With increasing concentrations of the world’s population migrating to urban areas in recent years, the relationship between social and economic development has become one of utmost importance. A concept that has been concerned with the diminution of this is social polarization, a contemporary term that Woodward (1995) describes as the widening of the gap between specific groups of people in terms of their socioeconomic circumstances and opportunities. Within Australian cities and towns, this process is best exemplified through wealth inequality. Originating from pre-established social polarity and economic structures, wealth inequality stimulates conditions that directly impact these dimensions of Australia in ways that will persist until the consolidative government and public initiatives are implemented.
Causes of Wealth Polarisation in Australia
The conceptualization of wealth inequality in Australia is established within the interdependence of the social and economic dimensions, attributable to the working class and income polarization. Igudia et al. (2016) believe that urban centers experience dualism whereby two distinct workplaces known as the formal sector and informal sector coexist, a statement which is expounded by Hamnett (1996) who expresses that cities are increasingly being distributed into a highly skilled/income upper stratum (formal sector) and a growing low skilled/income stratum (informal sector). The increasing growth within the subordinate position of this polarization can be recognized as being appealing to vulnerable individuals such as low-skilled manual or migrant workers unable to obtain more desirable, higher-quality jobs in the formal sector (Song et al. 2016). An estimate published in 2017 found that out of the 3 billion workers worldwide, the scale of employment in the informal sector amounts to as much as 1.8 billion workers (Ghecham 2017); while Bajada (2008) estimates that the informal sector creates an informal economy that is equivalent to approximately 15% of Australia’s US$1.053 trillion GDP.
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An understanding of income inequality can be gained from the knowledge of each sector, as it can be understood that workers in the informal sector are very likely to have low incomes compared to those in the formal sector. To substantiate this claim, the Australian Bureau of Statistics released data in 2018 that indicated that individuals in the top 20% of the income distribution receive 47.5% of all pre-tax and transfer income while individuals in the bottom 20% of the distribution accounted for a mere 3.6% of total income before taxes and government income transfers (Australian Council of Trade Unions 2019). From this, the capitalist system within Australia further encourages the polarization of wealth inequality.
The inextricable link between Western societies and capitalism has been argued to deepen the duality of wealth distribution in several countries. The Australian Council of Trade Unions (2019) found that Australian labor has increased dramatically over the past 27 years, yet only the corporate elites have benefited through increased executive salaries and bonuses while average incomes have remained relatively unchanged. Karl Marx concluded that there is capital accumulation for the capitalist class, yet commodified labor, limited wages, and hard social conditions for workers and the dispossessed – thus increasing inequalities (Franzini & Piant 2011). Through these perspectives, it is evident that capitalism enables contemporary wealth polarization and exemplifies the aphorism that the rich get richer and the poor get poorer. Formal recognition of the problem of inequality and its economic origins was discussed by Christine Lagarde, the Managing Director of the International Monetary Fund, as she said ‘Excessive inequality makes capitalism less inclusive… It hinders people from participating fully and developing their potential… The disparity also brings division. The principles of solidarity and reciprocity that bind societies together are more likely to erode in excessively unequal societies’ (Commonwealth of Australia 2014). Despite the aforementioned corroborating arguments, Joseph (2018) proposes the concept that capitalism is used as a scapegoat for the moral shortcomings of governments, regulators, and individuals regarding wealth inequality.
Impacts of Wealth Polarization within Australia
The primary impact of wealth polarization within Australia’s urbanized cities and towns can be physically demonstrated through spatial disadvantage. This is a further socially polarizing process as the increasing inequality is expressed and exemplified in the geography of human settlements (Pawson et al. 2015). Expanding on this, Kawachi (2002) presents the rationality that the connection between wealth/income inequality and spatial disadvantage is undoubtedly casual, as wealthy individuals relocate to affluent areas and thus displace those of lower wealth. It has been discovered by Daley et al. (2017) that the average income and wealth per person is higher closer to the state capital, while the disadvantaged populations of Australia’s cities are substantially clustered into suburbs predominantly located in middle and outer metropolitan areas (Kawachi 2002). This information, Burke & Hulse (2015) state that inner-city spatial disadvantage has been greatly reduced since the 1960s due to gentrification. The choropleth map of South East Queensland featured in Figure One accurately visualizes the abovementioned statement by Daley et al. (2017), whereas the following claim is shown to be. While this impact of wealth inequality can be materialized, the economic and political dimensions have to be assessed through other means.
An additional impact of wealth polarization in Australia is the threat of political instability. In a 1993 report by Alesina & Perotti, it was determined that the presence of a wealthy middle class enhances political stability –yet the shift away from an egg-shaped distribution of wealth to awards a distribution where the bottom and top ends are growing highlights the instability (Hamnett 1996). Further, it has been demonstrated that greater levels of wealth polarization critically depress political interest and participation in all individuals apart from affluent citizens, thus providing evidence that wealth polarization yields great impacts within the Australian nation (Solt 2008). A paper published by The Centre for Independent Studies presented the concept that millennials within Australia are becoming increasingly sympathetic to alternative systems to capitalism such as socialism (Joseph 2018), further accentuating the political instability faced by contemporary society.
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