The Rise in Inequality in Advanced Capitalism

This set of vocabulary flashcards covers key economic measures, historical periods, and sociological theories regarding rising inequality and financialization in advanced capitalist countries as discussed in Chapter 1 of the lecture notes.

Gini coefficient

A measure developed by the Italian statistician Corrado Gini that quantifies the extent to which the actual distribution of disposable household income deviates from perfect equality, ranging from zero (perfect equality) to one (complete inequality).

Lorenz curve

A graphical representation depicting the cumulative percentage of households on the horizontal X-axis and the cumulative income share of these households on the vertical Y-axis.

Functional income distribution

The distribution of income between the two factors of production: capital (including land) and labour.

Personal income distribution

The distribution of income between various individuals or households in a country, usually measured after taxes and government transfers.

Golden Age of Capitalism

The post-war economic boom of the 1950s and 1960s, characterized by both strong economic growth and declining levels of inequality.

Financialization

The increasing role of financial motives, financial markets, financial actors, and financial institutions in the operation of domestic and international economies.

Labour share

The portion of national income or added value that is received by the sellers of labour in the form of wages, salaries, and employment-related income.

Capital share

The portion of national income received by the owners of capital in the form of profits, rents, and other investment-related income.

Net national wealth

The total of all financial and non-financial assets (mostly land and real estate) owned by the residents of a country minus all the liabilities owed by them.

Productivity-pay gap

The divergence observed since the 1980s where net productivity continues to rise while hourly compensation for the typical median wage earner stagnates.

The Great Gatsby curve

A visualization showing the negative correlation between the level of income inequality and the degree of intergenerational earnings mobility.

Intergenerational earnings mobility

A measure of equality of opportunity focused on a person’s position on the income ladder relative to their parents’ position.

Relationship $r > g$

The central thesis in Thomas Piketty’s Capital in the 21st Century stating that wealth inequality rises when the net rate of return to capital ($r$) exceeds the growth rate of output ($g$).

Patrimonial middle class

A term used by Piketty to describe the structural transformation of wealth distribution in the 20th century where the middle 40 percent reached significant wealth shares (35 to 40 percent).

Asset-based welfare regime

A policy approach, particularly in Anglo-Saxon countries, where governments promote homeownership and asset accumulation as a form of "private insurance" against social risks to compensate for cuts in public spending.

Dominant class

A label used by Thomas Piketty for the top 1 percent (top centile), who numerically represent large groups of people that inevitably have the most social and political influence.

Lower classes

In the context of income distribution tables, this refers to those individuals located in the bottom 50 percent of the distribution.

Status anxiety

A psychosocial implication discussed by Pickett and Wilkinson where greater inequality leads to increased competition and stress among both poorer and wealthier individuals.

Median-voter theories

Theories of democratic politics claiming that politicians win more votes by moving toward the ideological center of the median voter, a concept challenged by evidence of increasing political inequality.

Shareholder model of corporate governance

A model of industrial world governance that privileges the interests of shareholders and managers at the expense of ordinary workers.