Enlightenment Now: The Case for Reason, Science, Humanism, and Progress

Hunter-gatherers are by all appearances highly egalitarian, a fact that inspired Marx and Engels’s theory of “primitive communism.” But ethnographers point out that the image of forager egalitarianism is misleading. For one thing, the hunter-gatherer bands that are still around for us to study are not representative of an ancestral way of life, because they have been pushed into marginal lands and lead nomadic lives that make the accumulation of wealth impossible, if for no other reason than that it would be a nuisance to carry around. But sedentary hunter-gatherers, such as the natives of the Pacific Northwest, which is flush with salmon, berries, and fur-bearing animals, were florid inegalitarians, and developed a hereditary nobility who kept slaves, hoarded luxuries, and flaunted their wealth in gaudy potlatches. Also, while nomadic hunter-gatherers share meat, since hunting is largely a matter of luck and sharing a windfall insures everyone against days in which they come home empty-handed, they are less likely to share plant foods, since gathering is a matter of effort, and indiscriminate sharing would allow free-riding.²¹ Some degree of inequality is universal across societies, as is an awareness of inequality.²² A recent survey of inequality in the forms of wealth that are possible for hunter-gatherers (houses, boats, and hunting and foraging returns) found that they were “far from a state of ‘primitive communism’”: the Ginis averaged .33, close to the value for disposable income in the United States in 2012.²³

What happens when a society starts to generate substantial wealth? An increase in absolute inequality (the difference between the richest and poorest) is almost a mathematical necessity. In the absence of an Income Distribution Authority that parcels out identical shares, some people are bound to take greater advantage of the new opportunities than others, whether by luck, skill, or effort, and they will reap disproportionate rewards.

An increase in relative inequality (measured by the Gini or income shares) is not mathematically necessary, but it is highly likely. According to a famous conjecture by the economist Simon Kuznets, as countries get richer they should get less equal, because some people leave farming for higher-paying lines of work while the rest stay in rural squalor. But eventually a rising tide lifts all the boats. As more of the population gets swept into the modern economy, inequality should decline, tracing out an inverted U. This hypothetical arc of inequality over time is called the Kuznets curve.²⁴

In the preceding chapter we saw hints of a Kuznets curve for inequality between countries. As the Industrial Revolution gathered steam, European countries made a Great Escape from universal poverty, leaving the other countries behind. As Deaton observes, “A better world makes for a world of differences; escapes make for inequality.”²⁵ Then, as globalization proceeded and wealth-generating know-how spread, poor countries started catching up in a Great Convergence. We saw hints of a drop in global inequality in the blastoff of GDP in Asian countries (figure 8-2), in the morphing of the world income distribution from snail to two-humped camel to one-humped dromedary (figure 8-3), and in the plunging proportion (figure 8-4) and number (figure 8-5) of people living in extreme poverty.

To confirm that these gains really constitute a decline in inequality—that poor countries are getting richer faster than the rich countries are getting richer—we need a single measure that combines them, an international Gini, which treats each country like a person. Figure 9-1 shows that the international Gini rose from a low of .16 in 1820, when all countries were poor, to a high of .56 in 1970, when some were rich, and then, as Kuznets predicted, it plateaued and began to droop in the 1980s.²⁶ But an international Gini is a bit misleading, because it counts an improvement in the living standards of a billion Chinese as equivalent to an improvement in the standards of, say, four million Panamanians. Figure 9-1 also shows an international Gini calculated by the economist Branko Milanović in which every country counts in proportion to its population, making the human impact of the drop in inequality more apparent.

Figure 9-1: International inequality, 1820–2013

Sources: International inequality: OECD Clio Infra Project, Moatsos et al. 2014; data are for market household income across countries. Population-weighted international inequality: Milanović 2012; data for 2012 and 2013 provided by Branko Milanović, personal communication.