Analysis | Putting an end to inequalities

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Article Index
Mesuring global inequality
The richest are getting richer
Inequalities: a raising global concern
The emergence of a "global middle class”
A middle class growing in the South
Tax as a fight against inequality
Which tools do we need to fight inequality in…

The world has never been richer yet inequalities have never been higher within a lot of countries in the North as in the South. How to explain this trend? What are the avenues for action?

If we measure wealth on the yardstick of goods and services consumed and produced1, the world has never been as rich as in 2015. And never has this wealth been so unequally distributed. The share of wealth owned by the wealthiest 1% or 10% is once again, in countries were tax data is available, at the record levels of the beginning of the previous century. Seven people out of ten live in a country in which the gap between the rich and poor is wider than 30 years ago (Oxfam, 2014 according to Milanovic, 2013). In OECD countries, the gap between rich and poor has never been wider: the income of the wealthiest 10% is 9.5 times that of the poorest 10% (OECD 2015); in the 1980s, the ratio was 7 to 1. In the rare countries of Latin America where inequalities have decreased, the Gini coefficients, which measure income inequalities, are still high. In South Africa, the Gini coefficient was lower in 1995 (0.56) at the end of apartheid than in 2009 (0.63) (Oxfam, 2014). These income inequalities nourish and reinforce inequality where health, education and gender (70 % of the poor are women – Cortinovis and Rivière, 2015), territory (between urban and rural populations) and, in some cases, ethnic inequality are concerned (in New Caledonia, a Kanak has 7 times less chance of graduating from higher education as a non-Kanak, Ris, 2013). The increase in inequality we can observe in countries can also be seen on a global scale. In 2016, half the world’s wealth will be owned by 1% of the population of our planet (Global Wealth Report 2015). However, for the first time, the reduction of domestic income inequality is on the menu of the international agenda. It figures explicitly among the Sustainable Development Goals (SDGs) adopted in September 2015 by the United Nations. Let us remember that the Millennium Development Goals, which had been oriented towards international cooperation since 2001, did not deal with income inequalities and focused on extreme poverty and access to basic services. In addition to this, they only concerned developing countries, as opposed to the SDGs which apply to all countries.

1 Other A Planet for Life dossiers deal with sustainable production and consumption conditions and the measurement of wealth and well-being.

How have economic inequalities become a universal problem which clearly calls for a coordinated political answer? Why is the increase in inequalities not sustainable? Why have inequalities widened and how can they be reduced from a practical point of view? What role in particular is international cooperation for development likely to play?

The emergence of inequalities as a global political issue

Over the last ten years, the increase in income inequalities has acquired an unprecedented importance in public debate. Even if few people remember that work by Piketty and Saez –before the former published his Capital – was quoted in Barack Obama’s inaugural speech in 2009, nobody or nearly nobody can ignore that capitalism is basically unequal, and Thomas Piketty2 one of the best-selling authors that human science has ever known. The first subject which has managed to make economics popular in the 21st century is the issue of inequalities.

2 Thomas Piketty, The new prosperity of rentiers, APFL 2013.

International economic institutions have also seized the opportunity to highlight the unprecedented increase in inequalities, even though these institutions are considered to be “liberal” and rather more prompt to focus on wealth creation by virtue of competition in their recommendations than on the possible effects of distribution that the former is likely to trigger. Bretton Woods institutions warned of the effects of rising inequality on development by means of the World Bank’s first annual report on the subject in 2006 (World Bank, 2006); the whistle was blown, in rich countries, by OECD publications a few years later (OECD 2011, 2012). The IMF, which no person in their right mind would think of calling leftist, came not far behind and published a paper in 2015 highlighting certain harmful effects of liberal orthodoxy (IMF, 2015), before publishing a report with an eloquent title in June 2016 – even with its question mark: Neo-liberalism: Oversold? The message is the same: “rather than producing growth, certain neo-liberal policies have increased inequalities and endangered sustainable economic expansion" (IMF, 2016).

