Sunday, July 2, 2017

Are Plagues and Wars The Only Way To Reduce Inequality?

We last visited Stanford's Professor Scheidel in February's "Inequality: Apparently What the World Needs Is Some Death and Destruction".
Today's post is via Aeon:

The bloodstained leveller
Throughout history, plagues and wars have left greater equality in their wake. Can we get there again without violence?
Blame inequality on climate change. Until the end of the last Ice Age, some 12,000 years ago, our ancestors lived in small foraging groups. They moved around a lot, owned very little, and passed on even less to the next generation, sharing any windfalls on the spot. The Holocene changed all that. Rising temperatures allowed humans to settle down to farm the land and domesticate livestock; collective management of resources gave way to private property rights, and new norms made assets hereditary. Over time, the cumulative rewards of brain, brawn and luck came to separate the haves from the have-nots.

This process of stratification was reinforced by the creation of states, as political power and military muscle aided the acquisition and preservation of fortunes and privilege: more than 3,000 years ago, the ancient Babylonians were well aware that ‘the king is the one at whose side wealth walks’. With the emergence of mighty empires, and as slow but steady increases in the stock of knowledge expanded economic output, the concentration of income and wealth reached previously unimaginable heights.

The principal sources of inequality have changed over time. Whereas feudal lords exploited downtrodden peasants by force and fiat, the entrepreneurs of early modern Europe relied on capital investment and market exchange to reap profits from commerce and finance. Yet overall outcomes remained the same: from Pharaonic Egypt to the Industrial Revolution, both state power and economic development generally served to widen the gap between rich and poor: both archaic forms of predation and coercion and modern market economies yielded unequal gains.

Does this mean that history has always moved in the same direction, that inequality has been going up continuously since the dawn of civilisation? A cursory look around us makes it clear that this cannot possibly be true, otherwise there would be no broad middle class or thriving consumer culture, and everything worth having might now be owned by a handful of trillionaires. Did democracy and progressive reform save us from this unenviable fate; or was it the labour movement, or mass education? All of these developments played an important role, and yet, at best, furnish only part of the answer. For inequality had already dipped steeply on several occasions, long before any of these modern breakthroughs had begun to appear.

From time to time, it turns out, history has pushed a reset button, driving down inequality in marked, if only temporary fashion. It is only by surveying its full sweep, over thousands of years, that we can discover the dynamics that drove this process. And these dynamics turn out to be very disturbing indeed: every time the gap between rich and poor shrank substantially, it did so because of traumatic, often extremely violent shocks to the established order. Catastrophic plagues, the collapse of states and, more recently, mass-mobilisation war and transformative revolution, are the only forces that ever levelled on a grand scale. No other – and less bloody – mechanisms have even come close. In a time of rising inequality, what does this imply for our own future?

But let us start at the beginning, in the very distant past. Europe is by far the best-documented case (see Figure 1 below). Economic inequalities emerged as farming spread from the Middle East around 9,000 years ago, and grew as the land filled up and small communities coalesced into larger societies. Archaeologists have discovered enough elite burial sites with luxury goods that had been manufactured for the privileged few and traded over long distances to support this reconstruction. The Roman empire was the culmination of this very drawn-out process. To the present day, no one state has come as close to monopolising political power in Europe as Rome did: for centuries, as many as four out of every five Europeans were ruled by the Caesars.
Figure 1: Inequality trends in Europe (all graphs from Walter Scheidel, The Great Leveller)
Wealth concentration at the very top far outpaced the growth of the economy: between 200 BCE and 100 CE, the largest reported fortunes of Roman plutocrats rose by close to a hundredfold while the population of the empire went up merely tenfold. Some aristocrats owned thousands of slaves, more than even the biggest planters of the antebellum South. In terms of personal net wealth, the richest among them were as remote from the common man as Bill Gates is from the average American today. By some measures, this trend continued all the way up to the fall of the Roman empire, as private palaces replaced mansions, and estates swallowed up entire towns and villages.

Until it all fell apart. In the 5th century CE, a terrifying array of disasters – internal strife, barbarian invasions, climate change – brought down the western half of the empire. The vast fortunes of the super-rich (early globalisers who owned property and invested capital all over the Mediterranean) vanished. To make matters worse, 100 years later bubonic plague first entered Europe, a raging pandemic that carried off a large share of its population. The disease killed so many workers that the price of labour soared, while that of land, now abundant and bereft of cultivators, plummeted, leaving the masses better off and landlords poorer. In Constantinople, the Byzantine emperor Justinian tried in vain to hold down wages by government decree. Papyrus documents from nearby Egypt show that the real incomes of ordinary farm hands rose by 150 per cent. A millennium of raging Roman inequality was undone in prolonged agony and dislocation, a period somewhat unfashionably but not entirely misleadingly known as the Dark Ages....