political resources are distributed.

Imagine that you only have a minute or two to tell someone about your paper. What is the main message of your paper that you want people to remember?

With the caveat that this is still ‘work in progress’, the main message would be as follows: in municipalities characterized by a higher levels of political inequality we observe that the most influential families are able to amass disproportionately large amount of land.

What’s the next step for your research on this topic?

The next step is to better understand the origins of political inequality and in particular to link it to the functioning of informal institutions as measured by (the changes in) religious behavior.

Please list two of your recent favorite articles or books in the field of politics and inequality, and why you chose them.

One could be Pablo Querubin’s work on political dynasties in Philippines and the other one the work by Michael Albertus on land reforms and land inequality. Both of them use fantastic datasets and very sound empirical methods to uncover new things about the way in which politics and economics interact with each other.

What’s an older article or book in the field of politics and inequality that you like, and why?

I think one can find a lot of inspirations from reading Albert O Hirschman. The relatively recently edited book by Princeton University Press entitled “The Essential Hirschman” could be a good reading I believe.

The interview was conducted via email by Joshua K. Dubrow, who also edited this piece, including the embedding of web links. This work was funded in part by the National Science Centre, Poland (2016/23/B/HS6/03916).

Neoliberalism and Democracy

The planet earth swimming in an unreal sea of money
~ jdubrow2000

This is a guest post by Alex Afouxenidis, Professor at the National Centre for Social Research, Athens, Greece. It is based on his chapter in, Political Inequality in an Age of Democracy (Routledge).

What is neoliberalism and how does it impact democracy?

Neoliberalism is based on the idea of ignoring fundamental human needs.

The success of neoliberal political strategies rests on a mixture of rhetoric and control of democracy’s major local and global institutions. It is also based on the erosion of the key actors and institutions that are the main underpinnings of contemporary democracies, such as pressure groups, civic organizations, and educational institutes.

In neoliberalism’s economic sphere, economic growth does not need to translate into growth of equality. Considering rising social, economic, and political inequalities, we are looking at abuse being taken for granted.

Table of Contents

  1. What is neoliberalism and how does it impact democracy?
    1. Understanding Democracies’ Political Shift toward Neoliberalism
      1. Market idealization is not working: it has generated profound constraints on people’s liberty and self-determination.
    2. Neoliberalism and Four Dimensions of Democratic Organization
      1. Neoliberalism and Democracy: The Economic Sphere
      2. Neoliberalism and Democracy: The Social and Political Spheres
      3. Neoliberalism and Democracy: The Cultural Sphere
        1. In global terms ‘neoliberalism’ itself has become part of popular culture packed with iconic figure heads such as Thatcher or Reagan and reactionary representational references to anti-statism, individuality, and consumerism.
    3. Neoliberalism, Democracy, and Crisis

Understanding Democracies’ Political Shift toward Neoliberalism

The pervasive counter-democratic ideological force of neoliberalism has had a deep impact on people’s lives, identities and beliefs despite its obvious failure to sustain any meaningful sense of ‘economic growth’. This is evident in many regions across the world where economies are being re-structured and reformed generating greater forms of inequality and limiting political freedom. Political crises have become everyday occurrence for many nations. Governments are in a continuous state of instability and many turn to (semi?) authoritarian rule in order to retain power.

Market idealization is not working: it has generated profound constraints on people’s liberty and self-determination.

As one reflects upon the countless analyses and informed criticisms on the impact of neoliberal ideology and strategy, it becomes increasingly clear that the main constitutive element of this sort of ‘philosophy’ is related to the idea of ignoring fundamental human needs. This conceptualization has generated a rupture with respect to western classical liberal discourses such as those, for example, put forward by J. Locke, J.S. Mill or J. Rawls. For, even though they strongly suggested personal autonomy, they equally forcefully reflected upon the idea that if the needs of individuals are not adequately met then liberty will be limited.

This radical shift in the liberal ideological agenda that emerged during the early 1980s used the language of freedom and individuality to promote a basically dehumanizing and oppressive status quo. Humanity thus was re-defined vertically and horizontally along and across the usual bi-polarities: poor/wealthy, in/out of work, males/females, gay/straight, western/non-western, north/south, black/white, moral/immoral, productive/un-productive, private/public and so forth. The question, in this respect, is not so much whether these categories actually exist or not, but rather how and in which ways they are used to generate and reproduce a vocabulary and a subsequent series of political practices and agendas.

In fact these are populist images of societal structures based on rather simplistic belief systems. In cultural terms, they advocate exclusivity of the ‘West’ over all others, intentionally promoting ideas which view the ‘West’ as a single all embracing cultural unit. In political terms, the market and economic ‘freedom’ are dissociated from the inner workings of democracy. Hence, if democratic procedures and/or processes contradict neoliberal thinking, then they may be overlooked.

Success of neoliberal political strategies rests on a mixture of rhetoric, force and, more importantly, control of the major local and global institutions such as the state and/or international financial organizations. In addition, it is also very much based on the slow or rapid fragmentation and, ultimately, severe erosion if not destruction of diverse agents such as public actors, pressure groups, civic organizations, think tanks, educational institutes and a variety of other structures which have formed the main underpinnings of contemporary democracies.

Neoliberalism and Four Dimensions of Democratic Organization

Over the past 35 years, a very powerful fable has been used to legitimize economic and social intervention operating across the four major areas of democratic organization, namely the economic, political, social and cultural spheres.

Neoliberalism and Democracy: The Economic Sphere

In the economic sphere, the main neoliberal idea is that societies and countries have to shift away from policies related to integration and replace them with policies – and the corresponding ideologies – of divergence. Economic growth therefore does not need to translate into growth of equality.

