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The time trend in global inequality

from James Galbraith and Jaehee Choi and The Inequality Crisis

Inspection of trends and changes in inequality gives a strong clue to the sweep of events. There are four trends and three distinct turning points. From 1963-1971, no trend appears, and changes in individual countries are for the most part small. After 1971, while inequality increases in some of the wealthy countries, in much of the world it is declining. After 1980, there is a radical change, and the world enters on a period of large inequality increases, sweeping across regions beginning in Latin America and Africa, hitting Eastern Europe and the (former) USSR after 1989, and moving on to Asia in the 1990s. In 2000 there is a further turning point, after which stabilization and even modest declines in inequality are found in Russia, China, Latin America, parts of Africa and elsewhere. Figure 1 provides this time trend as estimated above, over the entire global data set. The key turning points in the early 1970s, in 1981, and 2000 emerge very clearly.

Figure 1 The Time Trend of Global Inequality

US   UK   JP   AU

  1. Ken Zimmerman
    November 22, 2020 at 5:58 pm

    I agree with the trends and inflection points you identify. But for me the remarkable feature of the graph is what happens after 1980. With only a few breaks the level of inequality rises almost constantly to the current period. This is the result, in my view of the wealthy and powerful of the late 1970s finding a formula to not only keep themselves powerful and rich but also everyone else very much not powerful and rich. That formula: 1. Fear people of color; 2. Hate government; and 3. Trust the market. The formula has worked remarkably well for nearly 50 years. But today does show signs of weakening.

    This formula is the most recent in a long line of such methods to maintain the wealth, power, and status of some humans at the expense of other humans extending back to prehistorical times.

    J.-J. Rousseau observed in ‘The Social Contract’ (1762), “Man is born free, and yet we see him everywhere in chains.” We were all born equal, and our birthplace was Africa. Whoever we are, wherever we live, whatever language we speak, whatever our customs and beliefs, whatever the color of our skin, at some point in the last two million years our ancestors lived in Africa. It took several emigrations over that nearly two million years to get us to the four corners of the earth. About 55,000 to 75,000 years ago some early humans had taught themselves not merely how to take food out of the environment but to engineer the environment itself. That is, perform ‘ecological niche construction.’ This required not only the force and planning to do the work but also the careful observation of events around them to do the planning for the work. From archaeological digs we know these changes resulted in increases in violent conflicts, wars, and murder. Which resulted in the creation of monarchy, slavery, and the pursuit of empire. Humans began to prey on one another. At the same time the increasing size of human communities and their increasing access to resources necessary for human survival, including land led to the creation of not only distinctly different cultures but also the use of symbolism in the creation of ethnic identities and cultural boundaries. And the associated rituals to regulate interaction among neighboring ethnic groups. And as the smaller human groups were either absorbed or found it impossible to compete with the larger social groups, rituals became more detailed and more fixed. From this process elites arose. And from elites, monarchy of various forms arose. As monarchies became larger and richer, slavery began. It might be debt slavery, or the slavery of a captive, or vengeance or revenge slavery. Even early modern humans of 50,000 years ago exhibited some hereditary inequality. But over the entire period beginning about 40,000 years ago not only did elites grant themselves new privileges but they removed existing privileges from the people on the bottom. By the time Europeans came to the ‘New’ world, inequality was extreme on both sides of the Atlantic, particularly for monarchs. The effects of inequality grew and spread over the next 40,000 years.

    Over time the elites (monarchies, slave owners, the wealthy) learn from one another. New empires learn from old. It was not just for form, for example that the elites of the UK studied and study the Roman Empire.

    For social anthropologists and archaeologists, the printout of any society’s logic would be analogous to having its DNA profile. When we do not understand society’s changing premises, we are left with unanswered questions. Did states with divine kings arise from rank societies where sacred authority was preeminent? Did secular kingdoms arise from rank societies where military force was uppermost? Or could any type of monarchy arise from any type of rank society?

    Rousseau held that our ancestors were born without sovereign masters, governments, or laws, and that the only differences among them lay in their strength, agility, and intelligence. Those inequalities were authorized by Natural Law. Most later inequalities resulted not from nature but from the actions of society itself.

