The Great Leveler Read online

  THE GREAT

  LEVELER

  Albrecht Dürer, The Four Horsemen of the Apocalypse, from The Apocalypse, 1497–1498. Woodcut, 15¼ × 11 in. (38.7 × 27.9 cm).

  THE GREAT

  LEVELER

  VIOLENCE AND THE HISTORY OF

  INEQUALITY

  FROM THE STONE AGE TO THE

  TWENTY-FIRST CENTURY

  WALTER SCHEIDEL

  Princeton University Press

  Princeton and Oxford

  Copyright © 2017 by Princeton University Press

  Published by Princeton University Press, 41 William Street, Princeton, New Jersey 08540

  In the United Kingdom: Princeton University Press, 6 Oxford Street, Woodstock, Oxfordshire OX20 1TR

  press.princeton.edu

  Jacket art: Albrecht Dürer, The Four Horsemen of the Apocalypse, from The Apocalypse, 1497–1498.

  Woodcut, 15¼ × 11 in. (38.7 × 27.9 cm).

  All Rights Reserved

  ISBN 978-0-691-16502-8

  Library of Congress Control Number: 2016953046

  British Library Cataloging-in-Publication Data is available

  This book has been composed in Garamond Premier Pro

  Printed on acid-free paper. ∞

  Printed in the United States of America

  10 9 8 7 6 5 4 3 2 1

  For My Mother

  “So distribution should undo excess,

  And each man have enough.”

  Shakespeare, King Lear

  “Get rid of the rich and you will find no poor.”

  De Divitiis

  “How often does God find cures for us worse than our perils!”

  Seneca, Medea

  CONTENTS

  List of Figures and Tables xi

  Acknowledgments xv

  Introduction: The Challenge of Inequality 1

  PART I.A BRIEF HISTORY OF INEQUALITY 23

  1.The Rise of Inequality 25

  2.Empires of Inequality 62

  3.Up and Down 86

  PART II.WAR 113

  4.Total War 115

  5.The Great Compression 130

  6.Preindustrial Warfare and Civil War 174

  PART III.REVOLUTION 211

  7.Communism 213

  8.Before Lenin 232

  PART IV.COLLAPSE 255

  9.State Failure and Systems Collapse 257

  PART V.PLAGUE 289

  10.The Black Death 291

  11.Pandemics, Famine, and War 314

  PART VI.ALTERNATIVES 343

  12.Reform, Recession, and Representation 345

  13.Economic Development and Education 367

  14.What If? From History to Counterfactuals 389

  PART VII.INEQUALITY REDUX AND THE FUTURE OF LEVELING 403

  15.In Our Time 405

  16.What Does the Future Hold? 424

  Appendix: The Limits of Inequality 445

  Bibliography 457

  Index 495

  FIGURES AND TABLES

  FIGURES

  I.1Top 1 percent income share in the United States (per year) and references to “income inequality” (three-year moving averages), 1970–2008

  1.1General form of the social structure of agrarian societies

  3.1Inequality trends in Europe in the long run

  3.2Gini coefficients of wealth distribution in Italy and the Low Countries, 1500–1800

  3.3Ratio of mean per capita GDP to wages and real wages in Spain, 1277–1850

  3.4Inequality trends in Latin America in the long run

  3.5Inequality trends in the United States in the long run

  4.1Top income shares in Japan, 1910–2010

  5.1Top 1 percent income shares in four countries, 1935–1975

  5.2Top 0.1 percent income shares in Germany and the United Kingdom

  5.3Top 1 percent wealth shares in ten countries, 1740–2011

  5.4Ratios of private wealth to national income in France, Germany, the United Kingdom, and the world, 1870–2010

  5.5Capital income share in total gross income for top 1 percent of incomes in France, Sweden, and the United States, 1920–2010

  5.6The share of government spending in national income in seven countries, 1913–1918

  5.7Top marginal tax rates in nine countries, 1900–2006

  5.8Average top rates of income and inheritance taxation in twenty countries, 1800–2013

  5.9World War I and average top rates of income taxation in seventeen countries

  5.10Top 1 percent income share in Germany, 1891–1975

  5.11Top 1 percent income share in Sweden, 1903–1975

  5.12State marginal income tax rates in Sweden, 1862–2013

  5.13Trade union density in ten OECD countries, 1880–2008

  6.1Military size and mobilization rates in years of war in great power states, 1650–2000

