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From the French Revolution to the End of the Cold War

by Branko Milanovic

Pub Date: Oct. 10th, 2023
ISBN: 9780674264144
Publisher: Belknap/Harvard Univ.

A noted economist examines the thinking of six of his predecessors on how income is distributed and the conditions that favor or hinder the accumulation of wealth.

Although he figures in these pages, which require a solid background in economics, Thomas Piketty was not the first economist to think about inequality. He may have been the timeliest, however, given the spectacular rise of that inequality, which, by some economic theories, shouldn’t be happening. By Piketty’s own theorizing we might well see an economy in which the top earners capture so much income that “it threatens to swallow the entire output of the society.” Economists who preceded him formulated the problem in different ways, conditioned by their time. François Quesnay, who ranks among the first economists to deserve the name, lived in a time when French society was divided into “estates,” classes assumed to be more or less static, in which “all workers are assumed to be poorer than all capitalists, and all capitalists to be poorer than all landlords.” A small problem lies in this formulation, with Adam Smith and then David Ricardo, Karl Marx, and Vilfredo Pareto puzzling out what happens when class eventually gives way to individuals and the rise of individual elites. Milanovic’s final case study concerns Simon Kuznets, who discounted inequality in a time when it was far less pronounced than earlier (and today) and when class distinctions were suppressed in the anti-Marxist narrative of the Cold War. No matter how problematic their theories, each of these economists contributed to an evolving view of inequality: Marx, for example, by understanding that inequality is relative (“Our wants and pleasures have their origin in society; we therefore measure them in relation to society”), and Pareto by understanding that whatever the social structure, “the underlying distribution of wealth and income could not be affected”—or, in other words, that the rich get richer and the poor get poorer.

A dense, numerically knotty, bracing companion to contemporary economic thinkers on the problem of inequality.