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Rising Inequality: Where is the Revolution?

Income inequality continues to rise amidst greater globalization and along with it political polarization continues to rise too. With the gap between the haves and have nots increasing and the corresponding shrinkage of the middle class, an obvious question is why the masses don’t violently overthrow the government and replace it with a socialist one? After all, socialism appears to be in the air. By most econometric models dealing with income inequality, a revolution of some type ought to be on the horizon.

Capitalism has been described by some — particularly Marxists — as a system of control. Those who own the means of production — whom we will refer to as property owners — control their workers. Because workers are forced to work in order to support themselves, they have little choice but to put up with the behavior of their employers, which at times can be exploitive, if not outright abusive.

This now begs the following question: Do workers effectively suffer from a form of Stockholm syndrome? In the Stockholm syndrome model, hostages tend to identify with their captors who are seen as taking care of them. It is really a coping mechanism intended for the hostages to survive. As such, it is difficult to say whether they really sympathize with their captors, even after they have been liberated, because they now view them as fellow human beings or because they have been traumatized by their ordeal and their sympathy following liberation is a form of post-traumatic stress.

And yet, if we are suggesting that workers, especially low-wage workers, suffer from Stockholm syndrome, then we are saying that working for property owners who have power and control us is a traumatizing experiencing. But if they are suffering trauma, then they can’t possibly lead a revolution. Still, they can be led in a revolution, and while flirting with more socialist political candidates is hardly a revolution, it may arguably constitute a very low level form of revolution.

The notion that workers suffer from Stockholm syndrome is perhaps a bit extreme, but the concept of Prisoner’s Dilemma is not so much. We use the model of Prisoner’s Dilemma to explain decision making in the face of incomplete or asymmetrical information. In the classic case of prisoner’s dilemma two are arrested and then separated at the police station. Prisoner A is told that if s/he confesses. S/he will get a reduced sentence of say five years, but if the case goes to trial and Prisoner B in the next room testifies against Prisoner A, then Prisoner A will get a sentence of ten years. If Prisoner A can rely on Prisoner B to keep quiet, then Prisoner A will be acquitted and go free.

Of course, Prisoner B is being told the same thing and is confronted with the same choices. The point here is that in the absence of any knowledge of what Prisoner B will do, or vice verse, a choice nonetheless has to be made. And yet, how can the worker be in a position of asymmetrical information vis a vis the employer?  After all, the worker knows up front what his/her wages and working conditions are. The worker still understands that the only other option to work, even low-wage work, is perhaps starvation.

Here Prisoner’s Dilemma applies to the larger political and economic arrangements. In the absence of knowledge that one could be worse off under communism or socialism, the typical worker may opt for capitalism on the belief that s/he could be better off. But s/he does not really know that. The prisoner’s dilemma in this scenario is not that dissimilar from Rawls’s veil of ignorance where one is asked to choose a set of governing arrangements based on ignorance of one’s attributes and endowments and everybody else’s.

Under the veil of ignorance, it is assumed that one would choose the priority of the right over the good so that everybody’s basic rights will be protected. Similarly, workers would choose in a prisoner’s dilemma scenario a set of arrangements where they could keep the fruits of their success, assuming that they will have success. Otherwise, they are choosing arrangements whereby in the name off equality and fairness they could all be equally poor.

What most workers intuitively understand, in spite of capitalism’s failings, is that there is incentive to work. At a minimum, they are led to believe that they have a chance to be part of the middle class. But what if the middle class no longer exists? Then we obviously need a capitalist system with supports.

Americans have never been too enamored by true socialism, even though opportunities for workers appear to be increasingly more limited in the new global economy. And yet, it isn’t because they understand its failure elsewhere. Rather the American myth which forms much of our deeply rooted character holds that anybody has a chance to make it — that America is truly the land of upward socioeconomic mobility.

About 65 years ago, political scientist Louis Hartz wrote The Liberal Tradition in America where he echoed DeTocqueville’s famous observation that America was born free. What that meant was that America never had the caste like class system characteristic of old feudal Europe. In the old feudalistic system, there were two ways out of one’s class: death or revolution. Under those circumstances redistributing property from the propertied aristocracy to the propertyless masses might seem like an appealing option. But not in America.

On the contrary, Americans were equal because they were born free of their feudalistic past. This meant that everybody had an equal opportunity to prosper. As long as people continued to believe that there was a path of upward socioeconomic mobility, there would be every reason to believe under a veil of ignorance they would pick a market system. And yet, that isn’ the same as saying they don’t think that it needs to be a regulated market system.

Still, it explains why we don’t see any real revolution on the horizon, and most likely never will. But if conservatives and/or Republicans really want to stave off the low-level revolution of sorts that is increasingly found in Democratic presidential hopefuls, it would do them well to remember that markets that leave workers behind and rising inequality are indeed issues that really cannot go unanswered. Or at least they can’t go answered with the standard tropes of lower taxation, less regulation, and more free markets.   

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