Dan Nixon interviews Branko Milanovic about his latest book, Visions of Inequality: From the French Revolution to the End of the Cold War, covering everything from Adam Smith’s surprising views about slavery to misconceptions about Karl Marx’s basic position on inequality.
Dan Nixon is the Managing Editor of LSE Inequalities, having previously held editorial roles in various public sector and non-profit settings. His own work centres around the broad theme of “attention and society” and linking this to debates around technology and the environment. He has an academic background in disciplines across the humanities and social sciences, a particular interest being the philosophy of Maurice Merleau-Ponty.
Branko Milanovic is a Senior Scholar at the Stone Center on Socio-economic Inequality at the City University of New York and a Visiting Professor at the LSE’s International Inequalities Institute. He served as lead economist in the World Bank’s Research Department for almost 20 years. His books about inequality include The Haves and the Have-nots (2011), Global Inequality (2016), Capitalism, Alone (2019) and Visions of Inequality: From the French Revolution to the End of the Cold War (2023).
Cross-posted from the LSE blog
Branko, it’s great to have you here to discuss your latest book, Visions of Inequality. What was your inspiration for this one?
Thank you, it’s always a pleasure to be here at the LSE which is somehow “home ground” for me. The book looks at how inequality was thought about and studied by a group of very influential economists, historically, although it’s not really a “group” in any sense as they were spread out over two hundred years running up until the end of the Cold War.
I start with François Quesnay, who was writing before the French Revolution and is considered by many to be the founder of political economy, along with Adam Smith, the second author I look at. David Ricardo and Karl Marx are respectively the third and fourth. And this troika – Smith, Ricardo, Marx – is very common to be studied together, so there is nothing special there. But from the angle of economic inequality, the fifth author, Vilfredo Pareto, is important and interesting, as is the final one, Simon Kuznets. I then have a chapter that deals with how inequality was in my opinion not studied during the period of approximately 1965-90 (what I call “the eclipse”). That’s where the book technically ends, although there is a short epilogue which looks at recent contributions by different authors. This is fairly optimistic as there has been a huge increase in the interest elicited by topics around the income distribution in recent times.
How would some of those earlier thinkers have seen inequality in their time, compared to how we think about inequality today?
You know, what is interesting – and this only came to me as I was writing the book – is that if you look at Quesnay, Smith, Ricardo and Marx, in reality, what we would consider as inequality period was for them inequality between classes. So there were no treatises, then, with titles about some notion like “income distribution”. The income distribution emerges from class inequality.
So when you study them, you really have to look at what economists call functional income distribution, which is basically the distribution of income between three groups: land owners, capitalists (that is, owners of capital) and workers (who “own” labour power).
Quesnay was similar to the others, except that he didn’t have this three-partite distribution; his distribution is little bit more nuanced because it replicates the French situation before the revolution. He has a top class which is composed of three classes: the aristocracy, the clergy and the government. And so the reason Quesnay is so important is that he was the first one to introduce the class structure of a society. Moreover, when he looked at the three “top” classes, he was the first to introduce the idea of a surplus which emerges from the production, not from trade, as mercantilists thought. So there is that surplus, together with the objective that it would maintain the three classes that sit at the top of society, each of which provides some service to society. (The clergy provides religious services or spiritual sustenance, the aristocracy owns land which it rents out, and the government provides justice and peace). Afterwards, with Ricardo and Marx, that class structure becomes the tri-partite one – land owners, capitalists and workers – that we are more familiar with.
And this class-based way of looking at society changed as we move to the work of Pareto, Kuznets and beyond?
That’s right. Pareto is important because for him it’s really the elite versus everybody else. After this there is Kuznets, who looks at the structure of society where inequality is being determined by one part of the population being urban and the other rural, or one part being in manufacturing and the other in agriculture. Finally, when we come to the most recent period – about which I’m somewhat critical in the book – here, basically everything dissolves into “agents”.
So classes essentially disappear. And that was something that I was not fully aware of before: that we move from the world of class structure to an “elite vs everybody else” to a world of urban vs rural and then, finally, to a world where everybody is essentially the same.
To what extent do you think that mainstream economists working on inequalities today are factoring in these class structures and dynamics?
You know, I argue that this has now already come: it enters via the importance that began to be given to wealth and capital. Up until around the end of the last century, there was an enormous number of studies of wage inequality, the skill premium, differences between gender and that sort of thing. And of course, wages are important: they represent about 70% of the gross market income (including social transfers). But the main contributor to inequality is income from capital. And once you introduce income from capital you really introduce a class structure. So what we are doing now is re-introducing the class structure.
On top of that, we now are concerned about inequalities which these earlier authors were not necessarily worried about – or I should say, which they did not understand very much. For example, the historical issue of slavery is to some extent more present today in the analysis of capitalism than it was either in Marx or Smith. It was there, too, but I think it’s more prominent now. The gender issue was really quasi-non-existent throughout, maybe until Kuznets (but even he didn’t really look at it very much). And you can add to that the racial issue. So we have a much greater variety now, although I still think it’s important for studies of inequality to also be focused on the structural characteristics of a society.
What other insights could you share from these thinkers – perhaps that you found interesting or surprising, or which shed light on problems we’re grappling with today?
