- Hardcover: 336 pages
- Publisher: OUP USA (3 May 2012)
- Language: English
- ISBN-10: 019985565X
- ISBN-13: 978-0199855650
- Product Dimensions: 23.6 x 2.5 x 16.3 cm
- Average Customer Review: 2.0 out of 5 stars See all reviews (2 customer reviews)
- Amazon Bestsellers Rank: 919,871 in Books (See Top 100 in Books)
- See Complete Table of Contents
Inequality and Instability: A Study of the World Economy Just Before the Great Crisis Hardcover – 3 May 2012
|New from||Used from|
- Choose from over 13,000 locations across the UK
- Prime members get unlimited deliveries at no additional cost
- Find your preferred location and add it to your address book
- Dispatch to this address when you check out
Frequently Bought Together
Customers Who Bought This Item Also Bought
Enter your mobile number or email address below and we'll send you a link to download the free Kindle App. Then you can start reading Kindle books on your smartphone, tablet, or computer - no Kindle device required.
To get the free app, enter your mobile phone number.
an astoundingly broad, illuminating, and detailed examination of the global rise in income inequality between 1980 to the dawn of the financial crisis in 2008...Galbraith boldly brings the problem of radical inequality from the margins to the centre of economic analysis. (Imani Perry, London School of Economics)
A truly pathbreaking work of scholarship. (Barry Eichengreen)
A must-read for anyone who wishes to understand our political and economic era. (Joseph E. Stiglitz)
James K. Galbraiths (Marco Passarella, Economic Issues)
About the Author
James K. Galbraith is the Lloyd M. Bentsen Jr. Chair in Government/Business Relations and Professor of Government at the LBJ School of Public Affairs at the University of Texas. He is the author most recently of The Predator State: How Conservatives Abandoned the Free Market and Why Liberals Should Too
What Other Items Do Customers Buy After Viewing This Item?
Top Customer Reviews
Most Helpful Customer Reviews on Amazon.com (beta)
Galbraith's research argues and convincingly demonstrates inequality largely determines (1) the relative stability of a macroeconomy, (2) market economies generate inequality, and inequality destabilizes the economic system, i.e. generates economic crises, (3) the primary industry responsible for inequality is finance and the institutional structure of finance within a society, this implies (4) technology is not the primary cause of inequality, nor even a significant cause of inequality at a national level, and (5) outsourcing and international competition has not been a significant cause of inequality, instead (6) macroeconomic policy (both monetary and fiscal, but more accurately especially monetary policy, but also fiscal policy determine the degree of inequality and inequality determines the level of stability or instability of an economy) and political ideology, i.e. political economy radically determine the degree of inequality.
Now for the less happy analysis.
In a three sentence evaluation of the book, Nobel Prize winner economist Joseph E. Stiglitz writes: "In _Inequality and Instability_, James K. Galbraith examines one the most pressing issues of our time. In this accessible and far-reaching volume he investigates not only the depth and breadth of inequality in Europe, America, and elsewhere, but also its implications for politics and society. It is a must-read, for anyone who wishes to understand our political and economic era."
I fully endorse the first and third sentences. Indeed, I fully endorse the second sentence, save one single word, i.e. accessible. If you are a Ph.D., or a Ph.D. student, this book is accessible. Moreover, if you have a mentor or you are in an upper division undergraduate college economic course with an instructor to explain regression equations, Theil statistics, Gini coefficients, etc. this book will be accessible. However, if you are unacquainted with these phenomena, this book will be less then accessible.
Nonetheless, this book is too important to be ignored by a popular audience, every engaged citizen should absorb the basic argument. I have a suggestion. First, pick up a copy of Galbraith's _Predator State_ (2006), and read chapter 7, titled "What the Rise of Inequality is Really About", as a preface to _Inequality and Instability_. Second, read an abridged version of _Inequality and Instability_, before attempting to tackle the entire book. My suggested abridged version (for an U.S. audience) is, chapter 1, pp. 47-50 of chapter 3, (and possibly pp. 50-62 of chapter 3), then chapters 6, 7 and 13.
What will be learned can be summarized as follows:
(1) Inequality generates unemployment, and unemployment generates inequality, this I dub `Galbraith's Law.' Unemployment was not much of a problem post-Reagan (post-1984-5), but inequality has been on the rise. What Galbraith's Law suggests is if inequality is on the rise, unemployment is to follow. This is what happened in 2007-8, inequality destabilized the economy, a crisis manifested, and generated unemployment. Since the Great Recession of 2007-8, the Obama administration has failed to address inequality; consequently Galbraith's Law suggests the "Jobless recovery" will continue until inequality is reduced.
