Revisiting Increasing Inequalities | Suranjita Ray

The capitalist model of development based on neo-liberal ideology since 1990s privileged an integrated global market economy that became crucial to conquer economic inflation, remove imbalances in payment, increase economic growth rate and secure stabilization of the economy. Often referred to as the second-generation reforms, economic liberalisation saw a paradigm shift from closed economy to open economy that liberalised trade, interest rates, competitive exchange rates, and fiscal flow of capital. The freedom from direct controls to make the economy vibrant brought a series of fiscal reforms such as tax reforms, derugularisation of economy, increasing privatisation of property rights, and expansion of foreign direct investment. This brought an end to several restrictions such as trade barriers, import tariffs by cutting the import duties/customs duties, regularized markets, control, license and quota, which resulted in expansion of business activities as it opened the reserved sectors for private and foreign players. Liberalisation, privatisation and globalisation as major strategic mandate for the economic policies privileged market forces that prioritised free flow of finance capital and its accumulation as the precondition for growth and development. However, while greater liberalisation increased liquidity for the world trade in capital and technology and multilateral trading system became important, we find that asymmetries and inequalities have increased across the world posing serious challenges than ever before.

Oxfam Report: Increasing Inequalities

The report ‘Survival of the Richest’ released by rights group Oxfam International on the first day of the World Economic Forum Annual Meeting 2023 at Davos, provokes us to rethink why and how the world has become increasingly unequal. It states that despite the challenges such as climate change, rising cost of living, Russia’s war in Ukraine and COVID-19 pandemic, the world’s richest have gotten richer and corporate profits are surging. The richest 1 percent have been able to grab nearly two-thirds of all new wealth worth $42 trillion created since 2020. This is almost twice the money owned by the bottom 99 percent of the world’s population. It highlights that extreme poverty has increased for the first time in 25 years. The report is critical as it has not only brought to the fore multiple indicators to illustrate increasing inequalities but also argues why inequalities increased across the world.

Oxfam India’s ‘Survival of the Richest: The India Supplement’ reveals some glaring findings that underline the widening gap between the rich and the poor in India. In 2021, while top 1 percent of the population owned more than 40.5 percent of the total wealth, the bottom 50 per cent i.e 700 million people owned around 3 per cent. What is ironical is that in 2021-22, the latter paid six times more on indirect taxes as a percentage of their income i.e approximately 64 per cent of the total Goods and Services Tax (GST) paid, compared to the former who paid 3 per cent. The report further states that since November 2022, the billionaires saw their wealth surge by 121 per cent. It underscores the paradox of development as between 2020 and 2022, the number of billionaires increased from 102 to 166 while the number of people who are hungry increased from 19 crores to 35 crores.

An increasing inequality based on gender, caste and rural and urban divide is reflected in the gap in wages earned between 2018 and 2019. The female workers earned only 63 paise for every 1 rupee earned by a male worker. The scheduled castes earned 55 per cent of what was earned by the advantaged social groups. The rural workers earned merely half of the earnings of the urban workers.

The report also highlights how progressive tax measures can help combat inequality in India. Gabriela Bucher, the Executive Director of Oxfam International, argues for the need to demolish the convenient myth that tax cuts which results in increasing the wealth of the riches eventually also trickles down to everyone else. On the contrary, he explicates that ‘taxing the super-rich is the strategic precondition to reducing inequality and resuscitating democracy’. Amitabh Behar, Oxfam India CEO, also suggests that the progressive tax measures such as wealth tax and inheritance tax will not only ensure that the rich pay their fair share but will also tackle inequality effectively. He argues that while India’s billionaires are doing extremely well for themselves, sections of society experience multiple crises like hunger, unemployment, inflation and health calamities. The marginalised sections of society such as Dalits, Adivasis, Muslims, Women, and workers in the informal sector continue to suffer as the system ensures the survival of the richest. Since the poor are paying disproportionately higher taxes and are spending more on essential items and services compared to the rich, the latter need to be taxed. The Oxfam report finds that the poor are deprived of the basic necessities to survive. Some of its suggestions include paying basic minimum wages to the workers in both formal and informal sector which is essential for living a life with dignity, strengthening the public health systems and enhancing budgetary allocation for education to 6 per cent of the GDP.

