R > G: Understanding Inequality in Europe

What are the three main definitions of social class?

1) Status, lifestyle, prestige

2) Structured access to economic and power resources

3) Potential political agency (class consciousness)

What is the difference between gradational and relational class approaches?

Gradational: describes class as a scale (more/less income).

Relational: explains class through social relationships and market position (employer vs employee).

What are the problems with using income alone to measure class?

Doesn't capture hidden capital, wide variation within income groups, hard to get reliable data.

What does the Gini coefficient measure?

Income inequality in a society (0 = perfect equality, 1 = perfect inequality).

What is the Robin Hood index?

The amount of total income that must be redistributed to achieve equality.

What does the Theil index decompose?

Inequality between groups vs within groups.

What is Goldthorpe's class scheme based on?

Market situation, work situation, and employment relationship.

What does Wright's Neo-Marxist scheme emphasize?

Class is defined by control over the means of production and authority over others.

What is Piketty's First Law of Capitalism?

α (capital share of income) = r (rate of return) × β (capital/income ratio)

What does Piketty argue about r > g?

Capital grows faster than the economy, increasing inequality over time.

What causes the U-shaped curve in the capital/income ratio?

Decline due to war/taxation; rise due to privatization, low growth, capital accumulation.

What is the "Elephant Curve"?

Shows income gains from globalization: global middle class and top 1% gained the most.

What are Milanovic's extended Kuznets waves?

Cycles of rising and falling inequality tied to tech revolutions and globalization.

What are the "malign" and "benign" forces in reducing inequality according to Milanovic?

Malign: war, epidemics, conflict.

Benign: education, politics, tech benefiting low-skilled labor.

What is absolute social mobility?

Actual change in class position between generations.

What is relative social mobility?

Likelihood of moving between classes, independent of origin class.

What does the OED triangle represent?

Origin class → Education → Destination class; shows how education mediates class mobility.

What is the Great Gatsby Curve?

Shows that higher inequality is associated with lower social mobility.

What is the functionalist view of inequality (Davis & Moore)?

Inequality is necessary to motivate people to train for and perform important jobs; rewards match job importance and required sacrifice.

What are the three types of rewards in Davis & Moore's theory?

1) Sustenance & comfort (economic), 2) Humor & diversion (leisure), 3) Self-respect & ego-expansion (prestige).

What are Tumin's main critiques of Davis & Moore?

Difficulty in defining job importance, inequality hinders talent discovery, rewards often don't match job value, and societal access is unequal.

What is Wrong's critique of both Davis & Moore and Tumin?

Inequality may serve to motivate, but current extreme inequality is maintained by power, not function; prestige alone can motivate.

What is the ISCO classification used for?

Categorizing occupations in class schemes based on job titles and skill levels.

What is the SIOPS scale?

Measures prestige of occupations across societies (e.g., doctors rank higher than garbage collectors).

What does ISEI measure?

Socioeconomic status based on income, education, and job skill level; more objective than prestige scales.

How is "relative poverty" defined?

Lacking resources needed to live at the standard considered normal in a society.

What are the income group thresholds based on median income?

Bottom (≤60%), lower middle (60-80%), core middle (80-120%), upper middle (120-200%), top (>200%).

What is PPP in measuring poverty?

Purchasing Power Parity - adjusts income levels for differences in cost of living between countries.

What is "trickle-down economics"?

The idea that giving tax breaks to the wealthy will stimulate economic growth that benefits everyone (largely debunked).

What did Hope & Limberg find about tax cuts for the rich?

Tax cuts increased top 1% income share but had no significant effect on GDP or employment.

Why is capital income harder to tax than labor income?

Capital moves globally, can be hidden in offshore accounts, and is taxed less progressively.

What distinguishes relational class schemes from gradational ones?

Relational schemes explain class dynamics through power and ownership relations (e.g., Marxist theory).

How does Wright classify class?

Based on ownership of means of production, authority over others, and division of labor skill.

How does Eribon's memoir illustrate intersectionality?

His social class and sexuality intersect to influence his identity, mobility, and sense of alienation.

What is "massified but not democratized" education?

Education is widely available, but outcomes still depend on social class - reinforcing inequality.

What is the core critique of education as a mobility driver?

Education access and success are still heavily influenced by class background and do not ensure mobility.

What is loss aversion in mobility theory?

Wealthy parents are more motivated to prevent downward mobility than poor parents are to enable upward mobility.

What are the three main global income groups in the "Elephant Curve"?

A - Emerging global middle class (e.g., China, India)

B - Lower middle class in rich countries (e.g., USA, UK)

C - Global plutocrats (top 1% worldwide)

What does the "Inequality Possibility Frontier" represent?

As national income increases, potential for inequality also increases—more economic output = more room for unequal distribution.