  6.2Gini coefficients of income and top 0.01 percent income share in Spain, 1929–2014

  9.1Median house sizes in Britain from the Iron Age to the Early Middle Ages

  9.2House size quartiles in Britain from the Iron Age to the Early Middle Ages

  9.3Gini coefficients of house sizes in Britain from the Iron Age to the Early Middle Ages

  10.1Real wages of urban unskilled workers in Europe and the Levant, 1300–1800

  10.2Real wages of urban skilled workers in Europe and the Levant, 1300–1800

  10.3Rural real wages measured in terms of grain in England, 1200–1869

  10.4Top 5 percent wealth shares and Gini coefficients of wealth distribution in the cities of Piedmont, 1300–1800

  10.5Gini coefficients of wealth in Poggibonsi, 1338–1779

  10.6Top 5 percent wealth shares in Tuscany, 1283–1792

  10.7Top 5 percent wealth shares and Gini coefficients of wealth distribution in Lucca, 1331–1561

  11.1Real wages expressed in multiples of bare-bones consumption baskets in central Mexico, 1520–1820

  11.2Daily wheat wages of unskilled rural and urban workers in Egypt, third century BCE to fifteenth century CE

  11.3Changes in real prices and rents between 100–160s and 190s–260s CE in Roman Egypt

  11.4Wealth inequality in Augsburg: number of taxpayers, average tax payments, and Gini coefficients of tax payments, 1498–1702

  13.1Gross National Income and Gini coefficients in different countries, 2010

  13.2Estimated and conjectured income Gini coefficients for Latin America, 1870–1990 (population-weighted averages for four, six, and sixteen countries)

  14.1Counterfactual inequality trends in the twentieth century

  15.1Top 1 percent income shares in twenty OECD countries, 1980–2013

  A.1Inequality possibility frontier

  A.2Estimated income Gini coefficients and the inequality possibility frontier in preindustrial societies

  A.3Extraction rates for preindustrial societies and their counterpart modern societies

  A.4Inequality possibility frontier for different values of the social minimum

  A.5Different types of inequality possibility frontiers

  TABLES

  2.1The development of the largest reported fortunes in Roman society and the population under Roman control, second century BCE to fifth century CE

  5.1The development of top income shares during the world wars

  5.2Variation in the rate of reduction of top 1 percent income shares, by period

  6.1Property in 1870 relative to 1860 (1860 = 100), for Southern whites

  6.2Inequality of Southern household incomes

  8.1Income shares in France, 1780–1866

  11.1Share and number of taxable households in Augsburg by tax bracket, 1618 and 1646

  15.1Trends in top income shares and income inequality in select c
ountries, 1980–2010

  ACKNOWLEDGMENTS

  The gap between the haves and the have-nots has alternately grown and shrunk throughout the course of human civilization. Economic inequality may only recently have returned to great prominence in popular discourse, but its history runs deep. My book seeks to track and explain this history in the very long run.

  One of the first to draw my attention to this very long run was Branko Milanovic, a world expert on inequality who in his own research has reached all the way back to antiquity. If there were more economists like him, more historians would be listening. About a decade ago, Steve Friesen made me think harder about ancient income distributions, and Emmanuel Saez further piqued my interest in inequality during a shared year at Stanford’s Center for Advanced Study in the Behavioral Sciences.

  My perspective and argument have been inspired in no small measure by Thomas Piketty’s work. For several years before his provocative book on capital in the twenty-first century introduced his ideas to a wider audience, I had read his work and pondered its relevance beyond the last couple of centuries (also known as the “short term” to an ancient historian such as myself). The appearance of his magnum opus provided much-needed impetus for me to move from mere contemplation to the writing of my own study. His trailblazing has been much appreciated.

  Paul Seabright’s invitation to deliver a distinguished lecture at the Institute for Advanced Studies in Toulouse in December 2013 prompted me to fashion my disorganized thoughts on this topic into a more coherent argument and encouraged me to go ahead with this book project. During a second round of early discussion at the Santa Fe Institute, Sam Bowles proved a fierce but friendly critic, and Suresh Naidu provided helpful input.

