A couple of months after the publication of the first volume of his Democracy in America (1835), the French aristocrat Alexis de Tocqueville departed from his homeland again, this time to visit England and Ireland. Although he had previously visited the British Isles in 1833—when he met his future wife, Mary Motley—Tocqueville was now embarking on his first journey through industrialized Manchester.
Just a few decades earlier, France had been significantly more unequal as a society than Great Britain. However, with the onset of the Industrial Revolution in Britain, profound and growing economic disparities had reshaped the social structure. In his journal, Tocqueville remarked, “[T]he English have left the poor but two rights: that of obeying the same laws as the rich, and that of standing on an equality with them if they can obtain equal wealth.”
His encounter with Manchester left an indelible mark. Amid an emerging “cult of money,” a stroll through the birthplace of the modern factory presented stark contrasts. Tocqueville observed three hundred thousand “human creatures” toiling in the half-light of a city shrouded in perpetual fog, where the sun appeared as “a disc without rays.” “Here is the slave, there the master, there the wealth of some, here the poverty of most,” he wrote. “Here humanity attains its most complete development and its most brutish; here civilization works its miracles, and civilized man is turned back almost into a savage.”
England’s unprecedented inequality was the product of a modern and profoundly disruptive labor market, along with the ascendancy of private property rights that restricted access to pasturage, water, wood, and common land. In response to this growing inequality, which quickly spread to other industrializing countries, observers developed novel perspectives on what was then called the “social question.” Inequality’s causes and effects became one of the most fiercely debated topics of the mid-century, fueled by the pervasive sentiment that revolution loomed on the horizon. Engels cautioned that the “deep wrath of the whole working-class…against the rich” would inevitably “erupt into a revolution,” while Tocqueville prophetically sounded a warning just weeks before the revolutions of 1848 unfurled across Europe.
While present-day levels of inequality invite comparisons with the nineteenth century, today’s understanding of inequality is very different. What strikes one reading Tocqueville, Adam Smith, or Karl Marx is their neglect of interpersonal inequality—disparities among individuals. They focus instead primarily on inequalities among classes, determined by land ownership, capital, or labor position. Far from being concerned solely with altering the income distribution, they either hoped for or feared a transformation of the underlying class relations themselves.
Attempting to understand the shift in economic thinking about inequality from the eighteenth century to today is the task of economist Branco Milanovic’s new book, Visions of Inequality: From the French Revolution to the Cold War. Rather than crafting a history of inequality using our contemporary definition, Milanovic aims to illustrate how “our perspectives on inequality are shaped by the fundamental characteristics of our societies.”
The book begins with French economist François Quesnay and the classical political economy of Smith, David Ricardo, and Marx; progresses into the twentieth century with Vilfredo Pareto and Simon Kuznets; then culminates with the decline of interest in inequality characteristic of Cold War economics in both capitalist and socialist spheres. The selection is, of course, not exhaustive, but it allows Milanovic to articulate a compelling history of the concept of inequality.
Class is the crucial dividing line in Milanovic’s narrative. From Quesnay to Kuznets, we have transitioned from a legal definition, closer to what Max Weber called “status,” to an economic definition, and finally to the near disappearance of the very idea of class in favor of individualized explanation. Legal classes dominated ancien-régime societies like France at the time Quesnay published his Tableau Économique (1758). In such systems, as with most pre-capitalist societies, class is not defined in economic terms alone and class behavior cannot be reduced to economic incentives. Indeed, the status associated with the clergy and aristocracy acted as a barrier to the development of markets, albeit one that was eventually overcome. Only with the gradual rise of markets and the instrumental rationality that attends them did economic interests become decisive.
This profound transformation is captured first by Adam Smith and then by Ricardo. For them, inequality was “functional”: income does not define one’s class position, but is rather an upshot of it. As Milanovic writes, “interpersonal income distribution is subsumed within [one’s class role], or rather determined by it.” Since income inequality at the interpersonal level was just a reflection of class, it was of limited interest to Smith and Ricardo; instead, they focused on the relationship between the class structure and the common good.