All these reports and books converge on the rise of income inequalities as an undeniable fact. Whatever the indicator used (Gini, the share of the 1% in the national income, or the Palma ratio)3, the history of the last thirty years is that of an increase in inequality in countries in a context of reducing inequality between countries: considered as a country in itself, the country « Earth » and its billion inhabitants is more and more inegalitarian. On the other hand, if we suppose that it is inhabited by the "average" individual of each member country of the United Nations – i.e. a little less than 200 people – it is less and less inegalitarian. Global inequalities are increasing, but inequalities between countries are tending to reduce. Logically, to make these two phenomena compatible with each other, inequalities within countries have increased over time (figure 1 | Mesuring global inequalities).

3 The Gini Index (or coefficient) is a synthetic indicator of wage inequalities (income,standards of living, etc...). It varies between 0 and 1. It is equal to 0 in a perfect situation of equality where all the wages, incomes, etc. are equal. At the other end of the scale, it is equal to 1 the most inegalitarian situationpossible , where all wages (income, standards of living...) except one would be nil. Between 0 and 1, the higher the Gini Index, the higher the inequality. As for the "Palma ratio", this is the ratio of the share of the wealthiest 10% in national income on the share of the poorest 40% in this same national income. 

Mesuring global inequality

There are different ways to measure inequalities and their evolution. For 15 years inequalities between countries have been reducing (green curve) whereas if we take the world in its entirety they are increasing between individuals (dotted red line).
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The increase in wealth of the middle classes was lower than that of the richest: variations in the distribution of world income can be explained largely by the increase in the share of the richest 1% in the national income (figure 2 | The richest are getting richer). The economic recession in 2008 brought prospects of social ascension and accumulation of wealth to a halt in a number of emerging and developing countries. The feeling of injustice which results from the exponential enrichment of the “happy few” while the majority is still waiting for better times, has made this inequality socially unacceptable.

The richest are getting richer

The share of the national income earned by the richest 1% has been on the increase everywhere since the 1980 decade, the « liberal » decade of financial liberalization and the reform of the welfare state in most OECD countries.

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The perception of increasing inequalities is coherent with these few facts. Inequality is no longer considered as necessary and transient, as suggested by the Kuznets curve, but is considered as a major structural problem in most of the countries or regions where surveys are available – for example, we can quote the survey carried out in 44 countries by the Pew Global Attitudes Survey in 2014 (figure 3| Inequalities: a raising global concern).

Inequalities: a raising global concern

This inequality is seen as a major problem by most of those surveyed in rich and in poor countries, taken as a whole. There are subtleties within these groups, for instance countries such as Germany, Japan, Vietnam or Bangladesh which are differentiated by their very limited concerns for the subject.

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However, we can also note that the perception of the problem can be somewhat disconnected from its statistical severity in certain cases, and this is an important element if we want to understand the highly variable importance that inequality reduction can have on national agendas.

In addition to this, even if the stylized facts on the evolution of inequality cannot be challenged, political consensus on the severity of the phenomenon is more fragile, as is that of the means to be mobilised in order to contain it.

Increase in inequality and unsustainable development

Studies and press releases by the World Bank, IMF and OECD insist on the fact that the increase in inequalities is not strictly sustainable from the economic point of view, in as much as it impedes growth. OECD countries supposedly lost an average of 4.7 points of accumulated growth rate due to inequalities between 1985 and 2005 (OECD, 2011). Why? According to IMF, the increase in the share of incomes of the richest 20% has a negative effect on medium-term growth, whereas on the contrary, the increase in the share of income of the poorest 20 % affects it positively (IMF, 2015). The increase in inequality (in comparison with a more egalitarian situation) resulted in the lowest-income households under-investing in education, and in the long term, by a decline in productivity (Stiglitz, 2012); it restricts social mobility among generations; it can reduce aggregated demand, the propensity to consume of the most wealthy being lower than that of the lowest-income households (IMF, 2015). The increase in inequality also contributes to recurring financial recessions by triggering indebtedness, speculative bubbles and financial deregulation through lobbies (Rajan, 2011; Acemoglu, 2011).

Despite all this, medium-term economic growth is not the only variable or dimension of sustainable development affected by the increase in inequality.

By benefiting the richest, who are also the most mobile and more apt to subtract their incomes from tax, the increase in income inequality places public finance in an impossible budgetary equation? The financing of essential public goods and services, which is part of the post-war social contract and in its successive transformations, is now seen under the constraint of an apparently inevitable narrowing of the tax base of developed economies. The solutions offered by external debt and increased taxation of captive factors - in a nutshell, the middle classes– are no longer sustainable beyond a certain threshold; the risk is then that of a destabilisation of our democracies (Piketty, RST 2013). The reduction of inequality (SDG 10) and good governance (SDG 16) are therefore connected goals.

