Introducing Equilibrium Concepts into a Contested Field
Chapter 1: Introduction
The Introduction departs from the premise that societies can only live in peace and prosperity in the medium to long run if there is some sort of income distribution equilibrium realized in the economy. Hence, we believe that some degree of inequality is accepted, if not warranted by society. Whenever the modus is lower than the median and the arithmetic average in the distribution of personal incomes, one can expect a majority of the population to be satisfied by and large with their own status, given their group of reference. But earlier equilibria may be destroyed and societies are challenged to search – in their own interest – for new equilibria. In our view, which is founded both theoretically and empirically, the forces of globalization have contributed substantially to the erosion of income distribution equilibria. A view on the empirical facts shows that on a world scale level, there seems to be a process of convergence under way in the figures of income concentration for different income groups. This sort of ‘mobility’ in income distribution is well documented and reflected in upward trends for the Gini coefficients (both out of the market and net of taxation/transfers) as well as in downward trends for the wage share in developed countries such as Germany between 1990 and the present.