According to Milanovic, Smith (1723–1790) was the first to focus on the welfare of the largest group in society: the proletariat. “No society,” Smith wrote, “can surely be flourishing and happy, of which the far greater part of the members are poor and miserable.” Such concern led him to argue—contrary to the common understanding of his famous “invisible hand”—that not every class interest was aligned with the growth of markets. Smith went as far as to argue that capitalists’ interests were “never exactly the same as that of the public,” and that they generally tried “to deceive and even to oppose the public.” It’s true that Smith advocated for a minimal state, but this was to prevent its capture by special interests. Despite the way his work has been appropriated, he thought that the general welfare depended on preventing the capitalist class from imposing its narrow interests on others.
Ricardo (1772–1823) adopts Smith’s division of society into three classes (landlords, capitalists, and proletarians), but largely dispenses with his wariness of capitalists. For Ricardo, the goal is no longer to increase the wealth of the lower class, but rather to accelerate growth. The conflict to be feared, consequently, is not that between capitalists and the rest of society but specifically that between landlords and capitalists. According to Ricardo, rising rents, which favor landlords, raise the cost of food and translate into higher nominal wages for workers but lower profits for capitalists. This low-growth environment means higher inequality as landlords siphon off a greater share of the income distribution. According to Ricardo’s model, even though high growth translates into outsized profits for capitalists, it lowers inequality overall. This, Milanovic notes, was the first model to offer an “integration of income distribution and economic growth.”
Finally, in Marx (1818–1883), the three classes coalesce into two, since for him, landlords are just another type of capitalist lined up against labor. However, since Marx envisioned a classless society under communism, he wasn’t very interested in income distribution or the kind of redistributive politics that the Left typically advocates for today. From his perspective, redistribution would forestall revolution and leave the class system intact.
As Milanovic notes, Marx understood the “system of production and distribution” to be unified. “Any distribution whatever of the means of consumption,” he wrote in his Critique of the Gotha Programme, “is only a consequence of the distribution of the conditions of production themselves.” Focusing on redistribution was typical, he thought, of “vulgar socialism” and those liberals who, like “bourgeois economists,” considered distribution “independent of the mode of production.”
But Marx’s critique of the discourse around inequality went further. He didn’t believe that the abolition of capitalism and its class system would or should bring an end to inequality. It would continue to exist even under communism at its most developed phase. Indeed, Marx invoked the slogan popularized by the French socialist Louis Blanc a few years before—“from each according to his ability, to each according to his needs”—precisely because of the implication that people’s abilities and needs are not equal. For Marx, with the sensational development of the productive forces under communism, the question of inequality would simply become irrelevant. Once all human needs, broadly construed, can be fulfilled, inequality simply ceases to be a salient issue. To be sure, this abstract view is arguably inconsistent with Marx’s own views on human needs as socially constituted, but it shows the extent to which a focus on the class system and production could trump concerns about inequality and distribution.
In any case, by the turn of the century, economists’ focus on class relations began to wane. Italian sociologist and economist Vilfredo Pareto (1848–1923) led the shift toward an inter-individual conception of income distribution. While he admired the work of Marx and dedicated some of his teaching to socialist doctrines, Pareto was a conservative. He thought the overall income distribution in society would be difficult to alter since it probably reflected “the distribution of physiological and psychological characteristics of human beings.” His famous “law” stated that, regardless of political institutions, the distribution of income seemed to be constant, with roughly 80 percent of wealth controlled by 20 percent of the population.
But as Milanovic rightly points out, his views were less fixed than is usually assumed; Pareto did concede that this calculation was only valid “for a capitalist society.” But his conservative acceptance of inequality explains why he shifted his interest from class relations to competition between individuals. The “class struggle,” he wrote, “is a real factor...but the struggle is not confined only to two classes.... [I]t occurs between an infinite number of groups with different interests, and above all, between the elites contending for power.” In his worldview, class conflict is replaced with conflict among “atomistic individuals, caring only about their own gain and loss, not believing in any community or religious ties.”
