Equality Amongst the Unequals

Inequality is widely prevalent in our society which knowingly or unknowingly invites discrimination. But what is the rationale behind discrimination if I say everyone in the world has an equal value of money at any point of time? To be precise, everyone is equally rich in this world but is still discriminated against.

Theory of Equal Wealth

We were all at ground zero when we were born, and will surely get back to zero at the time of our demise. But ever thought about our life in between this period? Where do we stand during our lives? 

Everyone stands at the same stature which is though not at ground zero but at a value defined by a variable ‘k’, whose value depends on material wealth possessed by an individual at a particular point of time.

In short, “Total Wealth = kW” [W= Material Wealth]

And this total wealth possessed by all individuals is equal at any point in time.

How?

Origin of Theory

This theory is an extension of the theory followed by Lord Krishna. In Hindu scriptures, there is a famous story narrated in Shrimad Bhagavatam about Krishna and his childhood friend and a great devotee- Sudama.

One day Sudama’s wife asked him to go and meet Krishna in his palace. Sudama visits his old friend with some beaten rice as a gift for him. Despite being dirt poor and having dearth of proper meal, Sudama decided to gift those rice to Krishna which could have otherwise satisfied his hunger.

Looking at his palace, Sudama felt ashamed and decided not to give those rice to the lord. Krishna saw Sudama hiding something behind his back and playfully snatched it from him and cheerfully accepted his gift. Eating one bite of those rice, Krishna gifted one loka (heaven) to Sudama, on eating the second bite, Krishna gifted the second loka to Sudama. When about to give the third and the last loka to Sudama, Rukmini (Krishna’s wife) snatched those rice from him and ate them all by proclaiming her equal right over Sudama’s gift.

Krishna’s rationale behind giving all the lokas to Sudama was very simple. Sudama when given those beaten rice to the lord, it was all he had at that point. It was his total wealth, which he surrendered to Krishna as a gift for him while keeping himself hungry. So, Krishna’s logic to return the gift was the same. “Sudama gifted his everything to me, so I must deliver him everything I have”, said Krishna.

In simple terms, “Sudama’s everything = Krishna’s Everything.”

Those beaten rice were of the same value to Sudama as what the 3 lokas were in value to Krishna at that point in time.

This theory defines the value of our possessions.

Value of Wealth

Deriving from Krishna’s logic, everybody’s definition of ₹1 is different. For some, it has a value close to nothing whereas for some it’s value might be of quite a significance at a given point of time.

Coming back to our equation of ‘Total Wealth = kW’, here k is nothing but the weight assigned by an individual to his total material wealth.

Here 'k' is inversely proportional to 'w', providing us with the graph of total wealth being a rectangular hyperbola.

So, A’s ₹100 = B’ ₹1,000.

It’s just they assign different weights to their possession as it values differently to them.

Hence, total wealth possessed by all individuals are equal at any particular point of time and that’s why see philanthropist in our society. They know that they won’t lose on their wealth even after donation but in fact, gain in terms of ‘k’.

Accounting for Exceptions

Theory of Equal Wealth is a ‘psychological and a stock concept’ dealing with how people value their possession at a particular point in time. This is accounted for in short-run (at a particular point of time) to avoid large fluctuations in k and W.

[In the long run, we are all dead - Zero value]

But sometimes the market value of wealth fluctuates suddenly in the short run too about which the owner is also unaware (Case of ‘Ignorance of an owner’). In such a case equation of ‘Total Wealth (TW) = kW’ comes under scrutiny.

For example: Suppose the market value of total material wealth possessed by an individual is w₁ and his weight assigned to it is k₁. Now, the market value of one of his pieces of land suddenly rises (or falls) due to some developmental projects or fluctuations in market conditions. Unaware about it, a person’s assigned weight to his possession will remain the same (k₁) whereas his material wealth changes from w₁ to w₂ (w₁ ± change in the market value of land) and hence TW changes.

The situation of a rise in property value is depicted in the graph below:

Here one might observe phase 2 (Ignorance phase) as a contradiction to the theory. But it’s not the case. Although we usually assume that individual has the complete market information but in case of one's ignorance too the concept of equal wealth does not dilute.

Since the person is unaware of the change in the market value of his property (in phase 2), so as per him the value of a property is the same as it was in phase 1.

The ‘theory of equal wealth’ focuses on the needs of a person and satisfaction derived from it. Economically, the market value has changed but due to lack of information about it, psychologically the satisfaction derived by the person out of it will remain the same as it was in phase 1. So, the appreciated piece of land will be of the same value to him as it was in phase 1 (economically).

At t₂, when he will get to know about the appreciation, he will reassess his wealth and with an increase in possessed wealth, ‘k’ will simultaneously fall, and value of ‘total wealth’ will fall back to TW.

Thus, the equation ‘Total Wealth = kW’ will be validated again in phase 3.

Also, sometimes a person knows that the market value of his possession will most probably rise or that he will inherit some wealth in near future. Such is the case of ‘future uncertainty’. Here, although his current material wealth is less than what he has predicted for in future, but he will either deal with ‘k’ by taking into consideration the predicted results of future events where ‘w’ will change or wait for the event to happen. In the former case, when he will actually inherit wealth or when the market value will actually rise, his ‘k’ will remain unchanged as he has already accounted for this change in the past. Hence, again Total Wealth will remain the same as ‘kW’.

Existence of Inequality and Discrimination

One strong example of how psychologically people perceive their wealth and compare it with others is given by real data on happiness index (2019) and GDP per capita (2018*) of randomly picked 30 developing or third world countries* from different continents.

* Happiness index is measured on the basis of data of last year and that’s why we took the GDP per capita of 2018 rather than 2019. *

 * Developing or third world countries function at below potential GDP level and that’s why their data is taken for analysis. *

When examined the data and relationship between the two indicators, we found that the value of the coefficient of correlation between the two factors is ‘-0.19’, indicating a negative relation (inverse relation) between the rank of a country in Happiness index and GDP per capita but 0.19 is very close to zero which implies that the relation between the two factors is a very weak relation.

This implies that a higher income can not necessarily give more satisfaction. It depends only on how we perceive our material wealth and that of others.

In general, we focus on relative monetary terms. And that’s the reason we see inequality and discrimination in society.

The unacceptability of one’s ‘k’ causes the inequality to persist and provides a way for discrimination. Once a man truly realizes the actual value of his possession there won’t be any discrimination in the society.

Author: Gautam Sodani