STWR - Share The World's Resources

This short report presents a survey and analysis of inequality around the world, it's possible causes and consequences.

There was much research and debate regarding global inequality in 2005 with two major reports published on the issue, both agreeing that global income inequality continues to increase. According to the UNDP Human Development Report (HDR) 2005 only 9 countries (4% of the world’s population) have reduced the wealth gap between rich and poor, whilst 80% of the world’s population have recorded an increase in wealth inequality. The report states that 'the richest 50 individuals in the world have a combined income greater than that of the poorest 416 million. The 2.5 billion people living on less than $2 a day – 40% of the world’s population – receive only 5% of global income, while 54% of global income goes to the richest 10% of the world’s population.'

The UN’s Report on the World’s Social Situation 2005 ‘The Inequality Predicament’, identifies non-economic aspects of global inequality (such as inequalities in health, education, employment, gender and opportunities for social and political participation), as causing and exacerbating poverty. These institutionalised inequalities result in greater marginalisation within society. The report emphasises the inevitable social disintegration, violence and national and international terrorism that this inequality fosters. Ironically, the diversion of social development funds to national/international security and military operations produces further deprivation and marginalization, thus creating a vicious cycle.

In agreement with previous analyses, the above reports identify the forces of globalization, deregulation and liberalization as key contributory factors to global inequality. The HDR 2005 cites the unjust global trade regime as a primary cause in increasing global inequality. Greater financial benefit would be imparted to the South if they were able to trade equitably with the North than the benefit they receive through oversees development assistance (ODA). However, the North’s agricultural subsidies alone cost developing countries’ economies nearly as much as they receive in ODA each year. Even the World Bank’s World Development Report 2006 ‘Equity and Development’ makes recommendations to end subsidies and tariffs and create an even playing field. Despite wide spread recognition of these facts, the South is forced to continue trading on unfair terms, and round after round of World Trade talks continue to neglect the needs of the majority world.

This growing inequality is not confined to the global South but is rampant in economically powerful nations. Most striking is the growing level of inequality in the USA, a country with the highest GNP and primary exponents of the ‘Washington Consensus’. Economic inequality has continued to increase in the USA since the late 1970s. This inequality can be seen in numerous aspects of socio-economic life, such as growing income disparities, loss of opportunities – especially for women and minorities, inequality of health, education and crucially, political participation. One in eight people in the USA live in poverty and for a ‘developed’ country it has an unusually low life expectancy level. These factors highlight the extremely skewed benefits of the free market model, even within national borders.

Given the overwhelming evidence of the inability of the political economy to reduce inequality and deal with non economic aspects of prosperity, why are free market policies so ardently perpetuated by economically powerful nations? The answer is, unsurprisingly, profitability.

According to the International Forum on Globalization, 52 of the top 100 wealthiest economic entities are corporations as opposed to countries. Unlike countries, however, the key beneficiaries are a limited number of shareholders. It is the economic activities of these corporations that is so vital for the economic power and income of their countries of origin. The share of corporate profit as a portion of national income is at its highest for at least 25 years, and year on year growth in corporate profits are at an all time high. But, of course, the distribution of these profits is highly skewed. According to The Economist, over the past three years American corporate profits have risen by 60%, wage income by only 10%. Clearly the neoliberal approach favors corporate interests. Their vast resources and influence on governments and International Financial Institutions through their billion dollar lobbying activities is considerable. This influence, combined with the competitive, economic growth based directives pursued by dominant governments has perpetuated this model at the expense of the global public- a clear indictment of the democratic process.

It is clear when reviewing 37 years of high level reports on poverty and inequality (since the Pearson Report 1969), that any alleviation of inequality is increasingly subdued by the growing levels of economic competition between developed countries, and fueled by profit driven commercial interests. Ultimately, measures to create equality must entail a net transfer of resources from the richest 5% of the population to the majority world – the 40% of the world who currently live on less than $2 a day. Such a transfer requires international cooperation and the redirection of economic and political policy away from the existing competitive, growth driven regime, to a more cooperative, equitable framework. Given the absolute involvement of corporate interests in maintaining existing conditions of global inequality, new regulations capping the power and influence of corporations, and preventing their ability to exacerbate local, national or global inequality, without curbing their ability for innovation must be sought by the global public. Concerted public effort along these lines is crucial if the international political economy is to be rendered democratic and guided by the global public for their own benefit.

Sharing essential global resources to secure basic human needs will entail removing corporate control over them and allowing them to be cooperatively owned and managed by the global public, under the guidance of the United Nations. One of the primary results of sharing resources and regulating markets would be to drastically reduce disparities in wealth and income, access to food, water, energy, healthcare, education, technology and political participation. Marginalisation would be dramatically reduced and the underlying framework of international cooperation necessary to implement a redistributive economic system would inherently foster peaceful relations between nations.

Rajesh Makwana is the Director of Share The World's Resources (www.stwr.org), an NGO campaigning for global economic and social justice. He can contacted at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

Copyright 2006 Share The World's Resources (www.stwr.org)  
  

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