Inequality Book Reviews–scroll to index for reviews https://inequalitybookreviews.com Overview of many aspects of inequality Tue, 05 Oct 2021 22:05:09 +0000 en-US hourly 1 https://wordpress.org/?v=6.5.5 *****Prehistory, History, and Theory of Inequality https://inequalitybookreviews.com/2021/08/21/prehistory-history-and-theory-of-inequality/ https://inequalitybookreviews.com/2021/08/21/prehistory-history-and-theory-of-inequality/#respond Sat, 21 Aug 2021 22:43:26 +0000 https://inequalitybookreviews.com/?p=216 https://inequalitybookreviews.com/2021/08/21/prehistory-history-and-theory-of-inequality/feed/ 0 1. The Creation of Inequality (archeology and anthropology of the evolution to inequality) https://inequalitybookreviews.com/2021/08/21/1-the-creation-of-inequality-archeology-and-anthropology-of-the-evolution-to-inequality/ https://inequalitybookreviews.com/2021/08/21/1-the-creation-of-inequality-archeology-and-anthropology-of-the-evolution-to-inequality/#respond Sat, 21 Aug 2021 22:42:53 +0000 https://inequalitybookreviews.com/?p=214 The Creation of Inequality: How Our Prehistoric Ancestors Set the Stage for Monarchy, Slavery, and Empire.  Kent Flannery and Joyce Marcus.

Human societies were markedly egalitarian during hunter-gatherer times, but bit-by-bit surrendered precious parts of their equality to new social organizations that emerged with the onset of agriculture and settled life.  The authors’ extensive anthropologic and archeologic review documents this progressive loss of equality around the globe as human societies relentlessly evolved to larger and more complex organizations.  At all levels, these groups had a cosmology and a social logic that provided myths of origin, links to ancestors, and sources of authority.

For millennia, hunter-gatherer societies were limited to the size of extended families.  These groups enjoyed remarkable equality, mostly enforced by group pressure.  No one amassed surpluses, owned land, or controlled community tools, like traps and nets.  Food was shared during famines and divided according to rule after successful hunts.  Gift-giving for alliances was reciprocal and symmetrical to avoid humiliation.  Head men had no coercive authority and accepted no privileges.  Today, the remnants of these groups are found only in the most inhospitable places, like the Kalahari Desert, Amazon rain forest, and frozen north, because they lacked the size to resist evolving larger groups.

Some foraging groups moved beyond extended families to lineages, subclans, and clans, often reckoning descent from real or imagined ancestors and incorporating support from music, dance, and ritual.  Thus, by the late Ice Age, the first step had been taken toward “us versus them” mentality, increased group violence, intergroup competition, and greater social inequality.  Within these groups and with the shift to agriculture, the consolidation of power began that would lead to “big men”, chiefs, kings, and emperors.

Initially, the drive of some men to have enhanced social status was accommodated by allowing “achievement based” leadership, which was limited, nonhereditary, and generally harmless.  Eventually, some of these men increased their power by demonstrating greater “life force”, linkage of ancestry to the creation myth, and prowess as warriors.  Next, they consolidated their control over all group resources and made their positions hereditary, with adjustment of social logic and cosmology, if necessary.  Inevitably, these men looked to extend their power to neighboring societies.  They began by raiding adjacent villages to get heads, slaves, and loot.  Next they began conquering them to expand their territory.  Finally they began many generations of perpetual warfare during the various stages of consolidation of ever larger territories to form chiefdoms, kingdoms, and empires

This consolidation of power relationships simultaneously propagated downward within all social units.  Rank order societies emerged as dominant individuals increasingly gained hereditary control over a group’s resources.  Eventually, these societies progressed to a high level of unequal stratification that included aristocracy, religious leaders, warriors, merchants, peasants, and slaves.  In even more extreme cases, these levels solidified into castes that did not permit movement from one level to another.

Eventually, consolidation of power at the top was so complete that the terror, cruelty, and arbitrary demands imposed by rulers knew no bounds.  Often, the few subjects allowed to approach a ruler did so only after ritual purification and then prostrate with averted gaze to avoid punishment or even death at his whim.  Shaka, ruler of the Zulus, imposed a year of mourning at the death of his mother during which no crops would be planted, no cows would be milked, and no married couples would engage in sex.  He subsequently executed 7,000 of his own subjects for insufficient mourning.  

For much of the book, findings from thousands of archeological sites throughout all continents and the Pacific Islands are analyzed together with modern anthropologic correlation.  Initially, simple villages were organized for mutual protection, cooperative activity, and shared grain storage.  These villages gradually evolved into much larger cities with defensive walls, large central ritual areas, large temples, large private storage areas controlled by elites, monuments glorifying rulers, royal tombs with many sacrificed companions, and huge palatial structures for rulers, their many associates, and hundreds of concubines.

The authors argue that the progression to inequality is not the result of genetically transmitted human nature, but rather the result of culturally transmitted and altered “social logic”.  Initially, the transition to agriculture led to achievement-based societies that excelled at providing ambitious individuals with acceptable ways to increase their prestige without a hereditary component.  Eventually, the rise of debt-slavery, weaponized gift giving to humiliate rivals, cooption of religious narrative and ritual, and demonstrated prowess by warriors overcame the resistance to hereditary rank-based rule and led to increasing inequality.

Finally, the authors humorously speculate about putting egalitarian hunter-gatherers in charge to remedy inequality.  A certain degree of sexism, ageism, and ethnocentrism would remain.  Nevertheless, many positive changes would follow.  Harsh drug laws would be unlikely, given their use of psychoactive substances in their rituals.  Abortion would be legal, since some of their societies even practiced infanticide when resources were scarce.  Religious proselytizing would cease because other groups were believed to have their own cosmology for origins and religion.  Flexibility in marriage would be tolerated because their societies had various arrangements depending upon circumstances, including same-sex marriage, polygamy, polyandry, and other combinations.  With respect to inequality, sharing and achievement-based villagers would never allow CEOs to earn hundreds of times more than assembly-line workers and would insist on a safety net for the less fortunate.   