The economic insecurity of the popular middle classes of developed economies is manifest in the chart showing Milanovic’s data (2013), independently from the tax burden that the avoiders and other indelicate persons impose on it. Rejection of globalisation by the popular classes, in countries which were nevertheless defenders of free exchange such as the United Kingdom, as can be seen from the motivations of the Brexit vote, is a consequence of the idea that the middle classes of the “Global South” and the wealthiest classes in the world are the winners in globalization (figures 4 | The emergence of a "global middle class" and 5| A middle class growing in the South).

The emergence of a "global middle class”

The emergence of a "global middle class” under the effect of the income growth of densely-populated emerging countries (percentiles 35-65) occurred concomitantly to an erosion of the median income in certain OECD countries (percentiles 80-90).

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A middle class growing in the South

On a global scale, the « middle class » (deciles 6 and 7) is mainly composed of the inhabitants of emerging regions or countries – China, Latin America, and India.

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The dangers of political violence, insecurity and instability in their widest meaning that the increase in inequality has brought to bear are accentuated by the fact that they are, so to speak, out in the open. They are measured and known as they never were before; data is free of access, and telecommunications highlight their most blatant and unjust manifestations. Inequality creates frustrations which feed political conflicts and violence (Badie and Vidal, 2016). This contemporary observation is consistent with older economic observations made by Alesina and Perotti (1996) according to whom inequality can reduce political stability, with the effect of triggering a decrease in investment to below optimum levels.

Empirical data collected in 2006 at the time when the World Bank published the report on development, whose theme was that of inequality, shows that growth is actually essential to reduce poverty (-income), on condition that income distribution remains more or less constant (Deininger and Squire, 1996; Dollar and Kraay, 2001; Ravallion, 2001 and 2003; Bourguignon 2003). Likewise, the data show that an increase in inequality tends to increase poverty (World Bank, 2006). Inequality also affects the allocation of investments: only entrepreneurs with guarantees will be able to develop their projects by obtaining loans, even if these have a low yield. On the contrary, (more) profitable investment projects will be deemed more risky in the absence of collateral and for this reason rejected. Inequality of access to credit closes the circle which links inequality, growth and poverty (Bourguignon, APLF 2013).

Lastly the contribution of increasing inequalities to environmental degradation can be seen in the cases of consumption imitation, when lower and middle classes reproduce the models of the wealthier classes – the hypothesis here being that these last are the most harmful to the environment. The systematic checking of such a hypothesis cannot be systematically carried out because it is difficult to reduce the determinants of ecologically irresponsible behaviours to incomes within countries alone (Chancel, 2015). Does a super-rich person pollute more per euro, dollar – whatever – of additional income than a poor or middle-class person? The answer is empirical – and little known for the time being. On the other hand, to explain political inertia regarding environmental protection – and therefore its degradation – by the anticipation of a widening of the difference in income inequalities has been convincingly illustrated in recent history, whether in the maintaining of subsidy to electricity and coal in Poland or the waiver of the carbon tax under Sarkozy’s presidency (Hourcade, APLF 2013).

Are we approaching consensus on the causes of inequality?

To explain the increase in income inequalities, which has been characteristic of the last thirty years, the most consensual causes in the literature are: i) globalisation and, specifically the dissemination of a technical progress which was favourable to qualified workers and the reorganization of production to the advantage of owners of capital and managers; and ii) public policy reforms, with the deregulation of the labour market and the deepening of financial liberalization, a “capturing” of the political discourse by the wealthiest and the decrease in public expenditure” – including the loss of fiscal progressiveness. The most controversial causes are international trade and the competition that it induces between salaried workers, by structural unemployment, and the endogamy between new rentiers (“marry your like”). Without forgetting these last, we will now examine the few great “drivers” which have been the most documented (IMF 2015, OECD 2014).

