Social Inequality, Capital, and Economic Justice Explained

Classical Political Economy and the Problem of Inequality

One hundred years ago, Henry George's Progress and Poverty was more widely read than any other work on economics, including Marx's Capital (Smiley). Both George and Marx proposed radical solutions to the general problem of achieving economic growth with social equity (Smiley). Marxism conquered half of the world and left a heavy imprint on the other half, while Georgism exists today mainly in the history of economic thought and to a limited degree still affects local government revenue practices (Smiley). Some economists regarded land rent as ethically and economically quite different from profit and interest, in that rent was socially — not privately — created (Smiley).

George argued that land monopoly was the main cause of poverty; however, his remedy was the collection of land rent by government as public revenue, which left private property rights intact (Smiley). Yet during the last century, both neoclassical and neo-Marxist practice have, to a large extent, departed from the classical political economy three-factor model of land, labor, and capital, and adopted two-factor models that aggregate land with capital and rent with profit (Smiley).

By the end of World War II, neoclassical economics related economic progress principally to population, savings, and capital efficiency (Smiley). The Harrod-Domar model was its engine, and the Marshall Plan its vindication (Smiley). There was no radical analysis of poverty, and it was believed that the benefits of economic growth would trickle down to the poor (Smiley). Although during the past fifty years these neoclassical development models have been applied to the Third World, success has been far less than that achieved under the Marshall Plan (Smiley). A notable exception is that those economies which removed — or never had — the institutional constraints of concentrated land ownership tended to prosper (Smiley).

Neoclassical Development Models and Their Limits

Richard L. Harris examines "Capital, Inequality and Injustice in Latin America" in the June 1997 issue of International Journal of Comparative Sociology (Harris). The article examines contemporary economic, political, and social conditions in Latin America, using a combination of three key analytical concepts — capital, inequality, and injustice — to provide an integrated and global conceptualization of the predominant social structures, processes, and relations in the societies of the region (Harris). The application of these concepts reveals the fundamental social relations of contemporary capitalism that are primarily responsible for the pronounced extent of inequality and injustice characterizing these societies (Harris).

More than twenty years before Harris's article, Latin American social scientists Fernando Henrique Cardoso and Enzo Faletto produced what became a classic analysis of the economic, political, and social development of Latin America (Harris). In the preface to the English edition of their acclaimed book, they stated the fundamental basis of their perspective as follows:

Capital, Inequality, and Injustice in Latin America

"We seek a global and dynamic understanding of social structures instead of looking only at specific dimensions of the social process. We oppose the academic tradition which conceived of domination and sociocultural relations as 'dimensions,' analytically independent of one another, and together independent of the economy, as if each one of these dimensions corresponded to separate spheres of reality. In that sense, we stress the sociopolitical nature of the economic relations of production, thus following the nineteenth-century tradition of treating economy as political economy. This methodological approach, which found its highest expression in Marx, assumes the hierarchy that exists in society is the result of established ways of organizing the production of material and spiritual life" (Harris).

Harris claims that there is barely any evidence that the region consists of "postmodern societies" or that it has moved into a "postmodern era"; however, most of the problems and issues addressed by the so-called obsolete meta-theories persist in contemporary Latin America (Harris). Many of the region's inhabitants live under conditions that can be described as "uneven modernity" rather than post-modernity (Harris). The complex social reality of Latin America is best understood as a hybrid of "pre-modern," "modern," and "post-modern" ideologies, practices, and conditions (Harris).

It is worth noting the justification that Cardoso and Faletto gave for their use of the concept of capital in their analysis of Latin America's social, economic, and political development. They argued that the concept was necessary because they needed one that was "able to explain trends of change and opposing forces" (Harris). Moreover, they contended that "it was necessary to relate these forces in a global way, characterizing the basic sources of their existence, continuity and change, by determining forms of domination and the forces opposed to them" (Harris). Finally, they believed that "without the concept of capital as the result of the exploitation of one class by another," it is impossible to explain the movement of capitalist society (Harris).

Catherine MacKinnon notes that this theoretical tradition confronts organized social dominance and analyzes it in dynamic rather than static terms (Harris). It identifies social forces that shape social imperatives and attempts to explain human freedom both within and against history (Harris). It offers a critique of the inevitability of social injustice and a theory of the necessity of change (Harris).

Inequality and injustice share similar conceptual and analytical properties with the concept of capital, in that they facilitate a critical analysis of the dynamic relations, structures, and processes that underlie contemporary conditions of human existence in Latin America (Harris). Applied to the analysis of social reality in the region, the concept of inequality focuses attention on the "unequal access to power, to resources, and to a humane existence" that prevails in these societies (Harris). At the micro-level, this concept can be applied to the inequality between men and women within the family unit; at the mid-level, it encompasses the unequal access of different categories of the population to the basic necessities of human existence (Harris). At the macro- or global level, the concept encompasses phenomena such as the unequal economic relations between the region's economies and that of the United States (Harris). Indeed, given that the social, economic, and political disparities are so pervasive and extreme in Latin America, it is possible to argue that inequality should be the main explanandum — that is, the primary focus of explanation — of any intellectual effort that seeks to account for the historical development and contemporary conditions of the region's societies (Harris).