Terry Lynn Karl: The Structure of Choice for Inequality in Exploitation Economies

Terry Lynn Karl (Stanford University) talks about the structure of choice for inequality, referencing José Gabriel Palma´s remark that “inequality is a choice”. She reminds us of the “paradox of plenty”: The more natural resources a country owns, the more limited are the possibilities in the structure of choice. This is due to the high incentives for economic elites to extract the rents instead of investing in future technologies and a more diverse economy. This is especially the case for states in which the democratic institutions are not yet developed when natural resources are discovered. This dynamic results in a “vicious cycle”, in which economic inequality leads to political inequality which in turn produces more economic inequality. An important obstacle to break this cycle is that even in democracies, working class people tend to vote against their own interest. However, after passing a certain threshold of inequality combined with low social mobility, there is a possibility for change. She concludes that levels of inequality change only after severe crises when the resistance to change is weakened.

International Conference “Global Inequality – Trends, Causes and the Politics of Distribution” organized by the Friedrich Ebert Foundation – Representation in Mexico, the Instituto Belisario Domínguez, the Faculty of Economics of the UNAM, and the Universidad de las Américas Puebla.
Original version in English