Book Review: The Political Economy of Inequality

Frank Stilwell,
The Political Economy of Inequality (Polity Press, 2019)

Reviewed by Henry Paternoster, La Trobe University and The Australian Catholic University, Australia.

(This is a prepublication version of this review. You can find the published version in Thesis Eleven Journal, on the T11 Sage website)

Since the 1990s, a seeming paradox has developed within the study of class: global economic inequalities have grown enormously more pronounced, while theories of class based on economics are perceived as less relevant. As inequalities rose, the language that social theorists traditionally used to describe them lost popularity. Those who still believe in the relevance of class as a concept have, in many cases, traded the economics of Marx or Weber for the cultural theory of Bourdieu. This change reflects the diverse, symbolic, and embodied experiences of inequalities during an era in which stable employment, unionism and class-based politics have all declined. One consequence is that dynamics of economic inequality are less prominent in scholarship at precisely the time that those dynamics are becoming increasingly extreme.

Frank Stillwell’s The Political Economy of Inequality is a timely revaluation of the insights that political economy as a discipline can offer. It could not come from a more appropriate source: Stilwell is one the founding figures of political economy in Australia. Along with Evan Jones, Gavan Butler, Margaret Power, and Ted Wheelwright, Stilwell established the political economy department at the University of Sydney. Stilwell’s work, such as the four-volume Readings in Political Economy co-edited with Wheelwright, was a major contribution to the fledgling discipline in the mid-1970s. More recently, Stilwell’s Political Economy: The Contest of Economic Ideas has become a standard textbook for students of the discipline around Australia. After forty years of teaching at the University of Sydney, Stilwell retired in 2013, where he remains emeritus professor. Despite retiring, Stilwell remains an active leader within the discipline that he helped to found—both as editor of the Journal of Australian Political Economy—and by continuing to publish his own interventions into the field.

The Political Economy of Inequality is a refreshing, comprehensive, and informed analysis of recent economic trends alongside a series of conceptual tools for making sense of them. It is an ambitious book, in that it consolidates decades of political economic research while seeking to engage contemporary public discourse. Its theoretical foundations and conclusions will not be fundamentally new or surprising to academics. However, it is neither pop sociology nor a textbook intended for students. It treats the reader as serious, intelligent, and engaged, without expecting them to know anything about left-wing economic analysis. It is designed to provide a holistic analysis of inequality to those who may actually use these ideas to inform social change. Stilwell’s target audience includes ‘people engaged in political parties, trade unions, NGOs and social movements’ (p.xii). This accounts for the practical and applied tone of the book, making it an important read for scholars of inequality as much as those activists.

This book is transdisciplinary, which is on one of the strengths of political economy. Stilwell (p.xii) hopes that it will be of use to sociology, political science, development studies, history, and economic geography. Sociology can sometimes respond to issues of inequality and class narrowly, focusing on economic data to the exclusion of political narrative, or culture to the exclusion of economic power. A holistic and global analysis of inequality which draws together historical economic and political threads is therefore useful. What is newer to political economy as a discipline is the inclusion of ‘southern’ and postcolonial perspectives. The only name that it leaves out is the biggest one in the sociology of inequalities: Pierre Bourdieu. Sociologists will draw their own conclusions about whether this leaves any questions unanswered in Stilwell’s analysis. Is economic theory sufficient to make sense of inequalities, without recourse to symbolic power struggles? The strength of Stilwell’s analysis is, I think, sufficient to warrant a revaluation of the hegemony of Bourdieu’s theory in contemporary class analysis.

In this way, this book is interesting for its use of categories that are no longer in vogue. Stilwell defines class in a basically Marxist manner. In general this means placing relationships to the means of production at the centre of the analysis, which concretely means the possession of capital: those who own capital or land can earn large incomes without expending physical effort, whereas those without capital must sell their ability to work (p.6). Stilwell acknowledges potential issues with the labour theory of value, without engaging them at length (p.107). Stilwell does not take the strength of these concepts for granted, but neither does he shy away from them.

