On Inequality

...feels like Friday here in the office so one more post. I'm just jotting down some thinking I've done recently.


So I've been thinking through more of Lovecraft's thoughts on political economy, and inequality features prominently in his discussion of it. I've also been looking into the writings of his contemporaries writing on inequality, particularly contemporary economists. It seems to me there are four basic ways to approach inequality:


1. From a rights perspective: people have a right to what they earn, differences in wealth or inequality are merely differences in ability and effort exercised and monetize through contract and property rights. From a contractarian perspective, then inequality is largely acceptable. Inherited wealth, while justifiable from a rights perspective, can also be challenged from this perspective.


2. From an incentive perspective: this is almost a consequentialist approach to inequality. Inequality is good because it motivates effort and improvement. It also directs people to socially beneficial activities (if there are more profits in one industry than there are in another, people will have the incentive to enter that industry). I often like to reference Bernoulli's law - it is inequality that provides lift. Keynes largely comes from this consequentialist angle when he explains why he is fine with economic inequality. Lovecraft has a consequentialist approach to inequality too, but it is very different from this incentives explanation - it is more of an aesthetic and cultural justification for inequality.


3. From a human dignity perspective: this is more of a humanitarian approach. Concepts of human worth suggest that people deserve a certain standard of living, simply in the interest of human dignity. You could approach dignity as a question of relative outcomes as well. Lovecraft also expresses some of this humanitarian vision, which is somewhat ironic given his very well articulated Neitzscheism (no matter - foolish consistency is the hobgoblin of small minds).


4. From an opportunity perspective: this is the "equality of opportunity" approach, as opposed to the "equality of outcomes" approach in point #3. It can be thought of as the democratic perspective. The unequal circumstances we are born into stack the deck in favor of people whose parents (or grandparents, or great-grandparents, or...) were more successful. From this angle, it is pointed out that the contractarian approach can be naive by ignoring endowment effects.


Are there any other ways to think about inequality? I have sympathy for all four of these - I think most people do. Others, of course, lean heavily on only one or two of them. I personally don't think from an ethical standard it's clear what to do with inequality (or put it this way - if it is clear it's because you've come at the question with a very detailed ethical outlook to begin with). I'm not going to think about inequality this abstractly or broadly in what I write about Lovecraft's views on the issue, but the issue itself is a major part of his political economy.