Let’s go back 30 years. From the 1980s, structural adjustment policies aimed at re-establishing the macro-economic balances of developing economies hit by the drop in the prices of raw materials and unsustainable levels of indebtedness. They specifically resulted in a considerable reduction of public expenditure in health and education (Nassar, 1993, for the Egyptian case) as well as employment in the public sector, and belong to the social pact in a number of countries and to which the most widespread social coverage is attached. Measures of austerity and the privatisation of public services and companies, in a period of strong demographic growth, have led to profound changes in the labour market. The increase in unemployment (Jarret and Mahieu, 2002, for the Ivory Coast), and particularly of the young, and informality, (Bensidoun, Sztulman, 2015, for Egypt ; Koujianou-Goldberg and Pavnick, 2007, for Latin America) have accelerated income inequalities and, more generally, working and living conditions in society. The dualization of services has made access to essential quality services even more unequal, even though they are indispensable to the constitution of a human capital likely to break the cycle of intergenerational transmission of poverty.

The technological upheaval we have seen since the 1980s, coupled with the liberalization of international trade and the extension of global supply chains, has resulted in the relocation of the demand for low-skilled qualified manpower towards emerging countries and then towards developing countries, the decrease in the relative value of low-skilled qualified work and the valorisation of highly-qualified work (Bourguignon, 2012). The income differences between skilled and unskilled jobs have been considerably reinforced. The new global value chains have created new dividing lines between finance and real economy, between the ordering parties and the subcontractors, between the salaried workers at the top of the chain and those at the bottom. The bargaining power of these last has been considerably weakened.

The deregulation of the economy has resulted in its increasing financialization, with two important consequences for the distribution of wealth: (i) the incomes of those who make a living from the production of raw materials depend on highly volatile prices; (ii) capital draws more and more profit from the wealth produced, to the detriment of work. Tax policies, which tax working income more than the transfer of assets, accentuate patrimonial inequality (Piketty, 2013), an essential explanatory factor which strengthens social inequalities rather than fights them. In the United States, these policies are less and less progressive and redistributive: rich households and companies benefit from effective tax rates which are lower than what they were before the tax reductions set up by the Bush government in 2001 and 2006 (Hungerford, 2013).

The combination of these phenomena (job instability and a decrease in income, the concentration of assets, modification of public allowances and services) has a multiplying effect on inequalities of adjusted available income. The inequality of opportunity regarding work and insufficient access to resources and the different forms of capital (human, financial, social) are for a large part behind the reproduction of inequality and poverty between generations. Among these inequalities, those regarding discriminations of access to education are without a doubt the most decisive (Arestof and Sgard, 2012). According to this way of thinking, the income inequalities observed (or « ex-post ») refer fundamentally to inequality of opportunity (or « ex-ante »): access to knowledge, care, to a roof and everything this network of relationships without which you are kept away from the City and employment.

Exploring political options

If we suppose that collective preferences will emerge to reduce inequalities, and faced with all the possible causes, what are the political options? It would be ambitious to try to draw up an extensive list – from the setting up of policies promoting equality of opportunity and in particular access to education, to the Marxist structural reforms which use global and progressive taxation of assets - the political spectrum is a broad one. Inequality belongs to national histories and likewise, its correction cannot be reduced to the use of a particular public policy instrument. Even if the authors and institutions who are the most visible on the subject each have a preference or a priority among the solutions to be provided, all of them recognize that it is both by correcting the inequalities of opportunity (access to education, health and the labour market) and results (income inequality per se) then inequality reduction can be sustainably contained. This is what is suggested by the work of one of the best specialists on inequality, Anthony B. Atkinson. For this British economist, the reduction of inequalities calls for a progressive taxation of income and also a strengthening of social protection and wider ex ante and ex post distribution including guaranteed income and employment (Figure 6 | Tax as a fight against inequality). 

Tax as a fight against inequality

The Latin American countries having observed the strongest reduction of the Gini index are the ones which tax the most the highest income. In other words, the more the high income is taxed and the more the reduction of the disparities is important.

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A | Reduction of inequality of opportunity – the example of Chile

Practical examples of inequality reduction – rare enough in the current context where it is on the rise – confirm the range of instruments to be mobilised and target several registers of causes that we have listed (figure 6). Such is the case of the reforms set up in Chile by President Michelle Bachelet during her second term, inaugurated in 2014, which combine tax reforms and the reduction of inequalities of opportunity, specifically in the case of access to education (insert 1 Reduction of inequality of opportunity – the example of Chile and figure 7 | Which tools do we need to fight inequality in Latin America ?).