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2. The Great Leveler (high inequality throughout history, except briefly after catastrophes) https://inequalitybookreviews.com/2021/08/21/2-the-great-leveler-high-inequality-throughout-history-except-briefly-after-catastrophes/ https://inequalitybookreviews.com/2021/08/21/2-the-great-leveler-high-inequality-throughout-history-except-briefly-after-catastrophes/#respond Sat, 21 Aug 2021 22:41:23 +0000 https://inequalitybookreviews.com/?p=212 The Great Leveler: Violence and the History of Inequality from the Stone Age to the Twenty-First Century. Walter Scheidel. 2017.

The author’s thesis is that throughout recorded history extremely violent shocks have been necessary for essentially all substantial reductions in inequality. These shocks are identified as the Four Horsemen of Leveling—mass mobilization warfare, transformative revolution, state failure, and lethal pandemics. An enormous volume of examples from all of recorded history and from all parts of the globe is presented in support of these findings.

The exhaustive review shows that high inequality has been the default condition of humanity for thousands of years as “history has alternated between long stretches of rising or high and stable inequality interspersed with violent compressions.” This pattern has been a feature of human existence ever since agriculture began producing surpluses that could be captured by predatory elites with hereditary property rights. This process was enhanced by state formation, commercialization, and the exercise of political, military, and ideological power by elites. This has been the norm from the ancient and premodern civilizations of Mesopotamia, China, India, Egypt, Rome, Greece, Medieval Europe, Mesoamerica, South America, and others up to the major countries of the modern world.

The first of the Four Horsemen of Leveling, warfare, must rise to the level of mass mobilization to result in widespread reduction of inequality. With wars of sufficient intensity and duration, both winning and losing sides experience substantial decreases in inequality, not just from destruction of capital, but also from a changed political climate with respect to inflation, taxes for the rich, and conditions for workers. World Wars I and II, where all combatants lost a great deal and experienced considerable leveling, are prime examples of this process. Earlier preindustrial warfare usually did not rise to this level and usually did not contribute to a widespread reduction of inequality because of its more limited scale.

The second Horseman, transformative revolution, requires similarly pervasive mobilization of resources in every single town and village to achieve radical leveling. The Twentieth Century Communist Revolutions of Russia, China, and some smaller states are prime examples of this process. These revolutions resulted in markedly reduced inequality brought about by expropriation, extreme bloodshed, and considerable loss of wealth. Many earlier uprisings, including the French Revolution, also sought redress of grievances but rarely succeeded in significantly reducing inequality, at least in part because the necessary violence and control were beyond preindustrial means.

The third Horseman, state failure, occurred when earlier states were unable to check internal and external challengers, protect key allies and associates of rulers, and extract revenues required for these tasks and for enriching the power elite. Typical outcomes included loss of control of subjects and territory and replacement of state officials by warlords. Inequality decreased because the wealth of elites had been protected by the state and in many cases had been acquired by close association with the state as a source of rents and corruption. Examples of this processes include, Bronze-age Greece (Mycenae), the Tang Dynasty in China, the western half of the Roman Empire, the Classic Maya Civilization, and modern Somalia.

The fourth Horseman, lethal pandemics, resulted in such massive loss of life that market forces changed to the disadvantage of elites and in favor of workers and peasants. In the Fourteenth Century, the Black Plague killed 1/3-1/2 of Europeans and resulted in large tracts of abandoned and idle land and a shortage of workers. Thus the value of lands and rents of elites deceased markedly, and the wages available to surviving workers increased markedly. Interestingly, then as now, elites who favored laissez-faire when it worked for them, now demanded government intervention to suppress the rising cost of labor. However, the imbalance was so severe that market forces asserted themselves over government fiat and coercion. Examples include the Black Plague, the Columbian Exchange (gold and silver to Spain and Portugal in return for small pox and measles to the Americas, which caused more devastation than the Black Plague), the Justinian Plague of early Byzantium, the early Roman Empire Plague, and numerous others.

Special attention is given to the Great Compression of 1914 to 1945, which included World War I, the Great Depression, World War II, and the Great Communist Revolutions. The extreme violence of the time resulted in massive loss of life (well over 100 million killed), massive destruction of property, and extensive redistribution of property by taxation and inflation to fund the war and by confiscation in communist countries. As a consequence, inequality decreased markedly, particularly after World War II, so that the top 0.01% lost over 90% of wealth in France and Japan and 80% of income in the U.S.

Inequality remained low for several decades after World War II until about 1980 when it began an inexorable rise back to the much higher levels before the Great Compression. Numerous additional examples are provided to show that this is the usual sequence. Once violent shocks have passed, nothing is left with sufficient strength to restrain the market and other forces that inevitably lead to rebounding inequality. Thus the relative equality of the Great Compression that many of us thought was the normal status quo was actually a marked exception from the long-term baseline of much higher inequality.

In addressing the role of violence in falling inequality, the author mentions but does not try to answer some interesting related questions. He does not study the inverse of his thesis, namely whether high inequality gives rise to violent shocks. However, he does comment that “there is currently no compelling reason to assume a systematic causal connection between…inequality and…violent shocks.” Also, he focuses on the distribution of material resources within societies but not between countries. Hence, he acknowledges that northern European countries manage inequality much better than the U.S., showing that policy differences matter, but limits discussion to his view that European policies may be unsustainable due to aging and slower economic growth.

So what hope is there for those who think extreme inequality is not only unfair but bad for economies? The author explores a wide variety of potential candidates for peaceful alternatives for reduction of inequality. These include land reform, farm debt relief, economic development, democratization, education, emancipation, economic crises, and others. Generally, these conditions are found to have no correlation with consistently reduced inequality, except when associated with violence, such as with land reform. In addition, transformative violence from the Four Horsemen of Leveling is unlikely to return any time soon in the modern world, and no sane person would want it to. Consequently, the next long stretch is likely to be a relatively peaceful return to rising inequality.

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3. The Great Transformation (the rise of markets–consequences and economic theory) https://inequalitybookreviews.com/2021/08/21/3-the-great-transformation-economic-theory-consequences-of-the-rise-of-markets/ https://inequalitybookreviews.com/2021/08/21/3-the-great-transformation-economic-theory-consequences-of-the-rise-of-markets/#respond Sat, 21 Aug 2021 22:38:37 +0000 https://inequalitybookreviews.com/?p=206 The Great Transformation: The Political and Economic Origins of Our Time. Karl Polanyi. 1944.

