He discusses Thomas Piketty's recent book about Capital.
Piketty provides a good explanation of why inequality increases. It’s good not in the sense that everybody agrees with it, but in the sense of being good science: a general mechanism that is supported by mathematics and by data...[but] how does [Thomas] Piketty explain the decline of inequality during the middle of the twentieth century? It was a result of unique circumstances—two destructive world wars and the Great Depression. In other words, and forgive me for crudeness, shit happens. This is not a particularly satisfactory conclusion...Of course we know that inequality clearly does not increase forever, because in the long sweep of history, we've never (yet) seen a society where one person own everything. But what are the forces that bring it down? Turchin is unsatisfied with exogenous (coming from outside the system) explanations. Something inside the system must bring it down - inequality must call forth some sort of internal Robin Hood force, as it were. He cites an expert on international inequality, Branko Milanovic:
...Branko Milanovic addressed the question of what brings down inequality...there has to be some endogenous process that is triggered when inequality gets too high, and brings it down. Periodic operation of such a mechanism is what would generate repeated cycles.
Branko admitted that “malign” forces that could bring down inequality are not well-studied. As to “benign” ones, he cited three that fall under the acronym TOP: technology, globalization, policy. The only one that makes sense to me is policy—indeed, governments can reduce inequality by taxing high income and wealth. As to the first two, technology and globalization, I think that they rather explain why inequality increases.Turchin then looks at a theory from a different scholar.
In a later talk, Walter Scheidel addressed the “malign” forces...he identified four forces that have reduced inequality in historical societies:
- Mass mobilization warfare
- Transformative revolution
- State collapse
Note that all of them are “malign”, because they all involve violence. So violence is the great leveler. But of course some forms of violence result in increased inequality. Take war. Many conquest wars, for example those in which a band of warriors conquers egalitarian farmers, turns them into serfs, and sets the victors up as the ruling class — such wars obviously result in increased inequality.
This is why Walter focuses on mass-mobilization warfare. Societies that are forced to mobilize all citizens capable of bearing arms (or, at least, all males) are usually—always?—forced to reduce inequality. Same thing with revolutions—not all of them reduce inequality. Some simply exchange one set of oppressive elites for another. But others do level the weath [sic] quite dramatically.
I think Walter is on to something, and his theory can be made endogenous. That is, when inequality becomes too high, the chance of a state collapse or transformative revolution increases. Alternatively, or additionally, hugely unequal societies are defeated by more equal ones, which either eliminates them, or forces them to reduce inequality to rise up to this existential challenge.Military mass mobilization as a driver of equality
This is the point made in the Ian Welsh article I've cited often: The Technology of Violence and its Effect on Prosperity and Freedom. Throughout history, societies where the majority of the citizenry were mobilized in defense of it have been more equal. Ian looks at republican Rome and Switzerland as exemplars. A society where the majority of the population is malnourished, hungry, and weakened with disease because the elites divert all the society's wealth to themselves is not one that can successfully defend itself against invaders, and it certainly isn't powerful enough to conquer territory. Even greedy, sociopathic, self-interested leaders come to realize that over time.
The structure of the medieval world, centered around serfdom, had much to do with the fact that the methods of warfare were mostly in the hands of professional mounted knights, who were also society's wealthy landowners (it takes a lot of land to raise a horse), or paid mercenaries who were itinerant tradesmen in the art of war. One reason for the success of Genghis Khan's Mongols was the tribal cohesion and egalitarian nature of the steppe nomad life - there were few starving peasants, and all the nomads were crack horsemen and archers, rather than just a handful of elites. This allowed them to sweep across settled, agricultural societies of peasants where most people lived at the subsistence level.
