Global Inequality: Facts, Fallacies & Fudge

The World Inequality Lab ('the Lab') claims: "extreme wealth inequality is rapidly increasing".¹ Conversely, the International Monetary Fund (IMF) claims: "Global inequality has been declining fast since the 1990s".² Conservative commentators leap upon the latter narrative and claim that capitalism has lifted hundreds of millions out of poverty. What's really going on?!

The Lab and the IMF are both run by leading academics and they both draw on much the same data.³ However, they mean very different things when they use the word 'inequality'. In this article I will argue that the Lab's narrative is grounded in fact; the IMF's narrative is a fudge; and the conservative version of events is simply a fallacy.

According to the Lab's latest report⁴, the richest 10% of the world's population now owns 75% of the world's wealth. By comparison, the bottom 50% owns a mere 2%.⁵ The same report claims "...the wealthiest 0.001% alone... control today three times more wealth than half of humanity combined. ...This concentration is not only persistent, but it is also accelerating."

In 2022 the IMF welcomed the Lab's analysis, saying it "sheds light on the problem".⁶ What problem were they talking about? In their own words: "Widening income inequality is the defining challenge of our time...".⁷ Pardon? They seem to be totally contradicting themselves. Elsewhere, the OECD seems to confirm the Lab's analysis: "...in most OECD countries and many emerging economies, the gap between rich and poor has widened over the past decades⁸. The World Bank has also noted: "an increase in global inequality driven by a divergence in average incomes...".⁹

The Lab's data and methodology are sound.¹⁰ Moreover, applying the same methodology over the past 100+ years, a clear trend emerges: the more you have, the more you get. The graph below was produced by Our World in Data, based on the Lab's 2025 report. (Figures adjusted for inflation and for differences in living costs between countries).

This narrative of serious and growing inequality is confirmed by other sources. For instance, when the International Trade Union Confederation partnered with Oxfam to track the growing differential between CEO and worker pay around the world, what they found was just as shocking as anything above. "Global real wages for workers have fallen by 12 percent since 2019... Meanwhile, CEO pay has skyrocketed... a 54 percent increase in real terms." ¹¹ This is despite a significant increase in worker productivity (almost 10%).

In other words, the pie is getting bigger while the slice working people receive is getting smaller. Elsewhere, Oxfam has approached the same problem from a different angle and shown that billionaire wealth has increased by 81% since 2020. ¹²

But...

Despite occasional statements to the contrary, the IMF seems adamant that global inequality has been declining¹³. We will look at what they actually mean in a moment, but first some general notes on the data.

It is important to note that the IMF version of events is based on the GINI coefficient, which looks at income, rather than net wealth. Because taxes are often based on income, the ultra-rich have developed various mechanisms that allow them to minimize the amount they must declare. IRS papers leaked to ProPublica in 2021¹⁴ showed the results. Whereas the average American taxpayer pays about 14.5 percent...

In light of this, one might think that net wealth is a better way to measure inequality. However, as the leaked Panama Papers¹⁵ showed in 2016, the rich are equally adept at hiding their wealth, using dodges such as shell companies, trusts, offshore accounts and tax havens.¹⁶ According to Oxfam analysis, the amount of untaxed wealth hidden offshore by the world’s richest 0.1% exceeds the entire wealth of the poorest half of humanity (4.1 billion people).¹⁷ As of June 2026, Elon Musk alone is richer than 46% of the world population.¹⁸ Needless to say, the poor cannot afford the lawyers and accountants that are necessary for this kind of fiscal sleight of hand, so the data we are considering will always be skewed to under-represent levels of inequality.

Let's take a longer view and see what we find. Evidence suggests that the rise of capitalism was initially accompanied by a sharp rise in extreme poverty¹⁹ until somewhere between 1880 and 1900.²⁰ Why then?

"...existing data indicates that progress was achieved with the rise of organized labour, the anti-colonial movement, and other progressive social movements, which organized production around meeting human needs, redistributed wealth, and invested in public provisioning systems..." ²¹

In a related argument, we should note that the two leading contributors to any reduction of inequality in the 20th century (if there was one) were both avowedly anti-capitalist nations: China and the USSR. From the Lab database:²²

Incidentally, evidence suggests the IMF approach produces the opposite result. "IMF-required austerity is significantly associated with rising inequality, by increasing the income share to the top ten percent at the expense of the bottom 80 percent." ²³

Nevertheless, in their 'Introduction to Inequality'²⁴ the IMF again maintains that inequality is decreasing. However, they qualify this by saying (emphasis added):

"Within-country inequality has risen in most countries. While the progress in the reduction of global inequality over the last thirty years has been remarkable, within-country inequalities have increased, especially in advanced economies. Over the past three decades, more than half of the countries and close to 90 percent of advanced economies have seen an increase in income inequality."

