Justice in the Distribution of Wealth: Between Success and Failure — Part Three

·       Part Three 

·       That the political conflict is stirred by inequality...."The history of wealth distribution has always been deeply political"..!! The state is required to exert some control over the market economy and provide solutions, especially when there are acute problems regarding unemployment, which reached about 400,000 people for example in Palestine..and at a rate of around 30%..which is a dangerous indicator..States try to control the distribution of wealth and distribute it in a way that reduces the gaps that widen day by day..

-       The private sector...is a sector difficult for the state to approach in the era of globalization....or to touch its freedom in arranging its mechanisms and equations..and its laws..in the market..Thus, in a market economy, the government cannot enter the arena of changing the rules of the market game and the laws of supply and demand..which are championed by the proponents of liberal capitalism..On the contrary, supporters of the market economy demand that the public sector refrain from intervening, indeed relinquish part of its powers and rights to the private sector; the principle of privatization is one of these manifestations, selling some public-sector assets to the private sector..And people notice how some states have been ruined and their markets and societies deteriorated because of non-intervention by the government sector..Prices, monopoly, exploitation and corruption are attributes in some parts of the market, and it has been said about the price system created by the private sector... "the price system knows no limits..nor ethical principles".

-       Thomas Piketty's book.."Capital" in the twenty-first century..and his book "Top Incomes in France in the Twentieth Century" attempted to write about an important subject that concerns every individual, which is the issue of wealth distribution..and what economic growth sometimes leads to, deepening the gaps between social classes..where owners of capital appropriate returns on their capital and profits from their assets and these accumulate in a way that forms a power for them to demand a larger share of Gross Domestic Product.

-       However, economist "Kuznets" saw that there are balancing forces in economic growth such as competition and technological progress..which in the later stages of development lead to less inequality..and greater harmony between classes...and he seems to try to resemble what "Adam Smith" said about balancing forces in a market economy from supply and demand factors that are sufficient to settle the situation..in a quasi-fair manner..(the invisible hand)!! When wealth is concentrated in a small group..it thereby undermines the values of governance based on "merit".....In this concept "Ricardo" indicated that power should be socially accorded to people based on "merit and deservingness" and progress should be built on performance and achievement..and this, in his view, will occur only in democratic societies..which he described as able to regain control over capitalism and ensure the precedence of the public interest over private interests..while preserving economic openness..this is fine talk..but there are many phenomena in reality...capitalism does not budge from its deep roots of exploitation and monopoly..!!

-       He added that a "republic of experts" cannot replace democracy...for the scientific analysis of the phenomenon of wealth and inequality cannot settle any political struggle that may erupt over such disparities...."for political conflict is stirred by inequality"....!!

-       "Ricardo" also addressed in his book "Principles of Political Economy and Taxation" in 1817...the logical contradiction, whereby once both population and output begin to grow steadily, land becomes increasingly "scarce" relative to other goods and the law of supply and demand then requires that the price of land continuously rise as do the rents paid to landowners, who thereby become entitled to an increasing share of national income, while the share of the rest of the population shrinks...and thus social equilibrium is corrupted..."Ricardo" answered that the most effective remedy for this phenomenon is to levy progressive taxes..always on land...!!

-       Marx stated the principle of the infinite accumulation of wealth under capitalism...where he issued his first volume "Capital" in 1867..that is fifty years after "Ricardo"..when "Marx" lived in a period of misery for the working class, child labor and their exploitation with meager wages..and without laws..workers lived in the slums of the cities where industry operated..in that period.."Frederick Engels", Marx's friend, wrote the book "The Condition of the Working Class in England"..and they made clear that the more the share of capital in national income rises from industrial profits and rents on land and buildings..the more wealth concentrates in the hands of capital owners...

-       Kuznets had a different view opposite to "Ricardo" and "Marx" that inequality is on a continuous rise and increase...he says that with economic growth development, there is a stage in advanced stages in which capitalist growth achieves balanced growth and inequality in income reasonably decreases..regardless of economic policy choices and differences between countries..until it stabilizes at an acceptable level...so economic growth is likened to "the tide that rises and lifts all boats.." meaning that over time it will be beneficial to all..

-       There are forces that try to reduce disparities and bring convergence..such as the diffusion of knowledge and investment in training..skills and the law of supply and demand. The mobility of capital and labor, and advances in the technological climate, may automatically lead to the triumph of human capital (skilled owners) over financial, real-estate capital...and competent managers over shareholders, and skill over nepotism, and thus inequality becomes based on ability and individual contribution and in a situation.."economic maturity" then may automatically lead in a general sense to "democratic maturity"...That the accumulation and distribution of wealth no longer portend an inevitable clash between rentier lineages and lineages that own nothing but their labor..and "Kuznets" proclaimed.."inequality contracts"

-       On the other hand, statistician and economist "Malthus" advanced his bold theory concerning continuous demographic growth at rates that would almost end the world in the final outcome..he said that the threat to fair wealth distribution is "overcrowding" which begets widespread poverty as a result of migration from the countryside to poor neighborhoods in the cities.

- Palestine must pay attention to redistributing wealth and narrowing the gaps between the classes that make up Palestinian society. Unemployment rises to 30% and is expected to rise to 31% in 2019, this as an average, while in the Gaza Strip alone the rate exceeded 50%... and this is a dangerous and sufficient indicator to destabilize the fabric of society and push its stability to undesirable levels. The number of unemployed reached more than 400,000 individuals in 2018.... Also the number of university and college graduates ranges annually between 35,000 individuals up to 40,000 individuals... and this accumulation exerts pressure on a society that already suffers from inequality and a high annual population growth rate, creating overcrowding and migration from the countryside to the cities. Also land wealth and land prices are controlled by a small group that exaggerates the high prices, and the issue of rents for land and buildings and the payment of "khulwat" fall into the category of unjustified high prices, and prices and tax evasion; all this reduces business options in economic development and monopolizes them by a class of owners...and holders of wealth... At the same time public debt and domestic debt and budget deficits are accumulating... and the government is always in continuous search for financing for these debts and entitlements, at the expense of serious and general government investment spending that society needs to create jobs... and distribute this investment across several important sectors of the economy, rather than keeping public spending on services that reinforce individual consumption patterns... and not productive!! At the same time, the tax system must be modernized, regulated and restructured in a way that leads to social justice... Cooperation with the private sector and establishing joint projects... and keeping a reasonable distance... in the oversight of the private sector, granting this sector all facilities and organizing its behavior to undertake the development process and strengthen confidence, and enacting bold and studied laws... so that the development process can move forward... according to general rules shared with the private sector. And fighting the scourge of corruption..and settling disputes among people...!! Let us look at the economist "Kuznets"'s view on work and patience .. perhaps inequality will fade away, or decline to more just proportions!... by virtue of the mechanisms of the market system and its operating rules, in which the public sector is interactive with the private sector in economic development... and an exchange of the upper hand ... in the course of joint action...!

-        31-1-2019