Wealth disparity nothing new
And so, it has come to this: the richest eight people in the world — all men — now control more wealth than the poorest 3.6 billion.
While the trend toward ever-greater concentration of wealth has been clearly documented, the question of how it might reverse has received scant notice. In his new book, “The Great Leveler: Violence and the History of Inequality from the Stone Age to the TwentyFirst Century,” Stanford University professor Walter Scheidel provides some history lessons.
As the title suggests, Scheidel investigates patterns of wealth distribution from antiquity to the present. His research suggests that the current disparity is nothing new. Economic inequality, Scheidel writes, is a “defining feature of civilization” that gathers force in the absence of natural or man-made violence.
Notably, Scheidel found that financial crises have only a fleeting effect on reversing economic inequality. Since wealth concentration often reached extreme levels even before capitalism supplanted mercantilism in the 18th century, the historical record might seem to absolve market-based economic systems of complicity in the problem.
“Capitalism doesn’t have a monopoly on creating inequality, it is just one current way of getting there,” Scheidel said in a recent phone interview. “If you look at thousands of years of history, predatory behavior plays a great role. Rich people tend to be the more powerful and can exploit people through institutions, serfdom, slavery and tributary empires. There is market activity that supports inequality, but there is a stronger element of more political ways of becoming disproportionately rich.”
Scheidel didn’t say so, but tax and healthcare proposals in Washington could be seen as examples of history repeating itself.
Scheidel documented how cycles of extreme wealth concentration have ended over the last 5,000 years. (Spoiler alert: Not well.)
Scheidel identified four “great levelers,” which he dubbed “The Four Horsemen of the Apocalypse.” Here’s how those four leveled the economic playing field over the last five millennia:
Plague. In a severe epidemic like the Black Death that terrorized Europe in the mid-14th century, a large percentage of the population died — in that case, 60% — while leaving the physical infrastructure unscathed. “There was the same amount of land and capital but with fewer people,” Scheidel said, “creating a scarcity of labor that raised the real wages of (surviving) workers while devaluing land and other forms of capital.”
State collapse. As in Pharaonic Egypt and the Roman Empire, governments throughout antiquity reinforced inequality through the wealthy citizens who held power directly or influenced those who did. During the 21st century, state collapse is rare, though Scheidel cited Somalia as a fullblown example and Syria as being “halfway there.”
Revolution. Unlike state collapse, revolutions leave a country’s physical borders intact while changing the economic system. People holding great wealth when the Bolsheviks took power in Russia or when the Maoists took over China lost everything.
War. For the United States, mass mobilization warfare was the great leveler of the 20th century. Scheidel says economic inequality in the U.S. rose steadily from the time of the American Revolution until about 1914, then plunged as taxes on the rich rose and government intervention in the economy increased to prosecute the war effort. As labor became scarce, unions gained power, raising middle-class wages. At the start of World War I, the richest 0.01% of Americans held 5% of the total U.S. wealth; a quarter century after the end of the World War II, that number was still under 1%, from where it recently rebounded to pre-World War I levels.
Scheidel did not identify a single instance during the last 5,000 years when an extreme concentration of wealth was significantly reversed in the absence of one of the four levelers. That’s the bad news. The good news is that Scheidel doesn’t foresee any of the Four Horsemen returning soon. So assuming that rising geopolitical risks don’t turn apocalyptic — or that a Fifth Horseman doesn’t gallop onto the scene, perhaps in the form of climate change — expect the eight rich men to keep getting richer and most everyone else to keep getting angrier.
But as history amply demonstrates, it could be so much worse.