SOC Chapter 6 PDF

Social Stratification: Canadian and Global Perspectives LEARNING OBJECTIVES In this chapter, you will learn to LO1Describe how wealth and income inequality in Canada have changed in recent decades. LO2List the social factors underlying wealth and income inequality. LO3Appreciate the social origi...

Social Stratification: Canadian and Global Perspectives LEARNING OBJECTIVES In this chapter, you will learn to LO1Describe how wealth and income inequality in Canada have changed in recent decades. LO2List the social factors underlying wealth and income inequality. LO3Appreciate the social origins of poverty. LO4Understand why different sociologists argue that high levels of inequality are necessary, will inevitably disappear, or vary under identifiable conditions. LO5Recognize how people move up and down the structure of inequality. LO6Analyze change in the magnitude of inequality on a world scale. LO7Contrast competing explanations for the persistence of global inequality. REKOVERY? In January 2021, Djenaba Dayle faced a stark choice: food or rent. Employed as a server until the COVID-19 pandemic hit, she received the government emergency response benefit and employment insurance—but they weren’t enough. “It’s either pay my full rent and not eat or eat and get behind in my rent,” she said (Armstrong, 2021). A couple of weeks before the World Health Organization declared a worldwide pandemic in March 2020, Canada’s unemployment rate stood at 5.6 percent. By the time Dayle was interviewed, the unemployment rate stood at 8.6 percent. Some 1.1 million Canadian workers were unemployed. Hundreds of thousands more were working reduced hours because of the pandemic. The great majority were lower-level workers in the economy’s service sector. Servers, cooks, hotel staff, and airline staff were hardest hit as restaurants shut down and travel ground to a near halt. In-store retail workers, janitorial and building maintenance staff, hairdressers, and stage actors also suffered. A disproportionately large number of Canadians employed in lower-level service jobs are women, members of visible-minority groups, and youth. That’s why the unemployment rate was especially high among visible-minority workers (9.9 percent) and female youth (12.1 percent) (Statistics Canada, 2021e). If you happened to be a young, female, Black worker like Djenaba Dayle, chances are you were in big financial trouble in early 2021. On the other hand, some Canadians benefited financially from the pandemic. Internet entrepreneurs and their employees did especially well because so much economic activity went online. Lawyers, financial managers, professors, engineers, and physicians in private practice could work from home via the Internet while saving money on commuting, childcare, entertainment, eating out, and vacations. After the pandemic’s firstwave shutdown (March–April 2020), real estate agents in many parts of the country experienced booming demand for their services as some Canadians were forced to sell their homes to make ends meet while others bought new homes with bigger backyards and swimming pools. Many higher-level service workers saved money—collectively, more than $170 billion in just the first 10 months of the pandemic (Armstrong, 2021). Not surprisingly, sociologists and economists started talking about a “K-shaped recovery.” As illustrated in Figure 6.1, a K-shaped recovery involves sharply divergent paths after a period of initial improvement—an upward path for upper-level service workers and those employed in manufacturing, and a stubbornly flat path for lower-level service workers. FIGURE 6.1The K-Shaped Recovery Social stratification is the way society is organized in layers or strata. COVID-19 increased the gap between higher and lower strata, thus heightening interest in what is arguably sociology’s core issue. What consequences does social stratification have for the way people live? What patterns of social relations underlie and shape the distribution of advantages and disadvantages in society? How do patterns of social stratification vary over time and place? Is it desirable to reduce the level of social stratification in society? Is it possible? If so, how? These are among the chief questions students of social stratification seek to answer, and I will touch on all of them here. I first sketch patterns of social stratification in Canada and globally. I then critically review major theories of social stratification. Finally, I analyze the movement of individuals up and down the stratification system over time and how they perceive and evaluate it. social stratification The way society is organized in layers or strata. LO1 PATTERNS OF SOCIAL INEQUALITY WEALTH Most adults’ wealth (or net worth) includes a dwelling (minus the mortgage), a car (minus the loan), some appliances and furniture (minus the credit card balance), and some savings. Owning a nice house and a good car and having a substantial sum of money invested securely enhances your sense of well-being. You know you have a cushion to fall back on in difficult times, and you know you don’t have to worry about paying for your children’s postsecondary education or how you will make ends meet during retirement. In September 2020, the 20 wealthiest Canadian families enjoyed a net worth of between $3.3 billion and $41.7 billion each, their collective wealth having grown 26 percent over just the preceding six months when the COVID-19 pandemic began (Hemingway and Rozworski, 2021). These sums are so large they are hard to imagine. You can begin to grasp them by considering that if you spent $1000 a day, it would take you nearly three years to spend $1 million. How long would it take you to spend $1 billion? If you spent $1000 a day, you couldn’t spend that much in a lifetime. It would take nearly 3000 years to spend $1 billion at the rate of $1000 a day—and that assumes you don’t invest part to earn still more money. Another way of putting the wealth gap into perspective is to note that, in 2016, the 87 wealthiest people in Canada had the same amount of wealth as the more than 12 million Canadians at the bottom of the wealth ladder, who compose more than one-third of the country’s population (see Figure 6.2). Wealth inequality has been growing for decades. INCOME Income is the amount of money earned in a given period. Today, the average Canadian family earns more than 20 times as much as the average Canadian family did in 1950. However, that is less impressive than it sounds. More than half the gain is due to inflation. After all, a soft drink that once cost a dime now costs a dollar or more. Moreover, the average number of earners per family increased as more women entered the paid labour force beginning in the 1960s. As a result, more people are now generating the income of the average family than was the case in 1950. Even taking these factors into account, Canadian families earn considerably more now than they did 70 years ago, partly because they are more productive. That is, on average, workers are more skilled and are using more sophisticated technology to produce more goods and services per hour of work, so they are paid more. FIGURE 6.2The Balance of Wealth in Canada, 2016 How has the distribution of income changed over time? In brief, income inequality has increased since the 1970s. Thus, if we divide Canadian families and unattached individuals into fifths (the bottom fifth of income earners, the second fifth, the middle fifth, the fourth fifth, and the top fifth), we find that all but the top fifth have seen their share of national income shrink since 1976; only the share of the top fifth has grown (Statistics Canada, 2015a). The income data just reported represents the money that Canadian families and unattached individuals earn after paying income tax and receiving government benefits. Canada is a welfare state. That is, the government collects taxes and redistributes them in the form of social assistance payments, Employment Insurance payments, child tax credits, GST credits, and so on. The richest fifth of Canadians lose about a fifth of their income to income tax, while the poorest fifth of Canadians see their incomes increase by nearly two-thirds as a result of government transfer payments. If Canadians relied only on the market to distribute income, inequality would be much greater. Differences in income inequality are evident within Canada too. Income inequality is lowest in Prince Edward Island and New Brunswick and highest in Ontario and Alberta. However, the biggest geographical differences are between Toronto, Montreal, Vancouver, and Calgary on the one hand, and the rest of the country on the other. Canada’s four largest cities, with 38 percent of the country’s population, have witnessed the country’s biggest increases in income inequality in recent decades. Between 1982 and 2014, the increase in household income inequality was fully four times larger in Calgary than in the rest of the country (Fong, 2017: 5, 11–12) LO2 EXPLANATIONS OF WEALTH AND INCOME INEQUALITY What explains the distribution of income? Why are some people rich and others poor? You know that some individuals earn high salaries and amass great wealth because they are naturally talented. Sidney Crosby (hockey), Andrew Wiggins (basketball), Ryan Gosling (acting), and Drake (rap music) are Canadians whose success on the world stage has provided them with substantial earnings. The main reason for their excellence is a natural endowment in athletics, music, and so on. A genetic gift sets them apart. At the other end of the economic spectrum, some people have the genetic disadvantage of Down syndrome or schizophrenia—conditions that typically prevent people from earning big salaries. However, people at both ends of the spectrum are exceptions. Sociologists believe that for the great majority of people, genes play only a minor role in determining income. Even for people with a natural talent in the performing arts or athletics, effort is essential. Practice and years of dedication to the basics of a