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From Pareto to Piketty, Confucius to the Qur’an: How do we deal with inequality?

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Ghaleb Cachalia is an MP in the National Assembly and the DA spokesperson on Public Enterprises. He serves on the Ethics Committee in Parliament.

None of the major religions, which account for a more than significant portion of humanity, embodies a belief that we must replace a system of production for profit and a society ostensibly based on greed and self-interest with one that is commonly owned and planned for the needs of all.

It matters not whether you think greed is good or bad, whether inequality is necessary or not or whether the power afforded the rich creates an imbalance that marginalises people. That said, greed in itself is hardly an attractive quality and nor is power for the sake of it, let alone the unsettling image of the gluttonous set against the starving.

Christianity and practically all religions rail against the driven love of lucre while encouraging good deeds and charity. Indeed, in some religions, charity is enshrined as a requisite tithe on wealth. Rent-seeking and usury are almost universally frowned upon. A fair and humane appeal is encouraged – a helping hand, and in the words of Pope Francis, “a generous solidarity… an ethical approach which favours human beings”.

This is not to be confused with an ordering and levelling of the world. Indeed, the Qur’an says, “historically, mankind has always been at a loss” while urging the faithful to “believe and do good works, and exhort one another to truth and exhort one another to endurance”. This speaks, as it does in almost all religions, to an underlying acceptance of the nature of things and the injunction to ameliorate, by individual endeavour, the baser manifestation of loss.

An exposition of elements of what is perceived as a natural order is likewise evident in Hinduism – for all the complexities and apparent inequities of the caste system – whose teachings do not only reflect a division of labour but also, it is argued, point to fulfilment through the performance of duties. Buddhism too did not oppose the four-fold caste system of Hinduism. It does, however, oppose the derogation of those ranked lesser, and affirmed that anyone, from any caste, including the lowest of the four castes, could reach enlightenment.

Protestantism sees God as not having a direct role in the human world. It is guided by rational behaviour and champions values such as conscientious assiduity. Confucianism, on the other hand, sees reality and all its facets as imbued with and guided by an inherently ethical divine presence. Confucian thought sees some courses of action as preferable to others, because they are good in and of themselves, as distinct from the augmentation of value.

These similarities and differences notwithstanding, none of the major religions, which account for a more than significant portion of humanity, embody a belief that we must replace a system of production for profit and a society ostensibly based on greed and self-interest with one that is commonly owned and planned for the needs of all. The failure of historical efforts to achieve such engineered equality is a separate but related matter. The spawning of successive sets of elites is, however, an interesting one.

It took Vilfredo Pareto, the Italian economist and sociologist who coined the 80/20 rule, to develop the idea of the “circulation of elites” as being pivotal to progress, which he believed would give rise to new elites who would in turn challenge established political classes. In essence, Pareto was a liberal who sought to balance a free and open society with a safety net for the most vulnerable, resulting in his ideas being taken up by liberal welfare proponents and anti-fascist theorists like Piero Gobetti who wrote:

“The concept of an elite that imposes itself by exploiting a channel of interests and general psychological conditions against the old leaders who have exhausted their function is genuinely liberal.”

Pareto was exercised by problems of power and wealth. He understood that the gulf between rich and poor has always been part of the human condition, and he sought to measure it, gathering data on wealth and income across countries and history over a hundred years before Thomas Piketty sought to analyse it.

But for Pareto, unlike Piketty, “good” could not be measured. Instead, he posited the notion of Pareto-Optimality – that maximum economic satisfaction is achieved when no one can be made better off without making someone else worse off, a concept that has been used by welfare economists and proponents of negotiation/game theory. Distribution of wealth that is Pareto-optimal remains the gold standard of aspiration for many and involves a trade-off of interests and traditions against a better outcome for all parties.

These are the pertinent questions of the day that exercise the minds of liberals in our chronically unequal society and across the globe. They involve an understanding of the natural order of things, the philosophico-religious injunctions to temper loss and the push of Pareto towards an optimality which is worth considering – all within an acceptance of the power of paradox. The more knowledge we acquire, the more uncertainty we encounter. DM

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