1/2 A good place to start , germane to the current debate, is the data and analysis, going back more than two centuries, set out by Thomas Piketty in his best-selling study of historical and present-day inequality, Capital in the Twenty-First Century. It's generally accepted that the database Piketty built to write this work is broader and more thoroughly combed-through than anything comparable that was previously available.

All of Piketty’s economic and historical analysis in Capital is based on two extensive sets of data. The first is the World Top Incomes Database (WTID), an ever-growing collection of income statistics for dozens of countries over hundreds of years. Piketty states that his data set broadens the spatial and temporal limits of the pioneering work done in the same field by Kuznets in the 1950s, for many countries covering the eighteenth to the twenty-first centuries.

Piketty and his colleagues, including Emmanuel Saez, Anthony Atkinson, and Nancy Qian, used tax data to estimate the top income brackets—the top 10 percent, top 1 percent, and even smaller slices of the population—for the United States, Britain, France, Sweden, and Japan. They had data for other countries too, although it was less reliable. The data focuses on the income in the upper income brackets for a practical reason. In most countries before the mid-twentieth century, only people in the upper income brackets paid income taxes.

In addition to covering more countries and many more years, Piketty’s work adds other innovations to Kuznets’s work. Perhaps most important, Piketty is able to examine much finer fractions of income than Kuznets could. Kuznets focused on the income bracket for the top 1 percent in the United States, but Piketty creates brackets for the top 0.1 and top 0.01 percent, which gives him greater insight into the growing importance of the super-rich.

Piketty’s second important source of data tracks not how much people earn, but how much wealth they own. This data is based on estate tax returns—the information that must be provided when someone dies and their wealth is passed on to their heirs. The economist Robert Lampman pioneered the use of estate tax returns to study wealth inequality—the gap in wealth between the rich and others—in 1962 for the United States, and Atkinson and Alan Harrison later applied that approach to Britain. Alongside Jean-Laurent Rosenthal and Gilles Postel-Vinay, Piketty collected the data for France, for which he has more extensive information than for any other countries, dating back to 1807.

This wealth data allows Piketty to examine the link between wealth and income, which is central to his important arguments concerning inequality. The data also enables him to explore the effect of wealth-destroying shocks, like war or financial crises, on inequality.

As for what Piketty says about his findings from this data: he pays little attention to historical changes in living standards. He is almost exclusively concerned with how the difference in living standards between the rich and other people changes over time. For example, he does not attempt to compare the living standards of the nineteenth century poor with those of the twenty-first century poor. Rather he looks at the position of the poor compared to the rich in each of the periods he studies. In other words, the book focuses on the share—or portion—of income and wealth that each layer of society gets. Piketty makes statements such as, “The top decile’s [10th’s] share of total wealth [in the United States] dropped from 80 to 70 percent,” meaning the percentage of the entire economy held by the most wealthy 10 percent of the population fell by 10 percent.

Piketty uses a number of key measures to track the economy over the long term. Most important is capital, which he uses to mean the same as wealth. To Piketty, capital means “all forms of wealth that individuals (or groups of individuals) can own and that can be transferred or traded through the market.” Capital includes land, real estate, stocks and bonds, machinery, agricultural commodities, and other assets for which there are functioning markets. Due to the requirement that capital must be something that can be bought or sold, Piketty does not include human capital, such as a person’s education and skills, in his analysis of capital.

The other key measure in the book is income, which Piketty measures both for individuals and for countries. For most individuals, income is wages and possibly dividends (a share of the profits of a company in which they own stocks) or interest payments from capital they own. National income is then defined as “the sum of all income available to the residents of a given country in a given year, regardless of the legal classification of that income.”

Much of the analysis in the book involves the capital-income ratio, which Piketty labels β. It is calculated by dividing a country’s total amount of capital by the total national income in a given year. For example, if a country’s capital is worth 100 units, and national income in a given year is 20 units, β for that year will be 5—meaning it will take five years of income to accumulate the total capital for that economy.

Piketty claims that β is closely linked to inequality. A high β, meaning low income compared to a country’s capital, represents an economy with a low rate of economic growth (since lower income means lower growth) and high savings rates (since a large amount of capital has been saved up). Over time, that will lead to more inequality, as capital continues growing faster than income. If economic growth increases and the rate of savings does not change, β will tend to fall, bringing inequality down. This is a key point: simplifying somewhat, Piketty describes inequality—the gap between rich and poor—as higher during periods of stronger capital accumulation (the growth of a country’s wealth), and lower during periods of stronger economic growth.