    Today we suspect that our Ice Age forebears were not wholly without masters or laws. They almost certainly believed themselves to have been the creations of celestial spirits, powerful masters who gave men laws of social behavior. Most likely our ancestors also believed that the first humans had abilities beyond ours. Those “old ones” had taken on the role of betas in society’s dominance hierarchy and, when treated properly, would intercede on their descendants’ behalf with the alphas of the spirit world.

    Ice Age people lived on foods whose pursuit tended to keep societies small and mobile. Because fluctuations in the food supply might force some families to forage in the territories of others, our ancestors could not afford to have hostile neighbors. Foragers are not only diplomatic but make neighbors into honorary kinsmen. They do this by creating partners with whom they exchange such things as magical names, food, or gifts. Such partnerships allow one family to host another in times of need, just as if they had been related by blood or marriage.

    The logic of small-scale foragers has its own first principles. The following would be typical:
    There is an invisible life force within us.
    Certain spirits, places, and objects are sacred.
    Individuals differ in virtue.
    Generosity is one of those virtues.
    Older, initiated people tend to be more virtuous than younger, uninitiated people.
    Later arrivals in a territory are obliged to defer to earlier arrivals.
    Our way of life is inherently superior to that of our neighbors.

    Despite the widespread nature of such first principles, most anthropologists would not argue that they are encoded in our genes. Generosity is a widespread principle among hunters and gatherers, yet constant social pressure must be applied to ensure that individuals continue to be generous. Such pressure would not be necessary if there were genes for generosity.

    The secondary premises that grew out of the first principles were not as widely shared as the latter. For example, most foragers agree that humans differ in virtue, but they frequently disagree on which specific behaviors make individuals more virtuous. Such variations are the raw material for ethnic diversity, long-term social change, and greater inequality.

    Rousseau considered the replacement of self-respect with self-love an important moment in the creation of inequality. It now seems obvious, however, that both self-respect and self-love were there from the beginning. The tug-of-war between them may have been one of Ice Age society’s most significant logical contradictions.

    With the rise of agricultural villages between 9,000 and 4,000 years ago (varying by region), the environment for self-love had improved. In many parts of the world, however, the adoption of agriculture did not lead immediately to inequality. Lots of societies struck a balance between personal ambition and the public good, and in some regions that balance lasted well into the 20th century. There are archaeological hints, to be sure, that many of today’s achievement-based societies once flirted with greater inequality. Most of those flirtations, however, ended with a return to egalitarian behavior.

    What achievement-based societies excelled at was providing ambitious individuals (those who, in Rousseau’s words, “desired to be thought of as superior”) with acceptable ways of increasing their prestige. Those ways included prowess in raiding or head-taking, skill in entrepreneurial exchange, or sponsorship of increasingly important rituals. While all these paths could lead to renown, prominent individuals were not allowed to become a hereditary elite. They could serve as role models for their children but could not guarantee them the same prestige.

    Many Americans will find familiar the logic of achievement-based societies.
    All men are created equal. Work hard, play by the rules, and anyone can grow up to be prominent. If one provides one’s children with privileges they have not earned, they will be so spoiled that they will get their own reality TV show. The difference is this: the United States had to fight a Revolutionary War to get rid of hereditary aristocracy and never did figure out how to reduce disparities in wealth. Achievement-based societies, on the other hand, usually pressured all their members to give away the valuables they had accumulated.

    By what date did societies first show signs of achievement-based leadership?
    Between 9,000 and 3,500 years ago, by region. And what would be some of the clues? Archaeologists look for the building of men’s houses, either the larger and more inclusive type or the smaller and more exclusive type. They also look for accumulations of trade items that might be used in entrepreneurial exchange. They analyze residences and burials carefully, and unless they find convincing evidence that certain families’ children were entitled to sumptuary goods, they are likely to conclude that any obvious differences in prestige were achieved, not inherited.