  When my colleague Ken Scheve asked me to organize a conference on behalf of Stanford’s Europe Center, I seized the opportunity to gather a group of experts from different disciplines to discuss the evolution of material inequality in the long run of history. Our meeting in Vienna in September 2015 was both enjoyable and educational: my thanks go to my local co-organizers, Bernhard Palme and Peer Vries, as well as to Ken Scheve and August Reinisch for their financial support.

  I further benefited from feedback at presentations at the Evergreen State College, the Universities of Copenhagen and Lund, and the Chinese Academy of Social Sciences in Beijing. I am grateful to the organizers of these events: Ulrike Krotscheck, Peter Bang, Carl Hampus Lyttkens, Liu Jinyu, and Hu Yujuan.

  David Christian, Joy Connolly, Peter Garnsey, Robert Gordon, Philip Hoffman, Branko Milanovic, Joel Mokyr, Reviel Netz, Şevket Pamuk, David Stasavage, and Peter Turchin very kindly read and commented on the whole manuscript. Kyle Harper, William Harris, Geoffrey Kron, Peter Lindert, Josh Ober, and Thomas Piketty also read parts of the book. A group of historians at the Saxo Institute in Copenhagen met to discuss my manuscript, and I am particularly grateful to Gunner Lind and Jan Pedersen for their extensive input. I received valuable expert advice on specific sections and questions from Anne Austin, Kara Cooney, Steve Haber, Marilyn Masson, Mike Smith, and Gavin Wright. It is entirely my own fault that I have not been as receptive to their comments as I surely ought to have been.

  I am extremely grateful to a number of colleagues who generously shared their unpublished work with me: Guido Alfani, Kyle Harper, Michael Jursa, Geoffrey Kron, Branko Milanovic, Ian Morris, Henrik Mouritsen, Josh Ober, Peter Lindert, Bernhard Palme, Şevket Pamuk, Mark Pyzyk, Ken Scheve, David Stasavage, Peter Turchin, and Jeffrey Williamson. Brandon Dupont and Joshua Rosenbloom very helpfully generated and shared statistics on wealth distribution in the United States during the Civil War period. Leonardo Gasparini, Branko Milanovic, Şevket Pamuk, Leandro Prados de la Escosura, Ken Scheve, Mikael Stenkula, Rob Stephan, and Klaus Wälde kindly sent me data files. Stanford economics major Andrew Granato provided valuable research assistance.

  I completed this project during a Stanford Humanities and Arts Enhanced Sabbatical Fellowship granted for the academic year of 2015/2016: my thanks go to my deans, Debra Satz and Richard Saller, for their support in this matter (in addition to many others). This sabbatical allowed me to spend the spring of 2016 as a visitor at the Saxo Institute of the University of Copenhagen when I was putting the finishing touches on my manuscript. I am grateful to my Danish colleagues for their warm hospitality—and above all to my good friend and serial collaborator Peter Bang. I also owe a somewhat awkward word of thanks to the John Simon Guggenheim Memorial Foundation for awarding me a fellowship to pursue this project. Having somehow managed to finish this book before I had a chance to take up this fellowship, I will be sure to make the most of it in my future endeavors.

  As my project approached completion, Joel Mokyr kindly offered to include this title in his series and helped shepherd it through the review process. I have greatly appreciated his support and judicious comments. Rob Tempio has been a splendid instigator and editor, a true book lover and author’s advocate. I am also in his debt for his having suggested the main title of this book. His colleague Eric Crahan granted me timely access to the page proofs of two related Princeton books. Further thanks are due to Jenny Wolkowicki, Carol McGillivray, and Jonathan Harrison for having ensured an exceptionally smooth and swift production process, and to Chris Ferrante for his striking cover design.

