World Distribution of Gini Index
http://www2.physics.umd.edu/~yakovenk/econophysics.html
Radicals are often confronted with criticisms of their approach that directs attention to the fall of former communist nations. This line of critique assumes that the forms of communism/socialism (C/S) and governance/economics practiced in these nations mirrors the more ideal system radicals prefer. The critique also suggests that C/S arraignments have failed because they are less preferable to democracy and capitalism.
The graph above, taken from Adrian A. Dragulescu and Victor M. Yankovenko’s 2002 study, "Statistical Mechanics of Money, Income and Wealth: A Short Survey” (AIP Conference Proceedings 661), helps address this criticism. The critique these data offer of the failure of former communist nations approach are “objective” to the extent that they deal with differences in income inequality over time, and do not rely on subjective arguments concerning the value placed on governance forms (e.g., the preference for democracy).
This study, performed by physicists (these studies are known as econophysics because they combine assumptions of physics to study economic behavior) demonstrates an interesting outcome of the conversion of Eastern European and Former Soviet Union (FSU) nations from socialist/communist political-economic styles to capitalism. The graph in question compares the GINI coefficient of income inequality across nations grouped into five regions in 1988 and 1993 – or before and after the conversion of Eastern Europe and FSU nations to capitalism.
The graph illustrates nicely the results of a more complex analysis undertaken by Dragulescu and Yankovenko. Specifically, these researchers note that the GINI data indicate:
(1) that income inequality across similarly situated groups of nations is rather constant over time.
(2) The exception to this trend is the group of Eastern European and FSU nations, where income
inequality increased significantly between 1988 and 1993 (from about 0.27 to 0.47).
(3) The authors (remember they are physicists!)attribute this increase in inequality of incomes to the
transition to capitalism.
To these observations, let me add a few of my own. First, as the graph illustrates, income inequality is generally higher in non-Western than in Western nations. This may, in my view, be related to at least two conditions that hold in a number of these nations: lower wages for industrial workers, and higher proportions of the population that are rural and non-industrial.
In sum, empirically, the evidence from recent transitions of nations from C/S to capitalism indicates that the emergent income conditions are not objectively preferable for the majority of the population. This conclusion is supported by the rise in income inequality experienced in these nations after conversion, and the relatively high level of income inequality stability shown in other capitalist nations.
