My favorite books for understanding inequality and why there are still big disagreements over the cause

In contrast to seeing the causes of inequality flowing from the labour market, this book is focused on how the capital income ratio has changed using long time series of data that Piketty and his collaborators have assembled.

Piketty argues that there is a long-run tendency for the growth of capital to outpace income and this leads to increasing income accruing to capital which explains the rising levels of inequality in capitalist economies. His most well-known assertion is that r>g where r is the average annual rate of return on capital and g is the rate of growth of the economy.

In fact, this inequality has been emblazoned on t-shirts of those protesting the rise in income of the 1 percent.

The divide here is not within a country but across countries, in particular between rich and poor countries, which are often referred to as ‘The Global South’.

Hickel argues that the activities by those in rich countries designed to ‘help’ poorer countries have exactly the opposite of their claimed effect. Rather than being the mechanism by which poverty is alleviated the policies they advocate for these poor countries are really the causes of their continuing poverty.

He writes: "Today British apologists defend colonialism in India and interventions in China on the basis that it brought ‘development’ to these regions. But the evidence we have suggests exactly the opposite story. It was the colonial period that forced market integration that inaugurated the ‘development gap’ between Britain and Asia."

The approach of Milanovic is very different from that of Hickel in that it is intensive in the use of data which, he would argue, shows a much more nuanced picture of the success of the global economy in reducing poverty than argued by Hickel.

He begins by reproducing the ‘Elephant Chart’ from his earlier work. This is a chart showing the relative gain in real per capita income by global income level. The name ‘Elephant’ comes from the shape of the chart which shows the largest income gains to have occurred for those in the middle of the distribution and the lowest in the range of 70 to 80 in the percentile distribution and the highest for those at the very top. Those in the middle being the hump of the elephant those at the top being its trunk.

Milanovic argues that in many respects the years before the financial crisis were the most globalized years in human history and, during this period, saw a dramatic rise in income for most (but not all) of the poorest. 

Atkinson died in January 2017. His life’s academic work focused on the causes of inequality and poverty. He had a particular interest in policy in these areas which is reflected in this book which offers a rationale for and a detailed account of how household income can be made more equal.

He is concerned with inequality in developed countries, so his focus is on the US, UK, and European countries. He first sets out how it is that income inequality has so greatly increased covering some of the same ground as Milanovic. He then, in chapters on progressive taxation and social security, sets out detailed proposals which he argues would considerably reduce inequality and promote social justice.

His proposals on progressive taxation would, it can be safely asserted, reduce Tory MPs to apoplexy.

The papers in this book follow on from an article in Vanity Fair, "Of the 1%, for the 1%, by the 1%". Mimicking Abraham Lincoln’s famous definition in his Gettysburg Address.

A central argument that runs throughout the book is that the growing inequality in the US is chosen, not by its peoples, but by its government. The implication is that the rising inequality and its causes are a threat to US democracy. The book sees a great divide opening between the mass of its citizens and a plutocratic class whose income, and relative position, continues to improve. The book documents how governments have pursued policies that only benefit the 1%.