In 1944, the opposing monumental classics, The Road to Serfdom by Friedrich Hayek and The Great Transformation by Karl Polanyi, were published. From the right, Hayek argued that market liberalism led to prosperity, political liberty, and prevention of authoritarian governance. From the left, Polanyi argued that the rise of market liberalism during the industrial revolution led to intolerable hardship, inevitable unsustainable countermeasures, and finally collapse into fascism, the Great Depression, and World Wars I and II.

Since their publication during World War II, these markedly opposed ideas have now been tested by seventy years of history. For the first thirty years after the war, policies reflecting Polanyi’s ideas led to a mixed economy of government policies and regulated markets in the US, northern Europe, and elsewhere that produced robustly increased prosperity broadly shared at all income levels. For the next forty years, ascendency of Hayek’s ideas led to reduction of the role of government with attendant economic instability, rising inequality (with all economic gains going to the rich in the US), and coercive imposition of market liberalism by authoritarian governments with disastrous results throughout Latin America and the former Soviet Union. Given the adverse consequences of resurgent market liberalism, the rebuttal of its ideas in The Great Transformation is as important today as ever.

In The Great Transformation, Polanyi maintains that before the industrial revolution, markets did not play an important role in human society—they were embedded in society rather than the other way around. Goods and services were generally distributed without the motive for profit by the non-market mechanisms of reciprocity according to social relations, centralized storage with redistribution, and production for one’s own use known as householding. When present, the role of markets was peripheral and subordinate to politics, religion, and social relations.

The industrial revolution brought about an almost miraculous improvement in the tools of production accompanied by catastrophic dislocations of the lives of the common people, of which poverty was merely the economic aspect. During this time, English thinkers created the theory of market liberalism, which radically reversed the previous subordination of markets to society by removing the role for government so that society was instead subordinated to self-regulating markets (without government interference).

This change required that human labor, nature, and money be turned into commodities that could be bought and sold without regard to human and social considerations. Efficient functioning of markets also required callous indifference to the social dislocation, poverty, and damage to nature that resulted and even to hunger as a motivating factor for the working class. This change from regulated to self-regulating markets that organized the whole of society on the principle of gain and profit marked a great transformation of the nature of society by the removal of democratic control of markets.

The goals of this transformation were unrealistically utopian and could never be achieved without annihilating the human and natural substance of society. Even during its installation, laissez-faire proved to be a myth. Government action was mandatory to adjust the supply of money and credit, to enforce provisions for labor and land, and to prevent political disruption. Even with this level of government activity, market liberalism still imposed unsustainable hardships on ordinary people from speculative excess, growing inequality, competition from imports, depressions, unemployment, poverty, and reduced entitlement to assistance.

By the late 1800s, these impossible pressures of the self-regulating market necessarily led to a countermovement in industrialized nations to protect their societies from the market. This countermovement included protectionism for national markets and competition for colonies to take resources from other societies. In exotic and colonial regions with the absence of protective measures unspeakable suffering resulted. Thus Polanyi characterizes market societies as having two opposing movements, referred to as a “double movement.” These two contradictory movements resulted in simultaneous struggles to expand the scope of the market because of the opportunities for some and to limit the scope of the market because of the adverse consequences for many.

These internal contradictions led to disruptive stresses and strains that were unsustainable for market societies. In the domestic economy, class conflict resulted from issues like the choice between inflation for stability of workers incomes and employment and deflation for stability of currency for investors. Market liberals from Spencer to Mises held that popular democracy was a danger to capitalism and that workers should not have the right to vote. In the international economy, relentless shocks imposed by the gold standard forced nations to consolidate around heightened national and imperial boundaries. In international politics, intensified political, military, and economic rivalries finally culminated in World War I.

By this time, the class struggle over market liberalism was at an impasse. For a critical decade, economic liberals supported authoritarian intervention in service of their deflationary policy to protect currency exchange and investment. This merely weakened the democratic forces that might otherwise have averted the fascist catastrophe. During the Great Depression, the gold standard finally collapsed, foreign debts were repudiated, capital markets and world trade dwindled away, and the global political and economic system disintegrated. In a second great transformation of society that followed, the replacements of market society by fascism, socialism, and the New Deal were similar only in discarding laissez-faire principles. The conflict between the market and the elementary requirements of an organized social life had ultimately destroyed society. World Wars I and II merely hastened its destruction.

In 1944, Polanyi appears to have regarded the utopia of market liberalism as utterly discredited. He expressed the hope that the passing of unrestrained market economy could become the beginning of an era of unprecedented freedom. He noted that freedom as the absence of power and compulsion as claimed by market liberals is not possible in a complex society. The function of power is to ensure the measure of conformity which is needed for the survival of the group: its ultimate source is opinion.

Regulation both extends and restricts freedom; only the balance of freedoms lost and won is significant. The comfortable classes enjoy the freedom provided by leisure in security. They resent the suggestion to spread out income, leisure, and security to extend to others the freedom they enjoy. Obviously, those who lack security cannot enjoy the same freedom as the comfortable classes. Those who want more freedom for all need not fear that either power or planning will undermine their freedom. Regulation and control in a complex society strive to give us all the security we need to achieve freedom not only for the few, but for all.

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4. Capital and Ideology (history of ideologies of beneficiaries that claim to justify inequality) https://inequalitybookreviews.com/2021/08/21/5-capital-and-ideology-unfair-results-of-all-ideologies-that-claim-to-justify-inequality/ https://inequalitybookreviews.com/2021/08/21/5-capital-and-ideology-unfair-results-of-all-ideologies-that-claim-to-justify-inequality/#respond Sat, 21 Aug 2021 22:37:02 +0000 https://inequalitybookreviews.com/?p=203 Capital and Ideology.  Thomas Piketty.

This book is a follow up to Piketty’s Capital in the Twenty-first Century, the 1000+ page definitive economic documentation and review of global inequality.  Capital and Ideology is also 1000+ pages and provides a comprehensive review of the historic sequence of global economic systems that resulted in and claimed to justify the inequality described in the first book.  Piketty defines ideology as a set of plausible ideas and discourses describing how society should be structured.  He adds two interesting descriptions of ideology:  1. an idea in service of a particular interest, and 2. the justification for inequality by a system’s beneficiaries.

