Inequality, Imbalance, Instability: Reflections on a Structural Crisis

Globalization has been accompanied by worsening inequality within core countries of global accumulation processes, as exemplified by China and the USA, where income and wealth inequalities have regained the stratospheric heights of the 1920s. In parallel, there are significantly diverging life chances for the rich and the poor. Extreme inequalities are deemed intrinsically toxic due to their potential for the subversion of regulatory and accountability institutions, the corrosion of societal norms, and the quality of democracy. The present conjuncture of crises provides credible evidence that inequality, especially extreme inequality, is not just a contextual feature or a downstream outcome issue, but a crucial upstream, causal factor in the pathology of the financial meltdown. This article introduces contributions elaborating causal pathologies connecting inequality, imbalances and instability, emphasizing the centrality of global interdependence. Beyond surviving the crisis through assorted fiscal stimuli packages of emergency resuscitation and life support, there are deeper structural policy issues to consider. The crisis briefly opened up democratic space for short-term protective, and long-term corrective interventions. However, this space was equally quickly shut down again, as the political and financial establishment resisted yielding permanent ground: witness the return to fiscal conservatism, the revival of the culture of bankers' bonuses, and persisting international divisions over coordinated global action. There is an imperative to regulate rampant and dysfunctional financialization; to cooperate internationally for sustainable balanced economic growth; for an alternative politics to pull back from an inexorable slide into plutocracy, to let the people back in. Otherwise we risk lurching from one crisis episode to another, from tragedy to farce, and back again.

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