Egalitarian Capitalism

A Volume in the American Sociological Association’s Rose Series in Sociology

"Outlines a promising approach to egalitarianism for the early years of the twenty-first century."
-Journal of Economic Literature

"[T]his is serious, first-rate sociology in which the author's commitments, rather than clouding the analysis, clear the way forward for partisans of all stripe."
-American Journal of Sociology

"This book tackles the big question that has forever haunted the social sciences: can capitalism continue to thrive if made more equal? Egalitarian Capitalism concludes optimistically that efficiency and equality can be reconciled but this, Lane Kenworthy adds, depends on maximum employment. The social science debate has mainly been a war of words and theory. Kenworthy breaks new ground with his hard-nosed empirical scrutiny and unusual analytical rigor. Egalitarian Capitalism is the new yardstick against which we shall gauge good comparative macro analysis, and Kenworthy will, I believe, find himself on center stage in political economy debates for time to come."
-GØSTA ESPING-ANDERSEN, professor of sociology and university dean, Universitat Pompeu Fabra, Barcelona

"Egalitarian Capitalism makes a strong sociological contribution to the burgeoning debate about the diverging economic paths of the United States and Western Europe. The book will be an important source for researchers with interests in comparative patterns of inequality in the fields of economics, political science, and policy analysis"
-BRUCE WESTERN, professor of sociology, Princeton University

"In this timely and important contribution, Lane Kenworthy explores the relationship between inequality, economic growth, and employment in advanced industrial democracies. Based on extensive analysis of data on wage dispersion and household pre- and posttax transfer inequality, he argues convincingly that there is no evidence that inequality contributes to growth, and little evidence that inequality promotes employment creation, contrary to the claims of conservative politicians and mainstream economists. ... Students of comparative social policy and comparative political economy as well as policy analysts will find this work essential reading."
-JOHN D. STEPHENS, Lenski Professor of Political Science and Sociology, University of North Carolina, Chapel Hill

Declining participation in labor unions, the movement toward a service-based economy, and increased globalization have cast doubt on the extent to which welfare states can continue to stem inequality in market economies over the long-term. Does the new economy render existing models of social assistance obsolete? Do traditional welfare states hamper economic and employment growth, thereby worsening the plight of the poor? Lane Kenworthy offers a rigorous empirical analysis of these questions in Egalitarian Capitalism. The book examines sixteen industrialized countries in North America, Western Europe, and Scandinavia—each with different approaches to assisting the poor—to see how successful each has been in developing its economy and curbing inequality over the past twenty years.

Kenworthy finds that inequality grew in almost all of these countries, from the most progressive to the least. Using simple but powerful statistical tests, he assesses the theory that inequality is necessary to improve economic growth and reduce poverty. He finds no necessary trade-off between equality and economic growth but discovers some evidence that high minimum wages dampen employment growth in private sector services. Kenworthy suggests that without greater private sector employment, public supports may be unable to adequately sustain living standards for the poor. An equitable growth strategy necessitates a balance of policy options: Creating jobs is aided by loose employment regulation, low payroll taxes, and, in some cases, lower real wages for workers at the bottom of the income spectrum. However, high employment is also facilitated by a system that “makes work pay” with earnings subsidies, workplace flexibilities, financial support for those who are between jobs or unable to work, and universal health and child care coverage. Kenworthy suggests that these strategies, though generally presented as mutually exclusive, could be effectively combined to create a robust, fair economy.

Egalitarian Capitalism addresses fundamental questions of national policy with rigorous scholarship and a clarity that makes it accessible to any reader interested in the alleged trade-off between social equity and market efficiency. The book analyzes the viability of traditional welfare regimes and offers sustainable options that can promote egalitarian societies without hampering economic progress.

LANE KENWORTHY is assistant professor of sociology at Emory University.