profession are common to all who enjoy success. Effort is also significant for many Canadians who spend long hours at work—whether amassing billable hours in a law practice, doing endless chores in a small business, or working overtime at a construction site. However, although hard work may be necessary, it is not sufficient. Effort alone does not result in high income and wealth. The most important determinant of income for most people is capital in its various forms. Economic capital is ownership of land, real estate, industrial plants and equipment, and stocks and bonds. Capital generates income and can be inherited, so being born into a rich family almost automatically ensures one of a substantial income. economic capital Economic capital is ownership of land, real estate, industrial plants and equipment, and stocks and bonds. Thus, how high children rise in the socioeconomic hierarchy is a function of how wealthy their families are to begin with. For instance, an increasingly large number of players in the National Hockey League come from well-to-do families that can pay for the expensive training that is typically needed to reach the elite level. A full set of professional-quality equipment at around $3000 may be manageable for many families, but playing AAA hockey costs $25 000 a year. Training camps, personal trainers, travel, nutrition supplements, and so on can mean that having a child play from the age of 5 to the age of 18 will cost between $100 000 and $250 000. Placing a budding star in a private hockey academy is another $40 000 or so a year (Kolodziej, 2014). Mitch Marner has natural talent, but the fact that his family could afford to turn him into a Maple Leaf superstar didn’t hurt. FIGURE 6.3Factors Influencing Income Family wealth, including inherited wealth, helps people earn high income in two ways. Indirectly, family wealth can buy training and higher education and provide invaluable social and cultural capital to give offspring a boost up the economic ladder. Directly, family wealth can be invested to provide substantial annual income (see Figure 6.3). Of the 13 richest Canadians, six are grandchildren of one extraordinarily successful man: Roy Thomson. Although they may all be smart, hard-working individuals, they were born with tremendous advantages that surely mattered in determining their position in the socioeconomic hierarchy today. Apart from economic capital, human capital, or investment in education and training influences one’s income and wealth. Jobs requiring advanced skills are increasingly numerous in Canada, and education is one of the most important determinants of occupation and income (Statistics Canada, 2003a: 9). As the Canadian occupational structure moves farther away from its traditional resource-based foundation to a more mature, knowledge-driven economy, the importance of education will continue to grow (see Table 6.1). human capital Investment in education and training. Much evidence supports a human capital interpretation of the link between schooling and incomes. However, it is not a complete explanation for why people earn what they earn. For example, in the legal profession, almost everyone makes the same human capital investment: every lawyer acquires a law degree. Yet economic rewards vary even for people with the same experience and type of legal practice. Notably, female lawyers earn less on average than male lawyers do, even if they are matched in terms of experience and type of practice (Kay and Hagan, 1998). Part of the reason people with the same amount of human capital may receive different economic rewards is that they possess different amounts of social capital. Social capital refers to people’s networks or connections. People are more likely to succeed if they have strong bonds of trust, cooperation, mutual respect, and obligation with well-positioned individuals or families. Knowing the right people, and having strong links to them, helps in finding opportunities and taking advantage of them (Coleman, 1988). social capital The social networks to which people are connected and that give them varying degrees of access to others who are well-positioned. A related version of this argument is captured in the notion of cultural capital (Bourdieu and Passeron, 1990). Cultural capital comprises the set of social skills people have: their ability to impress others, to use tasteful language and images effectively to influence and persuade people. Although the notion of social capital stresses networks and connections with others, the idea of cultural capital emphasizes impression management skills and the ability to influence others. In different ways, both concepts emphasize being part of the right “social club.” cultural capital The widely shared, high-status cultural signals (attitudes, preferences, formal knowledge, behaviours, goals, and credentials) used for social and cultural inclusion and exclusion. The concepts of social and cultural capital also share the idea that families higher in the social hierarchy enjoy more capital of all types. Connections and culture help you find a good job. The hiring of new recruits, then, depends on the talent, effort, and skills that people bring to the interview, but it also depends on the connections and culture that people have. Indeed, culture and connections often influence who gets an interview. TABLE 6.1Average Hourly Wage by Broad Occupational Group, December 2020 Occupational Group​ Average Hourly Wage ($) Management​ 46.73 Natural and applied sciences​39.67 Education, law, and social, community, and government services​ 35.02 Health​ 31.96 Art, culture, recreation, and sport​ 28.71 Business, finance, and administration​ 29.39 Trades, transport, and equipment operators​ 28.55 Natural resources, agriculture, and related production​ 27.29 Manufacturing and utilities​ 24.89 Sales and service​ 19.47 POVERTY MYTHS ABOUT POVERTY People who are homeless sit at the bottom of the income distribution. Nobody knows exactly how many Canadians are homeless, but in cities across the country people sleep under bridges, in back alleys, behind dumpsters, in public parks, and in homeless camps. They do so night after night, month after month. In recent decades, the number of people with no fixed address has increased considerably. Homelessness is a sign of deep and persistent poverty. Exactly how many Canadians are poor is a matter of debate. Poverty lacks a universally accepted definition (see Research Challenge, How Should We Measure Poverty?). It is clear, however, that many people believe that people living in poverty—especially those who receive social assistance—are lazy, irresponsible, and lacking in motivation, abilities, and moral values. These images contribute to stereotypes of the “deserving” and the “undeserving” poor—for example, war veterans and children versus “welfare bums” and those “looking for a handout.” However, research conducted in the past few decades shows that many stereotypes about people living in poverty are myths: Myth 1: People are poor because they don’t want to work. The myth that people living in poverty don’t want to work ignores that many people can’t work because of poor health or a disability or because they must take care of their young children because of inadequate public childcare provisions. It also ignores that many people living in poverty work full-time, and many more work part-time. Having a job is no guarantee of escaping poverty because of the low minimum wage set by provincial and territorial governments. In 2021, the minimum hourly wage varied from $11.45 in Saskatchewan to $16.00 in Nunavut. Someone in Toronto working 50 weeks at 40 hours a week for minimum wage would earn $28 500 a year—above the current poverty threshold for an unattached individual but below the threshold for a parent with a child (Statistics Canada, 2020d). Myth 2: Most people who are poor are immigrants. Recent immigrants experience poverty rates significantly higher than the Canadian-born, but recent immigrants are only a small fraction of all Canadian immigrants. Once they become established, immigrants have lower poverty rates than do people born in Canada (National Council of Welfare, 2004). Myth 3: Most people who are poor are trapped in poverty. Actually, 80 percent of people with low income in a given year escape poverty in less than a year, and another 12 percent escape within two years (Statistics Canada, 2010a). Most people try to move out of difficult financial circumstances and most succeed, at least for a time. A camp of about 150 people who are homeless at a parking lot at the Port of Vancouver. Levels of domestic violence increased during the COVID-19 pandemic, so more women became homeless and moved to camps like this. EXPLAINING POVERTY General explanations for the existence of poverty range from individual-level to structural explanations. Individual-level explanations focus on the characteristics of people who live in poverty, asking how they differ from people who do not live in poverty. This type of explanation focuses on causes that lie within the person. According to this logic, someone experiences poverty because of a personal attribute, such as low intelligence or a behavioural abnormality. Some evidence suggests that individual attributes do explain a small amount of poverty. For example, people with disabilities have a higher risk of living in poverty than others do. Not all people with disabilities live in poverty, however, and the vast majority of people living in poverty do not have a disability. Most poverty is not a consequence of people’s characteristics. A related explanation focuses on people’s acquired attitudes: low self-esteem, lack of motivation to achieve, and an inability to delay gratification. Based on this logic, poverty persists because families experiencing poverty employ inadequate child-rearing practices that create bad attitudes. A related version of this argument identifies a “culture of poverty,” a way of thinking and acting supposedly shared by families living below the poverty