That's right: the official IMF line is that global inequality is decreasing except for most people in most countries.

This sounds like an absolute nonsense until you grasp the counter-intuitive way in which they are applying the term. They are talking about inequality between nations. This is completely different from what the Lab measures: the gap between rich and poor within nations. The Global Governance Forum has summed up the difference in this way: "The gap between nations has narrowed, but the gap between neighbors has widened."²⁵

I used the word 'counter-intuitive' above because, I would suggest, people weigh questions of equality and fairness by looking across their own society. It wouldn't occur to me to measure my relative position, as a working person in New Zealand, with that of a worker living in South Sudan. I wouldn't even know how to make such a comparison in any useful or meaningful way. Nevertheless, this abstract formulation is being used by the IMF to trumpet a massive reduction in inequality.

Is it reasonable to take this approach even further, as many conservative commentators have done²⁶, and suggest that capitalism deserves credit for lifting hundreds of millions out of poverty? This is where we start to find some interesting twists in the story. Here's one:

"From 1820 to 1980, rich countries surged ahead while most others lagged. But within many countries – particularly in the West – inequality declined during the postwar period, thanks to strong welfare states, progressive taxation, and inclusive growth. Since around 1980, these trends have reversed."²⁷

And here's another. According to the World Bank, China has lifted more than 850 million of its citizens out of extreme poverty. The country's poverty rate fell from 88% in 1981 to 0.7% in 2015²⁸.

The IMF does not highlight the case of China in their narrative, even though it represents almost the whole of their total in terms of inequality reduction. Why not? Rather, they make abstruse statements such as: "...per capita GDP growth rates accelerated in less developed countries, particularly in Asia, resulting in convergence in income levels across countries".²⁹

In short, the data does not point to any particular success story relating to capitalism. On the contrary, the IMF set and adjust their paramaters for 'extreme poverty' in such a way that they get a result are happy with. For instance: "There is a strong consensus among scholars that the $1.25 line is far too low, but it remains in official use because it is the only line that shows any progress against poverty - at least when you include China - and therefore is the only line that justifies the present economic order."

In his book "The Divide: A brief guide to global inequality and its solutions" (Penguin 2017), from which the above quote is taken, Prof. Jason Hickel takes an in-depth look at how this kind of 'creative' accounting has been used to disguise increases in both inequality and extreme poverty, and shows that these have occurred both within countries and between them. To call the IMF's conclusions 'fudge' is probably excessively diplomatic.

In the few cases where there have been reductions in poverty, these have achieved through determined resistance to capitalism. Whether it be the rise of unions and anti-colonialist movements in the 1880s-1900; socialist revolutions in the twentieth century; or the social democratic compromise after WWII... popular reactions against free-market capitalism are what produced progress.

On the flip side of the equation, as the World Inequality Database shows in country after country, the rise of neoliberalism post-1970s led to renewed levels of inequality.

Inequality takes a political form

More wealth leads to more influence, which leads to more wealth which leads to more influence, and so on. We know this. "Data from 136 countries confirms that as economic resources become more unequally distributed, so too does political power." ³⁰ In 2025 polling by Oxfam across 36 countries³¹ found that 86% of respondents either agreed or strongly agreed with the statement: "the top cause of economic equality is that 'rich people have too much political influence'".

The mechanisms that link inequalities in economics with those in politics have been thoroughly established and studied (elite networks, political donations, media control, think tanks, various forms of bribery, lobbying, subsidies, partisan appointments, tax breaks, etc). Unfortunately, nobody has yet worked out how to track such corruption globally. That said, we can measure the net results.

In short, "...inequality and democratic erosion are linked... The association between inequality and risk of democratic backsliding is robust, and holds under different measures and structures of both income inequality and wealth inequality". ³² Data from Freedom House shows that political rights and civil liberties have declined for 18 consecutive years. Statista presents the findings thus:

The Global Rights Index 2025, produced annually by the International Trade Union Confederation, measured this trend across a number of indicators, and found:

"In 2025 workers had no access or reduced access to justice in 72% of countries, a sharp increase from 65% in 2024."

"Authorities in 71 countries arrested and/or imprisoned workers, almost twice the rate recorded in 2014."

"Attacks on the rights to free speech and assembly were reported in 45% of countries – a record high..."

