Fidelity bank banner Bayelsa State banner
Killing inequality (1)

By News Express on 25/09/2017

Share on facebook Yahoo mail icon Gmail icon Share on Google+

Views: 2,509

Redistribution’s Violent History: World War II devastated the economic infrastructures of Germany and Japan. It flattened their factories, reduced their rail yards to rubble, and eviscerated their harbours. But in the decades that followed, something puzzling happened: the economies of Germany and Japan grew faster than those of the United States, the United Kingdom, and France. Why did the vanquished out-perform the victorious? 

In his 1982 book, The Rise and Decline of Nations, Economist Mancur Olson answered that question, by arguing that rather than handicapping the economies of the Axis powers, catastrophic defeat actually benefited them, by opening up space for competition and innovation. In both Germany and Japan, he observed, the war destroyed special-interest groups, including economic cartels, labour unions, and professional associations. Gone were Germany’s partisan unions and Japan’s family-controlled conglomerates; the US Teamsters, the United Kingdom’s Society of Engineers, and France’s Federation of Building Industries, all survived.

A generation after the war, only a quarter of West Germany’s professional associations dated back to the pre-war era, whereas a full half of the United Kingdom’s did. Olson’s findings had a disturbing implication: in politically stable countries, narrow coalitions of business lobbies hold back economic growth through self-serving policies, and only a major military defeat or a grisly revolution can overcome the resulting inefficiencies. 

Back when Olson was writing, few economists cared about economic inequality in advanced countries; unemployment and sluggish investment were the problems of the day. To the extent that experts did focus on inequality within countries, they did so with respect to the late industrialisers, where migration from poor villages to richer cities was accentuating income disparities. Even there, however, inequality was considered a temporary side-effect of development. The economist, Simon Kuznets, argued that it dissipated with modernisation. 

Had Olson considered inequality, he might have noticed that World War II had two other curious economic consequences. First, the devastation reduced inequality: not just in the defeated countries, but also in the victorious countries, and even in neutral ones. Second, these reductions proved temporary. Around the 1970s, developed economies started becoming less and less equal, defying Kuznets’ celebrated hypothesis. 

Such puzzles lie at the heart of The Great Leveler, an impressive new book by the historian, Walter Scheidel. Scheidel proposes that ever since foraging gave way to agriculture, high and rising inequality has been the norm in politically stable and economically functional countries. And the only thing that has reduced it, he argues, has been some sort of violent shock: a major conflict such as World War II or else a revolution, state collapse, or a pandemic. After each such shock, he writes, “the gap between the haves and the have-nots had shrunk, sometimes dramatically.” Alas, the effect was invariably short-lived, and the restoration of stability initiated a new period of rising inequality.

Today, the risk of violent shocks has fallen considerably. Nuclear deterrence has made great-power war unthinkable, the decline of communism has rendered wealth-levelling revolutions unlikely, powerful government institutions have staved off the risk of state collapse in the developed world, and modern medicine has kept pandemics at bay. However welcome such changes may be, Scheidel says, they cast “serious doubt on the feasibility of future levelling.” Indeed, he expects economic inequality to keep rising in the foreseeable future.

The Great Leveler should set off loud alarm bells. Scheidel is right to call on the world’s elites to find ways to equalise opportunities, and to do so before driverless cars, automated stores, and other technological advances complicate the task. A humanoid robot works side-by-side with employees in the assembly line at a factory in Kazo, north of Tokyo, Japan. The bloody history, he recounts, suggests that reducing inequality will be difficult, even in the best of circumstances. But he also exaggerates his case. There are reasons to believe that societies can reform without an instigating catastrophe.

The march of inequality

Jumping across civilisations and eras, The Great Leveler finds example after example of periods of rising inequality punctuated by cataclysmic events that suddenly flattened distributions of income and wealth. The range of evidence is breathtaking. Scheidel tracks the distribution of wealth between 6000 BC and 4000 BC through indications of physical well-being, such as skeletal height and the incidence of dental lesions; signs of conspicuous consumption, such as lavish burials; and evidence of entrenched hierarchies, such as temples.

He estimates inequality in the Roman Empire by looking at the assets of top officials and influential families, as reported in censuses. He measures Ottoman inequality by turning to records of estate settlements and official expropriations. For pre-modern China, fluctuations over time in the number of tomb epitaphs, which only the rich could afford, serve as a proxy for the shifting concentration of wealth. Specialists in particular eras and regions will undoubtedly quibble with some of Scheidel’s assumptions, inferences, and computations. But no reasonable reader will fail to be convinced that inequality has waxed and waned across time and space.

Scheidel also seeks to explain what causes inequality. Thomas Piketty, in his best-selling Capital in the Twenty-first Century, answered the question by arguing that the rate of return on investment generally exceeds the rate of economic growth, causing people with capital to get even wealthier than everyone else. Scheidel accepts this mechanism, but adds others.

