Income Inequality in Advanced Capitalism: How Protective Institutions can Promote Egalitarian Societies

in Comparative Sociology
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This study develops a Polanyian perspective on income inequality in advanced capitalist countries. Polanyi’s historical account of the rise and fall of classic liberalism in Britain illustrated how social groups and society at large devised “protective institutions” to shield themselves from socially destructive market forces. Recent qualitative applications of this idea identify three protective institutions as being the most important – the public sector economy, trade unions, and the family. Using data from 16 Western countries from 1970 to 2010, this study demonstrates that cross-national and temporal variations in these protective institutions explain a considerable amount of the observed patterns of income inequality among these countries, helping to explain why some countries have recently experienced rising inequality but others have not. The study ends by arguing that a Polanyian perspective provides more analytical and theoretical leverage than other sociological approaches to understanding income inequality.

Income Inequality in Advanced Capitalism: How Protective Institutions can Promote Egalitarian Societies

in Comparative Sociology



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  • View in gallery
    Gini coefficient of net income inequality for 16 western countries, 1970 to 2010.

    note: data from the luxembourg income study (2014). dashed line represents highest level of income inequality in the sample – us 2007. dots represent individual income equality estimates (n = 131).

  • View in gallery
    Scatter plots and correlation coefficients for key variables and income inequality: 16 advanced capitalist countries, 1970 to 2010.

    note: y-axes equal the gini coefficient of net income inequality × 100.

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