Piketty describes a progression of economic ideologies, with special emphasis on trifunctional (clerical, aristocratic, and commoner), slaveist, colonialist, proprietarianist (ownership), social-democratic, and communist ideologies.  This sequence progresses to revived proprietarnianism together with hyper-capitalism that has led to rapidly increasing inequality since 1980.  The details of these systems are extensively discussed. 

One remarkably twisted mindset of 19th Century exploitive proprietarianism is worthy of note.  In 1833, England outlawed slavery and compensated former slaveholders with 5% of GDP (paid by taxpayers) but gave no compensation to ex-slaves.  In the early 1800s, the French blockaded Haiti after its successful slave revolt and forced it to pay three years of national income to compensate former slaveholders.  When Haiti could not pay, France severely undermined its future development by forcing it to pay 15% of its GDP annually indefinitely (until WW I) to service French bank loans for the compensation.  Even Lincoln offered compensation to slaveholders before the Civil War. In the final chapter Piketty offers his views of many possible remedies to the social injustice of economic inequality.  His discussion ranges widely from better concepts of ownership to equality of access to education to international cooperation to prevent races to the bottom to progressive property, income, inheritance, and wealth tax, and more. 

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5. The Crisis of the Middle Class Constitution (evolution of constitutions to deal with inequality) https://inequalitybookreviews.com/2021/08/21/5-the-crisis-of-the-middle-class-constitution-evolution-of-constitutions-to-deal-with-inequality/ https://inequalitybookreviews.com/2021/08/21/5-the-crisis-of-the-middle-class-constitution-evolution-of-constitutions-to-deal-with-inequality/#respond Sat, 21 Aug 2021 22:34:14 +0000 https://inequalitybookreviews.com/?p=200 The Crisis of the Middle-Class Constitution. Ganesh Sitaraman. 2017.

The author, from the Vanderbilt Law School and the Center for American Progress, maintains that the number one threat to American constitutional government today is the collapse of the middle class. To make his case, he reviews the interplay of constitutional theory and the conflict of economic classes throughout history with special reference to the novel aspects of the US Constitution, which is a middle class constitution.

From the ancient Greeks onward, political philosophers were preoccupied with the problem of economic inequality and its relationship to the structure of government. They sought to prevent the clash of wealthy elites with everyone else from leading to the rich oppressing the poor or the poor seeking to confiscate and redistribute the wealth of the rich. In ancient Athens, from the time of Solon in 594 B.C. until 403 B.C., requirements for holding political power evolved from birth to wealth to geography to citizenship alone. In the next century, the golden age of Athens, democracy flourished. All 20,000 to 30,000 (male) citizens were entitled to direct participation. Leaders were selected by lottery rather than elections to eliminate advantages for wealthy or privileged elites. The majority of citizens who participated were essentially from the middle class.

This pattern changed for the great republics that followed throughout history, including Rome, Florence, Venice, and England. All had what the author calls class warfare constitutions that entrenched economic class into the structure of government in the hope of preventing instability, class warfare, and revolution. According to Aristotle, the best achievable constitution was what he called a middle constitution, but it required balancing of the interests of the rich and the poor by a strong middle class, such as was present in Athens. Aristotle also described what the author calls a class warfare constitution in the absence of a strong middle class. In this system, checks and balances are created between the rich and the poor by awarding divisions of government according to class, like today’s House of Lords and House of Commons. This became a dominant form of constitution for republics for the next two millennia.

The history of the ancient Roman Republic provides an example of the operation of a class warfare constitution. Around 493 B.C., a struggle between the patricians and plebeians eventually led to the formation of the plebeian assembly and tribunes to balance the aristocratic senate and consuls. Eventually this separation of political powers between economic classes failed to prevent major political instability because its provisions were not enforced. Over the centuries, the elite class of large landowners took control with impunity of more and more of the vital public lands they shared with plebs. Beginning in 133 B.C., first one then another of the Gracchus brothers became a tribune and was killed along with many followers when addressing this land use issue with land reform. In the century of extreme violence that followed, the Republic fell to a succession of strong leaders as Rome descended into class war, civil war, and finally rule by the Caesars.

During the two thousand year history of republics with class warfare constitutions that followed, scholars such as Polybius, Cicero, Machiavelli, Giannotti, Harrington, Hume, and Montesquieu continued to consider the problem of creating a constitution that would provide stable government by managing class conflict. In Florence of the 1530s, Giannotti revived the concept of Aristotle’s middle constitution for stable government. He concluded that mixed governments were unstable because of the inevitability of winners and losers in issues between the rich and the poor. He observed that if the emerging mediocri (middle class) in Florence could become strong enough it could hold the balance of power and make stable mixed government possible. In England in 1656, Harrington noted that political power follows economic power and that an economically unequal society could not be politically equal. In France in 1748, Montesquieu, known also for his theory of separation of powers, recognized that reasonable equality was essential for well-functioning government. He therefore suggested establishing outer bounds of wealth and then passing laws that will equalize inequalities through burdens they impose on the rich and relief they afford to the poor.

In the US in 1787, the founding fathers broke with tradition and created a middle class constitution, rather than a class warfare constitution as had been the norm for republics since ancient Rome. This change was influenced by centuries of constitutional scholarship, the ideals of the Enlightenment, and the unique American economic circumstances. In 1774, early America was astonishingly equal due to an agrarian society with widespread small property holdings and a boundless frontier. At that time America was considerably more equal than it is today. In 1774, the top 1% of households had just 8.5% of total income or 7.6% when only free households are included, while in 2012, the top 1% had 19.3%. Thus the existence of a strong middle class facilitated the balance of power between the rich and the poor needed for a middle class constitution.

In this constitution, the separation of powers was between the branches of government, rather than between the economic classes. Hence, there was no formal provision for special powers for property that would facilitate evolution of a landed aristocracy. Nevertheless, sceptics still feared capture of government through informal means if an elite group with shared beliefs managed to control all the parts of government. Thus a prerequisite for this government is a continuation of the reasonable equality and the strong middle class present at the time of its establishment to maintain the balance of power between the rich and the poor.

