Wealth gap will swallow our freedom

There is a pervasive notion that to speak of inequality is to oppose wealth creation or harbour some morbid obsession with the rich. This notion is as unhelpful as it is mischievous.

Inequality is not a matter of concern because of the dramatic statistical expressions we see in the media. It is the effect it has on reinforcing and entrenching poverty, and the distorting effect it has on democratic outcomes. Thus, the question is not so much about inequality itself, but how it comes to be, and what it causes to be.

In his lecture, Harvard University economist and historian David S Landes contended with the issue of inequality in asking the question, “Why are we so rich and they so poor?”.

He argued that the answer lay in one of two explanations. First, that the rich are so because they are good: hardworking, knowledgeable, educated and productive, while the poor are the reverse. In the alternative, that the rich are so because they are bad: greedy, ruthless, exploitative and aggressive towards the weak and vulnerable poor.

It would not be difficult to find 10 on each side of Landes’s exposition. Listening to a radio debate between Leon Louw of the Free Market Foundation and Ayabonga Cawe of Oxfam on the latter’s report on inequality in SA, this was clear. But as Landes suggested, what we need is a manner in which to tackle both sides of the problem.

It seems almost indulgent on the part of Oxfam that resources should be spent calculating and pontificating on the levels of poverty and inequality, when it seems so evident everywhere we look. But perhaps this surely must be, since it seems the nature and causes of inequality are still contested ground, as Louw demonstrated.

Louw insisted on the peculiar point that poverty has been eliminated, although he also stated that he, along with others, worked with the poor of Alexandra. What poor, one wonders. Perhaps most troubling about Louw’s views on poverty and inequality wasn’t his definition or measurement of it, but that he did not reflect on why he, Samaritan that he is, is needed by the people of Alexandra to “work with them”. Why is he so rich and they so poor?

Margaret Thatcher, who many see as the mother of the values espoused by those who argue for free markets, lay down her philosophy of freedom, saying, “A man’s right to work as he will, to spend what he earns, to own property, to have the state as servant and not as master … they are the essence of a free economy … and on that freedom all our other freedoms depend.”

As part of her philosophy, Thatcher also insisted that the rule of law was central to the freedoms for which she stood, and that it was this “which marks out a civilised society from barbarism”.

Thatcher was reinforcing notions long argued by the likes of Jean-Jacques Rousseau that civilised, free and democratic societies depend on the law, so that we operate not on might but on order. This meant a citizen’s size and strength would not determine her success against others. Giants would not have the day any more than mosquitoes had the night.

What we have seen produced by inequality is that those who have more have dominated those who do not have. We see this continually in the cases brought to the public’s attention by the Competition Commission.

The pursuit of surplus or profit has seen bread and construction cartels fix prices to the detriment of the poor, and keep out smaller enterprises. It is this surplus that creates inequality. It is this same surplus that reinforces it.

Indeed, wealth is nothing else if it is not surplus. This is to say, no one can be wealthy except by having something left over between what they have and what they need.

Under this definition, we can imagine wealth in terms of what is endowed through inheritance, enterprise or larceny. The nature of the accumulation of surplus, in our history and in present-day SA, is what characterises the inequality we face.

Inequality, in itself, is not a bad thing. What makes it so distasteful, especially our brand, is that it is exclusionary and self-reinforcing. No one who believes in freedom and democracy can tolerate our brand of inequality.

We should support the creation of wealth because it is that which is available for tax in order to provide shared services, and show solidarity to the weaker in society.

But as Thomas Piketty has argued in his book, Capital in the Twenty First Century, the accumulation of surplus and distribution of wealth has the potential to undermine the meritocratic values on which free and democratic societies are based. No one who believes in freedom can tolerate the kind of inequality we are faced with.

WHAT MAKES INEQUALITY SO DISTASTEFUL, ESPECIALLY OUR BRAND, IS THAT IT IS EXCLUSIONARY AND SELF-REINFORCING