The Solutions Journal
When people think about how to move our societies towards sustainability, they usually think simply about reducing our collective environmental impact. But the related question, of how human well-being can be produced more efficiently, is often ignored. Modern economic systems are disastrously inefficient ways of producing well-being. The vast majority of people in rich countries live at historically unprecedented standards of comfort and luxury. Yet between 10 and 25 percent of their populations suffer some form of mental illness each year as measured by the World Health Organization (WHO) standard diagnostic questionnaires. Rates of violence, drug abuse, self-harm among teenage girls, and many other problems are also appallingly high. And all this is achieved at levels of material consumption so damaging to the planet that climate disruption is already estimated to be causing several hundred thousand deaths a year.
That well-being has parted company with per capita income in countries with a certain level of wealth has been documented clearly and repeatedly. But what would we do if we wanted to maximize well-being at the same time as we move toward sustainability? Greater equality has a central role to play in achieving both objectives. Reducing the income gap between rich and poor can help free us from consumerism—the greatest threat to sustainability—while at the same time making powerful direct contributions to the well-being of whole societies.
Smaller income differences between rich and poor mean that we are less driven by the status competition that intensifies consumerism. In more unequal societies, people judge each other more by money and social position. As a result, money becomes even more important: it is how we show what we are worth. This is why people in more unequal societies work longer hours, save less, and get into debt more. The implication is that if we are to rein in consumerism, we must reduce the inequality that tends to amplify our worries about social comparisons.
Part of the reason why smaller income differences improve well-being is that the addition of a dollar of income makes more difference to a poor person’s quality of life than the same addition makes to a rich person’s life. But this is not the most important way in which greater equality contributes to well-being. More equal societies do better in numerous other ways. Almost all the problems associated with those nearer the bottom of the social ladder (e.g., poor physical and mental health, low standards of child well-being, violence, drug abuse, teenage births, and incarceration rates) are more common in societies with bigger income gaps. And rather than being just a little more common, problems like these are two to ten times as common in unequal but developed countries.
More and less equal societies perform so differently because inequality damages the social fabric of the whole society from top to bottom. The data confirm what many people have always thought: that inequality is divisive and socially corrosive. It damages social cohesion, weakens community life and reduces people’s sense that they can trust others. Life becomes more stressful and more dominated by status competition and status insecurity.
This means that rather than just hurting the poor, greater inequality reduces quality of life for the vast majority of the population. Some studies allow us to compare people living in more and less equal societies at the same position in their respective social hierarchies. They show that even those already comfortable do better in more equal societies. What that means is that if someone with a good education, job, and income lived (with the same education, job, and income) in a more equal society, that person might live a little longer, would be less likely to become the victim of violence, and could have children who might do a little better at school and be less likely to use drugs or to become teenage parents.
There are many ways to reduce inequality. One easy way is to reduce tax loopholes among the super-rich and large corporations. That should include international action to close down tax havens. But a weakness of relying too much on reinstating redistributive taxes and social security systems is that progress can be undone at the stroke of a pen by a new incoming government. Much more important in the long run is to reduce income differences before tax. Income differences within the largest corporations have widened ten- to fifteen-fold in the last 30 years. The bonus culture reveals the lack of any effective democratic accountability at the top. The solution is to pursue all forms of greater economic democracy: legislation requiring employee representatives on company boards and remuneration committees (as exists in more progressive countries); systems of tax advantages to employee-owned companies, cooperatives, and mutuals; plus funds providing loans to assist employee-buyouts.
More democratic companies have many advantages: they tend to have much smaller internal pay differentials, they are usually more efficient, they tend to perform better ethically (including environmentally), they redistribute wealth from external shareholders to employees, and they can turn companies from being pieces of property into communities.
The convenient truth then is that greater equality, achieved partly through more economic democracy, allows us to combine sustainability with a better quality of life for all.