This kind of wealth achieved really while doing nothing (it's all interest, stock, or business income, I doubt any of these guys made specific decisions that would have resulted in such enormous returns.) The result has been an increasing disparity between those at the top and those at the bottom. eight hyper-rich Americans today own as much as the entire bottom half of the nation’s households – but it is not an anomaly. Such massive inequalities are a global phenomenon.
I remembered reading several years ago an article by a futurist (not one of the silly types but someone who examines the past for trends in the future.) His comment was stark: increasingly wide disparity between the rich and the poor was the greatest predictor of revolution. Then again, one of my old professors noted that "welfare was democracy's alternative to revolution."
Walter Scheidel wrote a book entitled The Great Leveller,* which examined the relationship between economic disparity and social unrest, particularly violent. The U.S. is now beyond the disparity that existed in 1929 (leveled eventually by the Depression) and close to that of Rome in AD 400. Scheidel observes that, left to their own devices, most societies – including ancient Rome – seem to reach a demographic and technological limit of inequality. What reverses this is violence – and not just ordinary violence.
“Only specific types of violence have consistently forced down inequality,” Scheidel writes. War has to be total; revolution has to be ultraviolent and socially pervasive; state failure has to lead to violence so intense that “it wipes the slate clean”. Ditto the social effects of pandemics. The Black Death killed some 30% of Europe's poopulation. That leveled the disparity by making labor so much more scarce leading to higher wages.
World War I also resulted in a great levelling, at least until Thatcherism through the development of welfare states, communist revolutions, and confiscatory taxes required by the war. Scheidel didn't foresee any form of levelling given the technological and economic success of society. Then again, he couldn't foresee the enormous economic impact of the current pandemic.
One optimistic reviewer doesn't foresee any violent unpheaval from the disparity arguing that social democracy has stifled the distinctions.
Social democracy wishes to suppress inequality in a controlled, consensual way, using the very state the elite has fashioned to entrench it; heading off pestilence, state failure and violent revolution. The vast wealth being generated in the highly technologically efficient society of the 21st century must, contrary to Scheidel, offer the possibility of an even greater redistributional space in which social democracy can operate.
I would argue that until the most recent election cycle social democracy trends were being stifled by those in power, mostly the 1% and has lost the will to redistribute. Instead we have tax cut after tax cut that uniformly favor the top having very little benefit on the lower 90%. Hence the popularity of Sanders and the erstwhile popularity of Trump who was elected on the basis of his antipathy to the status quo until shortly after the election he joined it.
The current pandemic may lead to a levelling through the application of universal health care and changes to the welfare social net, perhaps a reinvigoration of social democracy. That would preserve the vast health of the 1%, but it would eliminate many of the current tensions. Perhaps.
*Scheidel, Walter. The Great Leveler: Violence and the History of Inequality from the Stone Age to the Twenty-First Century. Princeton UP, 2018. Scheidel writes that across recorded history, the periodic compressions of inequality brought about by mass mobilisation warfare, transformative revolution, state failure and pandemics have invariably dwarfed any known instances of equalisation by entirely peaceful means.’ Scheidel means to insist on the massiveness and violence of these disruptions; nothing less will do. A dark vision, indeed.
**Note that Thomas Piketty has an explanation in his book that I have not read but quote from a review:
That the rich have grown both absolutely and comparatively richer in recent decades has been evidenced in great statistical detail by Thomas Piketty in Capital in the 21st Century. While the two world wars and the world depression of the first half of the 20th century entailed a massive destruction of accumulated wealth which, however catastrophic, did reduce inequality, the postwar peace has restored the advantage of the very wealthy. The perverse price of peace, Piketty finds, is that in peacetime the return to capital (interest, dividends and profits) routinely exceeds the rate of economic growth (and therefore of income growth). Year by year, as long as this apparently invariable relationship holds, mounting inequalities in income distribution are inevitable.
I found one pertinent quote in a review that may have implications for how we react to COVID:
Scheidel’s statistics do not take into account the incalculable blood tax of conscription. A democratic ethos requires that when it comes – perhaps before all else – to the chance of dying on the battlefield, every citizen should be treated equally. By extension, it is intolerable that some should profit directly or indirectly from the deaths of their fellow citizens. Total warfare requires an exceptional measure of patriotism, the maintenance of which depends on the mass conviction that everyone is being treated fairly. In other words, the levelling effects of total warfare aren’t simply the result of the state’s squeezing the whole of society for every last drop of work, cash and blood; they are also a consequence of the equalising passions that moments of great sacrifice arouse in the population.
James C. Scott. "James C. Scott · Take Your Pick: Cataclysm V. Capitalism · LRB 18 October 2017." London Review of Books, 6 Nov. 2019, www.lrb.co.uk/the-paper/v39/n20/james-c.-scott/take-your-pick.
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