After thirty years of the myth of the ideal and irresistible market, the present represents an opportunity for challenging market rationality. Such challenges have always existed, but the current context perhaps represents a tipping point, an opportunity for change, where these challenges might receive a more a more receptive hearing among policymakers.
With this in mind, this article attempts to raise questions about some of the inequities of market economies, making particular reference to rising earnings inequalities, enduring gender inequalities and market valuations of some forms of work, specifically carework (where women are over-represented) and high level finance (where men are over-represented). It also considers widening understandings of 'the economy' to include aspects of care and domestic work which are currently hidden, and if recognised and valued appropriately potentially could lead to a more equal inclusive and sustainable society.
In so doing I make reflections on two issues addressed in this special issue: market recognition of individual 'merit', and the socio-economic value of what is recognised as work. Specifically I focus on the way that care and finance work are misrecognised by the market, leading respectively to undervaluation and overvaluation in ways which contribute to rising overall inequalities and enduring gender inequalities. I go further by linking these issues to the overall increase in earnings inequalities, in turn, a key element underpinning the economic crisis at the end of the first decade of the twenty-first century.
I develop this argument in a number of stages. First I set the discussion within the context of globalisation, rising inequalities and the falling share of output accruing to labour in general and low paid labour in particular. I then focus on the role of work and labour markets in shaping these inequalities, and consider some of the explanations put forward by economists to account for increasing inequalities in earnings in predominantly western societies.
Next, I turn to the question of enduring gender inequalities in labour markets. In this respect I consider how some of the economic properties of care and finance work lead to it being unjustly valued within a predominantly market system. To account for the gendering of this form of work, something not fully addressed within feminist economics, I suggest that progress might be made by bringing together ideas addressed by labour market researchers within the social sciences and those of gender theorists working predominantly in cultural studies and the humanities.
By way of conclusion, I argue that it is crucial to recognise the productive contributions of reproductive work and move towards a more Keynesian regulatory approach (appropriately modified to suit the contemporary global context) in order to create a more sustainable economy and one in which society takes control of the economy rather than vice versa (Polanyi, 1953).
Before beginning it is important to recognise that in the main I am dealing with general tendencies. I accept very much that the processes outlined materialise differently in different locations, but my rationale is that, at present, all states are constrained in their freedom to manage their economies and finance social policy by wider economic constraints. Until the end of the first decade of the twenty-first century these constraints were set by the supremacy of neo-liberalism, characterised by economic deregulation, privatisation, and fiscal discipline. Subsequently policies are likely to be influenced by responses to the global financial crisis and economic recession. While organisations and states operate within this common global framework, they do so in different ways, leading to different outcomes with respect to the extent of gender and earnings inequalities. Nonetheless in many countries earnings inequalities widened during the last two decades and gender disparities persist. Thus, while I am conscious of variation between states, in this article it is the general tendencies that are foregrounded.
Rising earnings inequalities and the economic crisis
Neo-liberalism has been associated with unsustainable increases in earnings inequalities, and a related imbalance between increases in productivity and wages, resulting in a fall in the share of output accruing to labour. More specifically, earnings inequalities have risen in 70 per cent and labour's share of income fallen in 51 out of the 73 countries for which data is available (ILO, 2008).
Focusing specifically on high income OECD countries (the OECD 11), earnings inequalities have risen among men and among women, while the gender pay gap has marginally declined as a consequence of widening class differentials, though remains persistent and at a high level (OECD, 2008) (1). In these countries, earnings dispersion increased by 11 per cent for women and 10 per cent for men between 1985 and 2005. For both women and men the increase was greater at the upper end of the distribution meaning that high-earning women and men now receive a greater share of overall earnings. At the upper end of the distribution women have moved into an expanding range of professional and managerial jobs but rarely reach the top; many stereotypically male jobs in manufacturing and in the middle of the distribution have declined; and in the relatively low paid but expanding personal services and elementary occupations, men's pay has fallen relative to the male median and so more closely approximates women's pay.
These variations across the distribution mean that when full-time workers are taken together, the increase in overall inequality is less marked, owing to a decline in the gender wage gap. The fall in the gender pay gap is therefore a consequence of widening inequalities by social class, and while the number of professional women has increased, much of the decline in the gender pay gap is a consequence of the decline in the relative earnings of lower paid men. In the case of the UK, for example, the gender pay gap in the lowest decile is only 5 per cent compared to 20 per cent in the top decile (2). Nonetheless a gender pay gap endures in all OECD countries and at the current rate of closure will do so for many decades.
Earnings form the largest element of household income in these...