Compare different economic schools view on cause of the inequality starting in the late 70s and choose the school that you agree with the most on this issue

The rise in income and wealth inequality since the late 1970s has been analyzed through different economic schools of thought, each offering distinct perspectives on its causes. Here’s a comparison of how some of these schools interpret the issue: ### 1. **Neoclassical Economics** Neoclassical economists often emphasize market efficiency, technological progress, and globalization as primary drivers of inequality. They argue that as economies grow and become more interconnected, high-skilled labor benefits from increased demand, which can lead to rising wages for those workers, while low-skilled workers may lag behind. They believe inequality is a natural outcome of a competitive market system and can incentivize productivity and innovation. ### 2. **Marxist Economics** Marxist economists focus on the systemic issues of capitalism, asserting that inequality is a fundamental feature of the capitalist system. They argue that the concentration of capital leads to wealth accumulation among the bourgeoisie (owners of capital) at the expense of the proletariat (workers). They point to factors such as labor exploitation, capital controls, and the diminishing bargaining power of labor due to weakened unions as key causes of rising inequality post-1970. ### 3. **Institutional Economics** Institutional economists emphasize the importance of social, legal, and political institutions in shaping economic outcomes. They argue that changes in policies, such as deregulation, tax reforms favoring the wealthy, and reduced social safety nets since the late 1970s, have significantly contributed to inequality. They highlight how institutions can either mitigate or exacerbate inequality based on their structure and governance. ### 4. **Behavioral Economics** Behavioral economists focus on human behaviors and decision-making processes that impact economic inequality. They might suggest that cognitive biases, preferences for short-term gains, and social norms can contribute to decisions that reinforce inequality, such as patterns of spending, saving, and investment that differ across socioeconomic groups. ### 5. **Post-Keynesian Economics** Post-Keynesian economists argue that income distribution is influenced by demand-driven factors and the roles of finance and capital accumulation. They point to the growing power of finance, changes in corporate governance towards shareholder value maximization, and the decline in public investment in social infrastructure as critical contributors to rising inequality. ### Evaluation While each school offers valid insights, I find the **Institutional Economics** perspective most compelling in explaining the causes of rising inequality since the late 1970s. This view recognizes the significance of policy changes and institutional structures that have directly impacted income distribution. The role of tax cuts for the wealthy, reduced corporate regulations, and the weakening of labor unions has had demonstrable effects, exacerbating the divide between high earners and low-wage workers. Furthermore, the interplay between political power and economic policy cannot be overlooked. The political decisions often driven by lobbying and the influence of wealth can lead to an environment that favors the rich, thus institutionalizing inequality. In conclusion, the rise of inequality is not just a market phenomenon; it is profoundly shaped by the institutions and policies that govern an economy. Addressing inequality requires a critical examination of these institutions and a commitment to reform that prioritizes equity and shared prosperity.