line. A culture of poverty is said to reinforce and perpetuate itself through poor upbringing and ill-formed personalities. RESEARCH CHALLENGE How Should We Measure Poverty? Analysts disagree about whether poverty should be defined in absolute or relative terms and whether the measurement of poverty should be based on income or consumption. An absolute definition of poverty focuses on essentials, suggesting that families that are poor have inadequate resources to acquire the necessities of life (food, clothing, and shelter). However, a person’s definition of “essentials” depends on values and judgments. What is essential also varies from time to time, place to place, and group to group. Many of our ancestors lived without indoor plumbing, and some Canadians still do, but most people would define indoor plumbing as essential. A family could survive on a steady diet of cod and potatoes, but most would define such a family as poor. A relative poverty line also has certain drawbacks. Two issues are central: relative to what, and how relative? Whether poverty ought to be defined narrowly in terms of economic measures (e.g., income) or more broadly with respect to community standards (e.g., safety of working conditions, environmental quality, type of housing) illustrates this area of disagreement. Most definitions tend to be narrow, focusing primarily on income. But even if a relative poverty line is defined narrowly, how relative ought it to be? One-third of average income? One-half? Some other fraction? Yet another disagreement plagues any definition. Should the definition of poverty be based on income or consumption? Because “the essentials” is a core idea in any definition of poverty, it makes sense to think about, and measure, poverty as the cost of purchasing essentials. Deprivation occurs when a family cannot acquire the essentials, not necessarily when income is too low. Income and consumption are correlated, but wealthy people can live off their savings, even with low income. The definition of poverty may mean little to a person who is homeless and sleeping on a hot air vent, but the definition of poverty is consequential because social policies are enacted, or not enacted, based on levels and trends in poverty. Politicians can lower the poverty rate by entitling people to social assistance benefits and redistributing income from high- to low-income earners through tax policies—or they can raise the poverty rate by doing the opposite. However, before doing anything, they must be able to define poverty. Canada didn’t have an official definition of poverty until 2018, when the government released a povertyreduction strategy. Its first objective was to establish an official poverty line using the market basket measure (MBM). The MBM takes into consideration the cost of a basket of goods and services that Canadians need to cover basic needs and enjoy a reasonable standard of living: healthy food, adequate clothing, shelter and transportation, a telephone, school supplies, and so on. Statistics Canada calculates the income needed to afford that basket, adjusted for household size and the area in which the household is found. By this definition, a single person living in Brandon, Manitoba, in 2018 needed a disposable annual income of $17 560.50 to remain above the poverty line, while a four-person family in Toronto needed $42 101.00 (Statistics Canada, 2020d). The second objective of Canada’s poverty-reduction strategy is to reduce the percentage of Canadians living below the MBM poverty line to 10 percent by 2020 and 6 percent by 2030. The government aims to achieve these targets by investing $22 billion in an enhanced Canada Child Benefit, a Guaranteed Income Supplement for seniors, and the New Workers Benefit (Employment and Social Development Canada, 2018). These targets as well as the MBM-based poverty line became law in 2019. Many people were optimistic about reaching these goals when 2018 figures showed that 8.7 percent of Canadians lived in poverty (Statistics Canada, 2020d). However, we can expect an increase in poverty for a few years beginning in 2020 because of the financial effects of the COVID-19 pandemic. Anti-poverty group Campaign 2000 criticizes the MBM for treating items such as childcare, prescription medicine, and internet access as discretionary expenditures, that is, things a family could reasonably choose to do without. Campaign 2000 also notes that the government calculates discretionary expenditures based on a survey that doesn’t sample people living in the northern territories or on First Nations reserves, precisely where poverty is most widespread in Canada. Consequently, Campaign 2000 argues for a relative measure of poverty that takes such high-poverty areas into account. Doing so would double the estimated percentage of Canadians living in poverty (Campaign 2000, 2020). Critical Thinking Questions Is the MBM definition of poverty absolute or relative? Is the MBM definition of poverty income- or consumption-based? Two objections undermine this social-psychological explanation. First, descriptions of poverty stressing a culture of depression, lack of hope, and fatalism may be accurate, but these states of mind are typically effects of poverty, not its causes. Second, many people who experience poverty do work, are religious, don’t smoke or drink, and so on. Therefore, evidence that supports explanations founded on these personal deficits is often lacking. Another type of explanation has greater currency in sociology. It stresses the organization of the economy as the principal cause of poverty. Capitalist economies feature periods of low unemployment and high profits followed by high unemployment and low profits. During recessions, many people lose their jobs and fall into poverty; during economic booms, unemployment is low and poverty rates fall. Moreover, as we have seen, many people with minimum-wage jobs don’t earn enough to escape poverty. From this point of view, the lack of good jobs, especially during recessions, is the major cause of poverty. Other analysts stress social policy as a factor affecting poverty levels. For example, if you received the minimum hourly wage while working full-time year-round, you may still be living below the poverty line, especially if you had children to support. In this sense, minimumwage legislation is a social policy that creates a group of working poor. However, the social world is not that simple. If minimum wages were to rise too much or too quickly or during an economic downturn, so too might the level of unemployment; some employers might not be able to afford a sudden big jump in wages. Debate over these issues continues, but the point is that our social policies affect people’s well-being, and understanding the consequences of policies is critical. The tax system illustrates another way that social policies affect poverty. A progressive tax system is one in which income is taxed at a higher rate the more someone earns. For example, in a progressive tax system, a person with $50 000 a year of taxable income may pay 25 percent of that amount in income tax while a person with $100 000 a year of taxable income may pay 35 percent of that amount in income tax. In Canada, although income tax is progressive, the overall tax system is approximately neutral. That is, most Canadian families pay about the same percentage of their total income in tax. That is because four factors undermine the “Robin Hood” effect of progressive income tax: 1.Taxes other than income tax, such as the HST, fuel tax, and property tax, are regressive; the tax rate is the same for everyone who pays these taxes, regardless of their income. 2.Higher-income earners are able to shelter part of their income from taxation by investing extra cash in registered education savings plans (RESPs) and registered retirement savings plans (RRSPs). 3.Higher-income earners tend to own investments that generate dividends and profits, which are taxed at a lower rate than are wages and salaries. 4.The very rich can hire tax lawyers and accountants to channel money to overseas “tax havens” such as Panama and avoid taxation altogether. Canada loses between $6 billion and $7.8 billion in tax revenue annually to such tax evasion (Oved, 2016). These four mechanisms help to keep one out of seven Canadians below the low-income line. Finally, other sociologists stress ways of thinking, or ideological perspectives, as explanations for poverty. Negative images of various groups lead to an undervaluing of the ways of life of Indigenous peoples, recent immigrants, and members of visible-minority groups. Discrimination follows from undervaluation. Discrimination causes poverty because it leads to less success in finding jobs and, when jobs are found, to more unsteady and low-paying work. Is poverty inevitable? Perhaps, but the extent of poverty can be substantially reduced. Many Western European governments have established job-training and childcare programs that allow more people to take jobs with livable wages and benefits. (see Theories in Dispute, The Feminization of Poverty?). In the five Scandinavian countries (Denmark, Finland, Iceland, Norway, and Sweden), the poverty rate is half that of Canada’s (Statista, 2018a). The fact that it is possible to reduce the extent of poverty raises a more general issue: Is inequality inevitable? That question has concerned sociologists since the mid-nineteenth century. We next review some classical answers to shed light on our prospects today. LO4 IS STRATIFICATION INEVITABLE? THREE THEORIES MARX’S CONFLICT THEORY Karl Marx was the founder of conflict theory in sociology. It is ironic, therefore, that social stratification and the accompanying conflict between classes were not inevitable in Marx’s view (Marx, 1904 ; Marx and Engels, 1972 ). He believed that capitalist growth would eventually produce a society without classes and therefore without class conflict. THEORIES IN DISPUTE The Feminization of Poverty? In the 1970s, North American feminist sociologists claimed to have identified a