What is organizational inequality? Why is it increasing as macroeconomic inequality increases?

Abstract

Inequality has been increasing for decades in both rich and developing countries and the academic literature addressing it struggles to provide explanations, let alone solutions. This article is concerned with a relatively underexplored area, the relationship between macro-level inequality and organizational inequality. The core focus of the article is the recognition that the two phenomena are closely bound up one with the other. This is made possible by adopting Rousseau’s notion of inequality as hierarchy and willingness to accept subordination to authority and disparity of treatment. In doing so, we highlight similarities and dissimilarities between Rousseau and Marx. Inequality remains an issue of hierarchy at both the macro and organizational levels. As it was for Rousseau, so it is today but it is much more layered than in Rousseau’s day: inequality in society is the accepted degree of hierarchy among its members, inequality in the economy and at work is the extent to which, accepted or not, there is an imbalance of power, financial resources, remuneration of work and access to opportunities and services. The increase in inequality is due to a radical change in the socio-economic model of advanced economies. This change involves a shift towards financialization, a pressure on labour through flexibility, the decline of trade unions’ power and the retrenchment of public social spending.