In his new book, The Great Leveler: Violence and the History of Inequality from the Stone Age to the Twenty-First Century, the Austrian historian Walter Scheidel puts forth a depressing and thought-provoking thesis: The only thing that can really dent rampant and long-lasting economic inequality is violence.
Violence in the book is broadly defined: It can refer to war, or to political upheaval, or to natural disasters. But the conclusion—that one ill can only be solved via some form of suffering—is an unsettling one, especially in an America rife with inequality.
I spoke recently by phone with Scheidel, who is currently teaching at Stanford University. During the course of our conversation, which has been edited and condensed for clarity, we discussed how rich people find it increasingly easy to hide their wealth, why the New Deal did less to ameliorate inequality than we might think, and the ways in which the world is in fact improving.
Isaac Chotiner: I have just read the sentence, “Only all-out thermonuclear war might fundamentally reset the existing distribution of resources.” What is it about your research that led to such bleak conclusions?
Walter Scheidel: It was essentially looking at history in the very long run and trying to identify the driving forces behind significant reductions in inequality. Everywhere I looked, over hundreds of thousands of years, I found that every single time you observe such a compression, such a reduction, it was always linked to some very massive, violent shock that usually cost millions of lives, and I haven’t really been able to find any significant counterexamples.
What are those examples that did reduce inequality?
They have changed over time. For most of history, it was the collapse of states or very severe epidemics. Collapse of states because the rich and the powerful are either the same people or are very closely allied, and if you destroy state structures, then the rich simply have more to lose. Everybody might suffer, but the rich have more to lose, and so they are less rich than before and inequality goes down. In the case of epidemics in agrarian societies, so many people died of, say, the plague that there was a scarcity of labor, so the price of labor wages would go up at the same time the income that rich capitalists could draw from capital and land would go down. So the rich were less rich and the poor were less poor, but only for as long as the plagues compressed population size.
What did it in the modern era?
So, in the first half of the 20th century we got new types of these leveling forces, which are World War I, World War II, which was nationalization warfare on an industrial scale, and the entire population mobilized either in the military or in the war effort at home. And very closely related are the Bolshevik revolutions that grew out of World War I in the case of Russia, or World War II in the case of Mao.
What about something like the New Deal, which wasn’t caused by violence, but rather caused by economic upheaval, and did lead to the beginning of a safety net that had some impact on inequality?
The New Deal is interesting, because it’s only in the U.S. that the Great Depression had this attenuating effect on inequality—not so much in other countries, for whatever reason. Maybe because it was particularly severe, or because it was paired with the legislation of the New Deal. Even so, if you look at the actual data, it seems that by the end of the ’30s things were already, by some metrics, beginning to go back to normal, so to speak. It was really World War II that made the biggest difference.
And what precisely did the war do?
What all countries that participated in the war or nearby have in common is they all had to mobilize on a huge scale. The government had to raise taxes to extremely high levels—94 percent top income tax within the U.S., 70 percent estate tax on large fortunes, that sort of thing—which would have been impossible in peacetime. It’s just not politically feasible to have that kind of taxation. Capital lost value because of common intervention in private sector. There was massive state intervention in the economy in general—almost like a planned economy temporarily, with wage controls, price controls, rent controls, any number of things. Often you had inflation right after the war, because governments had to print all this money to pay for the war effort.
One criticism of your book, and the use of the measuring tool that you use, the Gini coefficient, is that it focuses on inequality rather than the absolute condition of the poor. So even if inequality is just as bad or even worse than hundreds of years ago, the poor are much better off, and you are thus too pessimistic. What do you think of that argument?
I’m perfectly happy with it. I mean, I wrote about inequality, not about poverty. I also think that poverty alleviation is probably the more important issue, and of course it has been a success story, not just in the West, but around the world at this point, if you think of China and India and so on. It’s certainly much more important to make sure people don’t starve than to reduce the Gini coefficient in a wealthy society, so that’s certainly true. At the same time, it’s quite striking that inequality has really become a big deal, right, a big topic over the last 10 years or so, since the financial crisis has become a much bigger topic in the public consciousness and debate and so on.
And may have bad political consequences.
Yeah. It has political consequences. You could sort of say inequality is not necessarily bad in and of itself. It might have repercussions, it might reduce economic growth, because most people would have to reduce their consumption, and it might have psychological, and therefore political, consequences if it underpins the populism. It can actually become a very powerful factor in our lives and in the political system.
You give some reason to think that inequality now may be worse than the tools we use to measure it say it is. Why is that?
Well, first of all, because we now keep finding that for the very richest people it’s essentially impossible to pin down their real net worth because of offshore wealth and any number of things. The Gini coefficient is very bad at capturing this, so in that respect the metrics—the standard metrics—underestimate the extent of income and especially of wealth concentration, because wealth is easy to hide.
Is my reading of your book—that if you want economic inequality to lessen but don’t want violence, you are out of luck—too pessimistic? Are you upbeat about anything?
I’m optimistic about other kinds of inequality, like gender, race, and so on, where we have made progress. I’m optimistic about poverty alleviation, which, again, is a success story. I’m optimistic about inequality between countries going down, because the developing countries are catching up, so all of these are really nice stories. I’m just not very optimistic about economic inequality within [Western] societies, but I am optimistic about the absence of these leveling forces that were operational in the past. I don’t think there’s going to be another big world war, or revolution, state collapse, plague, and so on, which is a good thing, and if the price we have to pay for these things not happening is to have a certain degree of economic inequality, then so be it. I guess there’s a trade-off.