Finally, with Russian-American economist Simon Kuznets (1901–1985), Milanovic writes, “social classes and the elites both disappeared,” leaving just individuals. Kuznets won a Nobel Prize by providing, for the first time, empirical data on the global income distribution. In a path-breaking 1954 work he argued, contra Pareto, that relative inequality did not remain in a fixed ratio but would evolve in relation to structural changes in the economy. It increased with industrialization and the early stages of urbanization only to decrease when the productivity gap between the non-agricultural and agricultural sectors diminished. This evolutionary account justified pro-development policies even if they increased inequality over the short term, since, in the long term, it was assumed growth would bring inequality down. Of course, by the time he died in 1985, the “Kuznets hypothesis” was slowly being invalidated by accelerating inequality in Western countries.
After Kuznets, the discourse on inequality rapidly declined on both sides of the Cold War. In the West, political and social factors played a role, along with changes within the field of economics itself. The “neoclassical revolution” promoted a more formalized approach to economics, primarily focused on price formation, which left little room for discussions of income distribution. As Milanovic observes, Paul Samuelson’s influential nine-hundred-page textbook Economics dedicated a mere two pages to the topic. One of the leaders of the neoclassical revolution, Robert Lucas, argued vehemently against the focus on distribution, considering it one of the “most poisonous” tendencies in economics. The new models simply took distribution of assets as a given, obfuscating the fact that, as Milanovic writes, the “relationship between an employer and an employee is not merely a numerical relationship expressed by the gap of their income.” According to neoclassical economics, “Bill Gates and a homeless person behave alike economically and are just like two agents optimizing within constraints.”
Surprisingly, the Cold War neglect of inequality extended to socialist countries. This was partly due to strict secrecy surrounding data collection, which hindered economists’ ability to delve into the topic. Moreover, since historical examinations of inequality were predominantly structured around social classes and socialist governments wanted to present themselves as “classless societies,” questions about persistent inequality were implicit rebukes to their favored narrative. Finally, given Marx’s denigration of the concept of inequality, income equalization simply wasn’t a primary objective for socialist economists.
It’s only in the first decades of the twenty-first century that inequality has been put back on the agenda. The pioneering empirical work of Anthony Atkinson, Thomas Piketty’s mentor, was of crucial importance, but the crisis of 2008 really opened the space for a public debate about inequality and led to the worldwide success of Piketty’s Capital in the Twenty-First Century. This book offered not just data, but a compelling narrative and a theory of how wealth became so concentrated in Europe and the United States.
To be sure, Piketty’s book largely accepted a strictly inter-individual definition of inequality. But Piketty’s analysis, along with the financial crisis itself, led to a resurgence of interest in class relations and power structures. And debates spurred by his book have highlighted how a narrow emphasis on income distribution may obscure discussions surrounding workplace democracy, social needs, and public investment.
These normative questions naturally lie beyond the scope of Milanovic’s investigation. Nevertheless, by merely exploring the different ways inequality has been conceptualized, he prompts us to consider the political ramifications of our restricted focus on inter-individual distribution. In his classic 1974 book Labor and Monopoly Capital, the Marxist economist Harry Braverman already noted the profound implications of the shift away from a class-based analysis. Braverman wrote, “The critique of the mode of production gave way to the critique of capitalism as a mode of distribution.”
This transformation wasn’t merely technical; it represented a shift not only in our understanding of injustice and inequality but also in the significance attributed to politics in shaping social relations. The principle of self-governance over production, which was at the heart of the socialist agenda, had been relegated in favor of merely altering the distribution of resources.
During the second half of the twentieth century, this limited perspective sanctioned a retreat from the political domain in favor of market-based economic solutions, helping to erode democracy and the vitality of civic life. The pressing question, then, for those confronting inequality today, is how to integrate their analysis into a wider agenda that will democratize the economic realm and establish institutions enabling citizens to collectively shape their own destiny.
