For 200 years, there have been two schools of thought about what determines the distribution of income – and how the economy functions. One, emanating from Adam Smith and nineteenth-century liberal economists, focuses on competitive markets. The other, cognizant of how Smith’s brand of liberalism leads to rapid concentration of wealth and income, takes as its starting point unfettered markets’ tendency toward monopoly. It is important to understand both, because our views about government policies and existing inequalities are shaped by which of the two schools of thought one believes provides a better description of reality.
For the nineteenth-century liberals and their latter-day acolytes, because markets are competitive, individuals’ returns are related to their social contributions – their “marginal product,” in the language of economists. Capitalists are rewarded for saving rather than consuming – for their abstinence, in the words of Nassau Senior, one of my predecessors in the Drummond Professorship of Political Economy at Oxford. Differences in income were then related to their ownership of “assets” – human and financial capital. Scholars of inequality thus focused on the determinants of the distribution of assets, including how they are passed on across generations.
The second school of thought takes as its starting point “power,” including the ability to exercise monopoly control or, in labor markets, to assert authority over workers. Scholars in this area have focused on what gives rise to power, how it is maintained and strengthened, and other features that may prevent markets from being competitive. Work on exploitation arising from asymmetries of information is an important example.
Global Preventive Diplomacy Initiative Launched in New York Ahead of UNGA 80
New York, NY — The Global Preventive Diplomacy Initiative (GPDI) was launched at an exclusive event organized by the Center for International Relations and Sustainable Development (CIRSD) on the top floor of New York’s iconic MetLife Building, bringing together diplomats, philanthropists, business leaders, academics, and thought leaders for a conversation on the future of conflict prevention and international cooperation. The launch came just days before the opening of the 80th Session of the United Nations General Assembly, which annually brings together heads of state and government for the High-Level General Debate — making New York the world’s diplomatic capital.
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Eighty years after its founding, the UN finds itself at a critical juncture. Its purpose is on trial, and its mission urgently requires recalibration. The world it inherited from the scorches of the Second World War no longer exists, yet many of the organisation’s practices remain rooted in a bygone era – out of sync with today’s realities and detached from those it was created to serve.
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CIRSD President Vuk Jeremić to SINA Finance: Multilateralism Will Evolve, Not Disappear
Below is the full text of the interview:
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