(2) The financial industry, and its regulation or lack of regulation, is the primary determinant of the degree of inequality in an economy.
(3) The level of inequality radically determines the stability (low inequality) and instability (high inequality) of a macroeconomy.
(4) Economic policy can reduce or increase inequality in a society. Because of the importance of finance, monetary policy and interest rate changes can be argued to be the most important policy as both culprit and mediator of inequality.
(5) Although free-market labor market and wage policy does not necessarily cause severe income inequality, progressive labor market and wage policy is important policy to combat income inequality caused by the functioning (and dysfunction) of the financial industry which generates income inequality.
UTIP uses inequality in manufacturing wages (i.e. pay rates in the manufacturing sector) as a proxy for income inequality. If the proxy is good enough, that vastly improves the quality of the data, and so the range of questions that can be addressed. Galbraith spends Chapters 2 and 3 arguing that the proxy is good enough -- that manufacturing wage disparities do reflect income disparities closely enough for his analyses.
The rest of the book depends on whether the reader accepts these assertions or not. The problem, of course, is that the services sector is changing very rapidly, and any inferences from manufacturing to services may quickly be out of date. In any case, even the numerical analyses that Galbraith presents are not very convincing. For example, he uses the UTIP data to replicate the World Bank data. While the correspondence is good, it is not very good. (He fits a linear regression and gets R-square statistics of about 0.6, i.e. the UTIP data explains about 60% of the World Bank data.) While that is good enough to show that the two measures are related, I don't think that it is good enough for the applications later in the book. But then Galbraith says that the World Bank data are flawed anyway, so the point of the comparison is lost on me.
Anyway, if one accepts use of UTIP data, a few interesting conclusions followe. For example, while individual European countries show less income inequality than the U.S., Europe taken as a single entity shows more income inequality. Given Europe's higher unemployment rates (at least until recently) that suggests that greater income inequality correlates with greater unemployment, not the reverse. (I note that Galbraith isn't always careful to distinguish correlation and causation. His results fall far short of showing that inequality causes unemployment -- the causation could run the other way, or a third factor might be at play).
Another very interesting result is that global factors, including international financial credit, securities markets and so on, account for almost all the changes in inequality. Economic institutions also atre important. But that leaves very little scope for political interventions or indeed for a government role. Or at least that's how I read the last third of the book.
A comment on the book's accessibility: I found the book very readable. Yes, there are a few equations, but the reader can skip over those with no loss. Yes, there are some regression analyses, but their results are described in words in the text, so they can be skipped too. Galbraith is a good writer, and if you skip the tables, what he has to say flows nicely.
Galbraith has concluded from his research that waht has driven rising inequalities of income in the U.S. has been rising stock prices, asset valuations, and income drawn from stock option realizations, as well as wages and salaries paid in sectors financed by new equity. (Think Instagram, acquired after about seven years' of their work for $1 billion, and with only 27 employees.) These incomes at the very top were highly concentrated into 15 counties, and five in particular - the NYC area, three associated with Silicon Valley, and King Co. Washington. States with higher levels of inequality tend to have lower voter turnout rates - consistent with the idea the wealthier voters have a strong interest in restricting access to voting by poor people. (Yet, none of Galbraith's examples of the highest income counties - California, New York, and Washington, do so.)
Within Europe, Galbraith reports that countries with less pay inequality systematically enjoy less unemployment, other things being equal. He also asserts that Europe overall has more income inequality than the U.S., something that does not fit with my understanding that the U.S. and China lead in this dimension. Continuing, Galbraith tells us there is strong evidence that inequality rose through most of the world during globalization, and that recent winning sectors in the U.S. have not generated many jobs - (eg. Facebook's initial $100 billion valuation is linked to only 3,200 jobs).
Perhaps the reason that Galbraith sounds like a voice crying in the wilderness lies in sponsorship of mainstream economics; there’s a wonderful scene at the end of the movie “inside job” in which advocates of free-market laissez-faire are asked why they didn’t disclose sponsorship by major financial institutions and banks; they didn’t see it as relevant.
Look for similar items by category
- Books > Business, Finance & Law > Biographies & Histories > Business & Economic History
- Books > Business, Finance & Law > Biographies & Histories > Finance and Stock Market History
- Books > Business, Finance & Law > Economics > Econometrics
- Books > Business, Finance & Law > Economics > Economic Conditions
- Books > Business, Finance & Law > Economics > Economic Policy & Development
- Books > Business, Finance & Law > Economics > History
- Books > Business, Finance & Law > Economics > International Economics
- Books > Business, Finance & Law > Economics > Macroeconomics
- Books > Business, Finance & Law > Economics > Theory & Philosophy