Stilwell focuses on what is known and demonstrable rather than becoming bogged down in narrow theoretical debates. In other texts, this might be a kind of theoretical evasion. However, Stilwell succeeds by compiling a huge amount of empirical data alongside interpretations which are continuously being put forward and tested. For this reason, none of the arguments rest on cherry-picked evidence or shaky assumptions. The trends, patterns, and potential solutions that develop across the course of the book become very clear, even as Stilwell offers a range of possible explanations and theoretical tools. Each concept discussed has its limitations, but these are put in perspective by the weight of evidence showing that there is something to them. This is the kind of resource which stimulates discussion, rather than closing it down with oversimplified solutions.

One strength of this book is that it offers those interested in class a course in economic concepts that they may be unfamiliar with. In addition to classical Marxist concepts, Stilwell engages with the functional distribution of income, distinctions between public and private wealth, and a range of other concepts.

One example is a critique of GDP as a measure of the material wellbeing of a nation. According to Stilwell, GDP as a concept makes ‘sins of omission’. Stilwell argues that much household production is for its own consumption rather than the market, that GDP excludes volunteer work, and that it even ignores the cost (in leisure time and opportunities) of producing GDP (p.32). GDP also counts some things that measure market activity, but which do not reflect material wellbeing. For example, the cost of repairing damage from accidents, or more egregiously, both the destruction and reconstruction of war count toward GDP (p.32). Making a mess of the environment and then cleaning it up has a similar effect (p.32). Most problematic is that the GDP does not indicate the distribution of its social benefits (p.32); it would rise even while the majority of the population suffered economically, so long as the gains of the 1% were large enough. From this perspective, the concept of GDP ‘per capita’ is even more deceptive; it measures not the wellbeing of the average person, but rather the average of the productivity of the population. Stilwell notes that economists have warned against its misuse, but this has had little effect (p.33). This is compared with alternative indexes, such as the Genuine Progress Indicator (GPI), which avoids many of these problems, and shows a widening gulf between material wellbeing and GDP (p.33). Stilwell uses the Human Development Index (HDI) and the inequality-adjusted IAHDI as used by the UN, albeit with a warning: all measures contain a degree of arbitrary judgement, and therefore need to be treated cautiously, because ‘we tend to act on what we measure’ (p.33). This discussion will be particularly useful to people interested in inequality, but without previous engagement with these kinds of economic theories.

Each chapter concludes with a dot-point summary of its main points. The book itself concludes with six priorities for radical reform: public investment, unconditional basic income, progressive taxation, sustainable and equitable planning, constraints on corporate power, and an international compact for an egalitarian world order (p.256). These measures might be radical—especially by contemporary standards—but they are hardly revolutionary, and in either case they are firmly grounded in the evidence. Stilwell makes a strong case for the necessity of each of these measures throughout the book. This includes questioning dominant economic policies which contradict them, such as the notion that inequality drives productivity.

Stilwell engages with all the issues I would expect and more, including broader discussions such as happiness and ‘affluenza’. The text also considers gender and ethnicity, including feminist economics which locate the divisions between paid and unpaid work as key to inequality. That said, the focus of the text is the distribution of income and wealth. The informal economy is referred to, but the main story is the market, its consequences, and a range of possible political responses to them.

The Political Economy of Inequality avoids both over-abstraction and political dogmatism, treating readers as intelligent while exploring a wealth of empirical data. Stilwell avoids following fads, making a strong case for the enduring concepts of classical Marxist economic theory. This text maps the key contours of contemporary economic inequalities. This text succeeds in its goal of offering an applied overview of the strengths of political economy, carefully worded to be both academically rigorous and accessible to readers from any discipline. As such, it is a useful resource for making sense of economic inequality and the key political and theoretical responses to it.

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