By Guest Contributor Trevor Jackson
The Piketty phenomenon needs no introduction: Capital in the Twenty-First Century (2014) remains the best-selling book ever published by Harvard University Press, and since it appeared in English in 2014, Thomas Piketty and his small group of frequent collaborators have turned up everywhere. There is Piketty, writing a column in Le Monde, or anatomizing the rise of private capital in China, or charting the emergence of Russian oligarchs. This ubiquity is unprecedented: with the exceptions of Branko Milanovic and the late Anthony Atkinson, the study of inequality had languished during the latter half of the twentieth century. The crisis of 2008 certainly catalyzed a popular and scholarly interest in questions of distribution, corruption, and financialization; many economists (re)turned to the history of the Great Depression, and in 2013 the New York Times famously announced the arrival of the “history of capitalism.” But inequality continued to be the preoccupation mostly of development economists who were interested in poverty reduction. Capital in the Twenty-First Century was heralded as a kind of “unified field theory” of inequality, finally producing a single model that would be of use to historians, policymakers, and economists alike. Nothing about inequality has changed since 2014, except that everything has gotten worse, and every day it has become a bit more obvious that the central unifying characteristic of our contemporary moment is the experience of some form of inequality. Since Piketty’s book, we have had the rare opportunity of watching a discipline in the process of self-formation. Who will write and teach about inequality, and who will be their audience? What kinds of evidence will be admissible, intelligible, and valuable? What will be the accepted practices of this new field, and what will be its central animating questions? After Piketty, a new volume of essays, provides one possible answer, while Walter Scheidel’s new book The Great Leveler points in a very different direction.
Piketty’s influence is due in part to how easy his 685-page argument is to understand, and to communicate. Inequality is the result of two variables: g, the overall rate of economic growth, and r, the rate of return on capital. If r is greater than g, the owners of capital will be receiving income faster than the overall economy is growing, meaning they will get richer faster than everyone else, and inequality will increase. By Piketty’s estimation, throughout most of human history, r hovered around 5%, while g was negligible. The result was persistent inequality, and since wealth tends to be patrimonial, a closed elite passed down their unequal position generation to generation across centuries. The sole exception was 1945-1970, when a tremendous amount of elite wealth had been destroyed by the world wars and the Great Depression, and when global economic growth was abnormally high. Then, and only then, did the world become more equal. That period also coincided with the professionalization of economics and history, creating a foundational cohort of scholars and policymakers who believed that increasing equality was the norm rather than the aberration. Since the 1970s the return to free international capital flows has brought instability and reduced wage growth, dragging down g, while producing high rates of capital income, driving up r, and returning the world to the pre-1914 norm of patrimonial inequality. He builds this case through pioneering work in creating datasets for top incomes and wealth ownership, mostly in Britain, France, and the United States since about 1800. He supports his data with examples from literary sources like Balzac and Jane Austen, and that exquisite footnote in Ch. 11 to a plot twist in Season 4 of Desperate Housewives (Piketty, Capital in the Twenty-First Century, 621, n. 52).
Piketty consciously made both a substantive and a methodological intervention, and his last lines are something between a gentle scold and a call to arms:
To be sure, the principle of specialization is sound and surely makes it legitimate for some scholars to do research that does not depend on statistical series…Yet it seems to me that all social scientists, all journalists and commentators, all activists in the unions and in politics of whatever stripe, and especially all citizens should take a serious interest in money, its measurement, the facts surrounding it, and its history. Those who have a lot of it never fail to defend their interests. Refusing to deal with numbers rarely serves the interest of the least well-off (Piketty, Capital, 577).
Economists are certainly interested in money and its measurement, and three of them edited a collection entitled After Piketty, which contains some 22 essays by 25 people. One is by Piketty’s translator and one is a response by Piketty himself. One author is a historian, one an urban geographer, and one a political scientist. The rest are economists from academia, the Federal Reserve, the World Bank, think tanks, and Moody’s financial services company. Three of the economists are Nobel laureates; another is a PhD candidate. This set of contributors is a reasonable synecdoche of Piketty’s impact: the discussion of inequality, both as a historical phenomenon and a contemporary policy problem, is dominated by economists of various specialties and career stages.
The contributors to After Piketty critique his mathematical modeling, his variable specifications, his assumptions about human behavior, and the real-world policy implications of his work. Their approach is to accept his basic intuition that capitalism contains an inherent tendency towards inequality. Since capitalism is a multidimensional social system that is embedded in different times and places, specialists should therefore refine his models and investigate the local policies, politics, and institutions that constitute particular variants of capitalism. Some of these essays are ferociously technical: the reader will not get through Divesh Raval’s essay on what is wrong with Piketty’s model without taking the occasional derivative of a natural logarithm, and perhaps half the essays contain regression output tables. Historians are likely to be nonplussed by sentences like this one:
Here captures historically determined institutions for group G, is average wealth for group G in period t and thus represents endowments, is the wealth of individual i in group G in time period s, and is the idiosyncratic shock to i’s wealth in group G in time period s, where the shock has a mean zero with variance”(Derenoncourt, “Historical Origins of Global Inequality,” in After Piketty, 495).
But if historians are serious about producing new approaches to inequality, the difficulty is no excuse. These economists have ensured that the new study of inequality is predicated on a common language. It is mostly unintelligible to outsiders, with its strange mathematical declensions and its statistical conjugations, but it means that the field is predicated on evaluating, critiquing, and replicating each other’s work across specialties, which is appropriate for a phenomenon as universal as inequality. Perhaps the salience of inequality justifies learning to read, if not to speak, this language.