Bringing the Marginalised to Mainstream 

The report reiterates the need to rethink the strategies of development. While policies to tax the rich and investing in education and health are important steps, we find that a more equitable world for all will only be possible by working out alternative strategies of development that alter the structures of ownership and control over productive resources which have resulted in systemic inequalities, deprivation, alienation and exclusion. If the marginalised have to be brought to the mainstream of development, it is pertinent to address issues such as ownership and control over means of production, acquisition of land leading to displacement, exploitation of mineral resources, forest and water reserves, increasing farmers suicides, unemployment, poor health care, lack of education, increasing hunger, malnutrition, famishment and starvation deaths, distress migration and the very right to life and livelihood. Increased investment in the infrastructure, agriculture, technology, manufacturing, employment, education, food security, and economic growth should prioritise the basic needs of the large mass of common/ordinary people rather than the corporate world.

A rigorous analysis of the capitalist model of development reveals that its objective laws are based on the oligopolistic nature of market economy which is bound to accumulate wealth in fewer and fewer hands. Free trade and competitive market economy favour the successful establishment of monopoly of the powerful capitalist/corporate class. It also creates a large majority of disadvantaged class who are alienated from the means of production and labour power and become vulnerable to processes of deprivation and disentitlement. In fact, the powerful class and the periphery class are mutually constituted.

It is important to understand that the underlying philosophy of economic liberalisation and globalisation which compels integration with the capitalist world is certainly not to equalise but to create a peripheral status for the majority. Despite a series of socio-economic and political reforms and policies based on ‘protective discrimination’ to ameliorate injustice and inequality, dismantling of the traditional production systems has disintegrated the livelihood systems resulting in dispossession, deprivation, landlessness and distress migration. In fact, while globalization has contributed in mobilizing the marginalized sections across the world against discriminations and subjugations, and they voice their concerns and demand justice, they continue to remain vulnerable to processes of impoverishment, deprivation, discriminations, alienation, disentitlement, inequalities, and injustice. It is critical to understand that the integration of the world economy has failed to alter the structured and rigid boundaries embedded in the society that not only curtail the space and mobility for the marginalised communities but also strengthen the everyday practices inequalities, dominance and control.

We find that democratization of political institutions and modernization of economy have mobilized certain groups and communities horizontally against vertical/hierarchical ordered strata of traditional caste and occupational system. The political economy of an accelerated economic growth has also allowed the educated urban middle class to grow. However, the transition in the occupational structure and the rise of the middle class have failed to alter the power relations based on hierarchy and social oppression. Statistics on poverty and development indicate that majority of the poor belong to the Dalits and tribal communities. It is women amongst them who are the worst victims of processes of deprivation and marginalization. Despite increase in mobility and assimilation, the structures of caste and patriarchy that determine power relations, strengthen processes of domination and subordination. Women experience discrimination and unequal treatment in terms of basic right to food, health care, education, employment, control over productive resources, decision-making and livelihood not because of their biological differences or sex, but because of the gender differences which is a social construct. Increasing feminization of poverty, exploitation of women in the unorganized sector, morbidity,anaemia and malnutrition due to lack of access to nutrition and quality health care, lack of access to water, facilities of drinking water, sanitation and toilets, gender gaps in literacy and education, wage differentials between men and women, violence against women, and trafficking of women, illustrate that women are most vulnerable to processes of deprivation, marginalisation and exclusion because of the patriarchal structures.

Though we find transition from ‘cumulative inequality’ to ‘dispersed inequality’, there has been no radical alteration in the socio-economic and political status of the marginalized sections. Majority of them are not only excluded from the mainstream of development but also continue to remain confined to particular occupation and defined roles that determine their socio-economic status. Increasing deprivation and exclusion are therefore symptomatic of the development processes and policies that consciously ignore redistribution of the basic productive resources. Despite the campaign for equality and inclusive development we see resurgence of new forms of discrimination, exclusion, polarisation and domination that have pushed the majority to the margins of survival. Therefore, the everyday experiences of majority of the marginalised communities contest the success stories of ‘equality and empowerment resulting from economic growth and development’ which are highlighted by the government as well as the corporate world.

It is critical to address the root causes of inequalities rather than the symptoms of it. Understanding the complexities of the power relations based on unequal and hierarchical structures of class, caste, gender and ethnicity is important. Without dismantling these structures, the vast majority of the marginalised communities will continue to remain victims of the processes of deprivation, exploitation, subjugation, marginalisation and disempowerment. The promises to secure basic rights to live a life with dignity will remain rhetorical without annihilation of practices of inequalities and deprivations which is gaining ground. The political responsibility to find solutions for the wellbeing of all increases manifold at the moment when the theme of India’s G20 Presidency is ‘Vasudhaiva Kutumbakam’ that promises ‘One Earth One Family One Future’.

(Suranjita Ray teaches in the Department of Political Science at Daulat Ram College and can be contacted at suranjitaray_66[at]yahoo.co.in