Insert 1 | Reduction of inequality of opportunity – the example of Chile

President Bachelet´s aim was to satisfy a social request - students were on the streets for ten or more years: a generation which was not afraid of dictatorship because they were born after Pinochet. They went into the streets realizing, in a unified trans-class students´ movement, that the country was only recruiting talent from the dominating and therefore richest class. The best training and universities were all private and recruited their students from the already ruling class. You received a social “punishment” or social exclusion for the other classes that could not enter the private system. And even when they managed to get into the private system, there were other filters because they never mixed massively due to places of origin, colour, last-names, places of residence, and so on. The mobilized students were asking for the education area to be once again a mixing place where you could climb socially. The students were saying: “we want to break the system”.
President Bachelet started by declaring it illegal to make a profit in the state-subsidized private education system. This created a separation between what was purely private and what was purely public at all levels level. She then calculated that to fund free quality public education, Chile needed 3.2 GDP growth. What fiscal reform would give her this amount of money? What interests was she going to take on? Bachelet used FUT, a fund allowing private stakeholders to deposit profits, which as long as they were not withdrawn from FUT, were not taxed. All profit now has to be taxed. She also put an end to a concession to the building sector which had been exempt from value-added tax. She managed as such to get her 3.2 but actually achieved more than this. By making FUT illegal she stole all the profits the Church made in their schools. They could no longer own a government-funded business.  If they wanted to make a profit in their Catholic schools they would have to fund it with their own money. She won because there was massive consensus that the functioning of FUT and the profit made by private schools with public money was illegitimate. The allocation of mixed funding of both public and private schools was discussed with the syndicates and the deans of universities. There were a lot of obstacles. She was the target of large opposition campaigns and was crucified by the press but she managed to rely on the non-mainstream theory.
Many universities accepted the common goal of free education and they achieved a significant percentage of the generation of students entering university. For the first time the primary criteria of selection for students was whether they qualified for free education. Currently, there is a massive shift now in terms of who educates whom. Not only universities have become free but also investment made in public universities is increasing. So quality is also increasing and this was part of the political debate.
She choose to act at university level. She could have started at primary level and extended access to all. This point of entry is not as highly controlled by the Church as at University level. So the choice is clear and aims to show the purpose of enlarging the future elite of the country. Her message is the following: you can recapture the whole of society if you have high quality public services… and it can be done. She also added the two first environmental tax measures. And all of this did not really kill growth – which was the argument advanced by one of her opponents. Chile is actually growing at a rate of 2%. It would have been 4% without the global crisis but it is still growing all the same.

Read the whole the interview with Jose Luis Samaniego

Which tools do we need to fight inequality in Latin America?

The countries of Latin America where the inequality reduction was the most significant (left-hand side of chart) are those where a wide range of redistributive instruments – taxation, social security, education – have been mobilised. Approximately half the inequality reduction observed can be explained by monetary transfer policies, and the other half is from public expenditure on health and education.

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B | Taxing capital to break the endogenous dynamics of increasing inequality

In Capital in the Twenty-First Century (2013), Thomas Piketty attempted to project the capital/income ratio over the long term, in order to determine the probable trends of inequality. According to Piketty, the yield rate of capital (r) is still, in the long term, higher than the rate of growth of the economy (g).This “law“ explains the structural tendency of capitalism to create inequality ; those who have assets get rich faster than the other economic agents whatever their "merit” or “talent”. For this law to be confirmed, the capital/income (β) ratio should also increase in the long term, due to the more rapid accumulation of returns on capital than the global income generated by the economy. Piketty’s estimations for 2100, on the basis of a 10% savings rate and a “crushed” rate of growth of 1.5 % per year from the second half of the 21st century, result in a capital/income ratio of 500% in 2030 (equivalent to that of the Belle Époque, in 1910), and then around 680 % in 2100. This scenario, which to him is plausible, would be the result of an environment of “normative” growth, lower than the exceptional rates observed during a large part of the20th century due to the impacts of the world wars and reconstruction efforts.

Faced with this structural trend, Piketty advocates the setting up of a global policy to tax high assets with a highly redistributive vocation. This would make it possible to counter the structural trends of capitalism to generate inequality and maintain a market economy at the same time.