It is no coincidence that the age of mass mobilization of soldiers that occurred with the advent of firearms coincided with the increase in living standards during the Enlightenment period (and a dramatic population explosion as well). This really took off after the French Revolution with Napoleon's Grande Armée. Other countries realized that they needed to mobilize as many troops as possible and shove a rifle in each of their hands in order to compete with something like that. They also realized that military power was industrial power and vice-versa. Prussia developed an educational system to train all of its citizens to be good obedient soldiers and factory workers; it is that education scheme we still use in America to this day. And Bismarck began state-supported health care for all citizens, something the U.S. still lacks to this day (with the resultant bad outcomes). Here's Ian:
If, on the other hand, effective warfare requires significant wealth, as with Medieval knights, who require a multitude of serfs to support even one fighter, well, expect that those who aren’t good at fighting won’t be prosperous. People today don’t realize how many peasant revolts there were. What is instructive about them is the slaughter involved: the slaughter of serfs and peasants. Often huge rebellions would be put down with only a handful of casualties. Knights were very good at killing peasants armed with makeshift weapons.
If you can kill them and they can’t do anything about it, how much of what they produce is really theirs?
How armaments are made also matters. Even cheap weapons, if they must be made in centralized factories and cannot be made by individuals and small groups, will not be as useful to widespread prosperity as otherwise. The Jeffersonian style yeoman farmer society takes a serious blow in the war of 1812, when it becomes clear that the British centralized manufacture of weapons is more effective than making weapons locally.I've noted before that the timing of the Liberal reforms in England was due to the fact that during the Boer War, a study of the English working population revealed that they were so physically deteriorated by the Industrial Revolution that a medical survey found that one in three potential recruits was unfit to serve due to childhood malnourishment, chronic disease, physical deterioration from repetitive work, and so forth, brought about by the overcrowding, pollution, and other assorted maladies of industrialization. Black lung, cholera, stunted growth, and so forth, were some of the symptoms. It was only then that living standards started to improve in Britain; before that, the elites were perfectly happy overlooking the poverty and misery they had unleashed. Despite this fact, economists constantly assert that it was the "natural" workings of Industrial Revolution free-market capitalism that improved living standards and lifted people out of poverty over time, a complete and total fabrication. Similarly, there were concerns about the crippling effects of sweatshops on women's reproductive health. No fertile women, and the country might have a shortage of new recruits for the army:
Women were becoming essential to the Berlin economy, in the factories for wages to some extent, but also as seamstresses working at home for a pittance in the proletarian districts on the outskirts. In 1906, the Christian Home Workers' Association drew attention to their conditions with an exhibition. The poster designed by the Berlin artist Kaethe Kollwitz - memorialised today in Kollwitzplatz - depicted a woman with sunken, exhausted eyes...One newspaper article of the time, entitled The Effect of Sewing Machine Work on the Female Genital Organs, concluded that long hours hunched over the Singer sewing machine could result in women not being able to conceive children. Others (invariably male) worried about women who increasingly worked in factories near men who were not their husbands. Where might this lead? An august committee of the Reichstag opined that a woman's proper place was "at the cradle of her child".Berlin 1914: A city of ambition and self-doubt (BBC)
Note that the great age of the middle Class in the United States was just after the mass mobilization of World War Two. And not just the U.S. - the Beveridge Report which laid the foundation for Britain's welfare state was written to give soldiers something to fight for instead of returning to the aristocratic inequality and grinding depression of the "Wigan Pier" years. And Germany was rebuilt with American money to make sure that the depredation that led to rise of the Nazis would not be repeated. Funny thing that, the poverty and desperation unleashed by capitalism tends to produce demagogues, including the Communist ones, as we're seeing yet again.
This trend does not bode well for us. The United States does not mass mobilize soldiers for the army anymore; rather, it relies on a small, volunteer army using high-tech, and increasingly automated, weaponry. Not to mention digital technology makes spying on that population easier than ever with fewer people than previously thought possible. So the chronic illnesses and poverty of formerly middle-class Americans can be safely ignored by elites, who do not need these people as either soldiers or workers (about which more below). I don't have the transcript, but in this podcast with Jim Kunstler and Eric Garland, Garland relates a story where he talks with an Army recruiter in Illinois (I think), who tells him that between physical deterioration, chronic illnesses and psychotropic medications, the vast majority of potential recruits are dismissed immediately, and of those who are not, most of them can't even pass the basic aptitude test required to enlist. This is the state of Middle America today, and the elites just don't care.
