DIIS seminar: Prisen for ulighed: Hvordan kapitalisme undergraver demokratiet

Widening income inequality was a dominant theme at the World Economic Forum in Davos earlier this year. International organizations – from the OECD to the IMF – acknowledge how serious a problem it has become.

Few, however, speak to the deeper issue of the increasingly precarious relation between capitalism and democracy.

Robert Wade’s talk is a riff on US Supreme Court judge Louis Brandeis’ dictum: “We must make our choice. We may have democracy or we may have wealth concentrated in the hands of a few, but we can’t have both”.

In his talk, Professor Wade reports evidence on the economic, social and political consequences of inequality at the level reached in Anglo-American countries. The political costs of inequality result from two major sources.

First, they stem from the divergence between the preferences of the wealthy and those of the “median voter”, or general public, as to the content of public policy. For instance, cutting public spending is preferred by the wealthy, whereas boosting employment is supported by the general public.

Second, the wealthy are able to translate their preferences into public policy on issues where their preferences diverge from the general public’s. In other words, the political costs come from high “representational bias” in favour of the wealthy.

The seminar invites for a discussion of the impact of capitalism on democracy. Representational bias helps to explain political polarization and paralysis in US federal politics; which in turn helps to explain gridlock on a whole range of societal challenges, including financial reform and the biggest of all, climate change.

Speakers