Information Economy May Shrink the Rich-Poor Gap

Let's now pan to a contemporary, post-Industrial society — say, the U.S. An economy based on brains and connections? That sounds about right. It's been half a century since economists first lasered in on the importance of "human capital" — the notion that what is locked up in people's heads and how they relate to other people deserves just as much attention as a company's physical assets (its factories, trucks and land). With each new phase of our information society, it becomes truer that the way to get a leg up isn't to own a factory (they're all going overseas), but to own the thinking behind it. (See 25 must-have travel gadgets.)

In other words, you don't want to be in the business of manufacturing clothes — you want to be in the business of designing them. "Our economy is different in a thousand ways from the hunter-gatherer societies we studied, but they may be similar in one critical way," says Bowles. "Whether you're forming a hunting party or a team of software engineers, what matters is your creativity and your ability to make connections with others."

Does that mean income inequality in the U.S. is about to disappear? Probably not. In fact, over the past few decades it has accelerated — although a single generation is something of a blip for social scientists who are used to dealing with millennia. (See 10 big recession surprises.)

The broader point is that how a society decides to order itself matters too. Advanced capitalist countries like Denmark and Norway have vastly smaller differences between their rich and poor citizens compared with the U.S. That arises not from a different sort of economy but from a different attitude toward taxation and how much wealth should be redistributed.

Going forward, the U.S.'s knowledge economy may be a setup for a greater degree of income equality, but it's certainly no guarantee. To take one small example, if we, as a society, decide that new areas of knowledge are eligible for strict patents and copyrights — and that that knowledge can then be cloistered within the lineage of the inventor — it will be easier for a parent to pass wealth onto a child and, as a consequence, keep that family richer than others. Economic systems matter. But we're still the ones in control.

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