Upward trends in variables (for example, economic inequality) alternate with downward trends. ![]() Despite this complexity, our historical research on Rome, England, France, Russia and now the US shows that these complex interactions add up to a general rhythm. Cycles in the real world are chaotic, because complex systems such as human societies have many parts that are constantly moving and influencing each other. Incidentally, when students of dynamical systems (or, more colourfully, ‘chaoticians’ such as Jeff Goldblum’s character in the film Jurassic Park) talk about ‘cycles’, we do not mean rigid, mechanical, clock-like movements. And the cycles of inequality were an integral part of the overall motion. Over periods of two to three centuries, we found repeated back-and-forth swings in demographic, economic, social, and political structures. All of these societies (and others for which information was patchier) went through recurring ‘secular’ cycles, which is to say, very long ones. In our book Secular Cycles (2009), Sergey Nefedov and I applied the Phillips approach to England, France and Russia throughout both the medieval and early modern periods, and also to ancient Rome. But this is where looking at other historical societies becomes interesting. Does observing just one and a half cycles really show that there is a regular pattern in the dynamics of inequality? No, by itself it doesn’t. And if it’s cyclical, we can predict what happens next.Īn obvious objection presents itself at this point. In other words, when looked at over a long period, the development of wealth inequality in the US appears to be cyclical. Bring the 19th century into the picture, however, and one sees not isolated movements so much as a rhythm. The past 30 years are known as the ‘great divergence’. Commentators have called the period from 1920s to 1970s the ‘great compression’. From 1980 to the present, the wealth gap has been on another steep, if erratic, rise. Yet the wealth of a typical family increased by a multiple of 40. Over that time, the top fortunes hardly grew (from one to two billion dollars a decline in real terms). Then came the reversal: from the 1920s to 1980, it shrank back to levels not seen since the mid-19th century. In doing so, he found a striking pattern.įrom 1800 to the 1920s, inequality increased more than a hundredfold. The ratio of the two figures provided a rough measure of wealth inequality, and that’s what he tracked, touching down every decade or so from the turn of the 19th century all the way to the present. He looked at the net wealth of the nation’s median household and compared it with the size of the largest fortune in the US. In his book Wealth and Democracy (2002), Kevin Phillips came up with a useful way of thinking about the changing patterns of wealth inequality in the US. ![]() ![]() What is slightly less obvious is how a very long historical perspective can help us to see the whole mechanism. Yet obviously enough, all these factors must interact in complex ways. Some commentators point to economic factors, some to politics, and others again to culture. ![]() As the Congressional Budget Office concluded in 2011: ‘the precise reasons for the rapid growth in income at the top are not well understood’. Just one rich family, the six heirs of the brothers Sam and James Walton, founders of Walmart, are worth more than the bottom 40 per cent of the American population combined ($115 billion in 2012).Īfter thousands of scholarly and popular articles on the topic, one might think we would have a pretty good idea why the richest people in the US are pulling away from the rest. The top one per cent of fortunes holds two-fifths of the total wealth. Today, the top one per cent of incomes in the United States accounts for one fifth of US earnings.
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