Growth for Shared Prosperity

"The arc of the moral universe is long, but it bends toward justice." These words, famously spoken by Martin Luther King Jr., remind us that progress—social, economic, and political—is neither inevitable nor automatic. It requires deliberate action, sustained commitment, and the courage to challenge entrenched inequalities. Nowhere is this more evident than in the realm of economic inclusion. While capitalism has historically driven prosperity, it has done so within varying institutional structures, some fostering greater equality than others. The varieties of capitalism framework distinguishes between liberal market economies, which prioritise deregulation and competition, and coordinated market economies, where stakeholder cooperation tempers inequality. Yet, across these models, a common concern remains: does economic growth translate into widespread economic inclusion, or does it reinforce a meritocratic elite detached from the lived realities of the majority?

Growth and the Tyranny of Achievement

Proponents of meritocracy argue that economic growth is inherently just, rewarding those who apply themselves diligently. Yet, this perspective often overlooks the structural barriers that shape economic opportunity. The belief that success is solely a product of talent and effort disregards the fact that access to quality education, social capital, and economic mobility remains unevenly distributed. This "tyranny of merit" fosters resentment, particularly among those left behind by globalisation and technological advancement. Economic inclusion demands a reckoning with this paradox: if growth is to be a rising tide that lifts all boats, it cannot be contingent upon access to privilege masquerading as individual merit.

The Consequences of Exclusion

Historical patterns demonstrate that economic exclusion fuels political instability. The growing disillusionment with democratic institutions, particularly among the working and lower-middle classes, underscores a deep-seated frustration with economic systems that appear to serve only the privileged. In societies where wealth accumulates at the top while wages stagnate and job security erodes, economic growth ceases to be a mechanism of shared prosperity and instead exacerbates social divides. The consequences are evident in the erosion of trust in public institutions, the rise of populist movements, and a retreat into protectionist and nationalist ideologies.

Leveraging Growth for Inclusion

Can economic growth be harnessed to benefit all strata of society? The answer lies in strategic policy choices that prioritise inclusive institutions. For economic inclusion to be realised, policymakers must consider what is often referred to as the "golden triangle"—the balance between economic growth, social equity, and economic security. This model underscores that long-term prosperity is only sustainable when these three elements reinforce one another. Growth alone, without mechanisms for fair distribution, leads to wealth concentration, while equity without growth can stifle innovation and competitiveness. Economic security, in turn, ensures that individuals and businesses have stability, preventing the destructive cycles of economic crises.

Around the world, there have been different approaches to fostering economic inclusion:

• Progressive Taxation and Social Safety Nets: Nordic countries, such as Sweden and Denmark, have implemented progressive tax systems that redistribute wealth more equitably while funding robust social services, including universal healthcare and education. These measures seek to counterbalance market inequalities and ensure that economic growth benefits the wider population.
• Equitable Access to Education and Skills Development: Germany’s dual education system, which combines vocational training with formal education, provides an alternative pathway to economic success that does not solely rely on university degrees. By integrating apprenticeships with industry needs, Germany seeks to ensure a steady pipeline of skilled workers who can access stable employment opportunities.
• Worker Representation and Labour Market Protections: Countries such as the Netherlands and Austria have strong collective bargaining frameworks that ensure fair wages and job security. In contrast to more deregulated labour markets, these systems seek to provide a buffer against income disparity while maintaining economic competitiveness.
• Corporate Governance Reforms: The introduction of worker representation on corporate boards, as seen in Germany’s co-determination model, seeks to give employees a voice in decision-making processes, aligning business interests with broader social concerns and reducing income inequality.
• Place-Based Economic Development: The United States has experimented with Opportunity Zones, designed to channel investment into economically disadvantaged areas. While outcomes have been mixed, similar initiatives—when paired with strong oversight and community involvement—have the potential to stimulate local economies without exacerbating gentrification.

Moreover, a broader reimagining of economic success is required—one that values human dignity alongside productivity. Economic structures must recognise the intrinsic worth of all contributions, not just those that command the highest market returns. A society that measures its prosperity not by GDP alone but by the well-being of its citizens is one that safeguards democracy against the fractures of economic exclusion.

Concluding Thoughts

Economic inclusion is neither a by-product of growth nor an inevitable outcome of meritocratic competition. Rather, it is the result of deliberate choices, institutional arrangements, and a commitment to ensuring that prosperity is genuinely shared. If democratic societies are to withstand the pressures of discontent, they must reject the illusion that economic success is purely a matter of individual effort and instead foster conditions where all citizens have the opportunity to flourish. The examples of progressive taxation, education reform, labour protections, and corporate governance reforms highlight the pathways through which economic growth can be made more inclusive. Only then can economic growth serve its highest purpose: the advancement of a just and equitable society.

?