considerable and growing gap between women and men in the extent of poverty. Specifically, they meant that (1) women were more likely to earn low incomes than men were, and (2) the low-income gap between women and men was growing (Duffy and Mandell, 2013). These observations came to be known as the feminization of poverty thesis. The data suggest that while (1) is correct, (2) is not. In 1976, the low-income gap between women and men was 3.1 percent. It reached a high point of 3.6 percent in 1980. Since then, however, the low-income gap has fallen pretty consistently. By 2015, the low-income rate among Canadian women was just 1 percentage point higher than the comparable rate among Canadian men (Statistics Canada, 2017f). These figures contradict the view that the low-income gap between women and men is large and growing. Nonetheless, the gap between women and men living in poverty is real, and it is especially large among people in one-parent families and among older adults (although there have been improvements over time even among these categories of the population). The female–male poverty gap is largely a function of women’s position in the labour market compared to that of men. Women typically spend fewer years working in the paid labour force than men do because they assume the bulk of domestic and child-rearing responsibilities in most families. This means that they usually accumulate smaller pensions and more modest savings than men do. When they are working in the paid labour force, women typically earn less than men do, again minimizing their savings and pensions. Moreover, relatively low wages for women means that the advantage of working for a wage as compared to collecting social assistance payments is smaller for women than for men. Women are therefore more likely than men are to collect social assistance payments and experience poverty. Finally, women live an average of five years longer than men do, so their financial resources have more time to deplete. Critical Thinking Questions One reason the Scandinavian countries have a relatively low poverty rate is that they have found a way to get most single mothers earning low incomes (who would otherwise be their children’s sole caregivers) into the paid labour force. How do you think they have accomplished this feat? Apart from the suggestions you’ve made answering the first question, how could the male–female gap in low income be eliminated? In Marx’s sense of the term, class is determined by a person’s “relationship to the means of production” or the source of that person’s income. The source of income is profit if the person owns a factory or a mine. It is a wage if he, she, or they must work as a labourer in a factory or a mine. Accordingly, Marx argued that capitalist societies have two main classes: the ownership class (or bourgeoisie, to use his term) and the working class (or what Marx termed the proletariat), distinguished from each other by whether they own productive property (factories, mines, and wso on). class According to Marx, a grouping that is determined by a person’s relationship to the means of production or the source of that person’s income. In Weber’s usage, class position is determined by a person’s “market situation,” including the possession of goods, opportunities for income, level of education, and level of technical skill. bourgeoisie Owners of the means of production, including factories, tools, and land, according to Marx. They do not do any physical labour. Their income derives from profits. proletariat The term Marx gave to the working class. Members of the proletariat perform physical labour but do not own means of production. They are thus in a position to earn wages. According to Marx, during the Industrial Revolution that began in Great Britain in the late eighteenth century, industrial owners were eager to adopt new tools, machines, and production methods so they could produce goods more efficiently and earn higher profits. Such innovations had unforeseen consequences. First, some owners were driven out of business by more efficient competitors. They were forced to become members of the working class. Together with former peasants pouring into the cities from the countryside to take factory jobs, this circumstance caused the working class to grow. Second, the drive for profits motivated owners to concentrate workers in increasingly larger factories, keep wages as low as possible, and invest as little as possible in improving working conditions. Thus, as the bourgeoisie grew richer and smaller, the proletariat grew larger and more impoverished. Marx also believed that capitalism would experience increasingly severe economic crises of “overproduction” or “underconsumption” because the impoverished proletariat would be unable to afford to buy all that industry could produce. During such crises, businesses would go bankrupt, unemployment would spread, and workers would become more aware of the severity of their exploitation. Workers’ growing sense of “class consciousness” would encourage the growth of unions and workers’ political parties, which, according to Marx, would eventually try to create a new “communist” society in which there would be no private wealth. Instead, under communism, everyone would share wealth, said Marx, contributing to the welfare of society according to their ability and taking according to their need. Critical Evaluation of Marx’s Conflict Theory For five reasons, things did not work out the way Marx had predicted. First, industrial societies did not polarize into two opposed classes engaged in bitter conflict. Instead, a large and heterogeneous middle class of whitecollar workers emerged. Some of them were nonmanual employees. Others were professionals. Many of them enjoyed higher income and status than manual workers did. With a bigger stake in capitalism than propertyless manual workers had, nonmanual employees and professionals generally acted as a stabilizing force in society. Second, although Marx correctly argued that investment in technology makes it possible for capitalists to earn high profits, he did not expect investment in technology also to make it possible for workers to earn higher wages and toil fewer hours under less oppressive conditions. Yet that is just what happened. Third, many workers supported political parties that promoted improved state benefits, including employment insurance and health care, and they went on strike to demand higher wages from their employers. Their efforts won them improved living standards, which in turn tended to pacify them. Fourth, communism took root not where industry was most highly developed, as Marx predicted, but in semi-industrialized countries, such as Russia in 1917 and China in 1949. Moreover, instead of evolving into classless and democratic societies, new forms of privilege and authoritarianism emerged under communism. According to a Russian quip from the 1970s, “Under capitalism, one class exploits the other, but under communism it’s the other way around.” Many workers consequently became disillusioned with the promises of communism. Fifth, businesspeople developed new ways to avert economic crises and prolong the life of capitalism by stimulating demand. To encourage people to buy more things, they began advertising on a massive scale, which created new “needs.” To give people the means to buy new things they could not otherwise afford, businesspeople created easy credit. And to ensure that people frequently replaced the new things they bought, they started designing things to break down. Light bulbs with short 1000-hour lifespans, nylon stockings that developed runs after being worn just a few times, and inkjet printers containing a chip that made them die after printing a set number of pages were among the abundant fruits of such “planned obsolescence.” THE FUNCTIONALIST THEORY OF DAVIS AND MOORE In the mid-twentieth century, American sociologists Kingsley Davis and Wilbert Moore proposed a functional theory of stratification that, in contrast to Marx’s theory, asserts the inevitability of social stratification (Davis and Moore, 1945). Davis and Moore observed that jobs differ in importance. A judge’s work, for example, contributes more to society than does the work of a janitor. This presents a problem: how can people be motivated to undergo the long training they need to serve as judges, physicians, engineers, and so on? Higher education is expensive. You earn little if any money while studying. Clearly, incentives are needed to motivate the most talented people to train for the most important jobs. The incentives, said Davis and Moore, are money and prestige. More precisely, social stratification is necessary (or functional) because the prospect of high rewards motivates people to undergo the sacrifices needed to get a higher education. Without substantial inequality, Davis and Moore concluded, the most talented people would have no incentive to become judges, physicians, and so on. functional theory of stratification Argues that (1) some jobs are more important than others, (2) people must make sacrifices to train for important jobs, and (3) inequality is required to motivate people to undergo these sacrifices. Critical Evaluation of Functionalism Although the functional theory of stratification may at first seem plausible, we can quickly uncover one of its chief flaws by imagining a society with just two classes of people—physicians and farmers. The farmers grow food. The physicians tend the ill. Then, one day, a rare and deadly virus strikes. The virus has the odd property of attacking only physicians. Within weeks, there are no more doctors in our imaginary society. As a result, the farmers are much worse off. Cures for their ailments are no longer available. Soon the average farmer lives fewer years than their predecessors. The society is less well off, although it manages to survive. Are farmers or physicians more important to society? Now imagine the reverse. Again, we have a society comprising only physicians and farmers. Again, a rare and