Democratic wealth, democratic welfare: Is flux enough?

It is clearly undemocratic for wealth to be concentrated in the same few hands, year in and year out, as was traditional in the sorts of aristocracies which Tocqueville contrasted with early American democracy and as arguably remains standard in virtually all modern industrial societies. The crucial question is whether democrats ought to be content with wealth being concentrated in different hands from one year to the next, or whether democratic egalitarians ought to insist instead that wealth ought not to be concentrated in anyone's hands at all. Certainly we do see a fair bit of income volatility in advanced industrial economies. I shall offer evidence of that shortly. But I shall go on to argue -pace Tocqueville and his many followers³-that that is not enough. A more general model of 'democratic welfare' ought to take account of the circulation of public benefits, and of the need for them, alongside earnings flows. Evidence from across the Organisation for Economic Cooperation and Development (OECD) suggests that altogether too many of those who fall into poverty would get stuck there, were it not for government benefits; and those public benefits are more democratic in their incidence and their impact in some places than in others. That is one respect in which income volatility alone is insufficient to underwrite the democratic character of the economic order.