The first obstacle to this balance for the middle class was the regional institution of slavery. Although America was quite equal overall in 1774, this was not the case in the South. The slave-owning South in 1774 had almost exactly the same high level of inequality as the US does today. This problem was partly addressed by the Civil War and the 13th, 14th, and 15th Amendments. However, efforts to provide equality of the freedmen after the Civil War were undermined by political and Supreme Court maneuvers against reconstruction and by a southern reign of terror that included disenfranchisement, night raids, the KKK, and guerrilla warfare.

The next challenge to the middle class was the transformation from an egalitarian agrarian society into a more unequal urban society due to the industrial revolution and the closing of the western frontier. Inequality increased greatly as urban wage-laborers found themselves at the mercy of the plutocrats of the Gilded Age. Progressives like Teddy Roosevelt responded with constitutional amendments democratizing the country, corporate and income taxes, antitrust laws, campaign finance reforms, and professionalization of government officials. These changes were not enough. Subsequently, the World Wars, Great Depression, New Deal policies, and unionization were necessary, as well, for return to reasonable equality and a strong middle class that lasted from the 1940s to the 1970s.

During this golden period, the share of income for the top 10% fell from 49% to 35%; the share of wealth for the top 0.1% fell from 25% to 10%; home ownership rose from 44% to 64%; and male worker’s wage increases of 96% kept pace with productivity increases of 108%. Government policies critical to rebuilding the middle class included the GI Bill, funding for growth through infrastructure and basic research, regulation for financial stability like Glass-Steagall, the FDIC, and the SEC, progressive taxation, Medicare, and Medicaid. Additional policies with middle class support enhanced the quality of life, such as regarding safety, civil rights, and the environment.

Inevitably, the plutocrats counterattacked under the banner of neo-liberalism. Since the Reagan Revolution of the 1980s, policy choices, globalization, technology, and capture of government by wealth have caused inequality to again soar to the level of the slave-owning antebellum South and the Gilded Age. From 1979 to 2008, 100% of income growth went to the top 10%, and income for the bottom 90% actually declined. From 1976 to 2014 the share of income for the top 1% grew from 9% to 21%. By 2014, the twenty wealthiest individuals were wealthier than the bottom half of the US population. From 1979 to 2013 CEO’s salaries rose from 30 to 296 time those of their workers. An IMF study found that the decline of unionization contributed to about half the rise of inequality from 1980 to 2010. As the US has become stratified by wealth, inter-generational economic mobility has decreased substantially.

All of these changes have greatly reduced the size, income, and influence of the middle class to balance the excesses of the rich. From 1970 to 2012, the middle class decreased from 65% to 41%, while the affluent increased from 7% to 16% and the poor increased from 8% to 19% (Reardon and Bischoff).  The threats to the republic from this destruction of the middle class come in two forms: 1. Oligarchy or oppression of the poor by the rich and 2. Populist authoritarian demagogues leading overthrow of the rich by the poor. (Amazingly, the Trump campaign managed to divert the latter to service of the former.)

According to Jeffrey Winters, who has spent a lifetime studying oligarchs, the US is already a modern oligarchy. With increasing inequality, the wealthy isolate themselves from the rest of society by purchasing their own elite education, living conditions, protection, and other services. As their social empathy drops, they are less likely to support programs for the public good that benefit others unlike themselves. Hence many of them press for smaller government to avoid taxes, evade regulations, and defund social programs that benefit the general public. They have used their enormous resources to provide extensive funding for lobbying, political campaigns, ideological think tanks, and media that serve their perceived interests, particularly since the Citizens United decision of 2010.

These efforts have been spectacularly successful in achieving rule by the economic elite rather than by the majority. Right wing and libertarian ideologues first gained control of the Republican Party, then by 2016 all three branches of the federal government (as feared by the founding fathers). For the congressional and executive branches, a study of 1779 government policy outcomes over two decades showed that across all areas they overwhelmingly reflected the preferences of the affluent and business groups and that the views of the middle class and the poor had no influence at all (Gilens). For the judicial branch, the five conservative judges on the Supreme Court prior to Justice Scalia’s death were in the top ten of the most pro-business justices in history. Groups that are best able to get their cases to the Supreme Court are pro-business, anti-regulatory, and ideologically conservative.

Three options for dealing with the crisis of the middle class constitution are discussed: 1. Accept the status quo and adopt a class warfare constitution. This is not going to happen for obvious practical reasons and because it is antithetical to American tradition. 2. Safeguard the political process by severing the link between economic power and political power, such as by campaign finance law, prevention of regulatory capture, and an increasingly professional civil service. This approach is unlikely to succeed because of the “hydraulic problem” (money for influence blocked in one channel will find another) and the “paradox of process” (the well-to-do are better equipped with lawyers and lobbyists to navigate political and regulatory processes). 3. Rebuild the middle class through a complex process including tax policy, wage and benefit policy, education, structural reform in business and finance, corporate long-termism, a new labor movement, and prospective self-correcting mechanisms such as automatically triggering relevant laws when inequality reaches a certain level.

The most significant obstacle to these reforms is the problem of foxes guarding the hen house (government by economic elites). The author suggests that progress may be made by finding and supporting individuals in government not yet captured, social movements with mass mobilization, and facilitation of change during emergencies. In any event, saving the Republic will require the Republican Party to reclaim its tradition of progressive conservatives who believe in reform to preserve the best American traditions without radical change.

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6. Religion and the Rise of Capitalism (Christian justification of free market inequality) https://inequalitybookreviews.com/2021/08/21/6-religion-and-the-rise-of-capitalism-christian-justification-of-free-market-inequality/ https://inequalitybookreviews.com/2021/08/21/6-religion-and-the-rise-of-capitalism-christian-justification-of-free-market-inequality/#respond Sat, 21 Aug 2021 22:33:03 +0000 https://inequalitybookreviews.com/?p=208 Religion and the Rise of Capitalism. Benjamin M. Friedman.                                                               

(Review Michael Shermer in The American Scholar—considerably abridged).

Market Morality: The divine underpinnings of Western prosperity

Over the years, some religious conservatives have strained to attenuate Christianity’s doctrinal role in some of history’s darker moments—the Crusades, the Inquisition, the European witch hunts, pogroms against Jews, and the slave trade.  Some have gone so far as to credit Christianity for the core institutions of modern industrialized democracies, including and especially capitalism.

