Is there a correlation between capitalism and income inequality?

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?

No, capitalism does not cause inequality

Income inequality is a byproduct of every society, no matter what economic system under which that society functions. Capitalism, by nature, does not encourage or catalyze the inequality already in place.

Capitalism can be proven to shrink inequality

The tenets of the free market allow individual economic growth that acts as a literal opposite to the income inequality attached to capitalism.

Cronyism and social programs are causes of inequality, not capitalism

Modern detractors of capitalism fail to understand the nuances behind income inequality, and corruption and crowding out as a result of social programs are key causes for the unequal wealth distribution in many countries.

Yes, capitalism causes inequality

The economic system of capitalism has proven time and time again to directly influence a country's levels of income inequality across the board.

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.

A large portion of inequality is due to the "Superstar Effect"

The "Superstar Hypothesis" largely explains the inequalities seen today within the age of technological advancement, capitalism a driving factor in the emergence of the few over the many.

Income Inequality exists outside the realm of capitalism.

Income Inequality, broadly defined, has existed since before capitalism was adopted as an economic model.
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This page was last edited on Monday, 10 Aug 2020 at 14:38 UTC