  Introduction

  THE CHALLENGE OF INEQUALITY

  ”A DANGEROUS AND GROWING INEQUALITY”

  How many billionaires does it take to match the net worth of half of the world’s population? In 2015, the richest sixty-two persons on the planet owned as much private net wealth as the poorer half of humanity, more than 3.5 billion people. If they decided to go on a field trip together, they would comfortably fit into a large coach. The previous year, eighty-five billionaires were needed to clear that threshold, calling perhaps for a more commodious double-decker bus. And not so long ago, in 2010, no fewer 388 of them had to pool their resources to offset the assets of the global other half, a turnout that would have required a small convoy of vehicles or filled up a typical Boeing 777 or Airbus A340.1

  But inequality is not created just by multibillionaires. The richest 1 percent of the world’s households now hold a little more than half of global private net wealth. Inclusion of the assets that some of them conceal in offshore accounts would skew the distribution even further. These disparities are not simply caused by the huge differences in average income between advanced and developing economies. Similar imbalances exist within societies. The wealthiest twenty Americans currently own as much as the bottom half of their country’s households taken together, and the top 1 percent of incomes account for about a fifth of the national total. Inequality has been growing in much of the world. In recent decades, income and wealth have become more unevenly distributed in Europe and North America, in the former Soviet bloc, and in China, India, and elsewhere. And to the one who has, more will be given: in the United States, the best-earning 1 percent of the top 1 percent (those in the highest 0.01 percent income bracket) raised their share to almost six times what it had been in the 1970s even as the top tenth of that group (the top 0.1 percent) quadrupled it. The remainder averaged gains of about three-quarters—nothing to frown at, but a far cry from the advances in higher tiers.2

  The “1 percent” may be a convenient moniker that smoothly rolls off the tongue, and one that I repeatedly use in this book, but it also serves to obscure the degree of wealth concentration in even fewer hands. In the 1850s, Nathaniel Parker Willis coined the term “Upper Ten Thousand” to describe New York high society. We may now be in need of a variant, the “Upper Ten-Thousandth,” to do justice to those who contribute the most to widening inequality. And even within this rarefied group, those at the very top continue to outdistance all others. The largest American fortune currently equals about 1 million times the average annual household income, a multiple twenty times larger than it was in 1982. Even so, the United States may be losing out to China, now said to be home to an even larger number of dol
lar billionaires despite its considerably smaller nominal GDP.3

  All this has been greeted with growing anxiety. In 2013, President Barack Obama elevated rising inequality to a “defining challenge”:

  And that is a dangerous and growing inequality and lack of upward mobility that has jeopardized middle-class America’s basic bargain—that if you work hard, you have a chance to get ahead. I believe this is the defining challenge of our time: Making sure our economy works for every working American.

  Two years earlier, multibillionaire investor Warren Buffett had complained that he and his “mega-rich friends” did not pay enough taxes. These sentiments are widely shared. Within eighteen months of its publication in 2013, a 700-page academic tome on capitalist inequality had sold 1.5 million copies and risen to the top of the New York Times nonfiction hardcover bestseller list. In the Democratic Party primaries for the 2016 presidential election, Senator Bernie Sanders’s relentless denunciation of the “billionaire class” roused large crowds and elicited millions of small donations from grassroots supporters. Even the leadership of the People’s Republic of China has publicly acknowledged the issue by endorsing a report on how to “reform the system of income distribution.” Any lingering doubts are dispelled by Google, one of the great money-spinning disequalizers in the San Francisco Bay Area, where I live, which allows us to track the growing prominence of income inequality in the public consciousness (Fig. I.1).4

  Figure I.1Top 1 percent income share in the United States (per year) and references to “income inequality” (three-year moving averages), 1970–2008

  So have the rich simply kept getting richer? Not quite. For all the much-maligned rapacity of the “billionaire class” or, more broadly, the “1 percent,” American top income shares only very recently caught up with those reached back in 1929, and assets are less heavily concentrated now than they were then. In England on the eve of the First World War, the richest tenth of households held a staggering 92 percent of all private wealth, crowding out pretty much everybody else; today their share is a little more than half. High inequality has an extremely long pedigree. Two thousand years ago, the largest Roman private fortunes equaled about 1.5 million times the average annual per capita income in the empire, roughly the same ratio as for Bill Gates and the average American today. For all we can tell, even the overall degree of Roman income inequality was not very different from that in the United States. Yet by the time of Pope Gregory the Great, around 600 CE, great estates had disappeared, and what little was left of the Roman aristocracy relied on papal handouts to keep them afloat. Sometimes, as on that occasion, inequality declined because although many became poorer, the rich simply had more to lose. In other cases, workers became better off while returns on capital fell: western Europe after the Black Death, where real wages doubled or tripled and laborers dined on meat and beer while landlords struggled to keep up appearances, is a famous example.5