During the Korean war, around 70% of draft-age American men served in the armed forces; during Vietnam, the unpopularity of the conflict and ease of draft-dodging ensured that only 43% did. These days, even if every young American wanted to join up, less than 30% would be eligible to. Of the starting 21m, around 9.5m would fail a rudimentary academic qualification, either because they had dropped out of high school or, typically, because most young Americans cannot do tricky sums without a calculator. Of the remainder, 7m would be disqualified because they are too fat, or have a criminal record, or tattoos on their hands or faces. According to Sergeant Haney, about half the high-school students in Clayton County are inked somewhere or other; according to his boss, Lieutenant-Colonel Tony Parilli, a bigger problem is simply that “America is obese.”
That leaves 4.5m young Americans eligible to serve, of whom only around 390,000 are minded to, provided they do not get snapped up by a college or private firm instead—as tends to happen to the best of them. Indeed, a favourite mantra of army recruiters, that they are competing with Microsoft and Google, is not really true. With the annual exception of a few hundred sons and daughters of retired officers, America’s elite has long since turned its nose up at military service. Well under 10% of army recruits have a college degree; nearly half belong to an ethnic minority.
The pool of potential recruits is too small to meet America’s, albeit shrunken, military needs; especially, as now, when the unemployment rate dips below 6%. This leaves the army, the least-favoured of the four services, having either to drop its standards or entice those not minded to serve with generous perks. After it failed to meet its recruiting target in 2005, a time of high employment and bad news from Baghdad, it employed both strategies zealously. To sustain what was, by historical standards, only a modest surge in Iraq, around 2% of army recruits were accepted despite having failed to meet academic and other criteria; “We accepted a risk on quality,” grimaces General Snow, an Iraq veteran. Meanwhile the cost of the army’s signing-on bonuses ballooned unsustainably, to $860m in 2008 alone.Who will fight the next war? (The Economist)
Electing to Ignore the Poorest of the Poor (New York Times)
‘Income inequality’ is just another name for how we wage war on the poor (Raw Story)
Its a symbiotic relationship. When elites need the citizenry, the curb their rapaciousness. When they do not, as is the case today, their rapaciousness increases without bound until collapse. It's especially easy where 1.) elites can segregate themselves from the wider population they rule over, and 2.) the society subscribes to belief system that allow them to turn a blind eye to inequality like meritocracy, the level playing field, the Cult of Personal Failure, or Just-worldism. Mitt Romney famously fumed about half of Americans taking no responsibility for their lives and being dependent upon government, even as his early career was spent dismantling and strip-mining formerly viable companies for profit and shipping jobs abroad.
Mass economic mobilization as a driver of equality
What this shows, though, is that it's not just military mobilization, it's economic mobilization too. David Blacker makes this case in his book, which, although ostensibly about education, can be seen as a proxy for living standards in general under Neoliberalism.
When tycoons were dependent upon having access to plenty of workers, they invested in the infrastructure needed to train them, keep them reasonably healthy, and get them to the job - schools, clinics, sewers, trains and trolleys, and made sure they had reasonably good places to live ("worker housing" was an early obsession of the first Modernist architects). It was the "all hands on deck" phase of capitalism as Blacker calls it, and it was against this backdrop that America developed. You needed workers to expand production, and without those workers there was no expansion, and hence less profit. Workers dropping dead from exhaustion on the job would not be good for profits (although that still sometimes happened anyway). To crib from myself, "The Post office, public schools, parks, libraries, zoos, and the like were created as a part of this expansion. Today all of those are under merciless assault." Elites today no longer invest in "human capital" development because they just don't need it anymore. We have machines and third-wold workers, thank-you very much. And now they are busy clawing back those benefits they grudgingly gave up in the past.
