the only thing that can really dent rampant and long-lasting economic inequality is violence.Reduction in inequality has been, writes Scheidel, “only ever brought forth in sorrow”
I have written about this question before, in the context of Thomas Piketty's study of economic history. It does seem to be true that in times of peace and prosperity the rich gradually get control of a larger and larger share of the overall economic pie, leading to the obscene wealth of the Roman imperial elite, the Chinese imperial elite, and so on. There is some social mobility within these aristocratic societies, but most wealth is hereditary, locked up by elite families.
To shake the grip of the elite on wealth and power, something dramatic is necessary: war, revolution, plague. (The best documented rise in the income of European workers before the 19th century took place after the Black Death, when labor was suddenly in short supply.) But what about the modern era? Has very rapid social and economic change, or the vast increase in wealth created by industrialization, or democracy, changed the rules so that now we can create more equal societies without catastrophe?
Scheidel accepts the argument I sketched about the 20th century: that the great reduction in inequality was brought about, not by Social Democracy, but world war and violent revolution:
In the first half of the 20th century we got new types of these leveling forces, which are World War I, World War II, which was nationalization warfare on an industrial scale, and the entire population mobilized either in the military or in the war effort at home. And very closely related are the Bolshevik revolutions that grew out of World War I in the case of Russia, or World War II in the case of Mao. . . .What about the New Deal?
The New Deal is interesting, because it’s only in the U.S. that the Great Depression had this attenuating effect on inequality—not so much in other countries, for whatever reason. Maybe because it was particularly severe, or because it was paired with the legislation of the New Deal. Even so, if you look at the actual data, it seems that by the end of the ’30s things were already, by some metrics, beginning to go back to normal, so to speak. It was really World War II that made the biggest difference.I accept the general outline of this argument with regard to pre-modern history, and consider it possible with regard to the era of Social Democracy from 1945 to 1980. But it should be said that the modern world is not the Roman world with electricity. The working class of the modern era is wealthy compared to its ancestors, better educated, more politically involved. Nor is the elite the same; before 1850 about 90% of wealth was inherited, but today the figure is roughly 35 to 45 percent. New technology creates new wealth, allowing billionaires to spring up overnight.
But the real difference is the existence of democracies with a high degree of legitimacy. The people of any modern democracy could, if they wanted to, impose draconian wealth taxes on the rich and put an end to inherited wealth. There might be widespread attempt to dodge these taxes via offshore bank accounts and the like, but the state has the power to make this very difficult and the power to enforce such rules.
Which raises the question of why we have lost the willingness to soak the rich that was so widespread in the 1950s. Is that simply what happens when the crisis fades? It is because the elite has used their power and influence to break up the wartime consensus, fooling the rest of us into letting them get rich again? Or were there things about the era of equality that many people hated and couldn't wait to be rid of?
But whatever the reason, we have let inequality re-emerge. Whether we stop it, or let it keep growing, is one of the main political questions of the next decade.