Social Sciences in China (Chinese Edition)

No. 9, 2023

The Impact of Neoliberalism on Income Inequality in Countries such as the UK and the US

(Abstract)

Huang Ping and Li Qize

By combing through the main channels by which neoliberalism increased income inequality in countries such as the United Kingdom and the United States since the 1970s, this paper analyzes the internal mechanism of neoliberalism’s exacerbation of this issue. It reveals how neoliberal theory and economic policy have intensified income inequality in countries such as the UK and the US by means of education marketization, economic financialization, the globalization of capital, fiscal tightening and etc.. In view of this, it behooves China, on the path to common prosperity, to navigate the orderly development of capital and prevent brute expansion of private capital in the field of public goods such as education, aged care, and infrastructure; to curb the economic development from being diverted out of the real economy, guarding in particular against the tendency of non-financial enterprises to move into financial management; adjust capital-income distribution rights and increase the share of labor in income distribution; and utilize fiscal means such as taxation, social security, and transfer payments to alleviate the redistribution mechanism, and thus provide institutional and policy insurance for the realization of common prosperity.