In an "all hands on deck" situation, the workers themselves gain a new sort of power, precisely because they are needed. They also worked shoulder-to-shoulder. Well-placed strikes could disable the entire economy. For example, one reason the British Navy switched from coal to oil as its primary fuel source was to weaken the power of its domestic coal mining unions (though not the only one - oil is more energy-dense and smokestacks give away your position to the enemy). As Turchin and others well know, unions were a major factor in the reduction in inequality under capitalism, perhaps THE major factor, along with other mass movements like Chartism, something universally dismissed by economics, which claims that inequality reduction is just a "natural" phenomena of capitalism. This was supposedly explained by something called the "Kuznets curve". Economist Simon Kuznets noted that inequality rose inexorably during the Industrial Revolution, and then fell during the postwar years, and declared this to be a natural law of capitalism, thus conveniently ignoring the role of unions and warfare. And the economics profession followed suit, which is why arguing the opposite, as Piketty did, was so controversial. To think something else, that spiraling inequality was actually the natural state of capitalism, was to be dangerously close to Marxism. As Turchin concludes:
...we need a better understanding of why violence in some situations increases inequality and in others decreases it. Second, I think there are mechanisms other than violence that can reduce inequality. However, I am not very sure of this. Perhaps it’s just the optimist in me that wants to believe it...In my opinion, economics is perfectly capable of explaining why inequality increases, but fails to do so for inequality decreases, because they are a result of extra-economic forces. So if we want to understand how historical societies reduced inequality, we need to go beyond economics and bring insights from history, sociology, and anthropology.Indeed, any "real" economic science would have included those things a long time ago, along with ecology, energy and thermodynamics, but I digress.
Another factor may be government spending. History shows that it is the expansion of government, not its contraction, which tends to increasing living standards for the masses, but this may mix up effects and cause. Expanding government fueled by military conquest caused rising living standards for the core people of the Roman Empire; less so in the periphery. The Enlightenment took place against vast trading regimes funded by the actions of central governments determined to conquer and exploit aboriginal territories. Napoleon's imperial wars ended the peasant misery of the Ancien régime (trading one form of death for another), and set the stage for the rise of French during the Second Empire (" La Belle Époque"). Similarly, France's "Les Trente Glorieuses" emerged from the rubble of World War Two. And the government spending is what finally ended the global Great Depression of the 1930's in every country, that is, the increased demand provided by the government (including military spending) is what saved capitalism from sinking into permanent stagnation (which we appear to be looking at yet again). Let's look at history. During the Great Compression, government expanded. Today, austerity, unemployment, peace, and shrinking living standards go hand-in-hand.
Confrontation with an external enemy tends to spur benefits for ordinary people. Why was the GI Bill signed, and why was education practically free for thirty years? Because we were "competing" with the Soviet Union technologically. The SU, being socialist, had no qualms about making education free for all, and it was obvious that soaking it's own people in unpayable debt for a basic education would cause the US to fall behind; hence free education. With the demise of Communism and the Neoliberal takeover of the world, this is no longer a concern. American companies don't need to compete against Germany, for example, who offer a free education. Rather, they can just hire the Germans, get educated workers paid for by German taxpayers, and tell Americans to go to hell. Competition is for the workers, not the capitalists. The workers compete against each other in a Hunger-Games style tournament for jobs. Cooperation is the order of the day between monopoly capital and international governments. The big companies in Silicon Valley all agreed to cooperate to keep wages down and fight for more immigration, for example.
The postwar build-out of the suburbs came from a similar motivation. Land distribution was motivated by giving soldiers land so that they wold have something to occupy their time, since having a large, landless mass of people who are trained to kill with nothing to lose is a recipe for instability, and they knew it in 100 AD as much as 1945. In turn, that suburbanization spurred economic activity. Thus the rapidly expanding economy and expanding middle class went hand-in-hand. It's hard to see how the economy can recover so long as the majority of workers in it are getting poorer and losing jobs. After all, the elites and the Chinese can only spend so much.
