Surya Gowda reviews Branko Milanović’s Visions of Inequality: From the French Revolution to the End of the Cold War and how his analysis of class and inequality applies to contemporary America.
President Donald Trump made headlines earlier this year for assembling an administration chock-full of billionaires and multimillionaires. One of the most striking images from his inauguration was the center-stage assembly of ultra-rich Big Tech moguls, including Meta CEO Mark Zuckerberg, Amazon founder Jeff Bezos, and Tesla CEO Elon Musk. In contrast to rising global concerns about widening income inequality, Trump’s initial signals suggest he does not share the same worries.
Some speak of our current era as a new Gilded Age, in which a handful of titans of industry dominate American life once more. But do today’s “broligarchs” actually parallel the robber barons of the late nineteenth century? How much can we really understand inequality in the present by looking to the past? Economist Branko Milanović enlightens us in his latest book, Visions of Inequality: From the French Revolution to the End of the Cold War, which examines inequality through the perspectives of several influential economists over the last two centuries.
The meat of Visions of Inequality is its in-depth portraits of six heavyweights in the history of economic thought: François Quesnay, Adam Smith, David Ricardo, Karl Marx, Vilfredo Pareto, and Simon Kuznets. Milanović examines not only these scholars’ views on income distribution but also the actual economic and social conditions of income inequality that existed in their respective historical contexts and consequently informed their views. He stresses that his intention is to remain indifferent to the thinkers’ normative opinions regarding inequality and avoid passing judgment on how well their ideas have held up over time. Instead, he seeks to “be” the scholar in question, remaining as faithful to the latter’s outlook as presented in their own works and correspondence as well as to their personal quirks and mental disposition. Milanović hopes that bringing to light the time- and place-specific features of each author’s approach will help his readers see how their own views of inequality are shaped by the contingent features of the societies in which they live and that the ways in which inequality manifests in the future will look drastically different from how they do today.
Six theories on class and inequality
Milanović explains that the way we think (or don’t think) about inequality and the closely related phenomenon of social class has evolved alongside our frameworks of economic development, ideological battles, and laws. Quesnay, the founder of the study of political economy, wrote in pre-industrial France and introduced the first clearly delineated class structure in the field of economics. He distinguished the working class, the self-employed, and the capitalists or tenant-farmers from the ruling elite, which broadly overlapped with the First and Second Estates of the ancien régime and comprised landlords, government officials, and the clergy. Quesnay provides “only a static, one-shot picture of the class structure in a predominantly traditional society,” Milanović writes, with no prognostications concerning how that class structure or the incomes of the classes might change as the economy develops. Quesnay’s classes are perpetual legal entities. This is because the ideal society Quesnay envisioned was simply a more prosperous version of the agricultural and somewhat stationary Kingdom of France that existed in his time. Since the ideal had already been reached, there was no need for drastic change.
Classes in Smith’s schema, on the other hand, were economically dynamic rather than fixed legal categories. Writing in an age of industrial progress and innovation, the Scottish economist and philosopher identified workers, capitalists, and landowners as the constituents of the social classes. He theorized that tenant rents and wages increase as a society becomes richer and the value of land goes up due to the richer population’s higher demand for goods that are either grown on land or obtained from it. Meanwhile, profits and interest rates fall as the economy becomes less stagnant and property rights become more secure. This meant that the incomes of the landlords at the top of the class stratification and the workers at the bottom would go up, and the incomes of the capitalists in the middle would be reduced. Milanović points out that economic advancement, under Smith’s framework, would likely result in an overall decrease in inequality due to the fact that the working class far outnumbered the landlords. Smith’s goal in his primary contribution to economic thought, The Wealth of Nations, was to chart the development of societies from a primitive to a commercial state and describe government policies that would lead a country to the greatest “opulence.” Significantly, he believed that a country’s opulence, or economic success, could be measured by the prosperity of its largest class, its workers. This is because, as Smith put it, “No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable.”
England’s economic development in the early nineteenth century and its attempt at agricultural protectionism in the form of the 1815 Corn Laws, in particular, later led Ricardo to place explicit emphasis on the distributional conflicts between the three classes Smith identified: the landlords who benefited from less competition for the agricultural products grown on their land, the capitalists who lost profit due to higher prices for inputs, and the workers who had to pay higher prices for cereal grains. The early 1800s in England saw both great increases of income and wealth inequality and relatively high economic growth, and it was the threat to the latter that Ricardo explored in The Principles of Political Economy. He argued that if the tariffs on imported grains put in place by the Corn Laws were maintained and the population of England kept rising, the result would be higher food prices, higher rents, higher nominal wages to cover the rising cost of subsistence, and lower profits for capitalists since a greater proportion of their net income would be going to their workers. The decline in the rate of profit would lead to fewer savings and investments and, thus, slower economic growth. Ricardo believed the principal class conflict was between capitalists and landlords—that is, between profit and rent—and hoped that the government would allow cheaper grains to be brought in so that profits would rise and rents would fall. This state of affairs would both propel growth and decrease overall inequality, he believed, since the landlords at the top would lose, and the capitalists in the middle would gain. The position of the workers at the bottom would remain unchanged.
