Competing Concepts of Inequality in the Globalization Debate

How much are the world's poor sharing in the gains from the economic growth fueled by greater economic integration? There are seemingly conflicting answers from the two sides of the ongoing debate on globalization and inequality. On one side, the website of a prominent nongovernmental organization (NGO) in the antiglobalization movement, the International Forum on Globalization, confidently claims that "globalization policies have . . . increased inequality between and within nations."¹ This stands in marked contrast to the claims made by those more favorable to globalization. For example, an article in the Economist magazine states with equal confidence that "globalization raises incomes, and the poor participate fully."²

Why do such different views persist? Surely the evidence would be conclusive one way or the other? I have heard it claimed by a prominent advocate for one side of this debate that the other side is simply "ignorant of the facts." But surely the facts would be clear enough by now?

It must be acknowledged that the available data on poverty and inequality are far from ideal, though neither side of this debate has paid much attention to the data problems.³ There are also potentially important differences in the types of data used. The pro-globalization side has tended to prefer "hard" quantitative data while the other side has drawn more eclectically on various types of evidence, both systematic and anecdotal or subjective. Differences in the data used no doubt account in part for the differing positions taken. However, since both sides have had access to essentially the same data, it does not seem plausible that such large and persistent differences in the claims made about what is happening to inequality in the world stem entirely from one side's ignorance of the facts.

One reason why such different views persist is that it is difficult to separate out the effects of globalization from the many other factors impinging on how the distribution of income is evolving in the world. The processes of global economic integration are so pervasive that it is hard to say what the world would be like without them. These difficulties of attribution provide ample fuel for debate, though they also leave one suspicious of the confident claims made by both sides.

Conflicting assessments can also stem from hidden contextual factors. Diverse impacts of the same growth-promoting policies on inequality can be expected given the different initial conditions among countries. Policy reforms shift the distribution of income in different directions in different countries. Yet both sides make generalizations about distributional impacts without specifying the context. In a given national setting, there may well be much less to disagree about.

This paper looks into another possible reason for the continuing debate about the facts: the two sides in this debate do not share the same values about what constitutes a just distribution of the gains from globalization. The empirical facts in contention do not stem solely from objective data on incomes, prices, and so on but also depend on value judgments made in measurement—judgments that one may or may not accept. It can hardly be surprising that different people hold different normative views about inequality. And it is well understood in economics that those views affect how one defines and measures inequality—although it is ethics, not economics, that determines what trade-offs one accepts between the welfare of different people. A class of "ethical measures" of inequality is built on this realization.⁴ What is more notable in the present context is that important differences in values have become embedded in the methodological details underlying statements about what is happening to inequality in the world. These differences are rarely brought to the surface and argued out properly in this debate.⁵

This discussion points out three key differences in the value judgments made about distributive justice that underlie the globalization debate. The first concerns one of the favorite empirical...