TO DEAL WITH INEQUALITY, IT MUST BE BETTER UNDERSTOOD

By Jon D. Wisman

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Extreme inequality is the sometimes mentioned but not well seen elephant in the room. Mostly noted and then ignored, it continues its 45-year explosion, especially in the US and UK without pause or concerted opposition. How extreme is it? Bloomberg found in 2020 that the wealthiest 50 Americans owned as much as the poorest half of the U.S. population. Inequality is wrecking our social wellbeing, dramatically decreasing social mobility, and, for the least privileged, resulting in what economists Ann Case and Angus Deaton term deaths of despair. Schools, roads, bridges, mass transit, and parks are in decay. Trust in public institutions and other people has plummeted. Ecological devastation continues its advance. Most frightening, the democracy necessary for addressing inequality and consequent ecological devastation is rapidly being destroyed.

Society can still reduce inequality. But first, thought leaders, policy makers, and ordinary people must understand it. Why does it exist? Why is it tolerated?

The struggle over inequality has been the fundamental but unrecognized force driving human history. Underlying this struggle, as Charles Darwin first realized, is the fact that humans, like all animals, have been genetically selected to compete. Humans vie for social status to attract the opposite sex and improve the likelihood that their unique sets of genes survive into the next generation. If they succeed, their genes will carry their physical and behavioral traits into the future gene pool. The specific genes of those who fail to reproduce come to a halt.

Among humans, this competition for status is expressed more importantly in culturally evolved traits than in physically inherited attributes such as strength and beauty. Accordingly, what gains status mostly varies with cultural values or social institutions. For 97 to 98 percent of the human story, high status was given to successful warriors, efficient hunters or gatherers, generous members of the community, and charming, smart, artistic, and fun individuals. Because seeking wealth or political power was seen as deleterious to community, it was discouraged or even punished. However, these values have largely reversed since the rise of the state and civilization 5,500 years ago (only the last 2% to 3% of human history!). The highest status has been predominantly accorded to those who succeed in accumulating wealth and political power.  What counts in mate selection is what best promises the survival of offspring, and this depends upon a society’s social institutions. The rise of this new social institution—the state—marks the beginning of material and political inequality.

The state arose when warrior elites gained command over the metal weaponry, military organization, and ideology that enabled them to take control of productive resources. To survive, all others, deprived of ready access to necessary resources, have had to work with the productive wealth (mostly land and then, much later, capital) owned by elites. They have done so as slaves, serfs, indebted peasants, and wage earners.  Ever since, those possessing political power and wealth have enjoyed the highest status, making them sexually attractive because the children they parented have stood the best chance of thriving. With extreme inequality, belonging to a rich man’s harem could be more attractive than clinging to life and bearing children as the only wife of an impoverished or sickly man.

Prior to the nineteenth century, most state societies were as exploitative and unequal as they could possibly be, approaching what economist Branko Milanovic calls an “inequality possibility frontier” (the limit where elites take all output beyond what workers need for bare survival and reproduction). To take more would kill the goose that lays the golden eggs.

As noted above, inequality exists because it is rooted in an inexorable biological imperative. But why is it tolerated as the normal state of affairs? Predominantly because the prevailing ideology compellingly depicts the disproportionate allocation of wealth, income, and privilege to elites as in everyone’s best interest. In its modern form, the ideology holds that anyone who works hard can achieve economic success and high social status. Further, allocating the greater share of income and wealth to rich elites leads to increased investment and economic growth, generating employment and upward pressure on wages. Thus, the ideology explains, everyone wins.

Thinkers since Machiavelli have recognized that inequality can be maintained by either physical or ideological force. Physical force has often been necessary for establishing hierarchical social structures. But maintaining inequality by force creates social unrest and requires costly policing. It is far better for elites to embrace an ideological system that convinces both themselves and their subordinates that the existing social order is intellectually warranted and morally legitimate. Accordingly, ideology has always been the most effective day-to-day political weapon for maintaining the elite’s ability to expropriate the producers’ surpluses. Whenever ideology has proven insufficient, states protecting elites’ interests have invariably resorted to violence. As Thomas Hobbes put it, “when nothing else is turn’d up, clubs are trumps.” Revolts of the poor were always quickly and murderously repressed.

Only during the 19th century did the potential for reducing inequality arise. Industrialization and the attendant urbanization enabled workers to organize and revolt against their exploited condition. To avoid revolution, elites yielded to worker demands for higher wages, safer work conditions, shorter workdays, better sanitation, children’s education, and most importantly, the franchise. Worker welfare improved. Yet even though workers constituted the overwhelming majority of voters, inequality continued to increase thanks to the elites’ persuasive ideology. In all history, the only deliberate, politically-driven decline in inequality occurred between the 1930s and 1970s, following the extreme suffering during the Great Depression that substantially delegitimated elites’ ideology.

But over the past half-century, that ideology has again become persuasive, affording the elites sufficient political power to rewrite the rules of the game in their favor, including tax cuts, reduction in programs that benefit the general population, deregulation of industry and especially financial institutions, and expanded intellectual property rights. Inequality has consequently exploded without pause. Only broad popular understanding of the unfairness of this ideology can create the conditions for peacefully and democratically reversing inequality. But to occur peacefully, it must be accomplished before democracy is dismantled. The reason democracy is being eroded is that wealthy elites have always feared it as a means to reduce, if not eliminate, their privileged status.

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Jon D. Wisman is professor of economics at American University and author of The Origins and Dynamics of Inequality: Sex, Politics, and Ideology (Oxford University Press, 2022). He gratefully acknowledges Philip N. Lawton’s insightful comments.

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