Cycles of Inequality

Peter Turchin has an interesting piece in Aeon Magazine (rapidly becoming a very good website) on cycles of inequality in history and at present.

How, though, can we account for the much more broadly inclusive policies of the Great Compression era? And what caused the reversal that ended the Gilded Age and ushered in the Great Compression? Or the second switch, which took place around 1980?

History provides another clue. Unequal societies generally turn a corner once they have passed through a long spell of political instability. Governing elites tire of incessant violence and disorder. They realise that they need to suppress their internal rivalries, and switch to a more co-operative way of governing, if they are to have any hope of preserving the social order. We see this shift in the social mood repeatedly throughout history — towards the end of the Roman civil wars (first century BC), following the English Wars of the Roses (1455-85), and after the Fronde (1648-53), the final great outbreak of violence that had been convulsing France since the Wars of Religion began in the late 16th century. Put simply, it is fear of revolution that restores equality. And my analysis of US history in a forthcoming book suggests that this is precisely what happened in the US around 1920.

In 1921 and 1924, Congress passed legislation that effectively shut down immigration into the US. Although much of the motivation behind these laws was to exclude ‘dangerous aliens’ such as Italian anarchists and Eastern European socialists, the broader effect was to reduce the labour surplus. Worker wages grew rapidly. At around the same time, federal income tax came in and the rate at which top incomes were taxed began to increase. Somewhat later, provoked by the Great Depression, other laws legalised collective bargaining through unions, introduced a minimum wage, and established Social Security.

The lesson for today: do something similar which would presumably mean restricting immigration, taxing the wealthiest, and protecting the less well-off. Alas, this package is not currently within the Overton Window.



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4 responses to “Cycles of Inequality

  1. T. Greer

    Mr. Turchin provides an update over at his blog, Social Evolution Forum:

    While I find Mr. Turchin’s evaluation of inequality cycles in the U.S. fascinating, I question his comparision of modern American inequality with that found in pre-modern socities. I will probably have to write a critique when I get my own blog up and running again….

    Thanks for pointing his essay out to me, however.

  2. Will do. The critique will probably rest on a series of ideas I outlined in an essay I wrote several years ago, “Notes on The Dynamics of Human Civilization: The Growth Revolution.”

    The basic problem as I see it is that wealth creation in premodern times was mostly extractive – e.g. taking wealth from one part of the population and giving it to the other. Modern growth means that the game is not zero sum. The problem today is not that wealth is being taken from one part of the population and given to the other, but that the new wealth created is not being evenly distributed. The dynamics of wealth creation before and after the “Growth Revolution” are incredibly different; by extension, the dynamics of inequality do not carry over.

    Something close to that. With more citations, of course. ^_~

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