The Majority of Millennials Have $1,000 or Less in Savings (Howmuch.net)
As an American academic, Blacker identifies this agenda as the basis for the massive problem of student debt in that country. The US ruling class have arrived at the conclusion that educated and skilled graduates are surplus to requirements in the neoliberal phase of capitalism. Globalisation means that sector of the workforce can increasingly be supplied from overseas on a cheaper basis; and by saddling American students with crippling personal debt, the public funding of higher education can be shrunk significantly.http://www.zero-books.net/books/falling-rate-learning-neoliberal-endgame
Blacker notes that in 2012, US student debt was over $1 trillion, which was more than the total for credit card debt. He grimly states: ‘There is almost no escape from this iron cage that has been carefully refined by our banking overlords and puppet politicians ... a system of government-backed mass peonage, a kind of debt bondage with copious historical analogs’ (p.132). Having already alluded to the Nazi ‘endgame’, Blacker is here inviting us to draw a comparison between the predicament of students in the US today and another notorious example of state terror: slavery in the antebellum South. Half-jokingly, he posits that some form of Lincoln-style military occupation might be the only method of ending this economic bondage: ‘In the name of the UN, perhaps it is time for the blue helmets to roll in and to cordon off our universities … before they sell off still more unsuspecting 18-year-olds into lives of unremitting debt bondage’ (p.133).
Who's Profiting From $1.2 Trillion of Federal Student Loans? “There is a large student-loan industrial complex. Rising costs of college and flat family incomes have created enormous business opportunity for every step of the loan process.” (Bloomberg)
In other words, higher living standards are a dollars-and-sense decision by elites. So are lower ones.
One major reason that increased government spending on things like infrastructure repair advocated by prominent economists is so vigorously opposed by big business and their political/media shills is precisely because it would employ large amounts of people, thus creating a labor shortage and driving wages up.
This was the Great Depression model - government spending would employ the unemployed masses, and it worked, which is why they do NOT want it implemented now. Low wages have led to historically unprecedented high profits and kept workers cowed, to the point of working for virtually (or even literally) free. Neoliberalism is dedicated to the goal of shrinking wages by numerous means such as removing the safety net, open borders, labor deregulation and outsourcing, and automation, and it has been very successful at achieving this goal. But lower wages lead to inequality, obviously. The depressed demand cause by these lower wages has been papered over by financialization - making money through rent-seeking and debt slavery, but even economists are starting to conclude that Market fundamentalism is hard to propagate when most people are too poor to buy stuff. Eventually there's just too much debt to ever be paid off and, as Nicole Foss has pointed out, if they can't take your money, the only thing left to take is your freedom.
As for revolution, revolutions from below tend to, at least in the short run, level the playing field. Revolutions tend to emerge when the middle classes become frustrated and no longer have the upward mobility they once did. This frustration often boils over into an attack on the upper classes. Communist revolutions may have made everyone equally poor, but it still made them equal, and redistributing the wealth really did make the median person better off in the short term. If the assassination of a few key leaders can derail the movement, it tends to wither on the vine (like the Gracchi brothers). By contrast, revolutions led by the elites (like the Neoliberal economic revolution), tend to have the opposite effect. These actually increase inequality. That is, revolutions can came from the bottom or from the top, as Christopher Lasch noted:
The book's title[Revolt of the Elites] is a take-off on Jose Ortega y Gasset's The Revolt of the Masses, a reactionary work published in 1930 that ascribed the crisis of Western culture to the "political domination of the masses." Ortega believed that the rise of the masses threatened democracy by undermining the ideals of civic virtue that characterized the old ruling elites. But in late twentieth-century America it is not the masses so much as an emerging elite of professional and managerial types who constitute the greatest threat to democracy, according to Lasch. The new cognitive elite is made up of what Robert Reich called "symbolic analysts" — lawyers, academics, journalists, systems analysts, brokers, bankers, etc. These professionals traffic in information and manipulate words and numbers for a living. They live in an abstract world in which information and expertise are the most valuable commodities. Since the market for these assets is international, the privileged class is more concerned with the global system than with regional, national, or local communities. In fact, members of the new elite tend to be estranged from their communities and their fellow citizens. "They send their children to private schools, insure themselves against medical emergencies ... and hire private security guards to protect themselves against the mounting violence against them," Lasch writes. "In effect, they have removed themselves from the common life."