Max Weber’s highly influential work, The Protestant Ethic and the Spirit of Capitalism (1905)…argued that Calvinism’s doctrine of predestination helped fuel the secular institution of capitalism.  [Weber’s contemporary, R. H. Tawney,] countered that it was the spirit of individualism and the ethic of self-help and frugality that drove early capitalism, not Calvinist theology.

A century on, the author of this book develops Tawney’s thesis to its fullest, arguing that It was human potential in this world, not predestinarian beliefs about the next world, that drove capitalism.  Religious doctrines, promulgated by preachers from the pulpit, from which the faithful derived ideas that undergird capitalism, fueled its eventual development–for example, emphasis on human agency… and belief in the efficacy of markets to bring about personal and social goods….

In shaping this compelling narrative, the author has marshaled considerable historical evidence in its favor.  But why, to consider counterexamples, did not all societies in which Christianity is or was the dominant religion show Western forms of capitalism and democracy?  Obviously other factors were at work, such as geography and chance, that allowed capitalism to develop where and when it did in Europe.

Clearly, different peoples inculcated different forms of Christian beliefs, even within one denomination.  Consider the current divide between “prosperity gospel” Protestants, who believe that financial blessings come from God and hard work, and for whom conspicuous wealth is acceptable, and “social gospel” Protestants, who emphasize the obligation to reduce poverty, income inequality, crime, racism, and child labor, and for whom great wealth, if earned, should not be on public display.

Either way, the link between religious belief in individual agency and resultant economic success is what energizes most American Protestants today.  As the author notes, whereas 30 percent of Americans believe that luck plays a substantial role in determining one’s income, 54 percent of comparatively nonreligious European hold that view….Also, only 26 percent of Europeans agree that poor people are poor because they are lazy, compared with 60 percent of Americans.  Finally, and to the author’s point about agency and prosperity, 71 percent of Americans think that the poor can lift themselves out of poverty through hard work, compared with only 40 percent of Europeans.

Those numbers reflect what is called the “Just World” Theory of how lives turn out: if you are rich and successful, it is because you are hardworking, intelligent, creative, and willing to take risks, and you have been justly rewarded for your discipline and self-control; if you are poor and unsuccessful, it is because you are lazy, unintelligent, unimaginative, and risk averse, and you have been duly punished for your lack of will power and self-persuasion.  Thanks to the author, I can now see that this belief has its origin in the 18th century.  Of the many factors that went into the construction of the modern economic worldview undergirding capitalism, he has successfully added religion back into the causal equation.

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7. The Reactionary Mind (favors inequality from hereditary wealth and hierarchical status quo) https://inequalitybookreviews.com/2021/08/21/7-the-reactionary-mind-favors-inequality-from-hereditary-wealth-and-hierarchical-status-quo/ https://inequalitybookreviews.com/2021/08/21/7-the-reactionary-mind-favors-inequality-from-hereditary-wealth-and-hierarchical-status-quo/#respond Sat, 21 Aug 2021 22:32:45 +0000 https://inequalitybookreviews.com/?p=198 The Reactionary Mind.  Corey Robin.

Corey Robin’s book is a collection of his essays and hence does not provide a straight-line analysis explaining conservatism. Part one focuses first on historical topics like the French Revolution, American slavery, Richard Nixon’s southern strategy, and the rise of Thatcher and Reagan. Then it focuses on intellectuals like Hobbes, Burke, Maistre, Nietzsche, Buckley, Rand, and Scalia. Part two explores the linkage of conservatism and violence.

I did not find the book particularly enlightening as an explanation for the origins of conservative thinking and behavior. I don’t think modern conservatives choose their politics from reading earlier philosophers and intellectuals. I think their conservatism comes from the interaction of their social and economic context with inherited personality traits like dominance, territoriality, and level of empathy. Reportedly political preference is up to 40% genetically determined. In my view, books like The Righteous Mind by Jonathan Haidt and Moral Politics: How Liberals and Conservatives Think by George Lakoff are more to the point for this subject.

Nevertheless, I did find that this book provides many satisfying quotes, at least for those with my political persuasion. Some of these quotes are listed below:

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Modern conservatism came onto the scene of the twentieth century in order to defeat the great social movements of the left. As far as the eye can see, it has achieved its purpose.

…You say stuff like forced busing, states’ rights and all that stuff. You’re getting so abstract now you’re talking about cutting taxes, and all these things you’re talking about are totally economic things and a by-product of them is blacks get hurt worse than whites. And subconsciously maybe that is part of it. (Lee Atwater commenting on Nixon’s Southern Strategy)

In the United States, the free market has generated a long economic boom from which the majority of Americans has hardly benefited.

Since 9/11, many have complained, and rightly so, about the failure of conservatives—or their sons and daughters—to fight the war on terror themselves.

Ken Feinberg, head of the September 11 Victims’ Compensation Fund, announced that families of victims would receive compensation for their loss based in part on the salary each victim was earning–$300,000 for a $10,000 a year grandmother and $3,870,000 for a Wall Street trader.

When we talk about America’s victory in the Cold War, we are talking about countries like Guatemala, where Communism was fought and defeated by means of the mass slaughter of civilians.

After the Soviet empire fell…Western free-marketeers applied shock therapy (to install market liberalism) to formerly Communist countries with disastrous results.

Watching Jeffrey Sachs and the IMF in Russia, he (John Gray) could not help but see the free market as “a product of artifice, design and political coercion.”

…The most visible effort of the GOP since the 2010 midterm election has been to curtail the rights of employees and the rights of women.

**********
The conservative defends particular order—hierarchical, often private regimes of rule—on the assumption, in part, that hierarchy is order. “Order cannot be had,” declared Johnson, “but by subordination.”

Conservatism (is) the opposition to the liberation of men and women from the fetters of their superiors, particularly in the private sphere.

Conservatives are hostile to the goals of the left, particularly the empowerment of society’s lower castes and classes…

…Hierarchy, with its twin requirements of submission and domination.

For that is what the capitalist is: not a Midas of riches but a ruler of men.

He (Scalia) tells the power elite exactly what they want to hear, that they are superior and that they have a seat at the table because they are superior.