I am not the only historian to think so: Patrick Manning devoted his presidential address at the 2017 AHA meeting to the need for new ways of studying the history of inequality. So far his call seems to have been as unheeded as Barbara Weinstein’s 2007 presidential address to the AHA on “Developing Inequality” because the 2018 AHA meeting had only one panel on inequality. This has been a surprising turn of events. I, for one, was convinced in 2014 that the new study of inequality would be dominated by historians, using Piketty’s easily understood model and adding their deep contextual knowledge to his test cases of France, the UK, and the US. After decades of writing histories of the ordering, quantifying, discourse-producing, population-governing state, it seemed time for historians to turn their attention to the practices, discourses, and powers of the global 1%. That mostly has not happened.
Instead of historians applying Piketty’s model, economists have continued to search for empirical refinement. Going a step further than the authors of After Piketty, Richard Sutch has tried to replicate Piketty’s results with different data. Not data from a different place or a different context to try to generalize Piketty’s work away from rich countries in the North Atlantic, but rather a direct attempt at the scientific act of greater precision through repeating the same experiment. Sutch has his own set of top income data for the United States from 1810 to 2010, which he believes is more reliable than Piketty’s data and paints a different picture. Many of Piketty’s most striking claims are the result of patching together different sources of data, based on a series of (reasonable) assumptions about how households divide wealth and whether decadal averages are appropriate for smoothing out noisy data. Sutch finds that the result of Piketty’s splicing and interpolating is an inflation of the top 10% wealth share in 1870-1970, and an extrapolation of the 19th-century 1% wealth share from a single antebellum data point. He ends on a striking note, urging economists to emulate historians and not take historical statistics as given (Sutch, “One Percent Across Two Centuries,” 604).
It is striking that a historian did not produce the most ambitious history of inequality written since 2014. Walter Scheidel is a Professor of Classics and a Fellow in Human Biology at Stanford and has been a prolific writer of books that mostly focus on the demography of ancient Rome. His new book The Great Leveler also builds on Piketty’s work, but in a very different way than the economist-heavy discussions of After Piketty. The subtitle is Violence and the History of Inequality from the Stone Age to the Twenty-First Century, and Scheidel absolutely means it. He traces trends in inequality in different societies across all recorded history in an effort to prove a simple but terrifying thesis: the natural tendency for human society is that inequality will steadily and inexorably increase through the process of economic growth, and only total violent catastrophe like world wars, wholesale social revolutions, or galloping pandemics have ever reduced inequality. Piketty alluded to this possibility (Piketty, Capital, 146-50 and 275), but did not much dwell on it, so Scheidel is attempting to complete Piketty’s work by providing a historical answer to the question everyone asks after reading Piketty: what should we do?
The reader of The Great Leveler will find evidence drawn from, inter alia, the Akkadians of 24th century BCE (Scheidel, Great Leveler, 56-7) and the Sokoto caliphate of 19th century Nigeria (ibid, 61), changes in house sizes in ancient Rome (ibid, 267-9), the impact of the American Civil War on Southern landed wealth (ibid, 174-7), and the zaibatsu of postwar Japan (ibid, 120-5). The core of the book is four sections on what Scheidel calls the “four horsemen” of leveling: total war (meaning only the First and Second World Wars), totalizing social revolutions (meaning communism), state collapse (here featuring a comparison of Tang China and Rome), and plague (with the Black Death of course taking the lead). Only these mechanisms have ever reduced inequality, and even then, only in their most extreme forms: Scheidel reckons that the American Civil War and the French Revolution, for instance, probably either had no effect or actually increased inequality. Final chapters discuss and dismiss education, democracy, land reform, and economic growth as potential engines for reducing inequality. There is no wiggle room: “Causation is as clear as it can be,” he writes in his chapter on communism: “No violence, no leveling.” (Scheidel, Great Leveler, 223).
But Scheidel is not advocating the dictatorship of the proletariat: he seldom refers to communists without an introductory adjective like “raving” or “mass-murdering.” The chapter on communism is a standard list of the crimes of Lenin, Stalin, Mao, and Pol Pot, demonstrating that violence not only reduces inequality through destroying elites and their wealth, but that only the continued unremitting application of violence prevents the otherwise natural return of inequality. For Scheidel, increases in inequality are brought about through peaceable market mechanisms, like technology and globalization rather than, say, plunder or empire or expropriation. If indeed it makes sense to ascribe, as Scheidel does, one hundred million deaths to the leveling ambitions of communism, one wonders whether slavery, imperialism, and all manner of elite violence and dispossession from the Herero genocide to the Bengal famine were coincidental with or an integral part of maintaining the apparently normal persistence of inequality. This strange blindness to what surely is the historical norm of continual elite violence, when paired with the absence of gentler communist success stories in places like Kerala or West Bengal, creates a sort of dissonance: erudition in cutting-edge economics research paired with some historiographical positions from the late Cold War.
For all its ambition and the enthusiasm of its reception, The Great Leveler probably does not show us the future of studying inequality, and not only because Scheidel’s erudition would be difficult to emulate. Unrepeatable and unexpandable, The Great Leveler seems to allow for no further development, nowhere left to go. But, even further, the study of inequality is animated by a moral imperative: that inequality represents a real threat to the achievements of human society, and something—anything—can and must be done to fix it. In today’s world, Scheidel writes, the Four Horsemen have dismounted (Scheidel, Great Leveler, 436), and their return is neither possible nor desirable. If Scheidel is right, then the new study of inequality will become like cosmology: interesting but descriptive. If After Piketty and Sutch are right, there is a lot of work to do, but it will be done by and for economists inside and outside of academia. Neither option seems to be what Piketty had in mind.
Trevor Jackson received his PhD from the University of California, Berkeley, where he has taught the history of inequality. He researches the history of financial crisis and economic impunity in early modern Europe.