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< Back to question Is there a correlation between capitalism and income inequality? Show more Show less

The political debate around whether capitalism and the tenets of free market socioeconomic modeling are beneficial for society has been raging for hundreds of years. Within a modern context, the topic of income inequality (especially within largely capitalistic countries like the United States and, to an extent, the UK) has emerged alongside the effects of the free market on the world economy. So, a big question within both the economic and political realm asks: Is there a correlation between capitalism and income inequality?

Yes, capitalism causes inequality Show more Show less

The economic system of capitalism has proven time and time again to directly influence a country's levels of income inequality across the board.
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Capitalism, in itself, is designed to pool most of the money into a few individuals at the top

A capitalistic system inherently concentrates a large majority of wealth into the hands of the few highest and most successful people, creating massive economic disparities between separate socio-economic groups in society.
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The Argument

When considering that around 74% of America's wealth is in the hands of 10% of the population, there is a clear problem of inequality that capitalism naturally produces within a broader society. Its tenets of free-market consumerism and merit-based upon monetary success jump-start a system in which a very small proportion of the most "successful" or "productive" individuals gain the most wealth in a kind of positive feedback loop, as the gap between the rich, the middle class, and the poor, widens as time goes on. In a product-based economy, "Because people differ in their productivity, capitalism inherently creates unequal outcomes. It is not possible to preserve capitalism and eliminate inequality."[1] To halt the rampant inequality seen in many countries throughout the world, we must get to the root of the problem and improve capitalistic societies through governmental intervention or lessening of free market-based economic reliance.

Counter arguments

Simply because inequality is a natural byproduct of capitalism does not necessarily make it evil. Though there is unequal wealth distribution among populations in economic societies, capitalism has allowed, over time, for even the poorest constituents to live comfortably relative to those lost to the annals of history. The obesity rate among the poorest people in the United States beautifully displays the advantages that poor people have within this time in history because of capitalism. Though this does not lessen their plight or struggle whatsoever, capitalism has allowed all groups to increase wealth over time, not just stagnate those at the bottom.


[P1] Inequality is a natural byproduct of capitalism, which can be seen around the world in countries regularly implementing capitalism in their economic systems. [P2] Inequality can be combated by allowing governments to intervene in the vast wealth and wage gaps occurring in countries throughout the world, limiting the free market. [P3] Capitalism directly causes income inequality.

Rejecting the premises

[Rejecting P2] Just because capitalism causes income inequality does not necessarily mean that inequality is inherently bad, especially when capitalism increases the standard of living for everyone, no matter how large the gap between the wealthy and the less wealthy is. [Rejecting P3] Capitalism should not be discredited because of inequality.



This page was last edited on Tuesday, 25 Aug 2020 at 07:23 UTC

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