Reaction…begins from a position of principle that…some are fit, and thus ought, to rule others.

Conservatism adapts and adopts, often unconsciously, the language of democratic reform to the cause of hierarchy.

**********
Historically, the conservative has favored liberty for the higher orders and constraint for the lower orders. What the conservative sees and dislikes in equality, in other words, is not a threat to freedom but its extension.

…Conservatives have never been wild about the idea of freedom. It threatens the submission of the subordinate to the superior.

David Cole theorized a dual justice system in America: Granting maximal rights to all citizens would have a high cost in terms of safety, he observed, while denying those rights would have a high cost in terms of freedom. So what does America do? It does both: It formally grants rights to all, but systematically denies them to blacks and the poor.

More than the reforms themselves, it is the assertion of agency by the subject class that vexes their superiors.

Conservatism is the theoretical voice of this animus against the agency of the subordinate classes.

Making privilege palatable to the masses is a permanent project of conservatism.

That is the task of right wing populism: to appeal to the mass without disrupting the power of elites or, more precisely, to harness the energy of the mass in order to reinforce or restore the power of elites.

As long as there are social movements demanding greater freedom and equality, there will be a right to counter them.

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…Conservatism really does speak to and for people who have lost something. It may be a landed estate or the privileges of white skin, the unquestioned authority of a husband or the untrammeled rights of a factory owner.

Loss—real social loss, of power and position, privilege and prestige—is the mustard seed of conservative innovation. What the right suffers from today is not loss but success, and until a significant dominant group in society is forced to suffer loss—of the kind experienced by employers during the 1930s, white supremacists during the 1960s, or husbands in the 1970s—it will remain a philosophically flabby movement. Politically powerful, but intellectually moribund.

Conservatism is about power besieged and power protected. It waxes in response to movement from below and wanes in response to their disappearance…”

…Conservatism invariably arises in response to a threat to the old regime or after the old regime has been destroyed.

That is what conservatism is: a meditation on—and theoretical rendition of—the felt experience of having power, seeing it threatened, and trying to win it back.

Far from being an invention of the politically correct, victimhood has been a talking point of the right ever since Burke decried the mob’s treatment of Marie Antoinette. The conservative, to be sure, speaks for a special type of victim: one who has lost something of value, as opposed to the wretched of the earth (who have almost nothing of value).

What is truly bizarre about conservatism: a ruling class resting its claim to power upon its sense of victimhood.

**********Marxism-Leninism and free-market economic rationalism have much in common. Both exhibit scant sympathy for the casualties of economic progress. (John Gray)

…We’re still left with a puzzle about (Ayn) Rand: How could such a mediocrity, not just a second-hander but a second-rater, exert such a continuing influence on the culture at large?

I believe that one ought to have only as much market efficiency as one needs, because everything that we value in human life is within the realm of inefficiency—love, family, attachment, community, culture, old habits, comfortable old shoes. (Edward Luttwak)

“The real object” of the French Revolution, Burke told Parliament is “to break all those connections, natural and civil, that regulate and hold together the community by a chain of subordination.”

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8. How Will Capitalism End (Speculation) https://inequalitybookreviews.com/2021/08/21/8-how-will-capitalism-end-speculation/ https://inequalitybookreviews.com/2021/08/21/8-how-will-capitalism-end-speculation/#respond Sat, 21 Aug 2021 22:30:45 +0000 https://inequalitybookreviews.com/?p=195 How Will Capitalism End? Wolfgang Streeck. 2016.

Professor Streeck, Director of the Max Planck Institute for Social Research in Cologne, begins with a review of the 2013 book Does Capitalism Have a Future? He notes that post-World War II democratic capitalism was based upon the shotgun marriage of markets to pursue economic growth and democracy to prevent market excesses, such as soaring inequality, financial crises, hardship of market losers, and externalities like pollution. Since the 1970s, the reasonable balance between these contradictory forces has shifted to market dominance that has resulted in decreasing legitimacy and increasing distributional conflict. Consequently, the five authors of the book share the conviction that a structural crises bigger than the recent Great Recession looms for capitalist society, and each presents his view of how it may come about:

1. Wallerstein sees resource depletion, growing need for infrastructure, and demise of centrist liberal dominance as causing the final decline of the US-centered world order followed by a global confrontation between defenders and opponents of capitalism. 2. Calhoun sees the possibility of a large-scale collapse of capitalist markets followed by centralized socialist economies or Chinese-style state capitalism, although intervention by enlightened capitalists is still possible. 3. Mann sees US weakness leading to a shift of economic power from the West to the rest of the world with a move toward more statist economies still jeopardized by unsustainable consumption and possibly even catastrophic change like escalating climate change or nuclear war. 4. Collins sees automation as having destroyed the manual working class in the twentieth century and about to destroy the middle class in the twenty-first century with unemployment of 50-70% finishing capitalism by mid-century and probably leading to socialism with or without violent social revolution. 5. Derluguian sees internal political dysfunction from institutional and economic decline leading to fragmented social movements pitted against economic elites in the transition to post-capitalism.

The author sees all of these scenarios as contributing and reinforcing each other as capitalism collapses from its own internal contradictions. He suggests that what comes after capitalism in its final crisis, now under way, is not socialism or some other defined social order, but a lasting interregnium. This is defined as a breakdown of system integration that deprives individuals of institutional structuring and collective support and that shifts burdens for security and stability to the individuals themselves. Neoliberal ideology glorifies this breakdown of structured order and de-institutionalization as the arrival of free society built on individual autonomy. This neoliberal narrative neglects the very unequal distribution of risks, opportunities, gains, and losses that comes with de-socialized capitalism, including the “Mathew effect” of cumulative advantage. When this narrative no longer works, perhaps some crisis in middle class employment, as predicted by Collins, or some other wide-spread disorder will bring about the end of the post-capitalist interregnium and the emergence of a new order.

The trajectory toward financial crisis began in the 1970s, after three decades of successful democratic capitalism, when the profit-dependent classes reacted to declining post-war growth by rejecting the redistribution that provided the system with its legitimacy. With the loss of sufficient taxation, costs of dealing with the resultant distributional conflict were projected into the future, first by inflation in the 1970s, next by rising public debt in the 1980s, and then by increased private debt (with increased financialization) in the 1990s and 2000s, until the crisis of 2008. This was followed by central banks turning private debt into public assets, while overall indebtedness remained higher than ever.

