The Digital Economy Is No Leveller, It’s a Source of Inequality

The Digital Economy Is No Leveller, It’s a Source of Inequality
Servers. Servants or masters? Tom Raftery, CC BY
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When we think about income and wealth inequalities we are tempted to lay blame on the old way of doing things. In Capital in the Twenty-First Century, Thomas Piketty picks out inherited money as a driver of unsustainable disparities between the global rich and poor. Oxfam recently pinpointed the high-profit finance and pharmaceutical industries as engines of inequality that distribute wealth to the wealthy.

This view is consistent with those who place their faith in the digital economy as some kind of solution. It is held up as an alternative to traditional forms of economic activity, and one which can generate sustainable growth and narrow inequality. Lower barriers of entry into its markets (“anyone can start a business on the internet!”) is said to widen opportunities and lead to a more equitable distribution of wealth.

It is for this reason that many politicians and academics continue to advocate the aggressive expansion of the digital economy, especially into areas which have not witnessed much of this type of economic activity. Sadly, it’s not quite as simple as that.

Creative Licence

The expansion of the digital economy has gone hand-in-hand with the growth of the creative industries. The UK’s pioneering development of policy on the creative industries in the late 1990s was predicated partly on the desire to exploit the intellectual property generated by burgeoning digital technology. That applied particularly to those single operators and small businesses that proliferated in the cultural and creative sectors.