At the risk of taking us further afield from our assigned topic, I think that in light of the latest exchange between Tim and Henry, it may be helpful to step back for a moment and distinguish between the types of inequalities we're discussing, the potential objections to them, and how they're related.

We began with a question about status inequalities, which has blended into a discussion of economic inequality. This makes a certain amount of sense, since wealth is one dimension of status. This is one reason that's offered for objecting to income inequalities as such: Even apart from whatever concern we have about the absolute welfare of those at the lower end of the distribution, it's suggested that there are psychological harms from recognizing that one is in a poor relative position. This is the kind of harm Clay suggests may be ameliorated by a growing number of diverse status hierarchies. Henry and others have pointed to a relationship that runs in the other direction--focusing, so to speak, on the exchange rather than the use value of status--by pointing out the ways that some forms of status are more easily parlayed into cash than others. (Though I should note in passing here that some folks do indeed turn their Night Elf skills into real world cash by auctioning items or characters.)

What we're seeing in the discussion so far, I think, is a bit of a loop: Economic inequalities are problematic because (inter alia) they give rise to status inequalities, which are a problem because they can be parlayed into economic inequalities. To the extent that Henry is relying on this latter point, this seems like an attempt to change the subject. For clarity's sake, we want to consider the intrinsic harms of each kind of inequality independently before we get into the relations between them. The point about the exchange value of status is relevant to the intrinsic harms of status inequality only to the extent that the use value of status within a sphere is determined by a meta-ranking of status hierarchies that uses cash as its metric. And I think this is very often not the case: Whatever people with elite tastes are doing when they sneer at "low culture," I don't think (pace Henry) it's an attempt to get mass recognition of the value of one's favorite composer or artist. Often, it seems to be just the opposite: Think of the indie rock scenester who's heartbroken when the band he's been following since their first backyard gig is played on The OC. To the extent that there's a problem of different forms of status having different exchange value, that takes us back to the question of what's intrinsically wrong with economic inequality. If the primary problem with status differentials is the way they're leveraged into income differentials, it seems like it will be much easier, and much less intrusive, to think about how to deal directly with this form of inequality.

So back to economics. What are the problems with inequalities in this sphere? Even if Henry is right about exchange value, one potential problem with economic inequality is at least partially addressed if status pluralism reduces the psychological harms of material disparities between people. Then there's the potential process objection to which Tim alludes: Economic inequality may be a symptom of some kind of injustice, evidence that the wealthy are exploiting the less well off. And as I read Tim, he's really only making the rather modest point that the prevalence of power laws shows that this is not necessarily the case. On the other hand, as Henry points out, if those differences are largely a function of first-mover advantage or network effects, the "naturalness" of the distribution will not necessarily serve as a justification.

I think there's one additional objection to economic inequality that Tim neglects, however. It's a commonplace in ethics that ought implies can, which is to say, what it is morally incumbent upon us to do is a function of what it is possible to do. We cannot be morally required to guarantee everyone a six-figure annual income, say, if that can't actually be supported at this stage of economic development. Now, suppose you think that we have an obligation to improve the absolute welfare of the badly off as much as is practical, at least up to some threshold of well-being we haven't currently reached. Further suppose that you think, because of the declining marginal utility of wealth, that transfers from the wealthy to the poor both represent a net utility gain and are not likely to unduly burden economic growth, because such extreme wealth is more than what is required to induce the better-off to be optimally productive. In that case, extreme economic inequality is objectionable, not exactly in itself, but because it indicates that we are capable of further raising the absolute welfare of the worst-off through transfers we have chosen not to impose.

All that said, this latter conversation may be too broad in scope to fruitfully engage here. On the narrower question we began with, I think Henry's argument stands or falls with the proposition that the varied dimensions of status are ultimately dissolved in the cash nexus, and I'm still waiting to see a compelling reason to believe that this is so.