Financial inequality is recognised as a main problem of our age. Asymmetries emerging from the global production system give some clarity into this issue.
Financial inequality is an issue burdening all countries around the world, horizontally present in every model of society, which gradually led to the socio-political problems of our age. As a result of specific economic policies, while living in extreme poverty has globally decreased, there has been a general increase in economic inequality.
A vast scholarship traces financial inequality to discover the driving forces behind it. Nicola Phillips own contributions focus on forces that affect the current industrial organisation, under the global political economy. In his approach, financial inequality emerges from the interaction of distinct, but interrelated, asymmetries present in market power, social power, and political power.
The contemporary pattern of industrial production sits on the control of transnational corporations which - both functionally and geographically - fragmented the production process. Indeed, outsourcing and offshoring production shaped new regional patterns of specialisation and distribution.
As Phillips outlines, we now live in a Global Value Chain (GVC) world, where international trade is mostly about intermediaries and services, and industrial enhancement matches economic development. Therefore, a huge section of global employment is concentrated in this production segment. Despite this, concerns approached by GVC players have little to do with economic inequality. At the basis of this analysis there is the aim to demonstrate how the dynamics of the global political economy both stress financial inequality patterns and exploit them.
‘To put the point slightly differently, global patterns of inequality are critical to understanding how the GVC world was enabled to come into being from the 1970s onwards, and how it continues to serve the powerful economic and political interests which benefit from this form of global economic organization.’ (Nicola Phillips, 2017)
Let’s delve into the three dimensions of asymmetry above mentioned.
As it clearly appears from the analysis, this system of chronic inequalities is structural in the current global political economy, due to the GVC’s industrial production. Yet, are some of the extremes we live under today avoidable?
Beyond financial inequality and all its macro socio-economic consequences, like the wealth gap, micro impacts of this widespread phenomena further disproportionately affect specific groups and aspects of our daily life.
Wealth maldistribution and radicalisation of socio-political factors turn our economic system more exclusive for certain social categories. Many blame our capitalist system for this, calling for important centralised actions to mitigate the macro and micro consequences of such disadvantages. While many causes are in the hands of governments to be solved, many others are strictly linked to the contemporary globalised production model.
Honestly speaking, socio-economic inequality will likely always exist. Interventions should avoid it by becoming ‘dynastic’ and raise the minimum standard of living, to ensure everyone has dignified lives. What is currently missing is equal opportunities and access, as well as tailored solutions for minorities, which might unlikely come from centralised decisions - as centralised territorial structures are more associated with inequality. Therefore, changing scales at which policies are, not only implemented but also decided, might open up a new path of inclusive, shared wealth.