lethal virus strikes. This time, however, the virus has the odd property of attacking only farmers. Within weeks, the physicians’ stores of food are depleted. After a few more weeks, the physicians start dying of starvation. The physicians who try to become farmers catch the new virus and expire. Within months, the society has been wiped out. Who, then, does the more important work, physicians or farmers? Our thought experiment suggests that farmers do, for without them, society cannot exist. From a historical point of view, we can say that none of the jobs regarded by Davis and Moore as important would exist without the physical labour done by people in so-called less important jobs. To sustain the witch doctor in a tribal society, hunters and gatherers had to produce enough for their own subsistence plus a surplus to feed, clothe, and house the witch doctor. To sustain the royal court in an agrarian society, peasants had to produce enough for their own subsistence plus a surplus to support the royal family. By using taxes, tithes, and force, government and religious authorities have taken surpluses from ordinary working people for thousands of years. Among other things, these surpluses were used to establish the first institutions of higher learning in the thirteenth century. Out of these, modern universities and colleges developed. The question of which occupations are most important is thus not clear-cut. To be sure, physicians earn a lot more money than farmers today, and they also enjoy more prestige. But it is not because their work is more important in any objective sense of the word. Sociologists have noted other problems with the functional theory of stratification (Tumin, 1953). First, it stresses how inequality helps society discover talent but it ignores the pool of talent lying undiscovered because of inequality. Bright and energetic adolescents may be forced to drop out of high school to help support themselves and their families. Capable and industrious high school graduates may be forced to forgo a postsecondary education because they can’t afford it. Inequality may encourage the discovery of talent but only among those who can afford to take advantage of the opportunities available to them. For the rest, inequality prevents talent from being discovered. Second, the functional theory of stratification fails to examine how advantages are passed from generation to generation. Like Robinson Crusoe, the functional theory correctly emphasizes that talent and hard work often result in abundant material rewards. However, it is also the case that inheritance allows parents to transfer wealth to children, regardless of the children’s talent. By one count, more than one-quarter of Canada’s billionaires inherited a substantial part of their fortunes, most came from solidly middle-class and upper-middle-class families, and only one of them rose from rags to riches (“The World’s Billionaires,” 2010). WEBER’S COMPROMISE Like the functionalists, Max Weber argued that the emergence of a classless society is highly unlikely. Like Marx, however, Weber recognized that under some circumstances people can act to lower the level of inequality in society. Writing in the early twentieth century, Weber held that people’s class position is determined by their “market situation,” including the possession of goods, opportunities for income, level of education, and level of technical skill. Accordingly, in Weber’s view, four main classes exist in capitalist societies: large property owners, small property owners, propertyless but relatively highly educated and well-paid employees, and propertyless manual workers (Weber, 1946: 180–95). Weber also recognized that two types of groups other than classes—parties and status groups—have a bearing on the way a society is stratified. In Weber’s usage, parties are not just political groups but, more generally, organizations that seek to exercise power, the ability to achieve goals, even against the resistance of others. Control over parties, especially large bureaucratic organizations, does not depend just on wealth. A person can head a military, scientific, political, or other bureaucracy without being rich, just as a person can be rich and still have to endure low prestige. parties In Weber’s usage, organizations that seek to impose their will on others. power The ability to achieve goals, even against the resistance of others. Status groups differ from one another in the prestige or social honour they enjoy and in their lifestyle. Characteristically, members of high-status groups look down on members of low-status groups (see Sociology and the Media, Social Status in Schitt’s Creek). Celebrities form an especially high-ranking status group in North America. Some enjoy prestige because they are rich or talented. Others enjoy prestige just because they attract a lot of attention. Consider Kim Kardashian. She first drew the attention of the mass media by hanging out with Paris Hilton, great-granddaughter of the founder of the Hilton hotel chain. She received wider notice after the leak of a sex tape with her former boyfriend. She has no particular talents and her family was not especially rich, although their reality TV show improved their economic status a lot, as did her marriage to rapper Kanye West. Nor did power catapult her into a highstatus rank. As such, she illustrates how social honour alone can bestow rank on individuals. status groups Groups that differ from one another in terms of the prestige or social honour they enjoy and in terms of their style of life. SOCIOLOGY AND THE MEDIA Social Status in Schitt’s Creek Social inequality is evident in everyday social interaction. For example, social psychology research shows that, unless rich people are interacting with other rich people, they tend to turn a blind eye, give others the cold shoulder, look down on others, or look right through them. On average, people who are not rich tend to treat others with greater care, respect, and empathy (Kraus and Keltner, 2009). Finnish and American researchers have found similar patterns in their studies of drivers. All else the same, drivers of expensive cars are especially likely to be argumentative, stubborn, and disagreeable. They are less likely to stop and allow pedestrians to cross the road. The likelihood they’ll slow down falls 3 percent for every extra US$1000 their vehicle is worth (Coughenour et al., 2020; Lönnqvist, Ilmarinen, and Leikas, 2019). The Canadian hit TV comedy series Schitt’s Creek is a case in point. The 2020 winner of nine Emmy awards, including best comedy series, Schitt’s Creek is the story of four fish out of water. The Rose family loses its fortune overnight. Its members are forced to move from their mansion in the big city to two adjoining rooms in a rundown motel in the small town of Schitt’s Creek, which the father, Johnny (Eugene Levy) bought as a birthday present for his son, David (Dan Levy), as a joke in the 1990s. Because the parents have been so busy with their careers, their relationship with their adult children is frayed. The mother, Moira (Catherine O’Hara), can’t even remember the middle name of her daughter, Alexis (Annie Murphy). They bicker endlessly. The only things they find more horrifying than their surroundings are the townspeople, who know nothing of Paris, fine wine, and designer coats worth five months’ pay. The roadside sign at the entrance to the town—“Welcome to Schitt’s Creek, where everyone fits in”—is evidently a lie, at least in season one. However, over the show’s six seasons, the Roses adjust to their newly modest level of wealth. Moira leads a choir and becomes a member of town council. Johnny starts running the motel in partnership with its receptionist. Alexis goes back to school and falls in love. David opens a small store selling hand cream and other beauty products with his local boyfriend, Patrick. Relations within the Rose family become cordial as its members become part of a community. The townspeople really do welcome the Roses in the end. Schitt’s Creek soared in popularity in the United States halfway through Donald Trump’s presidency. It presented a better way—tolerance—when the country was being torn apart by animosity based on differences in wealth, race, political preference, and sexual orientation. However, often lost in the show’s feel-good message was its deeper sociological lesson: only when the Roses’ economic standing approached that of the townspeople could they begin treating their neighbours as equals and come to understand the value of community. Critical Thinking Questions Are armed conflict and economic inequality correlated at the national level? What happens to the level of armed conflict when economic inequality is based on ethnic, religious, or regional differences? Weber argued that to draw an accurate picture of a society’s stratification system, we must analyze classes, status groups, and parties as somewhat independent bases of social inequality. Each basis of stratification influences the others. For example, one political party may want to tax the rich and distribute benefits to the poor, thus increasing opportunities for upward mobility. Another political party may want to cut taxes to the rich and decrease benefits to the poor, thus decreasing opportunities for upward mobility. The class system will be affected in different ways depending on which party comes to power. Thus, from Weber’s point of view, nothing is inevitable about the level of social stratification in society. We are neither headed inexorably toward classlessness nor are we bound to endure high levels of inequality. Instead, the level of social stratification depends on the complex interplay of class, status, and party, and their effect on social mobility, or movement up and down the stratification system. We devote the next section to exploring these themes. social mobility Movement up or down the stratification system. THEORIES AT A GLANCE Stratification Theory​ Marx’s conflict theory​ -​ In capitalist societies, the two main classes are the