"Authorities in 71 countries (47%) arrested and/or imprisoned workers... almost twice the rate recorded in 2014."

The problem is clear enough. "Billionaire wealth jump(ed) three times faster in 2025 to highest peak ever, sparking dangerous political inequality." ³³ The following comment (from the Global Governance Forum) seems rather relevant:

"When people believe that the economic system no longer delivers its benefits equitably, they begin to lose faith in its legitimacy. That loss of trust can lead people to withdraw from civic life, sabotage institutions, or empower populists who promise to upend the system altogether. In this way, growing domestic inequality contributes directly to political polarization, social fragmentation, and the erosion of democratic norms."³⁴

The solution is clear enough as well. As the Lab puts it, in wrapping up their 2026 report: "Inequality is a political choice. It is the result of our policies, institutions and governance structures... The challenge is political will."

The rise of democratic alternatives

"The challenge is political will". That sounds simple enough, doesn't it? But neoliberal and postliberal governments have been thoroughly complicit, if not instrumental, in the growth of inequality. Political will needs to extend beyond seasonal visits to the ballot box. As Jason Hickel from the Global Inequality Project has said: "it will require organised political struggle".³⁵

It seems that 2026 may prove a watershed year in this regard. For a start, two expert teams have been working on ambitious projects designed to turn the tide. That hoary neoliberal shibboleth "there is no alternative" is being definitively laid to rest.

1) The Lab followed up their 2026 report on inequality with 'The Global Justice Project'.
"the first attempt to propose a fully quantified plan... combining four dimensions that today's debates often treat separately: redistribution at the world scale, a deep reform of the international financial and economic order, a radical transformation of energy systems, and substantial shifts in consumption patterns." ³⁶

2) At the same time a collaborative team of UN agencies, national governments, academic experts, civil society organisations, trade unions, NGOs and grassroots movements has been putting together the 'Roadmap for Eradicating Poverty Beyond Growth'.
"The Roadmap puts forward a toolkit of concrete policy measures that offer a vision and strategy for building a global economy that places human rights, ecological justice, and participatory governance at its center." ³⁷

We don't have the space here to go into the ins and outs of these two projects but it's important to note that they are simultaneously radical and mainstream works. You'll probably recognise some of the names involved: Thomas Piketty, Olivier De Schutter, Joseph Stiglitz, Gabriel Zucman, Jayati Ghosh, Kate Raworth, Jason Hickel, etc. These people will not be found tearing up flagstones anytime soon, they are leading academics, Nobel prize winners and research analysts. But what is important to note is that they have come to their conclusions through analysis, rather than the need to put flesh on the bones of ideology. They are not socialists in any 20th century sense, they do not even use the word, yet here they are arguing for economic democracy, a massive redistribution of wealth, climate justice, and the democratisation of work.

The big problem, as Grace Blakely has identified, is that, without organization, all this amounts to is 'asking nicely for an end to capitalism'.³⁸. That's where another key development of 2026 comes in. Democratic socialism has gone mainstream. From New York to Seattle to Washington DC, more US cities are selecting democratic socialist leaders and representatives. This needs to be seen as part of a developing international phenomenon. In 2018 Ipsos found that 50% of survey respondents across 28 countries think: "socialist ideals are of great value for societal progress".³⁹ That figure is just as high in some of the bastions of capitalism.⁴⁰

Using a fairly strict definition, the Democratic Socialist Project has identified developing democratic socialist organizations in more than 50 countries.⁴¹ Do these people all have the same goals in mind? No. Are they a monolithic force? No. But this appears to be part of the reason membership is growing so fast. As we can see from parties like the DSA in America and Die Linke in Germany, both of which have doubled their membership in the last two years, democratic socialism thrives when factions address their differences in the course of community organizing, rather than through sectarian debate.

There are developing alternatives to inequality, then. Transforming economics might seem like a tall order but we have already seen how inequality levels change according to social pressure, whether it be the rise of organized labour and anti-colonial movements in the late 19th century, socialism in the early twentieth century, social democracy in the 1940s, and (on the flipside of the coin) neoliberalism in the 1980s. The rise of democratic socialism represents a new, countervailing force. The World Inequality Lab is an important part of this; the IMF is not.

I have suggested that 2026 may represent a turning point. No doubt many will see this as overly optimistic. Donald Trump certainly feels threatened. He has called the democratic socialists "more dangerous to the U.S. than previous world wars and the Sept. 11, 2001, terrorist attacks" and "the biggest threat to our nation there is, maybe since our founding".

And, on that note, I shall leave you to pick a side.

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