Development With Neo-Liberal Policy - Is Income Inequality a Negative Societal Outcome?

Abstract: Neo-liberal policy as a means for development has been present in our society since the first experiment in Chile during the 1970s. This experience came to be known as an economic ?miracle? and the model was soon imitated by surrounding countries. In these countries income inequality has been a well-known feature and the Gini Coefficient in all Latin American countries exceeds the world average. There is however no consensus that income inequality is an actual societal prob-lem, or that the implementation of policy is needed in the struggle against it. The strengthening of the middle class is by numerous scholars, especially within the modernisation theory, mentioned as an important factor for democrati-sation. Increased marginalisation is opposed to the concept of a strong middle class, which is one of the reasons why it may be considered a negative pattern. Scholars advocating neo-liberal policy, on the other hand, mean that income ine-quality not is a problem in itself and that with time the free market will even out the gaps.