    Archaeologists examine as many of a society’s villages as they can, looking for any evidence that hamlets were obliged to contribute tribute or labor to a larger village nearby. When no such evidence appears, an achievement-based society is indicated. Archaeologists also try to evaluate any evidence for monument building, with the caveat that an occasional plaza, stone monument, or massive slit-gong might be evidence for achievement rather than hereditary leadership.

    How did the old hunter-gatherer logic come to be changed, creating routes to renown? Even foragers considered some individuals more virtuous than others and believed that one could increase one’s virtue over a lifetime. Building on this principle, many village societies created a series of formal steps to increase one’s virtue through the learning of sacred lore.

    Another route, using entrepreneurial exchange, was created by manipulating three principles common to foragers: (1) Generosity is good; (2) Exchanges of gifts create social bonds; and (3) The farther away one’s trade goods come from, the more impressed one’s peers will be. Some achievement-based societies tried to keep exchanges equal, using principles such as “Give one pig and one pig only.” Others decided that giving one’s neighbors more pigs than they could repay made one more generous (and hence more virtuous) than they.

    Once the latter principle was accepted, embarrassing one’s rivals with spectacular gifts became an acceptable path to renown. An unanticipated consequence of competitive exchange was that whole families and clans might be pressured into bankrolling an aspiring Big Man. If he were defeated by a rival, they could kiss their investment good-bye.

    The loss of face created by asymmetrical exchange could lead to blood feuds, and blood feuds could increase the scalping and head-hunting. Many societies believed that the taking of a head could add to one’s life force. Leading warriors into combat, counting coup, or returning with captives or body parts thus became another route to prestige.

    Achievement-based societies had great stability. At various times and places in the ancient world, however, self-love persisted until a hereditary elite arose. This phenomenon was not the inevitable outcome of population growth, intensive agriculture, or climatic improvement, even though all those factors could create a favorable environment for inequality. The key process involved one group of human agents battling for greater privilege, while other agents resisted with all the strength they could muster.

    Even when one segment of society succeeded in achieving elite status, the struggle was not necessarily over. Some cycle through various social forms.

    In those cases where rank society did develop out of achievement-based society, there were many preexisting inequities that could serve as raw material. Included were the differences in prestige between Big Men and rubbish men; between people who had climbed the ritual ladder and those who had not; between the clan that arrived first and everyone else; and between the man chosen for success by a demon and lesser men.

    Another strategy for achieving rank was the use of debt, which turned needy clan members into servants and neighbors into slaves. Debt could result from exorbitant bride-price, loans to aspiring Big Men, excessive war reparations, or the desperate cries of impoverished kinsmen. It was a route built on the principle that failure to repay a gift or loan made one less virtuous.

    Rank clearly represents a loss of equality, but how about we play the devil’s advocate. Was rank really such a bad thing? Lots of species have a dominance hierarchy, and it provides stability to their society? In fact, our closest primate relatives have pecking orders. But with an important difference. It is not predestined from the moment of birth that a given chimpanzee will become an alpha or a beta.

    Human rank societies are different. The child of ‘great person’ parents is born to
    be a ‘great person,’ no matter how short of talent they may be. The child of commoner parents will never become a ‘great person,’ no matter how clever they are. The ability to negotiate one’s position in rank society is much more limited than in a chimpanzee troop. There are confrontational interactions in rank society, to be sure, but they are usually between rivals of high rank. Among rank societies, war became a tool mostly for aggrandizement. When only titles this did not necessarily change the basic principles of society. When aggrandizement meant the acquisition of land, it could produce territories too large for the management principles of rank society. That set the stage for the political hierarchy characteristic of monarchies.

    The first monarchies or oligarchic states appeared 5,000 years ago. Yet they were neither common nor inevitable. As late as the 20th century, many parts of the world still displayed nothing more complex than rank societies. Still, empires are likely more than 4,300 years old. And along with empires came ethnic stereotyping, an escalation of simpler societies’ longstanding ethnocentrism. The precedent for racial, religious, and ethnic intolerance had been set. Early monarchies and empires did more than this, of course. Many state regimes took away whatever vestiges of equality the individual commoner had left. They also created colonialism. A subject that continues to create controversy.

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