Economics

Economic Equality and Economic Opportunity: An Existential Crisis

In the eyes of a conservative economic thinker, the right to equal opportunity stands far superior to any other economic right by allowing individuals legal access to a definite law and order machinery with a definite governance capacity for justice. This belief arises not from any desire to maintain a divided class-based society but from the realisation of the necessity of a functional justice mechanism for economic growth and development.

The attempts of many left leaning countries to establish a classless –  or at least an economically equal society – have been characterised by severe violations of the rule of law and justice, depending of course upon which side you are on. However in hindsight, looking at these attempts from even a centrist position, there needs to be an acknowledgement of the fact that the  law wasn’t the same for all. The fact that the rich continue to pay higher taxes stands testament to the above.

This article is not about how the attempts to establish effective economic equality in a state tend to throttle innovation or leave limited room for economic growth or progress through expansion. This article is about why attempts at establishing economic equality counters attempts at economic upliftment through economic opportunity by failing to safeguard justice as the core concept while dealing with any situation. This article is about why the idea of economic equality is in deep conflict with the idea of equal opportunity.

Economic equality, as a concept, traces its roots to the time of dissent among the peasant classes against the nobles and the rich. The idea at the core is sound but, as a conservative, I view it as the fantasy of an idealist. However, a realist would normally never accept this idea and provide arguments against it. I will do no such thing here. Instead I will focus on why economic equality prevents  establishment of a class of nouveau-riche and tends to collapse on itself as a concept by not permitting a society based on equality amongst the rich from even taking shape as an idea. Economic equality is a theory aimed only at equality among the poor and not-so poor.

The reason behind this is that, for establishing an effective economically equal society, rules and regulations would have to be legislated such that the rich do not get richer. This would entail denying them some economic opportunities for the simple reason that opportunity is the stepping stone to becoming richer. At the same time, these rules and regulations would not address the concept of opportunity for the poor as well.

No school of thought which deals with this idea of economic equality has mentioned economic opportunity as a means for the poor to rise above their present status. The focus is usually on an attempt to pull down the rich to a level nearer to the poor, while keeping the poor where they are. Upliftment as an idea is not in the framework of economic equality.

The process of understanding economic opportunity should not be disconnected from the ideas of innovation and economic equality. Economic equality need not necessarily be of income. The equality could be on the basis of economic laws which are equal for all and do not prove to be a disadvantage for a section. Following upon this idea of economic equality, economic opportunity tends to give rise to innovation which adds efficiency to the production process and is adopted by others in that particular sector as well, thereby creating an economic equality of technology to a certain extent.

Some of the ideas mentioned here tend to be more idealist than realist in nature such as the idea of maintaining economic equality of technology. Realistically, this is not possible as technology evolution and development is a constant process where the last unit of adoption may occur at the same time as the innovation of an upgraded technology.

Thus, economic opportunity tends to provide the poor in any economy with an ability to move upwards. This is far more important than economic equality as it reduces poverty in the long run. India is a classic example of this transformation wherein, after the 1980s when economic opportunity had just started being given a significant role in policymaking, the poverty levels in the economy started falling at a faster pace than before.

Therefore, opportunity is not just an equaliser for a Social Capitalist.  More than that…..it is a poverty reducer.

Thus, even though I began this article with the idea that economic equality and economic opportunity cannot coexist, I now seem to think differently – for economic equality should not always be income based. There are other parameters that can be considered as relevant indices like level of technology in an economic ecosystem or the extent of education in an economy, of economic equality.

I end this article with the idea that economic equality and economic opportunity might exist together to an extent depending upon which idea of equality one has adopted.

About the Author

picDhruva Mathur

Dhruva is a 20 year old fresh graduate from St. Xavier’s College, Mumbai with Majors in Economics and Political Science. He blogs at An Indian Youngster  and tweets at @Dhruva_Mathur and is followed by Kevin Rudd, Foreign Affairs and European Council on Foreign Relations among others. In his spare time, he enjoys reading and debating. He is a Social Liberal with a Right tilt for economics oriented towards development.

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