This contribution is published as part of the UNRISD Think Piece Series, Overcoming Inequalities in a Fractured World: Between Elite Power and Social Mobilization, launched to coincide with a major UNRISD Call for Paper Conference by the same name. In this series, experts from academia, advocacy and policy practice engage with the topic of inequality by critically exploring the various causes of deepening inequalities in the current context, their implications for sustainable development, and strategies and mechanisms being employed to reverse them as part of the global conversation on inequalities leading up to the review of Sustainable Development Goal 10 at the UN High-Level Political Forum in July 2019.
Could social policies to redistribute wealth and shore up democracy be in the interests of powerful and wealthy elites? According to interdisciplinary research, the answer is yes, as inequality entails several negative consequences that affect elite security. Yet as inequality increases, we are not seeing many changes in elites’ largely negative attitudes to such policies. This think piece argues that the way elites perceive inequality, not their actual material interest, is getting in the way of progress.
, Pontificia Universidad Católica de Chile
More not less inequality
Inequality is gaining centrality on the global agenda, following years of steady income concentration and new challenges to democratic rule. An increasingly unequal world contrasts sharply with the tools that we as scholars and practitioners have developed to understand it. For instance, in the 1950s the famous Kuznets curve indicated that inequality would develop along an inverted U trajectory, meaning that countries would become more unequal as they grew, but later wealth would trickle down from the wealthy to the less well-off, producing a return to more equality. Similarly, political scientists often portray a relationship between democracy and redistribution stemming from the influence of median voters, who are said to attract public spending toward them by rewarding or punishing elected officials with their voting patterns. Social science research has thus led us to believe that, as economies grow and democracy spreads, the world should converge to a pattern of equality, both political and socioeconomic. Yet, if nations are indeed converging to one pattern of distribution as they develop, this pattern today seems to be one of high inequality. Not only have developing nations remained unequal, but the egalitarian countries of western and northern Europe, and North America have re-entered a trend of income concentration.
Old models remain valid in some of their assumptions, and there is robust research showing that important mechanisms linking both income and democracy to equality indeed operate, such as the now classic works of Adam Przeworski et al.
and Ronald Inglehart
. Yet it is clear that there must be other actors and dimensions of inequality that explain why (and when) the world took a different turn. A good place to start is with key actors that have been overlooked by previous models: the elites. According to elite theorist John Higley (2018), elites can be defined as those occupying power positions in society. Since power defines elites, and we can safely assume that elites will (like everyone else) try to act according to their own interest, it is important to understand what kind of benefits inequality generates for them and what incentivizes them to pursue these benefits. Some take for granted that elites are only interested in increasing income concentration, viewing them as a constant force in the direction of more inequality. There is some truth to this, as those at the top should be expected to act with the protection of their privilege in mind. Nonetheless, it is not true that the higher the inequality, the better off the elites are.
Sociologist Leslie McCall (2013) shows that even in the United States, where welfare is often assumed to be normatively undesirable, citizens resent income concentration. Widespread resentment and dissatisfaction can cause negative consequences for elites as well, in the form of crime and political turmoil, for instance. If societies develop into a pattern of acute inequality, the poor might revolt and take justice into their own hands, and that scenario looks quite bad for ruling elites. Also, if inequality is such that workers cannot afford to stay healthy and productive, this impacts those who rely on the work of others to reproduce their own wealth. Signs of coming unrest from the poor have led elites to enfranchise them and to expand social protection in western Europe and the United States, as shown by political economists Daron Acemoglu and James Robinson
, and before them by sociologist Abraham de Swaan
. Finally, in a global scenario where some countries and communities enjoy great wealth while others nearby experience hunger, war, and despair, the former will find it difficult to stay immune to the misery of the latter as people migrate in search of salvation. It follows that elites may endorse some redistribution as a means to protect their own privilege.
Redistribution or repression?
