Top Heavy: A Study of the Increasing Inequality of Wealth in America.

Pundits and politicians regularly celebrate the "globalization" of our economy. They tell a tale of new products and prosperity. Arguably, however, this new global economy has been more successful in bringing third-world inequalities home to the U.S. than promoting equality abroad. The extent of these inequalities and what can be done to address them is the subject of two new works made even more timely by current Republican initiatives in Congress.

Edward N. Wolff's Top Heavy provides a superbly detailed discussion of wealth and poverty in the United States. Once more egalitarian than many European nations, the U.S. now has the most lopsided distribution of wealth in the industrial world. The top 1 percent of the social pyramid now holds an astounding 42 percent of all marketable wealth. Wolff's study also effectively challenges defenses of current U.S. economic policy such as that recently advanced by Michael Novak in the Wall Street Journal, ("What Wealth Gap?" July 11, 1995). Novak argues that when nonmarketable assets such as public lands, consumer durables, and pensions were taken into consideration, the average American is much better off than he at first appears. Wolff's study shows that even when such dubious factors are counted, inequality has grown substantially in recent years.

Great inequality places strains on a society even when the income of the poor is increasing. John Judis and Michael Lind pointed out in the New Republic (March 27,1995) that today's economic extremes allow the wealthy to withdraw into their own "barricaded nation within a nation, a world of private neighborhoods, private schools, private police, and even private roads. . . ." These privileged modes of escape often create new problems for the rest of society at the same time as they insulate and reduce the willingness of the wealthy to contribute to society as a whole. To be sure, literal economic equality is neither possible nor desirable. Nonetheless, when a few citizens are so wealthy they can buy their way out of widespread social problems while many others are too poor to participate effectively in social life, society loses a sense of community, of common goals and responsibilities.

When social critics make these arguments, they are accused of flaming the fires of class war. Global Village or Global Pillage by Jeremy Brecher and Tim Costello is indeed a work about class war--not of the poor against the rich but of the rich against the poor. Conventional textbooks tell us that breaking down tariff barriers allows nations to specialize in what they do best. Economies of scale will then lead to rapid advances for all.

But free trade's immediate effect today is to extend to capital a freedom it denies workers. Businesses enjoy the right of instant mobility for their physical plants and iron-clad protections for their "intellectual property" while workers and their rights are nontransferable. The new "free" trade agreements encourage a "race to the bottom," where governments and workers are often forced to cede bargaining power and rights within the workplace to match the lowest national standards. Brecher and Costello remark: "Downward leveling is creating a lose-lose negative sum game for the majority of people in all parts of the world."

Contrary to critics of economic equality, societies with great gaps in wealth and income suffer from slow rates of economic growth. Sluggish wages do translate into lower costs and higher short-term profits and savings for owners. This is supposed to encourage economic growth. However, low wages also mean low purchasing power and diminished educational opportunities. In a world of low consumption and dispirited and poorly treated workers, long-term profits decrease and the incentive to invest in new technologies diminishes.

Unfortunately, it is also true that this new world economy severely constrains the traditional liberal response to such problems. When the U. S. government builds new transit systems or hospitals, workers spend much of their new wages to buy goods from productive third-world plants where repressive business practices keep wages artificially low. High levels of U. S. government spending can no longer serve their historic "multiplier effect" of indirectly expanding jobs and reducing inequalities.The inability of tax-and-spending policies to ameliorate inequalities created by the new trade framework has done much to give liberalism its bad reputation.

Brecher and Costello recognize that job creation and taxing wealth are still important. Nonetheless, tax-and-spend agendas will only be fully effective within a new trade and labor framework which levels the playing field between labor and management both here and throughout the world. International trade treaties should require union protection, a minimum wage, limitations on work hours, and environmental standards. International financial institutions should fund high-wage jobs in the development of new environmentally friendly technologies in the third world. Dispute-resolution processes should be democratic, open to public participation, and backed by the power to exclude violators from the trading system.

Brecher and Costello's most distinctive contribution lies in an examination of efforts by grass-roots groups to slow the incursions of multinational capital and put more radical reform on the agenda. For example, historically protectionist U.S. textile workers convened an international conference which produced an agreement to support expanded trade with nations which ensure basic human and labor rights. Other worker-environmentalist coalitions have been able to spearhead successful campaigns to reform the labor and environmental practices of some multinational corporations as well as World Bank lending policies.

What is the relationship of these initiatives to more conventional efforts to win elections? Without new political leadership at the national level, even the best grass-roots efforts will have limited success. Domestic legislation on striker replacement would, for example, aid efforts to build international labor solidarity. In this global economy, it is imperative that citizens acquire a broader understanding of the connection of their own interests and concerns to larger social and political causes.

A progressive political movement, either within or outside the Democratic party, must mobilize America's millions of disenchanted voters. Those voters can best be reached by drawing upon the kinds of local activism undertaken by the environmental and union movements. Progressives can no longer afford the split between advocates of direct action and devotees of electoral politics. A new progressive politics must be democratic in its internal organization and committed to fostering the ongoing democratization of banks, unions, and corporations. These books make the need for and prospects of such a politics clearer.

John Buell, a former associate editor of the Progressive, is the author of Democracy by Other Means: The Politics of Work, Leisure, and Environment (University of Illinois Press).