Heaven and Hell : The Macro Dynamics and Micro Experience of Inequality

This paper draws on Rowntree and Keynes to analyse inequality in present day capitalism, by focusing on two current drivers. The first is the link between household income and the value of goods and services that a household can afford to consume, which in turn feeds back into the kinds of jobs created; this is labelled the cheap goods/cheap jobs nexus. The second is the growth of funded savings from some households, which are directed on to stock markets from where these flows may have destabilising effects on corporate decisions and asset prices. In both cases, these drivers of inequality bring new elements of precariousness for individuals and their households, as well as the potential for instability at the macro level. The paper argues that, from a policy perspective, it is important to focus on the role of the household in mediating the consumption and saving choices of individuals and as the unit that bears the risks that arise from labour and capital markets. The paper does not arrive at policy prescriptions, but instead aims to identify the importance of particular flows, links and institutions in late capitalism, as well as the many paradoxes around unequal societies, which need to be recognised before policy can be developed