Last night I stopped by Ron Davison’s blog R World. There he had put together a graph of the growing income disparity in the US, the idea being that the current Bush administration is doing worse in this regard than Clinton did a decade ago.

Yes, the graph is backed by concrete statistical data. But these numbers, by themselves, speak nothing of their cause.

Were changes in fiscal policy the primary cause behind the divergence of incomes? Taxation does affect income: directly, through policies for its redistribution from the richer to the poorer, and indirectly, by stimulating the economy. The first mechanism, however, doesn’t address the economic problem that led to the income inequality in the first place, it is only meant as a relief after the fact, while the second has too broad an effect.

I would rather propose to look elsewhere for the cause. To me the government has very little to do with both the problem at hand and the solution. Those of you who have read my previous article “Held Together by Faith” would know where my argument is heading to.

Not only in the US, but also here in Europe politicians are talking about a growing income disparity and a falling behind of the middle class. Some attribute this to deficits in education, others to the increased competition that arrived with the globalisation.

I say the principal cause lies elsewhere: corporations have been stagnating with respect to the market and globalisation has come to expose this, revealing millions of employees caught in workplaces where they fail to develop their economic potential.

Who makes up the top 10% of the income bracket? Mostly investors in the stock market, entrepreneurs, independent professionals, people with own businesses. What is common to all of them? Their greater engagement and activity in the open market where they enjoy a higher degree of economic potentials – compared to the workplaces within companies where one generally has as an employee a much more constrained playing field.

This economic divide increased and became more apparent over the past 10 – 15 years. After the end of the Cold War the market capitalist system underwent a significant boom. It expanded to the countries of the former Eastern Bloc and to China where hundreds of millions of people live. In the Western world it also went through developments marked by the liberalisation of many sectors, the falling of various protectionist barriers to trade, the adoption of electronic communications and trading, the privatisation of major utility companies across Europe and the introduction of the Euro. Markets became global.

Therefore, it is no surprise that to the entrepreneurs in the market globalisation came like manna from heaven: access to more capital and larger markets, new possibilities for networking and investment, exchange of ideas and know-how on a broader scale.

Corporations, on the other hand, developed rather sparsely over the same period. Most internal structural shifts, however heroic, were limited to the accommodation of computer technology. Still, over the past 10 – 15 years an array of companies underwent huge expansion and posted record profits. You may wonder, “how come?” The answer is simple: the primary cause for this spectacular growth of corporations didn’t originate from within, but was due to the improved conditions in the market environment: more people to sell to, more sources of finance, access to cheaper labour.

So, in a way globalisation both exposes and masks the growing gap between the market and the corporation. On one hand it presented companies with “free” room to expand, on the other, it exposed the fact that many employees behind corporate walls are falling behind. I suspect businesses would have faced greater pressures to reinvent themselves had the spread of the market capitalist system not provided new pastures to compensate for that.

Sooner than later, however, the world will run out of countries with non-market economies as the last stubborn supporters of “communism” succumb to capitalism; the population growth will slowly begin to level off. At last then the corporations will notice that they’ll have to look inward if they are to avoid stagnation, that we cannot have sustainable growth – of corporate profits, of personal income, if the economic potential of employees is being depressed.

There aren’t many options to close the gap, in fact I see just one – companies becoming more like their environment by adapting mechanisms from it: allowing monetary relations between employees, decentralising decision making, trimming frustrating bureaucracy. Yes, there will be initial suspicion and resistance to these changes, but in the end most people will like their new transformed workplaces – the possibilities for unrestricted interaction with colleagues, the more personal touch of relations in the office, the simple money rules, the ability to earn more.

This blog’s aim is to walk you through this new and transformed company. Stay tuned!