The most basic one involves predation. Until recently, the only way to become fabulously rich was to prey on the fruits of others’ labour. Cunning people grabbed power and then accumulated wealth through taxation, expropriation, enslavement, and conquest. They also monopolised lucrative economic sectors, largely for the benefit of themselves and their relatives and cronies. Exercising all this power—and holding on to it—required maintaining a military capable of over-powering challengers, which itself served as an instrument of further predation.

In ancient Rome, Scheidel writes, “commanders enjoyed complete authority over war booty and decided how to divide it among their soldiers, their officers and aides who had been drawn from the elite class, the state treasury, and themselves.”

In the modern world, too, authoritarian states with ruling cliques preserve political power and acquire immense wealth through violence; consider China, Egypt, Russia, and Saudi Arabia. Where these differ from pre-modern states is that they share power with giant private companies. Pre-modern China had no equivalent of the e-commerce company Alibaba, nor did pre-modern Egypt have anything like the Bank of Alexandria, one of the country’s largest financial institutions.

The owners of such companies include billionaires who have become wealthy, without relying on violence (or at least without relying on violence directly, since they may support it indirectly by paying taxes to repressive states). But Scheidel downplays the role that private companies play in creating and perpetuating inequality in modern autocracies, an error that leads him to make unduly pessimistic forecasts about the future.

We would be continuing this discourse in the next article.

•Lawrence Nwaodu is a small business expert and enterprise consultant, trained in the United Kingdom and the Netherlands, with an MBA in Entrepreneurship from The Management School, University of Liverpool, United Kingdom, and MSc in Finance and Financial Management Services from Rotterdam School of Management, Erasmus University Netherlands. Mr. Nwaodu is the Lead Consultant at IDEAS Exchange Consulting, Lagos. He can be reached via (07066375847).

Source News Express

Posted 25/09/2017 7:20:11 PM


Share on facebook Yahoo mail icon Gmail icon Share on Google+




You may also like...
Bishop urges support for President Buhari's war against...

How Akwa Ibom REC saved the day after...

EFCC grabs ex-Army Chief Ihejirika over alleged N13bn...

Nigerian Army vows to capture Boko Haram leader...

The role of endowments and CSR in Research...

APC Convention: Oshiomhole will delete PDP from Nigeria’s...

Detained Nigerian Shiites have no case to answer:...

Imo Assembly suspends four members for alleged misconduct...

Police nabs couple suspected to be armed robbers...

Court orders forfeiture of Ikoyi apartment where EFCC...

NUPENG threatens nationwide strike



Latest News PDP National Convention: Party leaders disagree over venue Labour set for nationwide strike over minimum wage Osun Election: Protesters storm INEC Office, as PDP heads to court Court orders APC to conduct fresh election within 30 days Modric ends Ronaldo-Messi Era, wins FIFA Best Player of the Year Award Security operatives swoop ‘on PDP leaders in Osogbo’ Evil son kills father to inherit millions of dollars Troops rescue 73 Boko Haram hostages Bayelsa receives N24.16bn Paris Club refunds, slams Lokpobiri over N800bn debt claim Okowa inaugurated to chair PDP Convention Planning, receives award today in New York FRSC screens 300,000 applicants for 4,000 jobs I have no regrets, says kidnapper after arrest


Most Read NUDE PHOTO OF OMOTOLA JALADE-EKEINDE surfaces online (396,964 views) Nigerian female sex addict opens up, says ‘I like it with both men and women’ (376,987 views) Shameless Genevieve Nnaji exposes breasts in public (308,818 views) Finally named: The full list of friends of Nigerian female sex addict who prowled Facebook (250,810 views) OLUMBA OLUMBA OBU (the one who called himself God) IS DEAD (232,508 views) Igbo scholar disgraces Femi Fani-Kayode •Demolishes claims on Igbo/Yoruba history with facts and figures (221,752 views) Breaking News: POPULAR REVEREND CONVERTS TO ISLAM in Kaduna (Nigeria) (200,266 views) OBJ’s son reported dead in Lagos plane crash •Names of more victims emerge (181,794 views) My wasted years in Olumba Olumba Obu’s Evil Brotherhood (165,922 views) THE FINAL DISGRACE: Igbo scholar unleashes more facts about Igbo/Yoruba history, finishes off Femi Fani-Kayode with second article (163,495 views) Lagos plane crash: Journalist releases victims’ names (158,280 views) Gunmen kill ASP, 2 other police officers in vain bid to kidnap Rivers PDP chieftain (147,001 views)


Categories Advertorials (3) African Press Organisation (81) Art & Literature (63) Business & Economy (3,627) Business Verdict (52) Columnists (933) Complaints & Requests (94) Enterprise & Opportunities (207) Entertainment (547) Features (653) Global Business Monitor (301) International (2,432) Interview (165) Live Commentary (28) Love Matters (144) News (39,118) Opinion (1,111) Pidgin (11) Politics (6,740) Religion (873) Sports (1,706) Stock Watch (34) AMA & Al Jazeera Global Update


CBN banner

Firstmobile banner




Anthony Joshua vs Alexander Povetkin: Highlights


APO Group Partner




GOCOP Accredited Member

GOCOP Accredited member



Africa Media Agency and Al Jazeera