bourgeoisie (who own but do not work productive property) and the proletariat (who work but do not own productive property). During the Industrial Revolution, industrial owners were eager to become more productive so they could earn higher profits. Less efficient owners were driven out of business and forced to join the working class, where they were joined by former peasants pouring into the cities looking for factory jobs. The drive for profits motivated owners to concentrate workers in increasingly larger factories, keep wages as low as possible, and invest as little as possible in improving working conditions. Thus, as the bourgeoisie grew richer and smaller, the proletariat grew larger and more impoverished. Marx also believed that the impoverished proletariat would be unable to afford to buy all that industry could produce, creating economic crises, during which businesses would go bankrupt, unemployment would spread, and workers would become more aware of the severity of their exploitation. Their growing sense of “class consciousness” would encourage the growth of unions and workers’ political parties that would eventually try to create a new, classless society in which there would be no private wealth. Davis and Moore’s functionalist theory​ -​ Davis and Moore observed that some jobs are more important than others, and important jobs require considerable education. Incentives are needed to motivate the most talented people to train for the most important jobs. The incentives, said Davis and Moore, are money and prestige. Thus, social stratification is necessary (or functional) because the prospect of high rewards motivates people to undergo the sacrifices needed to get a higher education. Without substantial inequality, Davis and Moore concluded, the most talented people would have no incentive to become judges, physicians, and so on. Weber’s compromise​ -​ Weber argued that the emergence of a classless society is highly unlikely but under some circumstances people can act to lower the level of inequality in society. He also held that a person’s class position is determined by his or her possession of goods, opportunities for income, level of education, and level of technical skill. Four main classes based on these factors exist in capitalist societies: large property owners, small  property owners, propertyless but relatively highly educated and well-paid employees, and propertyless manual workers. -​ Weber also recognized that two types of groups other than classes—status groups and parties—have a bearing on the way a society is stratified. Status groups differ from one another in the prestige or social honour they enjoy and in their lifestyle. Parties are organizations that seek to impose their will on others through the exercise of power. Just as a person can be rich and have low prestige, so control over parties does not depend just on wealth. Weber argued that to draw an accurate picture of a society’s stratification system, we must analyze classes, status groups, and parties as somewhat independent bases of social inequality. SOCIAL MOBILITY Mordecai Richler’s The Apprenticeship of Duddy Kravitz is one of the classics of modern Canadian literature. Made into a 1974 film starring Richard Dreyfuss as Duddy, it is the story of a poor 18-year-old Jewish Montrealer in the mid-1940s who is desperately seeking to establish himself in the world. To that end, he waits on tables, smuggles drugs, drives a taxi, produces wedding and bar mitzvah films, and rents out pinball machines. He is an obnoxious charmer with relentless drive, a young man so fixed on making it that he is even willing to sacrifice his girlfriend and his only friend and coworker to achieve his goals. We cannot help but admire Duddy for his relentless ambition, even while we are shocked by his unprincipled guile. Part of what makes The Apprenticeship of Duddy Kravitz universally appealing is that it could be a story about anyone. It is not just some immigrants and their children who may start out as people engaged in shady practices and unethical behaviour. Richler reminds us repeatedly that many of the wealthiest establishment families in Canada and elsewhere started out in just this way. Duddy, then, is a universal symbol of “upward mobility”—and the compromises with ethical standards that people sometimes make to achieve it. Much of our discussion to this point has focused on how we describe inequality and how we explain its persistence. Here I take up a different, although related, set of questions. To what extent are we trapped in a disadvantaged social position or assured of maintaining an advantaged position? At birth, do all people have the same freedom to gain wealth and fame? Are the opportunities we enjoy—our “life chances” as Weber called them—equally accessible to everyone? Sociologists use the term social mobility to refer to the dynamics of the system of inequality and, in particular, to movement up and down the stratification system over time. If we think about inequality as either a hierarchy of more or less privileged positions or a set of higher and lower social classes, an important question is how much opportunity people have to change positions. Typically, change has been measured by using one of two benchmarks: your first fulltime job and the position of your parents in the hierarchy. Comparing your first job with your current job is an examination of occupational or intragenerational mobility. Comparing the occupations of parents with their children’s current occupation is an examination of the inheritance of social position or intergenerational mobility. intragenerational mobility Social mobility that occurs within a single generation. intergenerational mobility Social mobility that occurs between generations. Whichever benchmark is used, social mobility analysts are interested in the openness or fluidity of society. Open or fluid societies have greater equality of access to all positions in the hierarchy of inequality, both the low and the high. Regardless of your social origins, in more open societies you are more likely to rise or fall to a position that reflects your capabilities. In contrast, in closed or rigid societies, your social origins have major consequences for where you are located in the hierarchy of inequality. In such societies, poverty begets poverty, wealth begets wealth. In feudal Europe or in the Indian caste system, your birth determines your fate—you are a peasant or a lord, a Brahmin or a Dalit, based on the position of the family to which you are born. In modern times, most societies have become more open. The circumstances of your birth do not completely determine your fate. Think about the changes in Canadian society over the past century. A mainly agrarian, resourcebased economy has transformed into a modern, advanced postindustrial nation. We have experienced substantial growth in well-paying occupations in finance, marketing, management, and the professions. To what extent have people from all walks of life, from all economic backgrounds, been able to benefit from this transformation? In the 1950s and 1960s, proponents of the functional theory of stratification and human capital theory imagined that equality of opportunity would predominate. They argued that as more and more skilled jobs are created, the best and the brightest must rise to the top to take those jobs and perform them diligently. We would then move from an ascription-based stratification system to an achievement-based stratification system. In a system of inequality based on ascription, your family’s station in life determines your own fortunes. In a system based on achievement, your own talents determine your lot in life. If you achieve good grades in school, your chance of acquiring a professional or managerial job rises. ascription-based stratification system A system in which your family’s station in life determines your own fortunes achievement-based stratification system A system in which your own talents determine your lot in life Other sociologists cautioned that this scenario of high individual social mobility might not follow from the transformation of the economy. They emphasized how advantaged families have long attempted to ensure that their offspring will inherit their advantages. Thus, a study of 31 500 Canadians found that, although Canadians are acquiring more years of schooling and more degrees than ever, not everyone benefits. Family socioeconomic background continues to exert a strong influence on the level of education a person attains (Wanner, 1999; see Chapter 11, Education). How does the level of intergenerational mobility in Canada compare with that in other countries? To answer this question, I rely on an index of intergenerational income mobility ranging from 0 to 1 (Conference Board of Canada, 2020). Think of the index as a kind of anchor. The heavier the anchor (the closer the index value is to 1), the more likely it is that parents’ economic standing will weigh down their children, so the children’s income won’t be able to rise much above their parents’ income level. The lighter the anchor (the closer the index value is to 0), the less likely it is that parents’ economic standing will weigh down their children, so the children’s income level will be able to rise much above their parents’ income level. Canada’s index value is 0.2. This means that if a parent earns $10 000 a year below the average income, the child is likely to earn $2000 less than the average income. As Figure 6.4 shows, Canada’s anchor is pretty light compared to the anchors in most other rich countries. The anchor is heaviest in the United States, Italy, and the United Kingdom. In those countries, if a parent earns $10 000 a year below the average income, the child is likely to earn between $4600 and $5000 less than the average income. FIGURE 6.4Index of Intergenerational Income Mobility, 13 Rich Countries In ending this section, I must note that young people are especially likely to experience limited upward mobility if they enter the job market during a