Some Thoughts on Inequality

Photo courtesy of Discover Beyond

This article was prompted by a question I came across during some recent discussions. Does inequality matter? My immediate reaction was to point out that all types of social oppression such as caste, class, gender, problems of ethnic minorities and struggles against political elites have some form of inequality as their foundation.

Then I realised what most people were talking about was economic inequality. Here I can do no better than quote from The Killing Fields of Inequality by Goran Therborn. This book focuses on economic inequality. At the beginning of the book, Therborn says, “Inequality is a violation of human dignity; it is a denial of the possibility for everybody’s human capabilities to develop. It takes many forms, and it has many effects: premature death, ill-health, humiliation, subjection, discrimination, exclusion from knowledge or from mainstream social life, poverty, powerlessness, stress, insecurity, anxiety, lack of self-confidence and of pride in oneself, and exclusion from opportunities and life chances.”

Economic inequality is also behind a major contradiction between liberal democracy and capitalism. A political system based on the idea of treating every individual equally and an economic system that ensures more wealth to those who can benefit from markets are bound to collide at some point. Various forms of inequality is the basis of many conflicts and state repression trying to maintain the existing social and political order.

These thoughts on why inequality matters do not mean what we are hoping for is some sort of utopia where everybody is equal. What it means is inequality lies behind the ongoing political struggles we are engaged in. Struggling against inequality involves changes at the level of the state, social norms and tackling hegemonic ideologies. Ideologies that legitimise inequality can come from various sources, both religious and secular. Depending on concrete historical contexts we need to identify strategic political spaces where we can make a change.

The term post-war state is used because, although armed violence has ended, the Sri Lankan state at present is a product of a 30 year armed conflict and how it ended. Troops were first sent in 1979 to deal with the Tamil armed struggle in the North. Military operations lasted until 2009 when the territory of the centralised Sinhala nationalist state was consolidated by military means. This has not solved political issues underlining state-minority relations. The second dimension that characterises the post-war state is the impact of more than four decades of the new period capitalist transition that began in 1977. This emphasised markets, the private sector and openness to global capitalism.

Macroeconomic data clearly shows the growth of economic inequality. At the time the war ended, the richest 20 per cent of the population acquired 51.4 per cent of national income while the poorest 20 per cent had only 4.6 per cent. The important question is how the economic crisis has had an impact on diverse various socio-economic groups. Although we have visual and anecdotal evidence, I have not seen any comprehensive account of the impact of the economic crisis on various socio-economic groups. This is also relevant to understand the impact of economic reforms that are carried out now. These are research questions that we need to focus on.

Changes in inequality indicators

It is possible to get a glimpse of some of the processes that underlie the economic inequality that prevailed in 2019. In the period of more liberal capitalism the share of agriculture in the economy has diminished. In 1977, 30.7 per cent of national output was from agriculture. In 2019 it accounted for only 7.0 per cent of national output. Its contribution to household income, even in areas classified as rural, declined. The 2019 Household Income and Expenditure Survey shows that only 8.6 per cent of income in the rural sector was from agriculture. This means there has been a gradual deterioration in the viability of smallholder agriculture.

This does not mean there is no profit making in agriculture. There is profit making and capital accumulation by some in agriculture. These sections have business interests in areas outside agriculture. Some of them have links with the political elite or they themselves play a role in party politics. Unfortunately, the study of the political and economic elite is a neglected area of research in Sri Lanka. This is true of their links to the agrarian sector as well.

In parallel to these changes in agriculture the share of the wage earning working class has increased. Probably the working class forms the largest social group today. The working class is found in organised, as well as informal sectors. Some find work through international labour markets. Large sections of the working class sell their labour to survive in sectors with a minimum level of institutions to protect labour rights.

With the growth of the working class, education and skills development have become even more important for social mobility. But the benefits of education and skills development get distributed unequally. Since the state monopoly on education was broken in the new period of capitalist transition, the role of the private sector in education has expanded. This has become a new avenue where richer classes can ensure quality education for their children. In addition, the state sector is not an equal system. Therefore, both private sector and state education provide more opportunities for the richer section of the population to provide a quality education for their children.

Two political trends have come together to stabilise the situation, suppressing the social and political response to the economic crisis that has now gone into our history as the aragalaya. These trends are the political force that gave leadership to consolidating the territory of the state through military means and the political force that has always stood for neoliberal capitalism. This combination is backed by international actors.

Looking at the ongoing reform process, it is clear that there will be further diluting or total removal of institutions that protect the rights of labour. There will also be reforms to allow the operation of markets on state owned land. This is something that has been attempted in the past through various projects but did not succeed. The economic crisis provides a new opportunity to further these policies. The impact of this will be seen from the densely populated wet zone of the country, to war affected North and East. These are bound to worsen the situation of the poorer sections of the population.

Institutional reforms to further capitalist transition always happen through struggles and conflict. The question in a country that has seen so much violence, state repression and dead bodies is will the post-war state be able to manage these reforms through peaceful means or are we going to see another round of state repression and violence? It is difficult to answer these questions about the future with certainty. But what is clear is the we need to begin a serious discussion about economic inequality and ditch the dominance of the discourse of poverty alleviation and safety nets, which has dominated the discussion on social policies since 1977. This has been a major ideological impact of the flow of foreign aid since 1977. At this moment what is central is the ideological struggle to bring economic inequality to the centre of our social policy debates.