Thus the post-war standard model of democracy transitioned to the neoliberal Hayekian model that substituted economic discipline for political legitimacy. This process was augmented by globalization that undermined labor’s bargaining power, increased the difficulty of taxation of mobile capital, and limited state control of finance. Consequently, stagnation, oligarchic redistribution, plundering of the public domain, corruption, and global anarchy have befallen capitalism. Some of the rich already consider their fate as independent from the fates of the societies from which they extract their wealth. Hence, they no longer care to contribute to those societies. The ratio of average income between the top 400 taxpayers and the bottom 90% is 10,327 to 1, and the ratio of wealth between the top 100 households and the bottom 90% is 108,765 to 1. Corruption extends beyond the legal definition to gross violation of rules, systematic betrayal of trust, and monopolization of political power by extreme wealth.

All of this is discussed in the long introduction of How Will Capitalism End? The following chapters are separate essays that considerably enlarge on these subjects and others, such as the European Union, the Euro, and the views of other authors. Selected excerpts from these chapters are listed below:

1. How Will Capitalism End? Crisis symptoms for the industrialized countries featured slowing growth, rising debt, and rising inequality. Increasing government debt was related to declining overall levels of taxation rather than excess redistributive democracy. The capitalist victory over democratic oversight is Pyrrhic because it has destroyed the only agencies that could save capitalism by limiting its excesses.

2. The Crisis in Democratic Capitalism. Neoliberal economics is basically the theoretical exaltation of a political-economic social order serving those well-endowed with market power, in that it equates their interests with the general interest. Today’s democratic states are being turned into debt-collecting agencies on behalf of a global oligarchy of investors.

3. Citizens as Consumers: Considerations on the New Politics of Consumption. Neoliberal capitalism makes the claim that privatization is superior to standardized collective action by government. However, collective goods like distributive justice and general rights are indivisible and cannot be commoditized.

4. The Rise of the European Consolidation State. In the 1990s, neoliberal politics cut taxes and the state by offering citizens private credit as a substitute for previously free public services. This was facilitated in the US due to powerful anti-taxation politics and a constitutional commitment never to compromise its “full faith and credit.” Consolidation in Europe had the additional disadvantages of continued popular support for distributive democracy and the lack of a hegemonic currency.

5. Markets and Peoples: Democratic Capitalism and European Integration. Globalization, financialization, and European integration (the EU) have strengthened authoritarian market liberalism so that it is now entirely shielded from democratic pluralism.

6. Heller, Schmitt and the Euro. In this system, multistate authority protects markets from state-level egalitarian-democratic infringement. Consequently, the European Central bank is the most independent central bank in the world, and egalitarian redistribution has been replaced by stronger incentives for the winners and more severe punishment for the losers.

7. Why the Euro divides Europe. When the Euro replaced national currencies and the EU replaced national governance, southern countries were no longer able to deal with inflation and budget deficits by occasional devaluations. Instead, northern countries that controlled the EU imposed austerity in the name of reform. Natural laws of the economy cited in the north are in reality nothing but projections of social-power relations which present themselves ideologically as technical necessities.

8. Comment on Wolfgang Merkel, “Is Capitalism Compatible with Democracy?” Post-World War II democratic capitalism came about as a historical compromise between a then powerful working class and a then weakened capitalist class. As it recovered, capitalism broke through this democratic containment. In a 2014 essay, Merkel identifies many problems which could be addressed by re-embedding capitalism in democracy and de-globalizing capitalism, such as by fixing the EMU.

9. How to Study Contemporary Capitalism? An understanding of both sociology and economics is required. An extensive discussion notes capitalism’s instability, dependence on expansion, overly simplistic rational action theory, and competing social and market justice. Fear and greed in capitalism lead to continuous uncertainty, which in turn leads citizens to demand political intervention for stability and social justice. A key concept is “investor confidence” which is capital owners’ pronouncement of their self-diagnosed psychological condition to signal whether expected returns conform to what they feel entitled to. Political economy should be able to expose the market mechanism for what it is: the outcome of a struggle between conflicting concepts of and claims to justice, rather than between subjective morality and objective laws of what is technically possible.

10. On Fred Block, “Varieties of What? Should We Still Be Using the Concept of Capitalism?” When social constraints led to the profit squeeze of the 1970s, political control over capitalism began to decay. Democracies at the level of the nation state were helpless against capitalism’s new international opportunities for evading those constraints. Fred Bock’s relatively optimistic view of capitalism as embedded in democracy and subject to its political control is not supported by the experience of the last four decades. This raises the question of whether intellectuals should search for reasonable ideas to repair democratic capitalism or instead begin to seriously think about alternatives to it?

11. The Public Mission of Sociology. The author believes the moment is approaching in which the foundations of modern society will again have to be rethought, like they were in the New Deal and after the Second World War. Since the 1980s, the victory of market-liberalism over the market-correcting capacity of popular democracy has had disastrous results, including unprecedented financial uncertainty, soaring inequality, and threats to the global commons. Yet sociology remained on the sidelines while market-liberalism economics (that happened to serve elites) dominated policy with the claim that it was a skilled trade like dentistry with a toolkit of proven techniques. Sadly, this brand of economics lacks concern for the social impact of its policies and overstates its status as a science, given its simplistic models, unrealistic assumptions, lack of empiric validation, and inability to foresee the 2008 financial crisis. Obviously, a balance must be struck between the needs of people and the needs of capital. Sociologists and political scientists, in alliance with heterodox economists of different stripes, have begun working on a new sort of political economy, a socio-economics that would again make the economic subservient to the social rather than vice versa. It is high time for the mainstream of the discipline to remember its roots and join the battle.

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*****Overview of Recent Inequality https://inequalitybookreviews.com/2021/08/21/overview-of-recent-inequality/ https://inequalitybookreviews.com/2021/08/21/overview-of-recent-inequality/#respond Sat, 21 Aug 2021 22:29:19 +0000 https://inequalitybookreviews.com/?p=193 https://inequalitybookreviews.com/2021/08/21/overview-of-recent-inequality/feed/ 0