C | The role of international cooperation

Attention paid to these issues now exceeds research alone, and development agencies in particular are mobilizing. Because it has become a global political issue with a direct impact on the sustainable development potential of countries, inequality is no longer considered as an affair of national sovereignty but more as a development challenge which it is urgent for agencies to address. For an agency like the French Agency for Development (AFD), for example, this calls for an identification and a finer characterization of the final beneficiaries of the financed projects, not to accentuate the inequalities but on the contrary, to reduce them, and by a focus on the equal access to essential services, the development of capacities, decent working conditions, improving the means of existence and living conditions of excluded populations; social protection and social links. AFD has also developed an ambitious strategy which allows its interventions to act on gender inequality. Now authorized by its supervisory bodies to intervene on governance, it will also be able to address tax issues. For Gaël Giraud, AFD’s head economist, the agency is perfectly legitimate to do this and it hopes to be able to go further than these traditional levers: it is the structuring of society and social relationships which generate unfair inequality and it is through its institutions that we must act to be able to glimpse more fundamental changes. How? By supporting the creation or recognition of Commons. The concept invaded the media when the 2019 Nobel Prize in Economics was awarded to Elinor Ostrom. Most of this economist’s work has consisted of demonstrating on an empirical basis that a number of natural resources can be generated locally by communities who define and set up ad hoc norms and institutions with the specific aim of avoiding the collapse of resources. Commons are defined from three elements: a resource, a community and a set of rules, i.e. rights and duties. The resource can be physical - grazing land managed by a community - or immaterial – freeware, for example. It can also have a more global scope (good health, quality education, a healthy climate). Faced with the mixed results of the efficiency of public governance and the inefficiency of the markets in a number of situations, commons offer an alternative to collective governance. The concept has since spread in a number of directions and some authors have turned it into a genuine social project. In this more holistic approach, Commons are a political alternative to the massive privatization of resources, goods and services which has generated profiteering and increased inequality. For Gaël Giraud, development agencies can and must accompany States in creating conditions for Commons to exist, and communities in organising and managing their resources. In the extract from the interview granted to A Planet for Life below. (Read Insert 2  | A cooperation which supports the creation of Commons), he illustrates this conviction with examples taken from AFD’s experience.