recession, a period of declining economic activity (Harvey and Kalwa, 1983). During a recession, unemployment increases, making it harder to find a job. Young people who do find a job must often take work below the level for which they are trained. When the economic downturn ends and employment picks up, employers are inclined to hire not the young people who have been unemployed or underemployed for a few years, but a still more junior cohort of young people, who tend to be better trained and willing to work for lower wages. Thus, young people who enter the job market during a recession are likely to experience relatively low upward mobility over their entire careers. The Great Recession of 2008–09 created a cohort of job market entrants, many of them with university and college degrees, who now realize that they may never achieve the economic successes of their parents’ generation (Smith, 2012). The same may turn out to be true for people who first entered the job market during the 2020–21 pandemic, which was characterized by high and lingering unemployment. PERCEPTION OF CLASS INEQUALITY An 18-country survey conducted in the mid-1990s found that Canadians were among the most likely to disagree with the view that large differences in income are necessary for national prosperity. Why then did Canadians think inequality persists? One question asked respondents how strongly they agree or disagree with the view that “inequality continues because it benefits the rich and powerful.” Most Canadians agreed with that statement. Only about one-quarter of them disagreed with it in any way. Another question asked respondents how strongly they agree or disagree with the view that “inequality continues because ordinary people don’t join together to get rid of it.” Again, most Canadians agreed, with less than one-third disagreeing in any way (Pammett, 1997: 77–8). Despite widespread awareness of inequality and considerable dissatisfaction with it, most Canadians in the survey were opposed to the government playing an active role in reducing inequality. Most did not want the government to provide citizens with a basic income. They tended to oppose government job-creation programs. They even resisted the idea that government should reduce income differences through taxation. Some observers think the COVID-19 pandemic may have caused many Canadians to reduce their opposition to government playing a more energetic role in reducing inequality. After all, in the fiscal year 2020–21 federal government spending related to the pandemic amounted to about one-quarter of a trillion dollars (Reuters, 2020). To put that in perspective, it’s about 72 percent of total government spending in fiscal 2018–19. Most Canadians strongly approved of the government’s response to the crisis, recognizing that without such strong government intervention, the death toll and the economic fallout would have been far more serious, especially for lowincome Canadians (Ipsos, 2020). Whether enthusiasm for government intervention persists remains to be seen. However, the earlier-noted tendency for recession-era job entrants to endure an economic penalty throughout their careers at least suggests where such enthusiasm is likely to be found. LO6 GLOBAL INEQUALITY LEVELS AND TRENDS IN GLOBAL INEQUALITY Despite the existence of considerable social stratification in Canada, we live in one of the 20 or so richest countries in the world—an elite club that also includes the United States, Japan, Australia, Germany, France, the United Kingdom, and a dozen or so other countries. In contrast, the world’s poor countries cover much of Africa and parts of South America and Asia. Inequality between rich and poor countries is staggering. In Manhattan, pet owners can treat their cats to US$100-a-plate birthday parties. In Cairo (Egypt) and Manila (the Philippines), garbage dumps are home to entire families who sustain themselves by picking through the refuse. The average income of citizens in the highly industrialized countries far outstrips that of citizens in the developing societies. The median annual income of Canadian households is 18 times the world average. Half of Canadians are in the richest 4 percent of the world’s population (“How Rich Am I?” 2018). About 800 million people in the world (more than 11 percent of the global population) are malnourished, while the citizens of the 20 or so rich, highly industrialized countries spend more on pet food than it would take to provide basic education or water and sanitation or basic health and nutrition for everyone in the world (World Hunger Education Service, 2015; Table 6.2). Has global inequality increased or decreased over time? Since 1975, the annual income gap between the 20 or so richest countries and the rest of the world has grown enormously. The share of world income going to the top 10 percent of individuals increased, and the share of world income going to the bottom 20 percent of individuals fell. Since 1980, the world’s richest 0.1 percent increased their wealth by the same amount as the poorest half of the world’s population (Milanovic, 2018). True, the number of people in the world living on $1 a day or less peaked in 1950 and then started to decline gradually. Still, nearly half of the world’s population lives on $2 a day or less (Milanovic, 2005). A half-hour’s drive from the centre of Manila, the capital of the Philippines, an estimated 70 000 Filipinos live off a 22-hectare mountain of rotting garbage 45 metres high. It is infested with flies, rats, dogs, and disease. On a lucky day, residents can earn up to $5 retrieving scraps of metal and other valuables. On a rainy day, the mountain of garbage is especially treacherous. In July 2000, an avalanche buried 300 people alive. People who live on the mountain of garbage call it “The Promised Land.” Statistics never speak for themselves. We need theories to explain them. I’ll now outline and critically assess the two main theories that seek to explain the origins and persistence of global inequality. LO7 MODERNIZATION THEORY: A FUNCTIONALIST APPROACH Two main sociological theories claim to explain global inequality. The first, modernization theory, is a variant of functionalism. According to modernization theory, global inequality results from various dysfunctional characteristics of poor societies. Specifically, modernization theorists say the citizens of poor societies lack sufficient capital to invest in Western-style agriculture and industry. They lack rational Western-style business techniques of marketing, accounting, sales, and finance. As a result, their productivity and profitability remain low. They lack stable Western-style governments that could provide a secure framework for investment. Finally, they lack a Western mentality: values that stress the need for savings, investment, innovation, education, high achievement, and self-control in having children (Inkeles and Smith, 1976; Rostow, 1960). modernization theory Holds that global inequality results from various dysfunctional characteristics of poor societies: lack of investment capital, Western-style business techniques, stable Western-style governments, and a Western mentality. TABLE 6.2Global Priorities: Annual Cost of Selected Goods and Services, 2018–19 Good or Service​ Cost (US$ billions) Additional annual cost, basic education for everyone in the world​ 11 Additional annual cost, water and sanitation for everyone in the world​ 15 Additional annual cost, reproductive health care for all women in the world​ 23 Additional annual cost, basic health and nutrition for everyone in the world​ 25 Annual dog and cat food sales, USA​ 30 World global perfume sales​ 53 World cocaine revenue (2008)​ 88 Annual beer sales, USA​ 114 Digital advertising, USA​ 116 Annual global arms sales​ 1822 Note: United Nations data for 1998 are adjusted for world population increase, 1998–2019, and the US consumer price index, 1998–2019. Digital advertising, USA, is estimated using data on January–June 2019 sales. It follows that people living in rich countries can best help their cousins in poor societies by transferring Western culture and capital to them and eliminating the dysfunctions. Only then will the poor countries be able to cap population growth, stimulate democracy, and invigorate agricultural and industrial production. Government-to-government foreign aid can accomplish some of this. Much work also needs to be done to encourage Western businesses to invest directly in poor countries and to increase trade between rich and poor countries. DEPENDENCY THEORY: A CONFLICT APPROACH Proponents of dependency theory, a variant of conflict theory, have been quick to point out the chief flaw in modernization theory (Baran, 1957; Cardoso and Faletto, 1979; Wallerstein, 1974–89). For more than 500 years, the most powerful countries in the world have deliberately impoverished the less powerful countries. Focusing on internal characteristics blames the victim rather than the perpetrator of the crime. It follows that an adequate theory of global inequality should not focus on the internal characteristics of poor countries. Instead, it should follow the principles of conflict theory and focus on patterns of domination and submission—specifically, in this case, on the relationship between rich and poor countries. That is just what dependency theory does. dependency theory Holds that global inequality is the result of patterns of domination and submission between rich and poor countries. From this point of view, rich countries have impoverished poor countries in order to enrich themselves. According to dependency theorists, less global inequality existed in 1500 and even in 1750 than today. However, beginning around 1500, the armed forces of the world’s most powerful countries subdued and then annexed or colonized most of the rest of the world. The Industrial Revolution began around 1780. It enabled the western European countries, Russia, Japan, and the United States to amass enormous wealth that they used to extend their global reach. They forced their colonies to become a source of raw materials, cheap labour, investment opportunities, and markets for the conquering nations. The colonizers thereby prevented industrialization and locked the colonies into poverty. In the decades following World War II, nearly all the colonies in the world became politically independent. However, dependency theorists say that exploitation by direct political control was soon replaced by new means of achieving the same end: substantial foreign investment, support for authoritarian governments, and mounting debt. 1.Substantial foreign investment. -​ Multinational corporations invested in the poor countries to siphon off wealth in the form of raw materials and profits. True, they created some low-paying jobs in the process, but they created many more high-paying jobs in the rich countries where the raw materials were used to produce manufactured goods. They also sold part of the manufactured goods back to the poor unindustrialized countries for additional profit. 