Outlook: Protestors are on to something, if they focus harder

So the Occupy movement has come to London, and the good folk of Goldman Sachs are obliged now to walk past a camp of anti-bank demonstrators in the heart of the City on their way to work of a morning. The protest laboratory at Occupy Wall Street in New York has spawned copycats and inspired activists the world over and, though their claim that "We are the 99 per cent" rather overstates the combined numbers, it is no longer possible to deny something of significance is happening. Still, the question remains if these demonstrations will achieve anything lasting, or if they will fizzle as fiery autumn turns to cold and drizzly winter.

The omens are not good. As any of the traders and deal-makers walking past St Paul's Cathedral can tell the protesters, winning support for your demands means finding and exploiting points of leverage – but this seems beyond the utopian ideals of our unhappy campers.

However, there is a thin thread that runs through these protest movements, that ties together the disparate grievances and unites the many themes found on placards from Athens to Zuccotti Park in New York. It has found voice in the idea of the 99 per cent, and it has opened a window at last to talk about inequality, not just as a result of the recession but also as an under-appreciated cause of the financial crisis.

Income inequality in the West soared in the years before the credit crisis. In the US, thanks to economists Emmanuel Saez and Thomas Piketty, we know the top 1 per cent held a larger share of income in 2007 than at any time since 1928 – the year before the Great Crash. In the UK, the Gini coefficient, a measure of income disparity, crept up relentlessly. The link between huge income disparities and financial crises is more than just a coincidence. JK Galbraith, in his definitive work The Great Crash 1929, identified "the bad distribution of income" as one of five contributory factors to the stock-market plunge and subsequent Great Depression. With more money than they know what to do with, the super-rich spend on luxuries and speculative investments only to pull them back sharply when exuberance is exhausted and fear threatens to take over. This sort of economy is more volatile than one more broadly based, one in which the 99 per cent holds more of the economic power.

Income inequality is only one of the many themes on display in the Occupy movement, but it is the most important. It also has the most scope to be translated into real policy demands and a point of political leverage at election time. It would be a shame if the Occupy movement lost the opportunity to generate real change because of its breadth and lack of depth.