Policy Focus is key – Redistribution is in the details

A fourth agreed broad point on causes of global inequality is that positions along the collectivist-individualist spectrum are substantially influenced by policy choice. Neither capitalism nor the way that resulting surpluses are distributed is a‘natural’process. So-called ‘market forces' do not exist outside of society and politics. Instead, it is socially constructed rules that bring order and direction to an economy, and these rules substantially shape distributional outcomes. This principle - that governance matters - is as valid for a global economy as it is for any national or local economy. To take some concrete examples, it matters hugely for the nature and scale of global inequalities when rules governing money determine that certain currencies such as the euro will circulate across the planet, while others such as the kwacha will not. Likewise, it matters substantially for the distribution of global resources when intellectual property regimes divide benefits between inventors and users in particular ways rather than others. It also matters enormously for the division of global wealth when rules of taxation determine who pays how much to which public authority. It furthermore greatly matters how rules of social policy set minimum wages, pension arrangements, access to health care, etc. And it matters considerably for global resource distribution when migration rules allow some people to move with relative ease across the planet, while others are locked into (usually highly disadvantaged) places. Hence, huge global inequalities prevail in good part because existing governance arrangements create and sustain those gaps. By the same token, alternative rules and regulatory institutions for the global economy could significantly reallocate resources more evenly across humanity. Indeed, many progressive redistribution of global resources requires major changes to global economic governance.