The privileged classes, which, according to Lasch's "expansive" definition, now make up roughly a fifth of the population, are heavily invested in the notion of social mobility. The new meritocracy has made professional advancement and the freedom to make money "the overriding goal of social policy." Lasch charges that the fixation on opportunity and the "democratization of competence" betrays rather than exemplifies the American dream. "The reign of specialized expertise," he writes, "is the antithesis of democracy as it was understood by those who saw this country as the 'last, best hope of earth'". Citizenship is grounded not in equal access to economic competition but in shared participation in a common life and a common political dialogue. The aim is not to hold out the promise of escape from the "laboring classes," Lasch contends, but to ground the values and institutions of democracy in the inventiveness, industry, self-reliance, and self-respect of working people.http://www.scottlondon.com/reviews/lasch.html
Class warfare is always taking place; its just a matter of which side is winning.
The Typical Male U.S. Worker Earned Less in 2014 Than in 1973 (Wall Street Journal)
The Middle Class Is Now a Minority (Gawker)
Richest 20 Americans Own More Wealth Than The Entire Bottom Half Of The Country: Report (International Business Times)
Fifth of US adults live in or near to poverty (Financial Times)
Despite the widespread circulation of the apocryphal Tytler nostrum, there has never yet been a society brought down because of too much wealth held by its middle class combined with too many restrictions placed on elite wealth accumulation.
There is a cycle here. By their rapaciousness, elites hollow out the very society that is the source of their wealth - Pliny once estimated that half of Roman North Africa was owned by just six people. For days as you journeyed into Rome, you saw nothing but vast latifundia worked by slaves, and inside Rome was a vast landless proletariat mollified by bread and circuses who needed to be constantly pandered to because they were ready to revolt at any time. That's not an empire on the rise; it's one beset by senescence. Inequality is not a spur to greatness, it's a sign of decay. That's a message to the present-day US (and most of the West in general).
I think one of the reasons people had a "let the banks collapse" attitude during the last crisis is because they sensed this. Such a collapse would cause untold harm and suffering, but it would be a reset, and the people in Middle America clamoring for Mellonist policies were, perhaps unconsciously, desiring for such an economic collapse to do what governments were prevented from doing: put a stop to the endless wealth redistribution to elites. That fact that such a reckoning was delayed only means the problems continues to worsen, hence the rise of politicians like Sanders and Trump, who have similar appeals to very different classes of citizenry.
It's also worth noting that collapse is often a voluntary response to extreme inequality. People withdraw from the system when it has nothing more to offer them. A lot of people in late Rome thought that running away and joining the barbarians was a lot more appealing than being a slave or on the dole. On the other side of the Alps, the natural resources for industry had not yet been depleted (timber, mines, topsoil, etc.), so that's where economic activity moved to. I think one of the reasons people are so eager to embrace collapse is that it is a great reset - it halts the endless deterioration of middle-class living standards and the endless accumulation of wealth at the top (and the associated aggrandizement and flaunting of that same wealth). You see this all the time in the peak oil stories where former hedge-fund managers and financiers are forced to come crawling to the formerly marginalized farmers and carpenters hat in hand and beg for a job in the new post-collapse order. I think this is wishful thinking by the marginalized of the so-called "new" economy; I doubt think things will unfold like that.
Turchin's final words convey concern; he very much hopes that Robin Hood forces can be called forth without the instigation of either a major war or economic collapse. But, looking at history, it's hard to see how. As long as less and less of us are needed as soldiers or workers, it looks as though the lower classes will have less of a revolution, and more of a genocide.
Return of the Oppressed (Aeon)