increasingly significant. This is a reflection of the worldwide increase in income and
asset disparity. This problem concerns income inequalities between developed and
developing countries as well as income disparities within the individual industrialized and developing countries. Although growing income disparities have been
empirically proven many times (cf. et al., Reports of OECD 2008, 2011, 2015),
recent economics publications are increasingly citing the consequences of this
growing inequality. The publications of Stiglitz and Piketty have received special
attention in recent years. Stiglitz emphasizes in his book The Price of Inequality:
How Today’s Divided Society Endangers our Future that although the per capita
GDP has risen in the USA, for example, the majority of citizens have not participated. In contrast, the income among the already wealthy reflected an above average
increase by means of rent seeking and other facilities. Stiglitz suggests that functioning societies with large distributional disparities do not function efficiently over
time as their economies become unstable and unsustainable. Such societies can
expect to pay a heavy price for the huge and increasing inequality. If the trend
continues – if nothing is done to counter it (or something is done to accelerate it) –
the price that society has to pay is likely to increase (Stiglitz 2012). Piketty presents a
similar argument. He squarely attributes the income and wealth disparity to the rise
in capital earnings relative to earned income. As an expected consequence, Piketty
cites increasing social tensions for the twenty-first century, which lead to instabilities
in capitalist systems.
The Marxist apocalyptic vision could be avoided through the advancement and
spread of knowledge, but there has been no change in the deep structures and
inequalities of capitalism – at least, not as much as envisioned in the optimistic
decades after the Second World War. If the return on capital investment is permanently higher than the growth rate of production and earned income – which was the
case in the 19th century and threatens to become the rule again in the 21st century –
then capitalism will always automatically generate unacceptable and arbitrary
inequalities and radically question the principle of performance on which our
democratic economies are based. (Piketty 2014, p. 13)
The evolution of income distribution is often based and justified on the idea of
performance. The principle is used in neoclassical economics to justify income and
wealth disparities. However, especially in the context of sustainable development,
the question arises as to what happens when the solidarity and coherence of a
developed society are jeopardized, for example, by income disparities and the
resulting social tensions, as shown by Stiglitz and Piketty. The effect on economic
development and stability is negative. The growing criticism regarding the empirical
findings on the relationship between growth and distribution is justified. The sustainability paradigm, in contrast to neoclassical economic development, clearly has
greater potential for progress. In conclusion, more intensive scientific studies of this
paradigm and the accomplishment of specific implementation measures can further
exploit this potential for progress.
14
M. von Hauff
asset disparity. This problem concerns income inequalities between developed and
developing countries as well as income disparities within the individual industrialized and developing countries. Although growing income disparities have been
empirically proven many times (cf. et al., Reports of OECD 2008, 2011, 2015),
recent economics publications are increasingly citing the consequences of this
growing inequality. The publications of Stiglitz and Piketty have received special
attention in recent years. Stiglitz emphasizes in his book The Price of Inequality:
How Today’s Divided Society Endangers our Future that although the per capita
GDP has risen in the USA, for example, the majority of citizens have not participated. In contrast, the income among the already wealthy reflected an above average
increase by means of rent seeking and other facilities. Stiglitz suggests that functioning societies with large distributional disparities do not function efficiently over
time as their economies become unstable and unsustainable. Such societies can
expect to pay a heavy price for the huge and increasing inequality. If the trend
continues – if nothing is done to counter it (or something is done to accelerate it) –
the price that society has to pay is likely to increase (Stiglitz 2012). Piketty presents a
similar argument. He squarely attributes the income and wealth disparity to the rise
in capital earnings relative to earned income. As an expected consequence, Piketty
cites increasing social tensions for the twenty-first century, which lead to instabilities
in capitalist systems.
The Marxist apocalyptic vision could be avoided through the advancement and
spread of knowledge, but there has been no change in the deep structures and
inequalities of capitalism – at least, not as much as envisioned in the optimistic
decades after the Second World War. If the return on capital investment is permanently higher than the growth rate of production and earned income – which was the
case in the 19th century and threatens to become the rule again in the 21st century –
then capitalism will always automatically generate unacceptable and arbitrary
inequalities and radically question the principle of performance on which our
democratic economies are based. (Piketty 2014, p. 13)
The evolution of income distribution is often based and justified on the idea of
performance. The principle is used in neoclassical economics to justify income and
wealth disparities. However, especially in the context of sustainable development,
the question arises as to what happens when the solidarity and coherence of a
developed society are jeopardized, for example, by income disparities and the
resulting social tensions, as shown by Stiglitz and Piketty. The effect on economic
development and stability is negative. The growing criticism regarding the empirical
findings on the relationship between growth and distribution is justified. The sustainability paradigm, in contrast to neoclassical economic development, clearly has
greater potential for progress. In conclusion, more intensive scientific studies of this
paradigm and the accomplishment of specific implementation measures can further
exploit this potential for progress.
14
M. von Hauff