Abstract
It is possible to do something about inequality: that is the core message of Tony Atkinson’s latest book. He has written it in a spirit of optimism (p. 308) and with an eye for practical matters. The book, thus, shares the attitude and goals of the ‘social investment’ perspective from which this review is written. In contrast, both to the many who lament rising inequality as if it is a natural, inexorable long-term trend and those who use the dark picture of rising inequality to campaign for simple solutions, Atkinson puts forward a whole host of measures that must be taken in combination to effectively lower inequality. These measures complement and go beyond social investment in several ways, as explained below. Above all else, lowering inequality requires serious commitment from all parties.
Inequality is clearly structured in three parts: diagnosis, proposals for action and an assessment of whether inequality can be lowered and the proposals implemented. While the argument is substantiated throughout with research results and information on the origins and history of the proposals, the book is written in admirably plain language. Atkinson explains economic models and research findings in an easily accessible manner. To set the scene, the book briefly discusses why (in-)equality of outcomes matters in addition to (in-)equality of opportunity. The focus then narrows towards inequality of economic outcomes – income, wealth and capital. The diagnosis relies on evidence concerning the distribution of these three outcomes as well as their changes worldwide. (In contrast to Thomas Piketty, Atkinson distinguishes clearly between wealth and capital and points to differences in their development.) The comparative and historical analysis serves to show that the rise in inequality is not a given by nature – that the world has actually seen periods of decreasing inequality in which welfare state interventions played a crucial role.
The proposals (summarized on pp. 237–239 and 303–304) are wide-ranging, including standards such as progressive taxation (Proposal 8), but also going beyond classical measures in two ways. First, the proposals are not restricted to social policy. For instance, Proposal 1 suggests directing technological change in such a way that employability is increased and the human dimension of providing service is emphasized. Proposal 2 concerns the process of governance and suggests introducing a distributional dimension into competition policy along with a forum for debate involving the social partners and civil society. Furthermore, Proposal 7 recommends creating a Public Investment Authority to build up the net worth of the state by holding investments in companies and in property. Second, some of the proposals seem radical such as Proposal 6 to pay a capital endowment (minimum inheritance) to all at adulthood and Proposals 12 and 13 on a substantial child benefit and a participation income (a basic income complementary to existing social transfers conditional on making a social contribution). Similarly, guaranteeing public employment at the minimum wage for those who seek it (Proposal 3) as well as a positive real interest rate on savings (Proposal 5) is regarded by some as radical considering the active involvement of the state. Other recommendations such as taxing inheritances and gifts (Proposal 9) may seem less radical, but they all follow from the aim of lowering inequality.
The last part of the book assesses whether the measures proposed would lower inequality at the cost of lowering economic output and slowing growth. Atkinson counters this worry with some theoretical arguments, as well as by estimating the effects using the United Kingdom as an example. Again, he is most radical in presenting a careful assessment and abstaining from making high-flying promises. In line with this attitude, he states clearly that his proposals will complement (social) investment in education and human capital (p. 302). However, he does discuss investments of businesses (pp. 124–125) and points out that social responsibility is increased by applying a long-term time-horizon in order to secure the company’s existence (and hence employment opportunities) rather than aiming at short-term profits.
Hence, while Atkinson doesn’t explicitly tie his argument to the social investment paradigm, there are lessons to be learned here: the task of lowering inequality must not be assigned to investment in education (p. 86) or social policy alone, and the time-horizon is crucial. It is somewhat disappointing that Atkinson focuses solely on economic inequality instead of using a multidimensional perspective, which might be expected by his advocacy of the capability approach and would have been more useful in assessing social investments. However, it is evident from his going beyond ‘textbook’ economic inequality (Chapter 3) as well as from his numerous references to other dimensions that his ultimate concern is for social justice. For example, he argues that unemployment reduces a person’s agency (p. 77) and argues for ‘leveling the playing field’ by introducing a minimum inheritance (p. 170). Yet, on gender aspects, he is guarded: he describes the increasing female employment participation (pp. 59–60) but does not take a clear normative stance.
Summing up, anybody who is concerned about inequality should read this book, which was written in the amazingly short period of 77 days. It is, however, the outcome of a life dedicated to the study of inequality and hence filled with informed arguments and details. Let us hope that the book inspires debates and action for fighting inequality!