Sanjoy Chakravorty - Fragments of Inequality: Social, Spatial and Evolutionary Analyses of Income Distribution

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FRAGMENTS OF INEQUALITY

FRAGMENTS OF INEQUALITY

SOCIAL, SPATIAL, AND EVOLUTIONARY ANALYSES OF INCOME DISTRIBUTION

SANJOY CHAKRAVORTY

First published in 2006 by Routledge 711 Third Avenue New York, NY 10017

Published in Great Britain by Routledge 2 Park Square, Milton Park Abingdon, Oxon OX14 4RN

2006 by Taylor & Francis Group, LLC

Routledge is an imprint of the Taylor & Francis Group, an informa business

International Standard Book Number-10: 0-415-95295-6 (Hardcover) 0-415-95296-4 (Softcover)
International Standard Book Number-13: 978-0-415-95295-8 (Hardcover) 978-0-415-95296-5 (Softcover)
Library of Congress Card Number 2005015174

No part of this book may be reprinted, reproduced, transmitted, or utilized in any form by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying, microfilming, and recording, or in any information storage or retrieval system, without written permission from the publishers.

Trademark Notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe.

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Library of Congress Cataloging-in-Publication Data

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Chakravorty, Sanjoy.

Fragments of inequality : social, spatial, and evolutionary analyses of income distribution / Sanjoy Chakravorty.

p. cm.

Includes bibliographical references and index.

ISBN 0-415-95295-6 (hb : alk. paper) -- ISBN 0-415-95296-4 (pb : alk. paper)

1. Income distribution. 2. Equality. I. title.

HB523.C44 2005

306.3--dc22

2005015174

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Visit the Taylor & Francis Web site at http://www.taylorandfrancis.com and the Routledge Web site at http://www.routledge-ny.com

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To
Basudeb and Minati Chakravorty, Baba aar Ma,
My parents, human capitalists

CONTENTS

This book has grown out of some scattered thinking over several years that ultimately demanded to be organized. I felt strongly that the com-partmentalized approach that the academy favors and rewards can be very effective in analyzing narrow questions but provides far less satisfying answers to the bigger questions, such as the most fundamental ones on income distribution. Why are incomes distributed the way they are? And how do these distributions change? This work is therefore a conscious effort to look beyond disciplinary boundaries, to bring an interdisciplinary approach to distributional analysis. The fragments in the title refers not only to disciplinary fragmentation, but also to the fact that societies are fragmented into unequal groups and territories are fragmented into unequal regions. I think that we do a better job of understanding inequality when we are able to stitch these fragments together.

Philadelphia, May 2005

I wish to acknowledge the individuals and institutions that have helped in this effort. Temple University provided a semester-long study leave during which the manuscript was written. Subhrobaran Das did many of the calculations of the numerical illustration in . Numerous individuals at Cambridge University, Jadavpur University, Temple University, Warwick University, the Center for the Study of Social Sciences (Calcutta), the Society for the Advancement of Socio-Economics, the Development Studies Association, and the Association of American Geographers commented vigorously on fragments of the argument. Two anonymous reviewers commented constructively. They cannot, however, be blamed for errors of fact or reasoning. I must claim sole responsibility for those. My son Shourjo bore my unpredictability with good humor, as always. My wife Pallabi was a fount of encouragement and a touchstone for ideas. To my family my gratefulness knows no bounds.

Consider the following facts. The richest 20 percent of Brazil's population earns about 30 times more than the poorest 20 percent. This level of inequality has continued virtually unchanged from the 1950s, when analysts began measuring income inequality in Brazil. In the Russian Federation, this ratio (of income shares of the richest and poorest 20 percent of the population) was around 12 in 1998, which is about twice as high as it had been just a decade earlier, before the collapse of the Soviet Union. These are dramatic examples: one of a very high level of inequality that has remained unchanged for decades, the other of a rapid change from a low to a high level of inequality. How do we explain this diversity of experiences? There is no doubt that random events (such as Boris Yeltsin's speech atop a tank during the 1991 coup attempt in Moscow) play a large role, just as there is no doubt that the structure of inequality can be understood in terms of economic, social, and spatial structure, and inequality change can be understood in terms of changes to these underlying structures. I begin from the position that, despite the likelihood of random events that can change distribution patterns, explanation is possible.

However, the search for explanation is stymied by epistemological boundaries. Because distribution is one of the pillars of developmentby economists. The discourse on classes, stratification, and power is in the domain of sociologists. And spatial inequality has traditionally been studied by geographers and regional scientists. The theoretical foundations and methodologies of these disciplinary approaches are often so far apart that it has been difficult to create a solid theoretical understanding of inequality as an outcome of economic, social, and spatial processes. This book attempts to fill some of these large gaps in interdisciplinary knowledge about the structure of inequality and processes of distributional change using a new theoretical approach combining elements of economic, sociological, and geographical theory.

This new approach is built on evolutionary foundations. I begin from the recognition that human behavior and action follow evolutionary principles (identified in fields as diverse as evolutionary psychology, sociobiology, and behavioral economics) and not some unproven assumptions about rationality and self interest. This means that individuals and groups are both important elements of social and spatial structure, and, therefore, both are relevant for theorizing structure and change in inequality. Second, we must acknowledge that evolution itself is not linear and continuous. The standard Darwinist-gradualist view of evolution has to be supplemented with the near certainty of discontinuity and nonlinearity, or what is called the punctuated equilibrium model of evolution. These ideas are detailed later in this chapter and permeate the explanatory part of the book ( onward).

These shiftsfrom linear to punctuated models, from individuals to groups, from abstract and monolithic to fragmented spacepurposefully suggest a fundamental shift away from the dominant mode of inequality analysis, which, as is well known, is the economic approach. Because of the limiting assumptions used in mainstream economic theory, assumptions that infer substantially more equality (of knowledge and power) than exists in reality, economic approaches turn out to be limited in their explanatory power. Inequality, I conclude, is too important a subject to be left to economists. I retain the important contributions: the theories on human capital, the interaction of demand and supply of different forms of capital, but reject the narrow specifications of the rational, self-interested actor model. The goal is to shift the discourse away from economic to social theories of inequality.

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