Social Justice, Well-Being, and Economic Organization*

Gianluca Grimalda, Kalle Moene, Fernando Filgueira, Marc Fleurbaey, Katherine Gibson, Carol Graham, Rubén Lo Vuolo, Reema Nanavaty, Hiroshi Ono, John Roemer, Alain Trannoy

Research output: Chapter in Book/Report/Conference proceedingChapter

1 Scopus citations


The average citizen of the world lives today in a better place than in the past. Income and life expectancy have on average increased, and extreme poverty rates have declined. Nevertheless, the dispersion of such a progress has been extremely uneven. In Section 8.2.2 we show that redistribution has been unable to reach the world’s poorest people, both globally and nationally. Since the 1980s, both income and wealth have become more concentrated in the hands of the super- rich. The world is drifting toward a new Gilded Age where a global plutocracy becomes more and more dominant. Furthermore, increased material well- being has not translated into increased subjective well- being in rich societies. We discuss the so- called Easterlin paradox highlighting how social comparisons hinder subjective well- being and how individual aspirations dependent on one’s social context can perpetuate poverty traps. Our discussion of economic systems in Section 8.3 starts off observing that markets are indispensable systems for the allocation of productive factors and goods for consumption. Rather than converging to neoliberal forms of economic organizations, a wide variety of capitalistic systems is possible, depending on their system of wage determination and level of income redistribution. Culture adds to this variety. A cooperative social ethos has arguably been instrumental to the establishment of broad- ranging redistributive institutions and safety nets in some countries. The core of our argument is that equality can serve as a development strategy (Section 8.4). A first cornerstone is wage compression. It stimulates innovation as the profitability of new technology rises, and it drives out of the market firms using inefficient technologies. Empirically, inequality in the US leads to greater productivity dispersion than the more egalitarian Nordic countries. A second cornerstone rests on the expansion of universal welfare programs, including income support, social insurance, and free access to health and education. A third cornerstone concerns asset redistribution. It involves guaranteed basic income, inheritance, and land reform. Taken together, these measures empower workers, who can then escape poverty traps and society as a whole can obtain higher incomes. Exploring forms of ownership and control of productive organizations, we discuss both profit- sharing and cooperative ownership - variants of democratic firms such as the Mondragon cooperatives and the Indian Self- Employed Women’s Association. Finally, we make a case for the democratic governance of firms, discussing founding principles, efficiency gains that it permits, and feasible institutional and legal forms that would sustain it. In Section 8.5 we critically examine the claims that globalization prevents egalitarian policies. Many argue that a "race- to- the- bottom" in tax rates jeopardizes the state’s fiscal capacity, and that competition from workers in the "South" reduces unskilled wages in the "North." We note that the share of taxation has never been so large in OECD countries, and that skill- biased technological change has played a larger role than trade in the stagnation of unskilled wages in rich countries. States are far from being powerless in the face of globalization. Nevertheless, we also point out some trends that may constrain states’ redistributive action in the future. High- skill workers are migrating toward North America, possibly attracted by low income taxes. Immigration toward the North seems to jeopardize social cohesion and thus compromise redistributive policies, as many voters turn to right- wing parties. We conclude, in Section 8.6, by indicating policies for the twenty- first century to combat rising global and national inequality. These include a more progressive income tax, a global tax on wealth, and a global basic income. These policies may sound utopian, because they require much stronger global governance than what exists at the moment. Yet they may be achieved progressively, as has happened with many other policies in the past.

Original languageEnglish (US)
Title of host publicationRethinking Society for the 21st Century
Subtitle of host publicationReport of the International Panel on Social Progress: Volume 1: Socio-Economic Transformations
PublisherCambridge University Press
Number of pages44
ISBN (Electronic)9781108399623
ISBN (Print)9781108423120
StatePublished - Jan 1 2018

All Science Journal Classification (ASJC) codes

  • General Economics, Econometrics and Finance
  • General Business, Management and Accounting


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