What explains the global inequality decline post-2000?

Rapid income growth in large-population countries (China, India) and the shrinking income gap between nations.

What is a "citizenship premium/penalty"?

Income advantage or disadvantage based on where you were born—location determines part of your economic outcome globally.

What is Piketty's core claim about capitalism and inequality?

r > g - the rate of return on capital exceeds the economic growth rate, causing rising inequality over time.

What is Milanovic's extension of the Kuznets Curve?

Inequality evolves in waves driven by tech revolutions, globalization, and conflict—endogenous to capitalism.

What data sources do Piketty and Milanovic use?

Piketty: fiscal/tax records; Milanovic: household surveys and global distribution data.

How does Milanovic define benign vs. malign forces reducing inequality?

Benign: education, democracy, labor protections

Malign: war, famine, epidemics, destruction of capital

What is the OED Triangle?

Shows how Origin class affects Education, which then affects Destination class - education mediates mobility.

What does the "Liberal Theory of Social Mobility" argue?

Industrialization increases both absolute and relative mobility due to demand for skilled labor; education is key.

What are critiques of the liberal mobility theory?

Education hasn't equalized opportunity, mobility is stagnating, and upward mobility rates are not increasing.

What is the Great Gatsby Curve?

Countries with higher income inequality tend to have lower intergenerational mobility.

What is the "Metamorphosis of Capital"?

Historical U-curve in capital/income ratio—high in 1800s, fell after wars/taxation, rising again post-1970s.

Why does capital return (r) tend to be high when capital (β) is low?

Scarcity increases value—if capital is rare, its return is higher; if abundant, returns fall.

What is the formula for the 2nd law of capitalism?

β = s / g

(β: capital/income ratio; s: national savings rate; g: growth rate)

What does Piketty predict about the future of inequality?

Rising capital accumulation and low growth will worsen inequality unless taxed or redistributed.

What is "hyper patrimonial society"?

A society where inherited wealth dominates income—wealth is concentrated among rentiers or heirs.

What's the difference between "supermanagers" and "heirs"?

Supermanagers earn high labor income; heirs gain wealth primarily from capital/inheritance.

What causes the collapse and rebound of capital in the 20th century?

WWs, tax policies, inflation, decolonization caused collapse; privatization and real estate booms caused rebound.

Why is Piketty's formula "r > g" considered the central contradiction of capitalism?

Because when the return on capital (r) exceeds the growth rate of the economy (g), those who own capital accumulate wealth faster than those who rely on wages, leading to a self-reinforcing spiral of inequality that undermines meritocracy and social mobility.

How does Milanovic's reinterpretation of Kuznets challenge Piketty's pessimism?

Milanovic argues inequality follows waves, not a one-directional trend. He sees inequality as endogenous to capitalism, with social and political forces (like education, war, or reform) potentially reversing inequality cycles—suggesting future decreases are possible.

How does education simultaneously promote and limit social mobility?

Education expands opportunity but is shaped by social class. Those from higher-class backgrounds often access better schools, tutoring, and networks, which reproduce inequality—even when educational access appears equal (massification without democratization).

What does the Great Gatsby Curve imply about social mobility and policy?

It suggests that high income inequality correlates with low intergenerational mobility, meaning societies with large wealth gaps tend to "lock in" advantage and disadvantage across generations—challenging liberal ideals of meritocracy.

Why is the Employment-Aggregated Approach criticized from a relational perspective?

It classifies people by job titles and skill levels but ignores power relations and ownership structures. Two people with the same occupation can experience vastly different degrees of autonomy, security, or exploitation.

Why is the Neo-Marxist (Wright) approach more explanatory than descriptive schemes?

Because it focuses on class relations (e.g., ownership of production, control over labor) rather than mere attributes. It reveals why inequality exists by analyzing how capitalism structurally privileges some roles over others.

What makes prestige scales like SIOPS limited as tools of inequality analysis?

They measure perceived status, not material reality or structural power. Prestige can reflect cultural bias, lacks theoretical clarity, and doesn't explain the mechanisms that produce or sustain inequality.

How does the liberal-industrial thesis use education to justify inequality?

It posits that inequality is a byproduct of meritocratic sorting—education determines outcomes, so inequality is earned. Critics argue this ignores how unequal starting positions affect educational attainment.

How does Tumin undermine the idea that inequality is functionally necessary?

He argues inequality limits talent discovery (due to unequal access), entrenches privilege, and rewards status rather than contribution. He also questions how "importance" of a job is socially constructed and often circularly justified by pay.

What is the policy implication of the Hope & Limberg study on tax cuts?

Tax cuts for the wealthy increase inequality but have no meaningful effect on GDP or unemployment. This undercuts the justification behind trickle-down economics and supports calls for progressive taxation.