In Capital, Piketty pushes against what he calls “economic determinism,” or the belief that there are natural forces within capitalism that keep it moving towards greater equality. In fact, Piketty states that “there is no natural, spontaneous process” making society more equal. As a result, he argues that without government action, there is no reason to expect inequality will not rise to very high levels in the future.

The key historical fact in the book is that wealth inequality in Europe and the United States over the last three centuries can be roughly divided into three stages, though each country’s experience is somewhat distinct. From the eighteenth century to what was known as the Belle Epoque at the end of the nineteenth century, private wealth held by the rich was far greater than national income. This means that β was very large—in some places greater than 7. Then, in the aftermath of World War I, the capital stock—or private and public wealth—shrank rapidly, and β remained low for several decades. In Britain in the 1940s, for example, it was as low as 2. Since the 1970s, inequality has risen nearly everywhere, a trend Piketty expects will continue.

Piketty’s explanation for these trends is based on three “fundamental laws of capitalism.” The first two are somewhat technical. The third, what he calls the “fundamental force for divergence,” is key. For the vast majority of human history, and in particular since capitalism took off in the eighteenth century, the rate of return on capital, represented by r, has been greater than the growth rate of the economy, represented by g. The rate of return refers to the average yearly profit or interest you get when you invest your wealth instead of keeping it hidden under your mattress.

The rate of return on capital has been remarkably constant— around 5 percent per year—throughout recorded history, even as the economy has evolved from agricultural to industrial to service-oriented. In contrast, annual growth rates for most of human history were tiny and only reached levels of 1 to 2 percent—and occasionally 3 percent—in the last two centuries.

To Piketty, the fact that the average rate of return is bigger than the average growth rate is what drives the economy towards inequality. When the return on capital exceeds the growth rate (which can be expressed as r > g, or r is greater than g), “it logically follows that inherited wealth grows faster than output and income.” Since fewer people than those who earn wage income hold capital, society will tend towards inequality.

As an example, consider two people, Jane and Joe. Both have the same job and earn $100,000 per year. Unlike Joe, Jane has an inheritance of $10 million, which she invests in the stock market, earning a return of 5 percent. Joe has no savings. Assuming both Jane and Joe spend $100,000 per year, let’s look at how their total wealth changes over time. After one year, Joe will have made his $100,000, which he immediately spends. Jane will have made $600,000 ($500,000—which is 5 percent of her $10 million capital—and $100,000 from her job). She also spends $100,000 but reinvests the $500,000. After 10 years, Joe’s total wealth will have grown very little—perhaps a bit if he can negotiate a raise—while Jane’s $10 million will be now be worth more than $16 million. In the beginning of this example, Jane was already much richer than Joe, but thanks to the dynamics of r > g, their total wealth is even more unequal at the end.

To expand upon this question, does this question already have any related answers in the archives?

I know of at least one study that attempted to answer this for ancient Rome. Their target was the state of the economy when the empire was at its population zenith, around 150 C.E. Sorry I know you preferred post classical but I'm not aware of a similar study for that period.

Schiedel and Friesen estimate that the top 1 percent of Roman society controlled 16 percent of the wealth, less than half of what America’s top 1 percent control.

In total, Schiedel and Friesen figure the elite orders and other wealthy made up about 1.5% of the 70 million inhabitants the empire claimed at its peak. Together, they controlled around 20% of the wealth. The next 10% composed of middling class households controlled another 20%. The remaining ~90% controlled 60% of the wealth, though this was just enough for them to eat once distributed.

They also built a theoretical Gini coefficient. The Gini coefficient scales from 0 to 1, where 0 means each portion of the population gathers an equal amount of income and 1 means a single person collects everything. Schiedel and Friesen calculated a Gini coefficient of 0.42–0.44 for Rome. By comparison, the Gini coefficient in the U.S. in 2007 was 0.45.

So overall wealth inequality in the US is probably on par with or slightly more exaggerated than in the Roman Empire. Take that with a grain of salt because it's notoriously difficult to compare economies like this over centuries or millennia.

Source: Scheidel, W., & Friesen, S. (2010). The Size of the Economy and the Distribution of Income in the Roman Empire Journal of Roman Studies, 99 DOI: 10.3815/007543509789745223

From what little we know, the past was a pretty unequal place, in terms of incomes. But leave the emphasis is on the "little" more than the "we know."

Modern "statistics" in the sense of states collecting data about the inhabitants of the country they govern, are largely developed in the latter half of the 19th century, and thus, questions about inequality going back before this cutoff are more difficult to answer. The sorts of tax data collected by Piketty, Saez and their various coauthors are unavailable for the period prior to income taxes, and finding substitutes is not easy. They are also very difficult to compare across time and space, without comparable data, long run price series, and so on.