Insert 2 | A cooperation which supports the creation of Commons

“Taxation is always ex-post redistribution. It arrives too late, so to say, because it always has to justify its intervention on an initial order of things that the most privileged (generally speaking, they are also those who contribute the most tax-wise) often tend to consider as “natural”. The redistribution of primary income is linked to the social pact, to the governance of companies, etc. It is important to intervene on the primary distribution of income even if it is much easier to simply change the tax code. This means entering into the way in which companies distribute their salaries, the governance of the chieftaincy of a village… But, basically, it’s much more important, and that’s where the question of commons comes in. A whole series of resources might be destined, if it was so decided, to be managed as Commons: natural resources, of course, but also work or money. Inequality only increases from the moment when the privatisation of a certain number of assets provides income. And that is where the origin of the forms of inequality which are contrary to social justice is mainly to be found. Experience shows that market competition alone cannot help to erode these incomes, on the contrary.
Commons certainly number among the most resilient institutions regarding the ecological shocks awaiting us in years to come. Communities organised into commons are seen as being much more resilient than big private or public bureaucracies which lack flexibility. For biologists and ecologists, the key word is not "green growth” but resilience. So the question we should now be asking is: what are the resilient institutions of the future?
To my mind, a large number of urban agro-ecological experiments in Latin America are going in this direction. We can also give the very practical example of fish-farming in the forest region of Guinea. AFD supports peasant-farmers for the development and management of fish farms for tilapia and other fish in ponds in the middle of the rainforest near Nzérékoré. Toma peasant-farmers, for example, suffer from a chronic lack of protein because the sea is too far away. And they can’t breed livestock because they are in the forest. Fish-farming is therefore an excellent solution; especially in a country which is still not food self-sufficient. But without electricity, and therefore no refrigerators, the fish must be eaten the day they are caught, hence a very efficient coordination between the women who sell the fish in the town market, and the fisherman who catches his fish in the pond in the forest — and above all, they have to agree on a selling price. When they explained how they managed, in fact, without knowing it, the groups who manage all this were telling us about commons, where the common resource is none other than fish.
Another example, in the region of Prey Nup in Cambodia, was a rice-farming area which was flooded by the ocean. The floods were extremely destructive, as in neighbouring Vietnam today, because even when the sea withdraws, the salt it contains destroys the soil. The country was therefore obliged to build dykes which inspired the magnificent novel by Marguerite Duras, Barrage contre le Pacifique. The major issue was that of reorganising the peasant-farmers behind their dyke, so that they could once again cultivate rice. Actually, they reorganised themselves as a commons, even though, as they of course have not read Elinor Ostrom, they do not have the vocabulary for this type of institution.
We can also mention DNDI - Drugs for Neglected Diseases Initiative - a network of initiatives based in Geneva, which have coordinated themselves to build a drug-supply chain, from research on the molecule to the distribution of drugs in the Global South. This enables the sale of cheap drugs to fight against diseases which do not interest the conventional pharmaceutical industry due to the lack of a profitable market in the Global South. DNDI works exactly in the same way as a commons on an international scale. It is neither a private company, nor a State, nor an NGO, it’s something else, a hybrid institution, and it works very well! To make it work, there has to be an unheard-of alchemy between private initiative, the public regulatory framework, the militancy of NGOs, etc.
You have to understand that the State has a fundamental role to play in a world of commons. It is far from true, as Proudhon believed, that a community is capable, all the time and everywhere, of spontaneously acting on its own initiative to create a commons from scratch. If there is no environment, and specifically one which is legal, to encourage this moment of establishment, it can be very difficult. It is the State’s job to create and regulate this environment. At AFD, in our public policies dialogue with the Global South, within the framework of the capacities that we have just received on governance, it is part of our mandate to support States in planning these conditions of possibilities, and also to directly help civil societies (village communities, NGOs, local authorities, businesses, digital communities, etc.) to build and manage the commons they will have adopted, commons which do not already exist, by nature, in the political decision of a group to make such and such a resource private, public or common goods. Moreover, the community sometimes sets itself up in the same movement in which it created a commons: you have the example of certain women’s associations in India, which have formed to manage a seed granary …
The commons approach represents a fundamental change. It finally challenges the great implicit programme of the Scottish Enlightenment which, in the 18th century, spread the idea that if everyone had the same rights, inequality would become natural because it would be endogenous to the free functioning of markets. Everyone has the same right to the resource, but de facto does not have the same effective access as it is delivered by the 'invisible hand'. Hence a distribution of primary wealth which is increasingly unequal, corrected by taxation only after the fact and too late. In a world of commons, it is actually more a case of the opposite. What counts is that everyone has the same access to the resource. To the equality of opportunity dear to Antony Giddens, we must prefer genuine equality, an equality which is compatible with differentiated rights. The great question is still, when we want to create the institutions to manage a commons, who will have the right to modify the resource, the right to negotiate these modifications, the right to opt out, etc.? Basically, differentiation occurs at the legal level and not at the level of access per se. And it is this reversal which can put an end to inequalities. In view of building a fairer society.

Read the whole interview with Gaël Giraud

As a conclusion

The sheer extent of the widening of world-wide economic inequalities over the last twenty years is currently well documented and commented. For democracies, the issue is one of responding to the signal conveyed by science and civil society – in the form of reports, books and articles on the question – and to provide a solution for this universal problem. There are at least two plausible scenarii.

In the first "depoliticization" scenario, the political response is built on consensus on the cost of action. Because it is deemed higher that the cost of action (fighting inequalities benefits society much more than if inequalities are allowed to increase), the cost of inaction induces the creating of policies which transcend the left-right split on the political chessboard, in an analogy with what we were able to observe regarding the climate prior to the universal and transpartisan Paris agreement in December 2015. The recent stands taken by Republican Party figures in the United States or by the Tories in Great Britain on the need to take economic inequalities seriously show that this scenario, however uncertain, is not completely ridiculous.

In an alternative scenario which we can call the “learning scenario” – no global action is carried out, except for a pooling of the successes and failures of the various national policies undertaken in a plethora of trial and error methodologies. Here, the SDGs offer the opportunity of bolstering and encouraging this learning around a simple objective and offer arguments to civil society and political stakeholders to convince them of the possibility of actually reducing inequalities even though a bipartisan agreement is lacking.

In the absence of response or reaction from the citizens of different nations the unavoidable widening of inequalities would be a third “business as usual” scenario which, for the sake of all, we would rather discard here.


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