2016 Chapters (Layout Features)

Preface: Inequality and Growth: A Preamble

Basu, Kaushik; Stiglitz, Joseph E.; Hon, Vivian

It was a part of the common wisdom of mainstream economics that, for developing countries, in the early stages of development, inequality would rise but, as growth persisted, inequality would, eventually, decline. Evidence gathered over the first three decades after World War II, seemed to suggest that this pattern would be borne out. But, as more time passed and growth persisted, inequality, as measured on several dimensions, has continued to grow. What this illustrates is the folly of trying to determine long-run future trends by extrapolating from a couple of decades of data. Looking at the past is an uncertain guide for the future: the innovations created at each stage of history may or may not make the next fundamentally different from those of the past. To peer into the future, we will not only need data but also analysis and theory. Our aim in this volume is more modest than peering into the distant future; but rather, to analyze the current state of global and regional inequality, to dissect the phenomenal increase in inequality that we have seen occur in recent times, and to better understand the relationship between inequality and development. But taking a cue from what was argued above, we have been mindful to bring analysis and economic theory to bear on data and statistics. This was one of the driving forces behind the conceptualization of this monograph, which eventually grew to being a two-volume set. But there were other driving forces.