Saturday, February 7, 2009

Distribution of Wealth – Ancient times and now

In difficult economic times, the distribution of wealth is raised as an indicator of immorality and unfairness in whatever society is being discussed. Critics point out that the rich are stealing from the poor, to become more wealthy themselves. Is this criticism valid and, if so, what can be done about it?

As much as I dislike the rich and feel sorry for the poor, there is an element of unfairness in human society that cannot be overcome. People in groups divide themselves naturally by intelligence, aptitude, and personality to produce a hierarchy of wealth and power. Why should this be so? It’s simply the fact that men are not equal in capability and temperment. Take a critical mass of people, perhaps ten thousand or more, put them together in a tribe, and a distribution of labor emerges. There will be farmers, blacksmiths, mechanics, cooks, tanners, merchants, soldiers, and finally kings. Most people do not want to worry about every aspect of their lives: finding/growing food, creating shelter, protecting themselves from harm, etc, so they become members of groups which incorporate a division of labor. Since each skill has a economic value, the ability to become wealthy depends on demand for a skill.

Let me quote a passage from Caesar’s Conquest of Gaul, illustrating the distribution of wealth in the flat societies of the Gallic tribes of 50 B.C:

“Everywhere in Gaul there are only two classes of men who bear any consideration. The common people are treated as slaves never to venture on their own initiative and are not consulted on any subject. Most of them, crushed by debt or heavy taxation or the oppression of more powerful persons, bind themselves to serve men of rank, who exercise over them the rights masters have over slaves. Two privileged classes exist: the Knights and the Druids. The Knights lead the army into battle; the Druids act as the religious men of the tribe.”

Like Gaul, Rome began with a highly disproportionate distribution of wealth: the Patrician class in control and the Plebian class subservient. In 200 B.C, the adult male population of Rome was 270,000 and the value of all property about $ 3 billion. It’s easy to imagine the wealthiest 1% of the population controlling 50% or more of this wealth. Scipio Africanus, the great general, who died in 183 B.C, left an estate of $ 600,000. His relative by marriage Aemilianus Paulus left an estate of $ 250,000.

As time went on in the Republic, there arose two great forces impacting the distribution of wealth: booty from war and the emergence of the Equestrian class (Knights). The former tended to enrich the generals (Caesar, Pompey and others) and move them up the wealth ladder, while the Knights became rich through their own efforts. Since the ruling class was prohibited from trade because it was seen as a low profession, the Knights became the businessmen the state needed to make the Republic work. They formed their own corporations and engaged in tax collection and public works. Over time, the wealth accumulated by the Knights, lowered the percentage of wealth controlled by the ruling class.

What about other societies? In America, since 1983, the percentage of wealth held by the top one percent of the population has been in the range of 30-35%. In 1916, the figure was 40%. The distribution of wealth for the top one percent in the United Kingdom fell steadily in the twentieth century – 70% in 1911, dropping to 23% in 2002. In Milan, Italy the percentage held by the top one percent was 23% in 1870 and 41% in 1900. Although wealth distribution statistics are scant, they still point to a certain inevitability regarding wealth and the human race.

I believe it is impossible to use legislation to re-distribute wealth. Where legislation is used, twin constraints act against it. The wealthy find ways to protect what they have, including the control they have over government, and the inefficient government apparatus setup to manage the re-distribution fails to achieve its goal. In the end, the forces of human behavior in a society drive the distribution of wealth to its own equilibrium.

4 comments:

John said...

Mike, I find this question of wealth distribution interesting, but I find your explanation a bit disheartening in that it shows that the nature of man is often an unchanging thing (I mean your evaluation of the subject shows this, not necessarily mankind as a whole as you are trying to persuade). I think everyone is aware that greed is historical, but the question is why has it been prevalent and is this something that is an absolute or has there been changes throughout history or times in history when it was more or less and when and why? You've painted a rather bleak picture of greed as if it will never change, but world history doesn't agree with you entirely. There are many examples of people who have tried and some who have accomplished freedom from greed. The fact that this is a question proves that there is a desire to be free from greed. Will there always be greed in the world? As man evolves he will undoubtedly mature in this subject. Remember, to borrow from your example, Rome use to watch people get murdered for entertainment, but that is a merely a note in history now.

corey91 said...

Its too bad that you have such a narrow view of society. This ideology is the sole invention of the Europeans. Other societies and cultures in different regions of this planet thrived without this distribution of wealth system that is prevalent today. It was only upon invasion that those cultures ended. The Europeans specialized in pillage/plunder and called it distributing of wealth. To systematically take advantage of others is a mental problem.

Mike Anderson said...

Corey,

You've got to read more history. Turns out that the Chinese, Peruvian, Mesoamerican, Egyptian, and Mesopotamian cultures all developed the same way. When man began to grow crops, he became differentiated by talent to support complex urban environments. At first only the strongest individuals held the wealth. Later land holdings made others rich and gave them power. Those without land were relegated to a lower position in society.

Michall said...

Interesting ... so the wealth distribution did not grow as the empire grew? In the republic times of Rome the distribution was less equal than in late empire state?

Can the distribution of wealth be the scale/inhibitor/source of instability of state/empire?

Or more precise is the inflation of currency?