Neoliberalism and Democracy: The Social and Political Spheres

Divergence and accompanying growing gaps in political inequality and social inequality have become accepted as systemic norms.

Accordingly, the nature of political systems has to be altered to accommodate for increased inequality, inequity and exploitation coupled by a reduced public sphere and an enlarged, dominating private sector through the diminution of all sorts of political participation and a reduction of the state’s capacity to organize civil life.

Neoliberalism and Democracy: The Cultural Sphere

In simpler terms, in an enforced alteration of political culture, the façade of a well organized democracy is only required to counter-balance the harsh re-constitution of society: to make it somewhat more respectable to the eyes of people. In total, neoliberal strategies have played a significant role in the realignment of the cultural sphere and cultural politics.

DALL-E “Gustav Klimt painting of democracy and money”

Neoliberalism, Democracy, and Crisis

Although some writers seem to be rather optimistic on the reversal of the neoliberal political project, mostly because of the effects of the current crisis, we should be more cautious.

For a long time the system has gone through various crises, and has nevertheless flourished despite massive reactions from a variety of people and organizations across the world. Neoliberal ideology has not been fundamentally challenged and if anything it seems that neoliberalism has gained, for example via the post-2008 crisis, influence and as a consequence a whole new range of economic, political, social and cultural strategies have been deployed.

The political process has been ‘de-legitimized’ to a large extent and liberal democracy appears deficient, and yet for the neoliberal political agenda this is probably good news. When one looks at the rising figures of social and political inequality, the widening gap between rich and poor and instances of extreme poverty within and across nations and regions, one looks at the same time at abuse being taken for granted. And much more research is required precisely on that last point.

Prof. Alex Afouxenidis is a Researcher at the National Centre for Social Research, Athens, Greece and specializes in Political Sociology. He is the editor of The Greek Review of Social Research, and recently edited a special issue on social media and politics. He can be reached at www.ekke.gr and afouxenidis@ekke.gr

This piece is based on the chapter “Neoliberalism and Democracy”, in Dubrow, J. (ed), Political Inequality in an Age of Democracy: Cross-national Perspectives, London: Routledge, pp. 40-48.

Elites care about inequality, but probably not in the way that you think

~ jdubrow2000 ~ Leave a comment

This is a guest post by Matias Lopez, Universidad Católica, Chile.

Do the elite care about inequality?

A survey of over 800 elites in six Latin American countries reveals that they acknowledge economic inequality as a problem, but see little incentive to reduce inequality. The elite from stronger and more stable democracies tend to be more aware of inequality as a political problem. Yet they do not view equitable income re-distribution as the answer.

The Problem of an Elite in Democracy

Latin America has some of the highest levels of economic inequality in the world, and it also has many democracies.

That a tiny elite accumulates excessive wealth and power prompts concern about the future of democracy. We know from several studies that this inequality may generate conflict and support for non-democratic leadership — a perilous situation recognized by citizens of the United States and Europe.

Questions:

  • What do elites themselves think about the risks of inequality?
  • Do they feel comfortable living with these risks, or do they feel worried about them?
  • And if they feel worried, what are they willing to do about it?

Exploring Elites and Democracy in Latin America

To answer these questions, Latin America provides a very useful set of cases.

Many large and durable democracies in the region, such as Argentina, Brazil, and Mexico, have high levels of economic inequality even though this inequality creates urban violence and social unrest. Extreme inequality in a democracy is a problem for average citizens because it puts in doubt Lincoln’s principle of “government of the people, by the people, for the people.”

Meanwhile, elites also have good reasons to fear inequality as they are clearly impacted by the political turmoil and the social violence that can follow.

I looked at the University of São Paulo survey conducted in six Latin American countries of over 800 members of the elite in the realms of politics, business, and civil society.

I found out that most of the elite share the usual concerns about inequality and democratic stability.

But the relationship between concern and action has not to do with inequality itself, but with the strength and stability of democracy.

Stronger and more stable democracies tend to have more members of the elite concerned about inequality. This seems intuitive, since stronger democracies may have more to lose from the sort of social menaces that accompany extreme inequality.

But if concern over the perils of high inequality would, rationally speaking, lead the elite to act to reduce inequality, then my second finding is counter-intuitive:

I also found out that, by and large, the Latin American elite have little desire to lower the level of economic inequality.

Inequality, over the past decade, has decreased significantly in Brazil, Argentina, Mexico and Chile. I found that countries whose inequality dropped also have elite who show the highest levels of concern. Brazil is a very interesting case in this regard. The country’s inequality has recently fallen but remains among the highest in the world. As in other Latin American countries, Brazilian elites share concern over the problem of inequality, but do not feel that they should be part of the solution. For example, they are strongly averse to paying more taxes, as shown in the figure below.

Figure 1. Brazilian Elite Agreement with Further Social Investment and with Further Taxation

matias-lopez-elite-figure-1

Source: USP 2008

Except for union leaders, all elite sectors in Brazil scored much higher for welfare spending than for taxation. Union leaders may believe that they will not be the ones paying extra taxes, as they often picture themselves as part of the working class, not the elite. Business elites seem to be aware that they would be preferential targets of taxation. On average, the elite do like the idea of increasing social welfare, as long as they are not asked to contribute more to it.

Summary

In sum, the elite often worry a lot about inequality. But they also feel that they get away with doing nothing substantive about it, and feel no need to sacrifice their own resources to end it.

This article is based on the chapter, “Elite Perception of Inequality as a Threat to Democracy in Six Latin American Countries,” in the book, Political Inequality in an Age of Democracy: Cross-national Perspectives.

Matias Lopez is a PhD candidate in political science at the Universidad Católica, Chile. His research is on democratic stability in contexts of high inequality. He can be reached at matiaslopez.uy[at]gmail.com