Well, although I read them since I was a much younger man, still there are many things that I’ve learned by re-reading them and also by reading books or letters that I had not read before, for example sociological essays like Marx’s essays on Class Struggles in France 1848-50 and the Civil War in 1871.
There are many things that I found that are new for me, but since I mentioned slavery, I found Adam Smith on human slavery quite interesting. He was a very great opponent of slavery on ethical grounds and also believed that slavery is inefficient as a way of production. But he also believed – and here’s the interesting part – that at some level slavery is inevitable in human society. He saw the absence of slavery in Western Europe at that time (there was no forced labour any more after the French Revolution and in England forced labour had kind of disappeared since the Middle Ages) but it was still present in most of Europe, in Russia, in the Americas, in the Arab world and the Ottoman Empire, and in China and India.
And he believed that one would never get rid of slavery because the slave owners are very powerful politically and they would never give away their assets. So as we would see it today, if we were to say to people who are extremely rich something like: “you should give the state (with no compensation) anything that you have above £5 million”, then according to Smith, this would never happen because of the political power held by the rich today, akin to the power of slave owners in the past.
That’s very interesting – and it speaks to suggestions like Ingrid Robeyns’s idea of limitarianism, the idea that above a certain threshold (say £100 million), there’s actually no moral (let alone economic) case for any individual to have such a sum as personal wealth. And Robeyns is very clear: this is not something we can imagine in any realistic way within the Overton window of what is politically acceptable today, but having this discussion is nonetheless important if we wish to imagine what a radically different world – a world without billionaires, for instance – could look like, and to consider whether or not this would be desirable.
Yes that’s right: one could take hope from Smith’s inability to imagine a world without slavery – this despite all his insights in other areas – when it comes to the possibility for imagining today radically different political economy configurations in the future. But what this example also gives you is a sense of how Smith was in many ways very realistic because he saw that people who have wealth also tend to have political power.
And one last point around his views on slavery, as I think this is almost never brought up. In his view, the condition of a slave is better in an arbitrary (that is, autocratic) government than in a quasi-democratic government. And the reason is as follows. He sees democratic governments as essentially being plutocratic governments of a ruling oligarchy. And for the reasons mentioned, he says these people are in power, they all own slaves, and they find it very difficult to disagree with their peers over their treatment of slaves. For example, suppose you and I have slaves, and I treat mine very badly. You will be reticent to complain about this; about reproaching me for treating my slaves badly because such interference in the way that I manage my property will be resented not only by me but by other slaveholders as well. You may get ostracized by your peers.
By contrast, Smith says, in the autocratic government, the relationship between the autocrat and the slaves is totally hierarchical; even the people in the middle, they’re simply in the middle, way below the autocrat: they are not his peers. So an autocrat can actually improve the position of the slaves more easily, should he wish to. And that’s why Smith says that actually in the French colonies, the position of slaves was better than in the English colonies. But that’s not what we would a priori expect, right? We would say: “OK, well democracy is better. Consequently, the slaves should be treated better in a democracy than in an autocracy”. But Smith says the exact opposite.
That’s an interesting insight. Is there another of the six thinkers who you’d like to say a bit more about here? Or perhaps around any misconceptions we might have about their views regarding inequality?
Well, I think that with Marx, what is interesting is that many people believe that because he’s on the left and he’s more radical than social democrats, that he must be extremely concerned about inequality. But that’s really not the case. What Marx was aiming for is a systemic change, which means the abolition of class society and the abolition of the private ownership of capital.
He thought that the reduction of inequality within a capitalist society was desirable insofar as it goes together with the trade unions’ struggle, with better conditions for the working class, and so on. But it was not, for him, the ultimate objective, and he was very explicit about this, particularly towards the end of his life (when he made his famous Critique of the Gotha Programme); all of this is just the means, and some believe that what he meant by this is that the trade union activity and all the work on the reduction of inequality is simply in the service of creating the political momentum and self-awareness among the working class that they should overthrow the system. In other words, for Marx, the reduction of inequality was a tool, not the aim, in capitalist society.
Interestingly, though, he says that once we shift to a socialist society, then we can start discussing this. And he famously introduced the idea that at first in socialism, the distribution would be using an equal criterion, but not one that would give to everybody the same amount as people are different by effort and intelligence, and because of this, there will always be differences in personal incomes and hence some inequality in society. As Engels put it, people who live in the valley will never have exactly the same income as people who live in the hills. Finally, it is only in the future that you reach a utopian communist society where the distribution would be according to the famous principle “from each according to his ability, to each according to his needs”.
So I think it’s interesting to distinguish between these three types of societies that Marx had in mind, and not to assume that because he’s more radical, he necessarily wants more equality regardless of the context. And this point speaks to a general aim of the book: to show just how much views have varied across the ages and across societies. We cannot therefore speak of “inequality” as a general concept; any analysis of it is inextricably linked to a particular time and place.
Due to the Israeli war crimes in Gaza we have increased our coverage from five to six days a week. We do not have the funds to do this, but felt that it was the only right thing to do. So if you have not already donated for this year, please do so now. To donate please go HERE.
It’s strange how Quesnay has beeen labeled founder of political economy now, a thing he never was during two hundred years after his death. It must be the neoclassic hegemony – after all Quesnay did coin the concept laissez faire.
Instead, Antonio Serra, Giovanni Botero and others were considered founders, two hundred years before Quesnay. But of course they proposed state intervention, so they probably don’t count.