Time for a US-China grand bargain

An old theme within social theory holds that societies with very unequal distributions of wealth can sustain their social cohesion so long as total wealth is growing.

Such total growth enables all who get a distributed share of that wealth—even those with the smallest shares—to experience at least some increase. The rich with the biggest shares can grab most of the growth so long as some is provided to those with small shares.

The pie analogy works well: so long as the pie is growing all distributed shares of it can also grow. Some will grow more, others less, but all can grow. If all do grow, social stability is facilitated (assuming the society’s population accepts unequal shares). Modern capitalism’s prioritization of economic growth as urgently necessary reflects such social theory (much as economic growth has reinforced it).

Of course, if instead, a society’s population prioritizes movement toward less unequal shares, economic growth becomes relatively less important. If a society’s population seriously accommodates climate change, economic growth can become still less important. Were social movements endorsing such priorities to grow and ally, they could well alter societies’ attitudes toward and commitments to economic growth.

US capitalism from 1820 to 1980 favored and fostered rising total wealth. The share going to wages grew while the share going to capital grew more. Notwithstanding many bitter capital/labor struggles, the United States as a whole exhibited considerable social cohesion. This was because, in part, a growing pie allowed nearly all to experience some growth in their real income. “Nearly all” could be rewritten as “whites.”

In contrast, the last 40 years, 1980–2020, represent an inflection point