By the mid-1800s, industrialism in Britain was well underway, and the capitalists were ascendant. Parliament repealed the Corn Laws in 1846, by which point the numerical and financial importance of landowners had dwindled. The new economy allowed Marx to simplify the three classes of Smith’s and Ricardo’s theories into two: capitalists and workers. Milanović explains that at the time Marx was writing Capital, “wealth inequality in the UK was not only rising but exceptionally high: the top one percent of wealth-holders owned around 60 percent of the country’s wealth.” Amidst these conditions, Marx theorized that capitalists’ exploitation of labor is an indispensable feature of the capitalist economic system and that class struggle—whether that be between capitalists and workers or different pairings of antagonistic human groups—is the engine of global history. Interestingly, Milanović finds that Marx’s picture of the evolution of inequality was brighter than most readers would assume. It’s true that Marx claimed that when certain forces that increase inequality under capitalism become especially strong, “the knell of capitalist private property sounds. The expropriators are expropriated.” However, in the long term, he believed that economic development may result in a reduction of profits and an increase in real wages and, therefore, in lessening inequality. Thus, an ever-deepening divide between a small number of rich capitalists at the top and the impoverished masses at the bottom may not be inevitable after all.
Pareto reconceptualized the class distinctions proposed by his intellectual predecessors as a distinction between elites and the rest of the population. Using data from various regions of Europe in the late nineteenth century, the Italian polymath concluded that incomes lie on a continuous power-law probability distribution across countries, socioeconomic systems, and time periods. Thus, “while the type of ruling elite, its origin, and its characteristics might vary,” there would always be an elite who ruled everyone else. Milanović shows how Pareto’s theories reflected the way in which inequality was evolving in his time, especially in France, where he lived and worked. Inequality in the country between 1890 and 1900 was higher than it was during the oligarchic regime of Louis-Napoléon Bonaparte—a great irony given the fact that the Third Republic, which was established in 1870, stood for a return to the egalitarian principles of the French Revolution. As nominal equality in the civic sphere masked a “regime of little-restrained capitalist rule,” as Milanović puts it, it makes sense why Pareto would posit that income distribution could not be altered by changes to a social system.
Writing in mid-twentieth-century America, Kuznets challenged Pareto’s view, proposing that income distribution does indeed change as society develops. Kuznets hypothesized that a society becomes more unequal as it undergoes industrialization and urbanization. This is because an increase in productivity in the non-agricultural sector of the economy results in a wider gap between the average incomes in the city and the countryside, and the diversity of new jobs created in the city (both in terms of their productivity and the wages they pay) creates deepening inequality within urban areas. Once the economy’s total income reaches certain heights, however, new economic forces are set in motion that blunt the forces of inequality. A reduction in the difference in productivity between the non-agricultural and agricultural sectors of the economy diminishes the urban-rural wage gap, and the abundance of capital in a richer society drives the rate of return on capital down and thereby reduces the relative incomes of the rich. Moreover, richer societies introduce social programs like old-age pensions and unemployment insurance that reduce inequality even further. Kuznets’s model of inequality reflects how inequality in America rose from the time of its inception in 1776 until it reached a peak in the 1860s. Inequality remained at that high level into the 1930s and then underwent a significant reduction in the years leading up to and during World War II.
Milanović’s vision of inequality
One would be mistaken to surmise, upon the basis of Milanović’s attempts to remain agnostic about the accuracy of his subjects’ theories, that Visions of Inequality on the whole eschews any normative prescriptions for the field of economics. To the contrary, Milanović’s discussion of the six political economists’ treatments of inequality serves as a launchpad from which he can jump into his critique of an economics that fails to consider questions regarding inequality at all.
Milanović puts forth the general principle that when class divisions are thought either to be fixed or inconsequential, inquiries into income distribution fall to the wayside. This is precisely what occurred after the Second World War, Milanović says, when competition between capitalism and communism “pushed economics, on both sides, into service of the ruling ideologies’ political ends.” During the Cold War, He continues, “Both camps shared the belief that, within their own systems, classes were the thing of the past, class divisions no longer existed, and work on income distribution was all but irrelevant.”
The perniciousness of this development cannot be overstated. Milanović points out that the reason we care about inequality in the first place is that we’re interested in how social classes can transmit advantages intergenerationally, creating de facto aristocracies. Economics must address income inequality and class if it is to provide insight into issues regarding inequality of opportunity and the reproduction of social inequities. If it fails in this endeavor, the discipline risks becoming a mere “science of the present,” perhaps slightly related to the future through investigation of saving and investment decisions, for example, but “fully disconnected from the past.” Moreover, Milanović explains that the dearth of inequality studies during the Cold War era meant economists on both the communist and capitalist sides were blind to how inequality might undermine social and political institutions—precisely the things they believed were so crucial to the functioning of their preferred socioeconomic systems.