One standard method is to use Social Tables. Gregory King's Social Tables (the "Scheme of the Income and Expense of the Several Families of England") from 1688 are a classic source for studying English inequality. They divide the population up by income levels, allowing a very imprecise, but comprehensive look at the population's earnings. They also allow the calculation of income shares for various population groups, though of course the extraordinarily rich (top 1%, 0.1%, etc...) are "top coded" in that they are listed as simply being above a certain level of income. Lindert and Williamson (1982, 1983) used them to study inequality, and combine them with other sources to attempt to show change over time.

Bob Allen (2016) has a working paper re-revising the King social tables which puts the matter quite clearly. A "rich" person might be in the landowner class (1.8% of the population) earning on average £271/year, whereas the capitalist/bourgeois class (merchants, officials, lawyers and such, 3.4% of the population) would be earning £175/year. A normal farmer or worker would be earning more like £12-16 a year, and they would be more like 80% of the population. So, that's a pretty big gap, on the order of 15-20x income gap between the median worker and the median "rich person" (top 5%). Allen's results are a bit more modest if you measure in terms of household purchasing power rather than individual earnings, presumably because there are usually more income earners in lower income households.

Lindert and Williamson have also worked with Branko Milanovic to assemble a variety of social tables for different societies going far back in time, and while the evidence is extremely fragmentary, they try and draw some conclusions about "ancient inequality." They suggest that, in general, ancient societies were quite unequal, but not out of line with modern standards in terms of Gini coefficients. They also try and construct what they call "inequality extraction ratios." The idea here is to correct for the concept that, for a given level of income, only so much "extraction" of wealth by the top income % is possible, because the lower % will fall below the threshold of subsistence, which is obviously not sustainable. And so, richer societies can be more unequal, as measured by standard metrics such as the Gini coefficient, simply because there is more income to distribute unevenly before people begin to starve. Or, put a different way, there is a "maximum feasible Gini," and the "inequality extraction ratio" is equal to 100 if the measured Gini = maximum feasible Gini.

Their results are a bit all over the map, including some places with extraction ratios higher than 1 (!?), suggesting most people were unable to sustain themselves at all - an implausible long-run state, but conceivably true for some years in some places. But their general finding is that even fairly equal places in the past were about as unequal (in terms of extraction ratios) as modern Brazil or South Africa, and highly unequal places were about as bad as the modern Congo.

I would not trust these results as in any way definitive, but they have been pathbreaking in trying to understand inequality going back further than Piketty et al., and are suggestive of the sources (social tables) that are usually used to make inferences about it.

Sources: Lindert, P. and Williamson, J. (1983) "Reinterpreting Britain’s Social Tables, 1688-1913," Explorations in Economic History (20)

Allen, R. (2016) "Revising England's Social Tables Once Again," University of Oxford Discussion Papers in Economic and Social History, Number 146, July 2016

Milanovic, B., Lindert, P. and Williamson, J. (2011) "Pre-Industrial Inequality," The Economic Journal (121)

For a critical view on the use of King's tables: Holmes, G.S. (1977) "Gregory King and the Social Structure of Pre-Industrial England," Transactions of the Royal Historical Society, vol. 27

This question is explored in Thomas Piketty's book "Capital in the 21st Century". Piketty explains that the wealth inequality for most of the time was wide due to slow economical and demographic growth and due to lack of divergent factors. Up to the World War I, western societies could be described as patrimonial societies, since your status and quality of life was best described by the wealth you own, which in turn was most likely inherited one way or another. The wealthy owners of capital (be it land or, later on, factories) were able to increase their wealth by 5% every year (that is, the rate of return on capital was 5%) while the economy grew roughly 1% every year with a slight increase during the industrial revolution. Bear in mind that the importance of inheritance did not diminish due to the French Revolution or any such events, as wealth and inheritance continued to play a major role in the distribution of income, which in turn perpetuated the inequality of wealth (since I can use extra income to buy more wealth). I am mostly mentioning wealth because as per Piketty's analysis labour income did not play a significant part in the big picture as it was mostly minor. Given in mind that in western societies at least 50% of people did not have any wealth themselves and could not inherit anything, this is a significant distinction. While I cannot provide you exact numbers for income, given that the labour income was negligible compared to income on wealth and that, for example, by World War I 1% of the richest people in France owned about 70% of wealth (according to Piketty) it is safe to say that most of the society lived in relative poverty while the top centile enjoyed great wealth. Piketty cites Jane Austin and Balzac to show that for the aristocracy, even if you had an income that was a couple of times larger than the national average, you were considered quite poor. Capital ratio to national income during this period was about 6-8 years of national income, that is.

