In 1937, when Japan set out to conquer Asia, its “one percenters” earned a fifth of all income, around the same extravagant slice their American counterparts are enjoying right now. Eight years, three million dead and two atomic bombs later, their share of what was left had shrunk to a mere six percent. One of the most unequal economies on Earth had turned into one of the most egalitarian.
This dramatic leveling was by no means unique. For hundreds and perhaps thousands of years, peace, stability and development have rewarded those at the top of the food chain more than anybody else. Profits from business, connections and power multiplied in the hands of the few and passed between generations. But the inverse is also true: Every time the gap between rich and poor narrowed ― during the two world wars, for example ― there was massive violence, a shock to the established order.
These shocks forced a reduction of inequality across much of the globe. In the more distant past, the fall of empires and terrible epidemics did the same. The specific mechanisms vary widely ― the destruction of capital and high taxes during wars; expropriation, collectivization and economic planning under Communism; or the sudden demise of elites when states unraveled to the rise of workers’ wages when the plague decimated entire countries.
Peace and stability have rewarded those at the top of the food chain more than anybody else.
The one thing all these events had in common was the violence, misery and suffering they visited on millions of people. Even equalizing change that seems perfectly peaceful was often rooted in such shocks: surging labor union membership, the expansion of voting rights, mass education and the growth of the welfare state were all closely tied up with the experience of the world wars.
Yet inequality has proven resilient, and regularly advances once violent shocks retreat. This remains true to the present day: taxes, union power and social solidarity have declined while the fortunes of the one percent are soaring once again.
So what does the future hold? None of the violent levelers of the past are likely to return any time soon. There has not been a serious global plague since the Spanish flu a century ago, and we are now better equipped than ever to deal with such hazards. For better or worse, states and governments are here to stay. There is no new Lenin waiting to start a revolution, nor a world war to give this revolution a chance of success. Climate change may well end up increasing disparities between the most vulnerable parts of the globe and others, rather than the opposite.
Inequality is resilient ― it regularly advances once violent shocks retreat.
In the absence of major disruptions, there is no shortage of forces that drive up inequality. Ever more sophisticated automation and computerization threaten many different types of jobs and separate high earners with sought-after skills or connections from those in increasingly precarious jobs in the service and sharing economy. American society is particularly ill-equipped to address this problem, as growing residential segregation by income and uneven access to quality education preserve and reinforce inequalities between families.
Globalization has made developing countries more equal but tends to have the opposite effect on more advanced economies. Populist politicians peddle deceptively simple remedies but have little hope of altering this basic fact.
Even more powerful transformations have only just begun. The unstoppable graying of rich countries around the world is bound to place new burdens on the welfare state: the more public spending is diverted to the elderly, the less there is left for redistributive programs that support the economically disadvantaged. Immigration, the obvious answer to the challenge of aging, is more likely to raise inequality than bring it down. This will be a bigger problem in Europe than in the U.S., as a steady of inflow of lower-skilled and sometimes poorly integrated workers from the Middle East and Africa will open up new gaps between the haves and the have-nots and dampen voters’ willingness to support generous welfare programs.
Populists peddle deceptively simple remedies but have little hope of altering inequality from globalization.
Finally, new technologies are going to create other issues. Once genetic and cybernetic enhancements of the human body migrate from the domain of science fiction to real-life labs and clinics, the well-off will inevitably be in the best position to take advantage of these offerings, both for themselves and their offspring. It is fair to guess that not every country will impose equally stringent regulations on such interventions.
None of this raises particularly high hopes for the future of economic equality. The violence of the economic levelers in our more unsettled past are no longer with us, and that is surely something to be thankful for. At the same time, the concentration of income and wealth has been rising with no end in sight.
But what if high inequality carries within it the seeds of its own downfall? Does economic polarization tear at the fabric of society and raise the specter of violent unrest and dissent that might one day force change and upend the system?
Highly unequal societies routinely manage to survive for hundreds of years.
Viewed over the long term, world history suggests that matters are not nearly that simple. Certain types of shocks have reliably flattened differences in income and wealth, but high inequality as such does not necessarily usher in violent change.
In fact, highly unequal societies routinely manage to survive for hundreds of years. While the France of Versailles and Marie Antoinette suffered a revolution, its similarly unequal neighbors did not. Neither Russia nor China were particularly unequal when Lenin and Mao Zedong took over. And while some forms of inequality have indeed been shown to raise the risk of civil war in the developing world, richer economies have resolutely remained impervious to these pressures.
This should come as a relief to everyone who prizes life and peace more than a more balanced distribution of resources. But it also makes the question of how to reduce inequality even more intractable. Although moderate policy proposals can reasonably promise improvements at the margins, more sweeping advocacy tends to ignore a key lesson of history: that great equality was usually bought at the price of great violence. Absent this brutal and unwelcome leveler, the prospect of bringing about significant improvements may well be much dimmer than we would like to think. It is true that the past does not determine the future — but just how different can we expect the future to be?