Since the launch of Piketty’s Capital in the twenty-first century, we have become obsessed with inequality. “There’s been class warfare going on for the last 20 years and my class has won”, declared Warren Buffet in 2011. According to Stiglitz’s new book, due to be published later on this month, the USA is no longer home to the American Dream but, instead, to “the Great Divide”. Increasingly, this rising inequality is being linked with slower and less stable economic growth – including by the IMF. Given concerns about “secular stagnation” in Europe and beyond, something which I will be discussing this coming week in London, the disquiet about inequality is not likely to disperse any time soon.
However, there is one rather significant missing element in much of the mainstream debate – but one that, if grasped and acted upon, has the potential to resolve many of the problems we currently face. It is the elephant in the room – the one that the admittedly male dominated economics profession can all too easily overlook: women. In other words, if we want to understand the big disparities in our economy, we need to talk about sex.
Let’s start with the richer economies. Not only have many of the major economies witnessed a growing gap between the richest and poorest in their societies, they have also experienced increased inequality of another kind: increasing inequality between women. The gap between women – between those high achieving women at the top and those scratching out a living at the bottom of society – is far greater than it was in previous decades, something to which the sociologist Leslie McCall has drawn attention. “Feminism, like wealth, does not trickle down”, writes Laurie Penny, author of Unspeakable Things: Sex, Lies and Revolution. Female liberation has, without a doubt, allowed a good number of women to forge ahead. I for one would not be where I am today without it. After all, most Cambridge colleges, including my own, only began to admit women in the 1970s. However, whilst some women have successfully broken through glass ceilings, women at the bottom seem to have experienced far fewer benefits. Many are implicitly if not explicitly exploited – exploited through segregated labour markets that offer lower pay for female dominated occupations. Many have literally been left “holding the baby”, with sole responsibility for bringing up children, the male parent having abdicated responsibility – financial and otherwise.
Where the problems faced by women at the bottom have gone unaddressed, poverty has become increasingly “feminised”. The term “feminisation of poverty” was first coined by Diana Pearce in the late 1970s after investigating trends in the USA. More recently, Gertrude Shaffner Goldberg’s book Poor Women in Rich Countries investigated the issue for eight major developed economies. The results are concerning. In large parts of Europe and the USA, the reality is that poverty is a problem that can affect a woman’s life much more so than it does that of a man. Those women most obviously at risk fall into two main groups: lone mothers and elderly women living alone. In other words, women at both the start and end of their adult life. However, even between these two times, and as Goldberg points out, the societal expectations and pressures faced by women – such as caring for children and elderly parents – can quickly corrode a woman’s chance of success in the labour market, placing her at greater risk of poverty in the event of divorce and in later life (as a widow), and affecting her “bargaining power” within the household.
It is difficult to get to grips with inequality and poverty without recognising the role of gender. This becomes even clearer if we turn to poorer countries, where economists are somewhat much more inclined to discuss gender. To put it in blunt terms, and those used by thirty-six influential women in a letter to the German Chancellor, Angela Merkel, and the chair of the African Union, Nkosazana Dlamini-Zuma, “poverty is sexist”. For the poorer countries these women have in mind, the facts are, of course, abundantly clear: girls have far fewer educational opportunities than do boys; women have less access to credit compared with their male counterparts; women (unlike men) are vulnerable to death in childbirth and are exposed to violence and rape to which they frequently have little legal recourse; and women often have limited rights of ownership or of inheritance compared with their brothers and husbands. Needless to mention the phenomenon of up to 100 million “missing women”, or the lack of female political representation across the world. Development experts certainly recognise but nevertheless still struggle to battle against these and other gaping gender disparities.
The significant lack of gender equality in poorer countries together with the “feminisation of poverty” in many richer economies could not be more worrying. Worrying not only for women, but also for men. The pursuit of gender equality does not come at the cost of the opposite sex. Gender equality is not a zero-sum game. As the United Nations and World Bank have both accepted in the context of economic development, and as Amartya Sen has long argued, it is something that can benefit everyone. The way it does so is through economic growth. Here, history adds much support to the case that gender equality is good for growth.
Whilst economists are used to claiming that free markets and democracy are at the root of Western riches, economic historians have recently identified a new player: female empowerment. Whilst we think of “feminism” as being a modern-day concept, associated with the likes of Pankhurst, Friedan and Greer, female empowerment in fact has long historical roots in the West, beginning well in advance of the region’s global economic supremacy. Seeds were being sown as far back as the fourteenth century – the century marked by the Black Death.
The Black Death brought significant labour shortages, which, as textbooks would predict, pushed up the market wage. Where labour markets were sufficiently well developed, as was the case in England and the Netherlands, this had a major impact on women. The shortages combined with the higher wage drew a greater number of women into the workforce. The result was economic independence – perhaps for the first time in history, young women could support themselves independently of their fathers. Teenage girls went to work rather than being “married off”, enabling them to take control of their lives and to decide for themselves whether, when and who to marry. The result was that women married later in life and entered that marriage on a (relatively) equal basis. By the sixteenth century, the average age of first marriage for British women had reached the remarkably modern age of 25 years old – and there it stayed for centuries.
It was the economic freedom that women began to achieve early on in Britain that paved the way for the nation’s economic rise. As highlighted by Jan Luiten van Zanden and Tine de Moor, working and marrying later in life meant that women had smaller families and so parents could better afford both to educate their children and to save, helping to provide the economy with the resources it needed to grow. The resultant lower population pressure also prevented downward pressure on wages, which not only helped to limit poverty but also gave businesses an incentive to mechanise. According to the economic historian Bob Allen, it was the combination of these high wages with cheap coal (which made capital cheap to run) that brought about the Industrial Revolution – that made industrialisation profitable. In the simplest possible terms, the decisions made by the average woman – decisions about work, marriage and family – had the power to transform the economy. In fact, as much power as the male inventors with whom we are already very familiar.
What history shows is that greater freedoms for women underpinned the very beginnings of modern economic growth. If we want to understand why the West became rich and why so many other parts of the world are still poor, gender (in)equality is precisely the place to look.
This year will see the drafting and adoption of a new set of United Nations Sustainable Development Goals – goals which will replace the Millennium Development Goals and which will influence development policy in poorer countries for years to come. History adds significant weight to the notion that women and girls need to be placed at the very top of the agenda.
Back here in the rich West, and where concerns about the “feminisation of poverty” deserve greater attention, we cannot afford to be resting on our laurels: whilst women have come a long way, much can still be achieved. At a time when the US and Europe are worrying about “secular stagnation”, it is more important than ever that we avail ourselves of the significant growth opportunities which could be opened up by continuing to pursue equality for men and women – and, in particular, by focussing on those women at the bottom. Of course, for a profession as fiercely male dominated as economics, that opportunity is all too easy to miss. Hence, next time you are involved in a discussion about inequality, poverty or secular stagnation, don’t forget to mention that short three letter word beginning with “s” that is sure to attract attention.