It’s the nature, not just the level, of your inequality that matters. How a country feels is about differences in income between rich and poor, but also how the sources of that income differ.
That’s the useful reminder from new research examining how capitalism varies between countries and over time. In olden times, the rich got their income from capital (ie owning assets), while the masses relied on labour income (ie from doing some work). Many cling to that view of the world, but it’s not a good description of today’s capitalism in many countries, including the UK.
Our rich today earn both labour and capital income, with the offspring of today’s landed gentry becoming bankers, lawyers or management consultants rather than characters from a Jane Austen novel. It is higher inequality of earnings from labour that has done most to increase income inequality, so we need a more complex understanding of class than thinking in terms of capital v labour.
But some countries, including ones we think of as more equal than us, retain more of the old kind of class divisions – the top in Scandinavia and Germany are much more reliant on capital than the rest of their populations, reflecting those countries’ higher wealth inequality (that their UK fans ignore). Those after an equal and classless society will have to wait for the afterlife, but Taiwan and Slovakia are apparently as close as we get on Earth. Book your post-Covid flights now.