2.Support for authoritarian governments. -​ According to dependency theorists, multinational corporations and rich countries continued their exploitation of the poor countries in the postcolonial period by giving economic and military support to local authoritarian governments. These governments managed to keep their populations subdued most of the time. When that was not possible, Western governments sent in troops and military advisers, engaging in what became known as “gunboat diplomacy.” -​ In the postcolonial period, the United States has been particularly active in using gunboat diplomacy in Central America. For example, in 1952 the democratic government of Guatemala began to redistribute land to impoverished peasants. Some of the land was owned by the United Fruit Company, a US multinational corporation and the biggest landowner in Guatemala. Two years later, the CIA backed a right-wing coup in Guatemala, preventing land reform and allowing the United Fruit Company to continue its highly profitable business as usual (LaFeber, 1993). 3.Mounting debt. -​ The governments of the poor countries struggled to create transportation infrastructures (airports, roads, harbours, and so on), build their education systems, and deliver safe water and at least the most basic health care to their people. To accomplish these tasks, they had to borrow money from Western banks and governments. Some rulers also squandered money on luxuries. As a result, debt—and the interest payments that inevitably accompany debt—grew every year. Crushing interest payments leave governments of poor countries with too little money for development tasks. Foreign aid helps, but not much. Foreign aid to the world’s developing countries is only one-seventh the amount that the developing countries pay to Western banks in loan interest (United Nations, 2004: 201). In 1893, leaders of the British mission pose before taking over what became Rhodesia and is now Zimbabwe. To raise a volunteer army, every British trooper was offered about 23 square kilometres of native land and 20 gold claims. The Matabele and Mashona peoples were subdued in a three-month war. Nine hundred farms and 10 000 gold claims were granted to the troopers and about 100 000 cattle were stolen, leaving the native survivors without a livelihood. Forced labour was subsequently introduced by the British so that the natives could pay a £2 a year tax. CORE, PERIPHERY, AND SEMIPERIPHERY Although dependency theory provides a more realistic account of the sources of global inequality than modernization theory does, it leaves a big question unanswered: how have some countries managed to escape poverty and start rapid economic development? After all, the world does not consist of just core countries that are major sources of capital and technology (the United States, Japan, and Germany) and peripheral countries that are major sources of raw materials and cheap labour (the former colonies). In addition, a middle tier of semiperipheral countries consists of former colonies that are making considerable headway in their attempts to become prosperous (South Korea, Taiwan, and Israel, for example; Wallerstein, 1974–89). Comparing poor peripheral countries with the more successful semiperipheral countries allows us to identify the circumstances that have helped some poor countries overcome the worst effects of colonialism. The semiperipheral countries differ from the peripheral countries in four main ways, which I outline next (Kennedy, 1993: 193–227; Lie, 1998). core countries Capitalist countries that are the world’s major sources of capital and technology (the United States, Japan, and Germany). peripheral countries The world’s major sources of raw materials and cheap labour (the former colonies). semiperipheral countries Former colonies that are making considerable headway in their attempt to become prosperous. Type of Colonialism Around the turn of the twentieth century, Taiwan and Korea became colonies of Japan. They remained so until 1945. However, in contrast to the European colonizers of Africa, Latin America, and other parts of Asia, the Japanese built up the economies of their colonies. They established transportation networks and communication systems. They built steel, chemical, and hydro-electric power plants. After Japanese colonialism ended, Taiwan and South Korea were thus at an advantage compared with the former colonies of, say, Britain and France. South Korea and Taiwan could use the Japanese-built infrastructure and Japanese-trained personnel as springboards to development. Geopolitical Position Although the United States was the leading economic and military power in the world by the end of World War II, it began to feel its supremacy threatened in the late 1940s by the Soviet Union and China. Fearing that South Korea and Taiwan might fall to the communists, the United States poured unprecedented aid into both countries in the 1960s. It also gave the countries large, low-interest loans and opened its domestic market to Taiwanese and South Korean products. Because the United States saw Israel as a crucially important ally in the Middle East, Israel also received special economic and military assistance. Other countries with less strategic importance to the United States received less help in their drive to industrialize. State Policy A third factor that accounts for the relative success of some countries in their efforts to industrialize and become prosperous concerns state policies. As a legacy of colonialism, the Taiwanese and South Korean states were developed on the Japanese model. They kept workers’ wages low, restricted trade union growth, and maintained quasi-military discipline in factories. Moreover, by placing high taxes on consumer goods, limiting the import of foreign goods, and preventing their citizens from investing abroad, they encouraged their citizens to put much of their money in the bank. This situation created a large pool of capital for industrial expansion. The South Korean and Taiwanese states also gave subsidies, training grants, and tariff protection to export-based industries from the 1960s onward. (Tariffs are taxes on foreign goods.) These policies did much to stimulate industrial growth. Finally, the Taiwanese and South Korean states invested heavily in basic education, health care, roads, and other public goods. A healthy and well-educated labour force, combined with good transportation and communication systems, laid solid foundations for economic growth. Social Structure Taiwan and South Korea are socially cohesive countries, which makes it easy for them to generate consensus around development policies. It also allows them to get their citizens to work hard, save a lot of money, and devote their energies to scientific education. Social solidarity in Taiwan and South Korea is based partly on the sweeping land reform they conducted in the late 1940s and early 1950s. By redistributing land to small farmers, both countries eliminated the class of large landowners, who opposed industrialization. Land redistribution got rid of a major potential source of social conflict. In contrast, many countries in Latin America and Africa have not undergone land reform. The United States often intervened militarily in Latin America to prevent land reform because U.S. companies profited handsomely from the large plantations they owned (LaFeber, 1993). Another factor underlying social solidarity in Taiwan and South Korea is that neither country suffered from internal conflicts like those that wrack Africa south of the Sahara Desert. British, French, and other western European colonizers often drew the borders of African countries to keep antagonistic tribes in the same jurisdiction and often sought to stir up tribal conflict. Keeping tribal tensions alive made it possible to play one tribe against another, which made it easier for imperial powers to dominate. This policy led to much social and political conflict in postcolonial Africa. Today, the region suffers from frequent civil wars, coups, and uprisings. It is the most conflict-ridden area of the world. The high level of internal conflict acts as a barrier to economic development. In sum, postcolonial countries that enjoy a solid industrial infrastructure, strategic geopolitical importance, strong states with strong development policies, and socially cohesive populations are in the best position to join the ranks of the rich countries in the coming decades. Countries that have some of these characteristics are likely to experience economic growth and an increase in the wellbeing of their populations. Such countries include China, India, Chile, Thailand, Indonesia, Mexico, Turkey, Russia, and Brazil. We conclude that, as is the case for social stratification within highly developed countries like Canada, the existing level of global inequality is not inevitable and can under some circumstances change for the better. I take up this theme again in the book’s final chapter, Chapter 14, Social Change: Technology, the Environment, and Social Movements.