TL;DR
Most arguments in favor of Marxism focus on the need to reduce inequality in society. Inequality itself, though, is not really a societal problem. It is easily measured however, and is used as a statistical proxy for actual societal problems, without the bother of showing any actual causation between inequality and the social ills in question.
Don’t fall for this trap in USA version 2. Strong property rights and rule of law protect the wealthy, the upwardly mobile and the struggling alike.
The Details:
Economic inequality, whether of wealth or income, is often adduced as one of the principal reasons for supporting Marxism. This has become particularly fashionable since Piketty and Saez published a paper in 2003, followed up by a massive (and very fashionable) book by Piketty in 2013 detailing how income and wealth inequality is getting worse and worse in Western societies, and the only way to fix this is to institute massive income and wealth taxes on the wealthy (coincidentally defined to be just above what a 2-income journalistic or academic couple would likely earn).
Piketty’s work has been criticized on a number of grounds: he doesn’t get US tax history right, he leaves out private retirement plans in accounting for wealth, ignores fringe benefits and government transfers in accounting for income, ignores changes in household size, ignores the value of nonmonetary assets like academic tenure in accounting for wealth, etc. I see all these as valid critiques of Piketty’s specific work, but my principal response to the focus on rising inequality is a bit different: even if it’s true (which it may not be), so what?*
The Apple-laden Stranger
Suppose you have one apple, and your friend has three apples. A stranger walks up who has 10,000 apples. Now how many apples do you have? The inequality of the situation has certainly changed, but your personal situation has not. If you were relatively happy with your apple to begin with, you should still be just as happy with your apple now.
A few reasonable responses to this new situation: you could perhaps ask the stranger (whom you might wish to add to your network of friends) how all these apples were acquired, perhaps learning a new horticultural skill in the process; perhaps your new friend would like to hire you to work in the orchard; perhaps you could offer to help with the marketing of the bumper apple crop; perhaps…
In the inequality über alles formulation of Marxism, though, the arrival of the (clearly evil, probably wearing a monocle**) stranger is a source of oppression for you. Since the inequality of the situation has materially worsened, you must have been harmed in some way. Though you were previously unaware of this large stash of apples, many of them, by rights, clearly belong to you and must have been taken from you in some as-yet-undiscovered fashion.
Gedankenexperiment: 2 Communities
While it is certainly possible that inequality of income or wealth correlates with the poorest members of society being treated badly, it is not necessarily so.
Consider the following Gedankenexperiment: we have two communities, A and B, each of which contains 30,001 inhabitants, both of which trade sufficiently with the outside that total income or wealth within the communities does not affect overall monetary value by inflation.
Community A has 30,000 inhabitants who have an average income of $15,000 each, distributed in some reasonable way (the details aren’t massively important here, just that we’re allowing some reasonable natural variability, while having a fairly strong central tendency and not allowing negative incomes – if you like, assume a Rayleigh distribution, which would have a standard deviation of $7,841). Community A also has one millionaire inhabitant who lives off investment income.
Community B has 29,999 inhabitants who have an average income of $150,000 each, distributed in the same way as most of community A (scaled by a factor of 10 – Rayleigh would give a $78,410 standard deviation). Community B also has two billionaire inhabitants who live off investment income with investments roughly equivalent in yield to those of the millionaire in community A.
Which community would you prefer to live in? The poorest members of community B have 10 times the income of the poorest members of community A. Community B appears to be rather comfortable for everyone, while community A would have quite a few members who are struggling. On the other hand, however you choose to measure inequality, it’s worse in community B.
The point of this is not that the scenario is realistic in any way – the point is that inequality is not necessarily a bad thing in and of itself. What makes this demonstration work is that inequality, however measured, is generally independent of scale (that is, independent of the currency the incomes and/or wealth are measured in) but economic comfort is most certainly not.
Inequality as Easily-measured Red Herring
Now, it could be that inequality is a statistical proxy for higher poverty rates, poorer lower-class health-care outcomes, lack of social mobility, crime, hopelessness, and a variety of true societal ills. But maybe it’s not. I certainly haven’t seen any serious work done to show that inequality correlates strongly with, for example, a lowered standard of living of the first income quintile. Perhaps it’s been done and I just haven’t seen it, but from the rhetoric generally used, I think it’s more likely that it is just considered obviously true that “inequality=bad” (in fact, I strongly suspect that if such work had been done, it would be just as fashionable and well-known as Piketty’s book). It’s intellectually lazy to allow a perhaps-vaguely-correlated proxy to stand in for the problems themselves, simply because the possible-proxy is easier to measure. It’s the academic equivalent of looking under the streetlight for the eyeglasses you lost in the dark alley, because the light’s better there.
Inequality is not itself a problem. It is simply an easily-measured attribute of society that may or may not correlate with actual societal problems. Many cancer patients have significant weight loss. Some people with significant weight loss have cancer. I would speculate therefore that there is a slightly positive correlation between significant weight loss and cancer. Overeating, however, does not reduce cancer, even though it may reduce the incidence of significant weight loss. Attempting to “solve” inequality is not likely to actually help society any more than overeating will make people healthier – sometimes the weight loss doesn’t represent a health problem, and even when it does, the issue is the underlying problem, not the weight loss. A focus on inequality results in taking the focus off the actual problems.
Even if Marxism does reduce income inequality, does it mitigate any of the actual problems of society? Are the members of the first income quintile in Venezuela better off than those similarly situated in the US?
Postscript: after writing this essay, I ran across this allegory by Frank J. Fleming sounding many of the same notes. Enjoy!
* there is another line of reasoning, explicated here and here by Gramm and Early, that not only did Piketty get it wrong about increasing inequality, a much bigger problem is income equality: the nearly-flat area of the earned income-net income curve in the first three income quintiles. Third quintile earners had ten times the earned income of bottom quintile earners, but after accounting for transfers and taxes, had almost identical per-capita net income.
Gramm and Early:
“Despite Democratic politicians’ efforts to provoke resentment against the rich, when was the last time you heard working people complain that some people in America are rich? The hostility of working people is increasingly focused on a system where those who don’t break a sweat are about as well off as they are.”
**why Mr. Peanut should have been adopted as the quintessential example of evil capitalism is beyond me.