Capitalism can cause massive economic inequalities. Indeed, a century after Adam Smith wrote the Wealth of Nations, the richest 1% owned a record-breaking 70% of England’s wealth. Not surprisingly, this era saw the rise of a very different economic theorist: Karl Marx. [You can see this and many other graphs here.]

But does capitalism have to increase inequality? If so, why was the golden age of American capitalism an era of rapidly decreasing inequality? Was this “Great Levelling” a natural product of capitalist development, as theorised by Simon Kuznets? Or was it a historical anomaly resulting from the two world wars and political interventions, as argued by Thomas Piketty?

Yet more questions emerge if we take a more global outlook. Was the Great Levelling within rich countries but a veil behind which they plundered the Global South, making capitalism an inherent engine of global inequality? If so, why has global inequality reduced during the recent era of globalised capitalism?

There are very few people who can judge these questions with the same nuance and understanding as Branko Milanović. Milanović is a leading scholar of global inequality. But he is also a particularly sensitive commentator on capitalism. Born in communist Yugoslavia, Milanović has a rare ability to look at capitalism from an arms-length, without indoctrinated faith but also with a deep appreciation of the limits of its alternatives. 

I hope you enjoy our conversation!

VISUAL DATA

We discuss a lot of numbers in this episode. You can find a lot of relevant graphs in my Substack post:

https://onhumans.substack.com/p/the-evolution-of-inequality-under

To follow Milanović's own work, and get a lot of more graphs, see his many books and his blog "Global Inequality" at https://branko2f7.substack.com/

SUPPORT

I hope you enjoy the conversation. If you do, consider becoming a supporter of On Humans on ⁠⁠⁠⁠Patreon.com/OnHumans⁠⁠⁠⁠. 

MENTIONS

Names: Karl Marx, Alexis de Tocqueville, Brad DeLong (see episode 18 & season 1 highlights), Simon Kuznets, Arthur Berns, Thomas Piketty,  Gabriel Zucman, Emmanuel Saez, Jason Hickel, François Quesnay, Adam Smith, David Ricardo, Vilfredo Pareto

Names: Gini coefficient, Kuznets-curve, Mondragon (a Spanish cooperative), homoploutia (when the rich both own capital and work for an income) 

Books: Visions of Inequality (Milanovic), Capital (Marx), Capital in the 21st Century (Piketty), Global Inequality (Milanovic), Capitalism, Alone (Milanovic)