Inequality has been at the forefront of political debate all over the world, from the insurgent campaigns of Bernie Sanders, Jean-Luc Mélenchon and Jeremy Corbyn to the election of Andrés Manuel López Obrador (AMLO) in Mexico, and has even provided the impetus for Xi Jinping’s crackdown on corruption on China. The way such widely different societies are facing the same issue makes Walter Schiedel’s The Great Leveler a very timely and important contributor to the debate on inequality.
Schiedel’s book can be summarised in a simple sentence: rising inequality is inevitable in any peaceful, stable society. Only the ‘Four Horsemen’ are capable of leveling the economic field – mass-mobilisation warfare, complete revolutions, the utter collapse of the state and brutal plagues. In their absence, inequality will rise and rise.
The areas of the world with the lowest inequality have for decades been Western Europe and Japan but Schiedel skilfully demonstrates this was due to the two World Wars being played out on their territory. The sheer level of capital destruction was one factor in reducing the wealth of the upper classes, the increased power of the working class who were needed to man the vast armies and hence could demand more redistribution was another factor. The most staggering transformation was in Japan. An income sufficient to place a Japanese in the 0.01% in 1946 would have barely allowed them to scrape into the top 5% in 1936, just a decade earlier.
The other great historical event to reduced inequality was the Black Death. By killing such huge swathes of the workforce, but leaving capital largely unharmed, it raised the relative scarcity of labour and allowed workers to demand far higher wages. Numerous governments made efforts to cap wages but within a century wages had doubled for the working class in Western Europe and it would be a further two centuries before they fell to pre-black death levels. However, even Jeremy Corbyn would hesitate before suggesting that killing 1/3 of the working class was a price worth paying to reduce inequality.
One sad aspect is that the great reductions in inequality that communist Russia and China (as well as Vietnam and Cambodia) saw have all been reversed in recent years as they allowed market reforms. The colossal loss of life seems to have been completely in vain. Even the bloodiest revolutions can only bring temporary respite it seems. The threat of Soviet invasion was another factor keeping European inequality low by placating the lower classes. It is no coincidence that the fall of the USSR coincided with a rise in Western European inequality.
But what of the future? Trade unions receive a lot of mention as the one partial exception to these rules but Scheidel points to their cratering membership as proof they were a legacy of the war-era mass mobilisations and collective spirits. The fact modern wars no longer require such huge armies raises doubts such an era will ever occur again. The Vietnam, Falklands, Iraq and Afghanistan wars all coincided with tax cuts in their nations, and Vietnam was the last to feature conscription. Being in a state of perpetual mobilisation can hold down inequality, Classical Athens was one of the most level states economically, even in peacetime, while Israel’s inequality has skyrocketed since the signing of peace treaties with several neighbours.
The famous Kuznets Curve, where inequality rises as a nation reaches middle-income status and then falls, also comes in for criticism. 40/49 nations studied fail to show such a trend. The optimistic idea that growth will cure inequality seems just a fantasy. Institutional factors are far more important. For proof of how detrimental a poor government can just observe how Somalia improved by most human development metrics (including inequality) after it ceased to have a functioning government in 1996, indeed it outperformed many African peers in both relative and absolute terms. Latin America meanwhile has seen incredibly high inequality under just about every economic model; colonialism, export subsidies, protectionism, statism and now liberalism. The lack of cultural respect for education in Latin America coupled with its lack of funding, in addition to endemic corruption and low-level instability, seems to be what has doomed the region to perpetual inequality and low economic growth. Cultural factors could also be in play here, but these are more anecdotal. In my own experiences, travels and readings I’ve found Latin Americans to be proud of inheriting wealth and to have bewilderment at why a “self-made man” is any better than one who inherits his money, perhaps the popular appeal of the cultural legend of Protestant European and American meritocracy will ensure its real-world counterpart doesn’t fully die.
Latin America, with its high inequality in every country, is an example of a continent that has seen none of the Four Horsemen in the last century and so serves as a potential vision of our future. If the only two futures are of Latin style entrenched inequality or revolution and plague, then Schiedel is certainly correct in admitting “the message of this book has been unremittingly bleak.”
Goodreads score: 3.88