Dear Mathew - this is an excellent question - thank you

There are many illusions in modern life: Maybe the number one illusion is that everybody is free. Here are a few examples:

1. For years people really fought the system, wanting to reduce the working hours down to 8 hours a day. Now with all the digital technologies - that give us so much 'freedom' we are enslaved to 16-20 hours a day to the 'need' to be informed and to be connected!

2. Minimal wage has grown upwards in many countries; but with it the gap between rich and poor. So yes, people have more money, because banks print more money out of thin air. But from it; the rich get richer and the poor get just enough so they can continue to work and dream to one day be richer, while they work to support the rich being more rich exponentially.

3. Democracy is the same; it gives people the illusion they are free and those who get elected are those who have the money to be a candidates, or the power, or the powerful rich friends. See the last two candidates in the US election.

So who will redistribute the income in less developed countries?

The rich will do it; or the politicians friends of the rich, and they'll do it in such a way that the system will continue to make them and their friends richer.

How it should be done? What is the just way?

That's why your question is excellent one. And if real answers will not come soon than I believe we will see more revolutions and inner conflicts like we have seen during the Arab Spring.    

Hi, Matthew,

I would refer you to two books that add to this conversation. The first, Acemoglu and Robinson's What Nations Fail provides a strong historical case for the conditions for economic growth: (a) shared political power that generates stability, (b) institutions that motivate people to participate in the economy, and (c) substantive property rights that support saving, investing, and innovating. I do believe that Acemoglu and Robinson under-estimate the role that capital accumulation plays in development and especially the role that slavery and colonization played in capital accumulation, but their arguments do need to be heard.

Secondly, I refer you to Zizek's Trouble in Paradise, which attempts to decouple democracy and capitalism. In his view, capitalism with it's unbalanced preference for capital over labor is in many ways the antithesis of democracy and the equality it presumes.

Taken together, I suggest that the answer might be that the only force that can redistribute national wealth in a way that promotes egalitarian economic advance is a mass movement of the people that redistributes political power first, then economic. Of course, this is highly problematic. As Zizek rightly observes, it is easy for the masses to come together to overthrow a tyrant, but another thing altogether to resist the temptation to appropriate the tyrant's wealth-hoarding for a new elite once the fissures in the masses have reasserted themselves.

Capitalism does indeed create wealth. The creation of wealth creates powerful elites. It is an ongoing challenge for the disempowered masses to unite in a meaningful way to achieve an egalitarian society. Zizek wants socialism (I think). Acemoglu and Robinson want more creative destruction and unfettered entrepreneurialism. I think I would prefer human rights to trump property rights.

Good Attempt from Erez and Peter! What a voice of Wisdom! Development can never be achieved when the poor people over 90 per cent of the population are becoming poorer while the rich less than 10 per cent are becoming richer. If democracy with all its attractive elements can not cure this social ill, how can we correlate democracy and social justice. The version of democracy we are seeing in most less developed countries is more destructive to the course of the majority and if democracy is all about majority rule, the poor majority should have been in control to redistribute income in their favour but i tell you the poor majority are being rendered to become weaker and weaker as democracy grows, then what is the fate of the poor majority under democratic institutional arrangement? Remember the vulnerability of this so-called poor majority, little or no access to legal redress, it has been the few rich in this democratic system having full access to all opportunities made available by the world system, most of these opportunities elude the poor. The few rich are becoming more powerful as democracy grows as a result of capital accumulation over the years given them the opportunity to perverse the course of justice, buy over the best lawyers in the land, win almost all the learned judges to themselves, then who rescue the poor majority? will democracy will eventually fail or disappoint the poor majority living in the less developed countries?     

It seems to me there are two different questions in place: (a) who will distribute income?; and (b) does democracy aggravate inequalities?

There are no simple answers for those, specially because an straight answer will be probably connected to some ideological presuppositions. But the debate about those questions is quite rich.

In my opinion, the greatest specialist on underdevelopment, international inequality, and reproduction (and aggravation) of poverty, is Samir Amin. I would recommend both "Accumulation on a World Scale", "Imperialism and unequal development", "Empire of Chaos", and "Maldevelopment: an anatomy of a global failure". You may find some quite interesting arguments there about both questions you pose.

I will cite a passage of each just to give an idea of Samir Amin's arguments. I hope it helps on the discussion:

“As for the hypertrophy of administrative activities in the underdeveloped countries, this is one of the commonplaces of underdevelopment. An analysis that seeks to go beyond mere description of the problem needs to answer a whole series of questions in this connection. First, on the general plane, what are the comparative rates of growth of public expenditure and the material basis of the economy, at the center and in the periphery? (...)” (Samir Amin, Accumulation on a World Scale)

“These same problems crop up with respect to international trade. International trade links countries characterized by different social relations of exploitation (different rates of surplus value), involves goods whose production requires a vast consumption of natural resources (raw materials, oil, agricultural products), and pits monopolies against each other both within and beyond their national borders. Viewed in this light, the vicious circle involved in postulating universal harmonies in international trade cuts a sorry figure.” (Samir Amin, Imperialism and unequal development)

“The problems of the third world are major, and the new globalization intensifies them further. Can the development path taken by certain semi-peripheral states continue? In those that are already semi-industrialized, the development strategy is confronted with a decisive choice. Based on a distribution of income less and less egalitarian, such a path will clash more and more with emerging democratic aspiration (…) a stabilizing democracy along Western lines accompanying a capitalist path of economic development seems to me to be an illusion. Is it, moreover, a real objective of the Western powers? Or only a tactical diversion of the moment?” (Samir Amin, Empire of Chaos)

“The productive apparatus of the countries of the periphery is thus not the reproduction of that of the centre at an earlier stage of its evolution. These apparatuses differ qualitatively. That is the meaning of inequality in the international division of labour. These differences explain the fact that while the Lorenz curve for the centre is stable (or perhaps moves towards less inequality), at the periphery it moves the other way towards greater inequality. The distortion in distribution is a condition of enlarged reproduction, of accumulation on a world scale.” (Samir Amin, Maldevelopment, 2nd edition)

Se pueden encontrar estudios en la web que correlacionan democracia con desarrollo, en particular desarrollo humano. La sindicalización, y su efecto directo en la mejoría del ingreso, es una gran muestra a favor. El libro de Krugman, THE CONSCIENCE OF A LIBERAL, da buenas pistas y bibliografía.

the contradiction of capitalism is that it needs to remove poverty (poor people are bad consumers) and at the same time it creates poverty. One of the major success of capitalism was when the Ford Company could triple the workers' wages and still make a much bettercut than before.

Redistribution of incomes is done through taxing incomes, taxing higher incomes higher than lower, and leaving a base income tax free. Still income inequality is increasing, as those in power can realize increasing incomes which even will outrun increasing taxes......

There is also the flat tax that work in some countries and the negative tax suggestions to compliment it for the very poor. This too can be considered. International cooperation are searching for low tax countries. So a country with flat tax, low enough, may be attractive to such firms. If the flat tax is low enough it might draw people back from the 'black market'. So it may give at the bottom line more income and create greater option for 'honest living'.

Interesting read and as rightly pointed out by Apoena Canuto Cosenza, there are no straight forward answer to these questions. Partially, it could be due to the vision of democracy that has been old to us in the developing countries or it could be to our own version of the practice of democracy.