Inequality and Redistribution: Some Continuing Puzzles

Anunequal distribution of income and wealth is an inherent feature of all complex societies, and up to a point, a desirable one. A highly skewed distribution, however, raises questions of seriousmoral and practical concern:Towhat extent does socioeconomic inequality undermine the principle of political equality on which democratic societies are based? Under what conditions does it lead to lead to political polarization that retards economic growth or threatens the stability of democratic institutions? And under what circumstances do distributive struggles become the basis for violent social protest or rebellion? Interest in these questions has grown in recent decades, but answers have diverged quite a lot. The median voter theorem (Meltzer and Richard 1981) has provided an influential basis for explaining why people vote for redistributive policies, but evidence to support its simplified motivational assumptions has been mixed, at best. The American experience shows this quite clearly (Bartels 2008), although it is hardly a unique example (e.g., Wallerstein and Moene 2003; Kenworth and McCall 2008). Research on the effects of economic inequality on broader forms of political protest and rebellion has also yielded apparently contradictory results. Recent landmark studies by Boix (2003) and Acemoglu and Robinson (2006) provide politicaleconomy foundations for the long-standing argument that high concentrations of wealth impede the emergence or consolidation of democracies. In a similar vein, economists have argued that inequality leads to political instability and low levels of investment (e.g., Alesina and Perotti 1993; Birdsall, Graham, and Sabot 1998). On the other hand, influential studies of contentious politics and civil war dismiss inequality as a significant explanatory variable (Collier and Hoeffler 2000; McAdam, Tarrow, and Tilly 2001; Fearon and Laitin 2003). They contend that social grievances are not closely linked to differences in the actual distribution of income and focus instead on the resources and opportunities available to political entrepreneurs. Of course, votes for redistribution, interest-group pressure, contentious politics, and civil war are distinct phenomena; and explanations for why they take place can be expected to differ in major ways. Even so, the divergent claims about the effects of economic inequality indicate that we still have a way to go if we are to understand how, or whether, it matters politically. Moving forward will require a closer examination of the social-psychological foundations of beliefs about inequality and the way these articulate with the broader social and political environment.