Inequality: An Entangled Political Economy Perspective (Palgrave Studies in Classical Liberalism)

'This book is a thoroughly researched and well written exploration of one of the most divisive topics in modern democratic discourse. Novak brings careful and clear thinking to a topic too often clouded in emotion and guided by moral intuition. ' --Peter Boettke, Professor of Economics and Philosophy, George Mason University, USA 'Inequality has bred a climate of hostile political discourse reminiscent of the cold war. In this lucid book, Novak explains how we can transcend that hostility by recognizing the deeply entangled character of politics and economics within modern societies.' --Richard E. Wagner, Hobart R. Harris Professor of Economics, George Mason University, USA 'Mikayla Novak has provided a bold new intellectual foundation for social policy analysis.' --Jason Potts, Professor of Economics, RMIT University, Australia In recent years the degree of income and wealth inequality within developed countries has been raised as a central issue in economic and social policy debates. Numerous figures across diverse ideological affinities have advocated policy measures to significantly alter income and wealth distributions, while the inequality debate has become infused with other subjects such as social justice and identity politics. This book presents an account of economic inequality from a contemporary classical liberal perspective. Inequality is seen as a by-product of entangled relationships within society, bringing to the fore key ideas from complexity, evolutionary and network sciences. Novak illustrates that inequality is problematic insofar as it generates pro-rich redistribution and constrains progress by the less well off. Economic inequality has important links with issues such as fiscal and regulatory policies, discrimination and social exclusion, and institutional design. This unique book is important reading for social science academics, policy makers and people interested in exploring the dimensions and solutions to inequality, a critical issue of our time. Mikayla Novak is Postdoctoral Research Fellow at RMIT University, Melbourne, Australia. Novak is recognised as one of Australia's leading economists in the classical liberal philosophical tradition. She has been a prolific contributor to Australian public policy debates, having written over 240 newspaper opinion articles on economic and social issues Preface and Acknowledgements 6 Contents 10 List of Figures 12 1: Introduction 13 Inequality as Focal Point 13 Debating Recent Inequality Trends 18 The Consequences of Inequality 20 The Key Drivers of Inequality 22 Sketching Inequality in a Classically Liberal Political Economy Frame 25 Structure of the Book 31 References 33 Part I: Theoretical Foundations 39 2: Entangled Political Economy: A General Introduction 40 Introduction 40 Entangled Political Economy as Alternative, and Antidote, to Mainstream Political Economy 42 Entangled Political Economy and Its Perspectives on Economic and Political Organisation 48 Managing Tectonic Relationships in Entangled Political Economy 56 Conclusion 60 References 62 3: Explaining Inequality in an Entangled Political Economy 66 Introduction 66 Inequality and Entangled Political Economy: Positive Aspects 68 Inequality Drivers: Insights from Economics, Sociology, and Political Science 75 Inequality, Scale, and Turbulence in Entangled Political Economy 83 Conclusion 85 References 87 Part II: Case Studies 94 4: Taxation and Expenditure Policies 95 Introduction 95 The Entangled Political Economy Vision of Taxation 97 Redistributive Properties of Taxation: Entangled Political Economy Perspectives 102 Key Features of Government Expenditure in Entangled Political Economy 108 The “Samaritan’s Dilemma” and Monocentric Public Governance 117 Conclusion 122 References 123 5: Regulatory Policies 129 Introduction 129 Regulation and Entangled Political Economy: General Reflections 130 Consequences of Regulation for Income and Wealth Redistribution 138 Regulatory Governance in an Entangled Political Economy 150 Conclusion 154 References 155 6: Social Exclusion 162 Introduction 162 Defining Identity: An Evolutionary Approach 163 Why Do We Identify Ourselves and Others? 167 The “Groupishness” of Human Behaviour as a Source of Discrimination and Exclusion 169 Public Sector Enforcement of Group-Based Discriminatory Norms 172 Implications of Group-Discrimination for Income and Wealth Inequalities 177 Conclusion 182 References 183 Part III: Reforms 190 7: Economic Constitutionalism and Inequality 191 Introduction 191 Necessity of Rules-Based Economic Order, and Perpetual Challenge of Maintaining Good Rules 192 Taxation and Expenditure Policies: Imagining a Fiscal Constitution 201 Towards a Regulatory Constitution 207 The “Special Case” of Competition Policy? 214 Conclusion 216 References 218 8: A Society of Dignified Equals and Inequality 224 Introduction 224 A Changing of the Rules: Emancipation Sequence and the Moderation of Group Biases 225 From Affirmative Action to Reparations: The Controversies Surrounding “Reverse Discrimination” 237 Not by Formal Institutions Alone: Toleration as Binding Agent for Social Equality 244 Conclusion 249 References 250 9: Conclusion 256 References 263 Index 265 "'This book is a thoroughly researched and well written exploration of one of the most divisive topics in modern democratic discourse. Novak brings careful and clear thinking to a topic too often clouded in emotion and guided by moral intuition. '--Peter Boettke, Professor of Economics and Philosophy, George Mason University, USA'Inequality has bred a climate of hostile political discourse reminiscent of the cold war. In this lucid book, Novak explains how we can transcend that hostility by recognizing the deeply entangled character of politics and economics within modern societies.'--Richard E. Wagner, Hobart R. Harris Professor of Economics, George Mason University, USA'Mikayla Novak has provided a bold new intellectual foundation for social policy analysis.' --Jason Potts, Professor of Economics, RMIT University, Australia. In recent years the degree of income and wealth inequality within developed countries has been raised as a central issue in economic and social policy debates. Numerous figures across diverse ideological affinities have advocated policy measures to significantly alter income and wealth distributions, while the inequality debate has become infused with other subjects such as social justice and identity politics. This book presents an account of economic inequality from a contemporary classical liberal perspective. Inequality is seen as a by-product of entangled relationships within society, bringing to the fore key ideas from complexity, evolutionary and network sciences. Novak illustrates that inequality is problematic insofar as it generates pro-rich redistribution and constrains progress by the less well off. Economic inequality has important links with issues such as fiscal and regulatory policies, discrimination and social exclusion, and institutional design. This unique book is important reading for social science academics, policy makers and people interested in exploring the dimensions and solutions to inequality, a critical issue of our time."-- Provided by publisher