It is no longer Occupy Wall Street movement or some groups demonstrating in Washington DC’s Pennsylvania Avenue, where the two Bretton Woods institutions — the World Bank and the International Monetary Fund (IMF) — are located.

Rather, it is inside the shiny buildings that a new debate is taking place and centered more or less around one politically sensitive issue — the growing gap between the haves and the have-nots, and to what extent that can harm economic growth.

The recent spring meetings hosted by the two institutions saw at least three papers prepared by top economists arguing that the issue needs to be taken seriously.

Though it is not yet an official position adopted by the IMF, which usually advises governments on the need for growth and taxes, IMF chief Christine Lagarde was quick to say that adjustment of priorities has already translated into action, with the organization incorporating the anti-inequality ideal into the policy advice it offers member-states.

Her deputy Min Zhu, consolidating the argument, said: “The fund is always changing, evolving in the past 70 years. For example, in the ‘90s when the Soviet Union collapsed restructuring became the big issue. In the financial crisis global interconnectedness became a big issue. After the crisis, particularly, income inequality became an issue.”

One example he cited was tax evasion. He said the most popular demand from countries seeking technical assistance was for help with revenue collection, in the hope of tracking down a greater share of taxes.

The significance of this new approach, whether it is an evolution or not is that it contradicts a well-established culture at the two institutions and point to a new argument that inequality can have a negative impact on growth. Such argument is backed by notable economist Nobel laureate Joseph Stieglitz who stated that inequality can make growth volatile and as well create conditions for sudden economic slowdown.

The anti-poverty and development organization Oxfam, a typical critic of the IMF, welcomed the papers saying that, “extreme inequality is damaging not only because it is morally unacceptable, but it is bas economics.”

Such an approach, yet to be adopted officially, is expected to draw some backlash from right wing politicians and lobby groups in rich industrialized countries like the US Tea Party, which usually campaigns for less taxes on the rich arguing that the system should favor those who work hard and generate money that is going to be reinvested again in the economy to provide job opportunities, while reducing inequality through bureaucratic measures and ending with removing incentives from the poor on the need to work since they can be spoon fed.

It was during the Ronald Reagan and Margaret Thatcher eras in both the US and Britain that such arguments took root with the state machinery geared to support it.

George W. Bush followed suit, while Tony Blair was not far from the Thatcher economic agenda when he started to dismantle the welfare state. In fact she was his first visitor at 10 Downing Street when he took over the prime minister’s job for the first time.

Then it was the period that witnessed the collapse of the Soviet Union and its socialist model. And it was tempting to declare the supremacy of the market economy, but the new papers released for discussion that an issue like inequality is of vital interest to economic growth and could not be left to market forces only to adjust.

That brings into the discussion the role of the state. If the debate on this issue is renewed in well established, industrialized countries, it is more vital to be debated in developing countries, including Arab ones, where people are still exploring which way to go. It is not only economy, but politics as well.

The social unrest that has resulted in political and even security concerns in a number of Arab countries could be attributed mainly to these roots.

After all, inequality and the growing gap between the rich and poor are fueling that unrest in one way or another.

That is a serious issue, which needs the state intervention through programs that can make poverty alleviation a movement for the whole society, politically and economically motivated, so as to put one block on the road to stability.

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