All of that changed in the 20th century due to the World War I, the Great Depression, and most importantly, World War II. Indeed, due to it's destruction of wealth, World War II was the major factor in changing both wealth and income distribution across the board. Since there was little capital to inherit or draw income from, the income from labour became the most important factor to determine social status. This was unprecedented and caused a wide middle class to rise. It is considered a period of meritocracy and mild wealth and income inequality. In France, as Piketty notes, the period between 1945-1975 is even called "Les Trente Glorieuses", the Great Thirties. At the beginning of this period, capital to national income ratio was roughly 2-3 times national income.

However, both Capital and Inhertance has started to regain their importance in the 80s. This happened due to a change in taxation of both wealth, wealth income and capital gains (the income you receive for selling assets relative to the price you've bought them for) and the general attitude. As Piketty notes, for example, while in the US up until 80s you've had high taxes on capital gains and income on wealth due to the cultural attitude towards inheritance - it was considered un-American to live off the income on inherited wealth. This, however, did not persist. Capital regained it's importance and right now, according to Piketty, capital to national income ratio is about 6-8 national income again. Piketty also notes a new and unprecedented phenomenon - the rise of patrimonial middle class. Therefore, since 1980 inheritance and income on wealth regained it's importance and therefore it would be safe to assume that, while the situation at the moment is not the same as before the World War I, the forces that cause inequality and wealth concentration might well lead to it. The dynamics of labour income are a bit different as well, as Piketty notes the rise of super-managers - people who have both great wealth that would bring them substantial income, but also have, due to inefficient corporate governance, increased their salaries to up to 60 times the national average. This is different from the rentières before the WWI, who would mostly gain their wealth from a stable income on wealth.

This is my reading of Piketty's "Capital in the 21st Century", I have recently read this book and while I am a historian, I am not an economist. If there are any mistakes, please do correct me. Please also note that while Piketty's book is an important and quite ambitious project to understand the changes in inequality throughout history, nonetheless it has its faults. I would urge to read both Piketty's book and the critique to it and take this with a grain of salt.

I hope this answers your question and is in accordance with subreddit's rules.

(rambling post ahead, I haven't had coffee, but I think it's pertinent to the conversation)

This is a more complicated question than you might have anticipated, OP. The idea of equality as we know it in the Western world has only been around since the Enlightenment, thanks in part to John Locke's writings (Two Treatises on Government, if you're interested). Sure, there are egalitarian aspects to various societies and religions throughout the world, but as I frame it, modern equality tends to require some kind of participation by the state, since concentrations of power (and resources) have been a near-constant, historically. Kings and lords (and czars and boyars, etc) had the most, the serfs/peasants worked to provide first for their lords, second for themselves. A wise lord knew not to overly tax his workers, but the concept of wealth was beyond any commoner (for the most part, I'm assuming there were exceptions). Things began to change in Europe after the Plague, as workers became more scarce and could leverage that fact in their favor. There were experiments throughout Europe during the Renaissance in egalitarian government; the Italian merchant cities were commerce driven and less beholden to traditional class structure than the countryside, and Novgorod in Russia was an important cultural and economic center (until Ivan III ate them in the late 15th century).

(WARNING: MARXIST CONTENT HISTORICAL MATERIALISM AHEAD)

The modern political economy as we know has really only existed since, and I'm really stretching it, the 16th century. Mercantilism, the forerunner to the capitalism we all know and love (eh), found its footing in modernized nations. We have to wait until Louis XIV's France before we see the modern political economy born out of the state's interest in economics. Why is this important? If you accept that not everyone starts on a level playing field, then policies dictating resource distribution require the guidance and institutions of the state. In Lockean terms, each man was entitled to life, liberty and property - the formation of sovereigns was in response to the propagation of private property. As more people came to own and value private property, a stronger hand in the form of the state was required (this is also Engels' view, to some extent - see ). Economic stratification leads to private property ownership, the sovereign exists to safeguard private property.

Okay, why the digression into political theory? If we want to talk about inequality, we have to first define what equality is - in Locke's terms, we're back to "life, liberty, property." The Enlightenment and subsequent progressive movements throughout the Western world have propagated that notion of equality across class lines, so that everyone is (and should, if you agree with Marx on the relationship between economy, class, and political systems) interested in the ownership of private property. So that's one definition of equality, and with that we can define inequality. If it's an even distribution of private property, then holy shit, no, there's never been an equal distribution of resources. In fact, as work becomes more specialized (and this has been shown over time), the rich only tend to get richer as wealth begets wealth (access to information, market capital, purchasing power).

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