But supporting redistribution is of course not elites’ only option. According to several political economists, elites’ choices regarding the poor tend to run in one of two directions: either responding to their redistributive demands or repressing them through force. This dichotomy is also assumed to mirror the distinction between democratic and autocratic regimes. The cost of repression compared to redistribution decreases as inequality increases, Acemoglu and Robinson say. But investing in repressive institutions runs counter to creating high-quality liberal institutions, which are the fabric of effective property rights, and the civil freedoms from which elites benefit directly. Effective liberal institutions come with democracies, where checks and balances, political competition, and contestation generate credible constraints over rulers, and thus a more effective rule of law. As political scientist Michael Albertus (2016) shows, elites can be more vulnerable to expropriation under autocratic rule than under democratic rule, precisely because they lack effective means to contain ruling autocrats. Elites thus have good reasons to preserve liberal institutions. It follows that both democracy and redistribution can serve elites’ protection needs. If this is the case, why do we observe little redistribution and poorly performing democracies?
Redistribution as a strategy to protect elites’ own well-being is a difficult business. On average, most citizens benefit from less conflict, more health, and more opportunity, but it is not necessary for everybody to pay the cost of those social goods in order for society to enjoy the benefits. Those who do not engage in solving inequality but benefit from such initiatives will have greater returns than those who do engage. It follows that there are greater incentives to opt out while others bear the burden. Of course, if most elites act this way then nothing happens. Research on inequality often focuses on this type of paradox or dilemma of collective action.
But there are other factors that prevent elites from engaging in redistribution. According to the political sociologists Elisa Reis and Mick Moore
, elites in the Global South systematically delegate the task of sponsoring redistribution to “the state”, which they see as alien to them, and, by their inaction, inadvertently obstruct the road to equality. Sociologist Alice Krozer
finds in her research that elites often underestimate their own influence and power while overestimating that of others, which also resigns them to inaction. Merike Blofield (2011), a political scientist, notes that, while the poor are overly exposed to cultural references about the way of life of the rich, elites have very limited contact with the reality of the poor, which accounts for their underestimation of the problems that disadvantaged groups face. They thus perceive the consequences of poverty but have an inaccurate ideas about the processes that generate them.
These researchers show that elites rely on imperfect information. Like all of us, their actions are based on perceptions and preconceived understandings of how the world works. Sometimes those understandings have a significant correlation with reality, sometimes they do not. My own work on elites in Latin America and South Africa shows how the incentives for redistribution generated by exogenous forces, like crime and distributive demands, are often at odds with elites’ understanding of inequality, which can create incentives in the opposite direction. My colleagues Graziella Moraes Silva, Chana Teeger, and Pedro Marques and I show that elites’ cultural understanding of the poor mediates the effect of otherwise strong economic incentives to pursue redistribution, which explains why elites often spurn social policies even when in theory those policies suit their interests. In other words, although elites’ goal is to maximize their own well-being, the tools that they use to pursue this end are not entirely rational, but often circumscribed by culture.
In sum, understanding elites is key to understanding inequality. They are the primary beneficiaries of inequality of course, but this does not means that the more unequal society is, the better off elites are, as extreme inequality also imposes important costs on them. Elites have the resources to make social and political changes that would both lift the poor out of poverty and protect themselves. But, like all of us, they lack the information needed to make optimal decisions. Elites’ political choices are not only often bad for the poor, they are also bad for themselves. Elites would benefit from having an educated, well- trained and satisfied labour force, as well as from relying on voters that are committed to democracy and political stability. They often fail to pursue those goals, not necessarily because they do not share the same general goals as the rest of the population, but because they choose unfitting means and make imprecise cost-benefit estimations.
Albertus, M. 2015. Autocracy and redistribution.
Cambridge University Press.
Blofield, M. 2011. "Desigualdad y política en América Latina." Journal of Democracy en español
, 3, pp.58-74.
Higley, J. 2018. "Continuities and Discontinuities in Elite Theory." In The Palgrave Handbook of Political Elites
(pp. 25-39). Palgrave Macmillan, London.
McCall, L. 2013. The undeserving rich: American beliefs about inequality, opportunity, and redistribution
. Cambridge University Press.
Photo: Monopoly by William Warby (Creative Commons BY 2.0 via Flickr)