Visions of Inequality concludes on an optimistic note with respect to the future of economics as an academic discipline, highlighting how inequality studies have proliferated during the early twenty-first century. Once the ideological straitjackets of the Cold War were off and, incidentally, income inequality had risen to obviously high and problematic levels, Milanović states, it was only a matter of time before the topic of inequality came back to the forefront of economic discussion.
According to Milanović, between 1986 and 2007 incomes of the bottom 85 percent of the U.S. population increased at a nearly identical rate of 20 percent. Meanwhile, within the top 15 percent of the population, each richer percentile experienced an income growth rate higher than the last. The top one percent, in particular, enjoyed real cumulative growth of 90 percent. Against this backdrop of widening inequality, French economist Thomas Piketty published hugely influential work showing that because returns to capital—which are mostly received by the rich—exceed the growth of mean income, capitalism necessarily gives rise to ever-increasing inequality. These relative returns to capital compared to labor are particularly high today.
The new ability to digitize and process large amounts of data also greatly expanded our knowledge of historic inequality. Researchers like Peter Lindert and Jeffrey Williamson, for example, were able to use archival sources to investigate inequality in historical periods such as revolutionary America and England at the time of the Glorious Revolution. This historical research has opened up new possibilities for economic inquiry and served as a source of hypotheses and data for social scientists broadly. Greater availability of regular household survey data from China, the Soviet republics, and much of Africa and a growing ability to compare price levels across countries has also had a significant effect on contemporary inequality studies. These developments have allowed work on global income inequality to flourish, further putting inequality studies back on the map.
Visions of inequality after Milanović’s
But in ending his work here, Milanović leaves his audience in suspense. If one takes him at his word and assumes that any concept of inequality cannot be separated from the particular time and place in which it arises, then Visions of Inequality, taken as a whole, begs the question: Which class distinctions or frameworks for analyzing inequality are appropriate for our current epoch? Milanović briefly alludes to the Occupy Wall Street movement’s protests of the “one percent” in the aftermath of the 2008 financial crisis. He also considers that the forces of globalization could produce a global elite that operates at a level beyond the nation-state and, therefore, affect how inequality can be measured both within countries and between them. But he ultimately deprives his reader of prognostications regarding how important developments such as the digitalization of society or the growth of Big Tech’s influence in both the private and public sectors should inform our approach to inequality going forward.
Today, a handful of tech giants like Meta, Amazon, and Google control the cloud, digital platforms, artificial intelligence, and vast amounts of user data. A “vision of inequality” for our own age may take stock of this unequal dynamic and draw a class distinction between those who control these digital resources that we all increasingly depend on and those who do not. Indeed, this is the model proposed by Yanis Varoufakis in Technofeudalism: What Killed Capitalism. The former finance minister of Greece compares tech elites who wield power over big data and control access to digital spaces to feudal lords who controlled land and labor in medieval times. These elites and the technology companies they run influence our behavior, choices, and desires in ways we may not even be aware of, and that other wealthy business owners cannot. Through their roles in the development and control of social media, surveillance systems, telecommunications infrastructure, and more, tech moguls, more so than the titans of other industries, are able to reshape political discourse, social norms, and regulatory landscapes across the globe. As Big Tech becomes embedded in and holds greater sway over the actions of governmental institutions during the second Trump administration—through, for example, the Space Force rocket launch contracts granted to Musk’s SpaceX and Bezos’s Blue Origin, and lobbying by Meta, Google, OpenAI, and other companies to block state AI laws—Varoufakis’s depiction may ring increasingly true.
Whether technofeudalism is the best paradigm for making sense of inequality and class today or not, Visions of Inequality teaches us that all depictions of inequality will cease to be descriptively relevant one day. Perhaps an inherent weakness of Milanović’s historicist approach to inequality studies is that it requires that even his own ideas are only appropriate for the time being. Milanović’s emphasis on the importance of not disregarding inequality and class within the field of economics may, in hindsight, seem like a mere product of its time, inextricably connected to the aftermath of the financial crisis and the rise of tech billionaires and broligarchs. For all we know, further technological development and effective social planning may bring about an abundance of goods and services that renders concerns about inequality, human suffering, and the intergenerational transmission of social class obsolete. These developments—or other ones—may rightfully make inequality studies a relic of the past.
Author Disclosure: The author reports no conflicts of interest. You can read our disclosure policy here.
Articles represent the opinions of their writers, not necessarily those of the University of Chicago, the Booth School of Business, or its faculty.
Subscribe here for ProMarket‘s weekly newsletter, Special Interest, to stay up to date on ProMarket‘s coverage of the political economy and other content from the Stigler Center.
