Earlier this month the OECD released a report outlining the global trends in inequality. Given the change in the global pattern of civil unrest witnessed this year – the London riots, the ‘Arab Spring’, the Occupy Wall Street movement, and even the current Russian protests – it is worth considering the role of inequality as an underlying cause of civil unrest and conflict.
Economists typically see civil unrest, rebellion and civil war as “large-scale predation of productive economic activities.” As many have noted in a variety of contexts, institutionalized redistribution of wealth is the price the wealthy pay to insure against having their wealth taken by force.
However, the research into the topic of inequality and civil unrest finds that the ingredients for conflict are not so clear-cut. The long history of study reveals the following key factors as important in determining the likelihood of civil conflict.
- High proportion of GDP from primary commodities (which could be partially related to African colonial history).Partly one could argue this is the result of rents available to a select few producers of the export goods, which the people believe are not being appropriately shared. I think Australians can see parallels there between our own government and African rebels. Of course, having a government to undertake these social objectives is the peaceful way to go about it.
- Geography and history, especially cultural, religious, and colonial legacies, matter a great deal.
- Low education levels
- Low rates of economic growth
Surprisingly, there is quite a deal of evidence that income inequality and lack of democratic rights have no significant effect on the likelihood of civil war. I have my reservations about the strength of such findings, for a number of reasons. The below map of income inequality, measured by the Gini Coefficient, shows a pretty clear ‘eyeball’ trend to me.
My first concern is that data on inequality is often poor and incomplete, particularly in areas where conflict is common or ongoing.
Second, recent research shows that income inequality alone is not a sophisticated enough measure to predict civil unrest. There needs to be group structures in place, and inequality between groups – be they racial, geographical, religious, or otherwise – to catalyse civil conflict. I am sure there are many people looking for explanations of this type of group behavior in evolutionary psychology, which may prove to be fruitful.
In a study of the variation between inequality and conflict in Indian states, researchers have shown that redistributive policies are an effective means to reduce civil unrest… Policing is at best a short-term strategy.
Third, and this is where the OECD report adds value, inequality is often related to other factors used to explain civil conflict – corruption for example. Their report shows that a high degree of income inequality is associated with low rates of economic growth, which is a known contributing factor to civil unrest.
But the OECD report goes a little further and divides countries into ‘developed’ and ‘emerging’ economies, and finds that in developed economies, income inequality has less impact in economic growth than in emerging economies. Intuitively, this makes sense.
A country with high levels of education, where the income divide is between the wealthy and extremely wealthy, is unlikely to see the complete set of ingredients for civil unrest. Yet that does not eliminate the development of a critical factor – a group identity, or structure that can almost institutionalise inequality.
This group dynamic was certainly one contributing factor in the London riots. A 7.30 report at the time had a great interview with a former UK police advisor who pinpointed a growing pool of disengaged citizens, perhaps from families with generational unemployment and council housing – a pool of people with nothing to lose who can associate as a group, and are attracted to the excitement of the riots as an opportunity to be part of something.
When I wrote about the Occupy Wall Street movement some months back I noted that that inequality is creeping up in much of the developed world. Coupled with the elevated risks associated with low economy growth, governments need to pay close attention to potential triggers of civil unrest, especially after some years of relative calm.