What determines who gets what? What causes the dramatic inequalities in the distribution of income and wealth described in the preceding chapters? Probing these questions requires a shift from a description of patterns to an analysis of causation. Complex political economic judgements are required. The inequalities in the distribution of income and wealth, for example, may be regarded as embedded in the normal working of capitalist economy. Such a view leads those on the political Right and Left to draw markedly different inferences – either accepting economic inequality as a natural phenomenon or advocating radical challenge to the system that produces it. On the other hand, if the inequalities are traceable to more contingent factors – particular features of labour markets or welfare state provisions, for example – more piecemeal reforms may be worthy of consideration. A more social democratic response then beckons.

Evidently, understanding the causes of economic inequality is a precondition for making some sense of debates about appropriate responses. This chapter seeks to identify the principal causal clusters. These include, first, structural factors, such as the nature of the capital–labour relationship, the use of economic power and changes associated with corporate globalisation and financialisation. Second, there are the more directly political influences of government, particularly the effects of neoliberalism on public policy. Third, there are labour market conditions and the effects of industrial relations policy changes. A fourth factor is discrimination according to gender and ethnicity.