LECTURE 17-18: REVOLUTION, REDISTRIBUTION AND SOCIAL REFORMS AFTER WAR Flashcards
how did we measure inequality
wealth not income: capacity to accumulate economic assets more durable in time
trends of wealth inequality: first increased over time
4k years from discovery of agriculture, inequality increased in old world (after development of animal farming substituting human labor) but not in new world:
- presence of domesticable animals in Europe but not elsewhere (cows vs lama)
- shifted most important factor of production from labor to land: accumulable and transmissible so allowed societies to increase inequality and accumulate wealth
- fundamental role by technology and political shifts
episodes of slowdown linked to negative demographic shocks which might have had temporary redistributive effects
1450: Black Death killed 37% of pop, increased value of labor (less workers and higher wages) + plague as leveller because it killed more poor people = inequality decreased in short term
accelerators of inequality
- colonialism
- industrial revolution
industrial revolution
- economic shifts (capitalism), technological changes, agricultural, demographic, commercial, financial, energy
spread of IR
after 1830, other countries catch up in England. move to model in which capital owners extract higher rents and are the real winners of the game
industrialising
creating a new social class that get rich through capital accumulation
implications for inequality
before, mainly at societal level. now, worldwide gap between wealthy / productive countries and poor countries.
colonialism
investing in capital is productive until capital is low: core countries were capital abundant with low returns.
began investing in capital scarce nations with high returns
rise of ownership society shift from feudalism 19th
feudalism: some groups in society possess rights on wealth (clergy and aristocracy) but are not subjected to traditional laws on ownership
industrialisation: ownership society arises based on social class that aims at protecting their own property rights over private wealth
- disappearance of privileges based on religious authority or familial status
- idea that everyone was not entitled to accumulate wealth, a right secured by state
belief in benefits of generalised competition among individuals or states. free market leads to optimal economic outcomes
conseuqneces
domestically: highly unequal societies
internationally: high disparities among regions
richer but more unequal
20th end of ownership society
during 1914-1945 series of events brought to collapse of ownership society:
- WWI and II
- Great Depression
- bolshevik revolution: aim to avoid communism
what happened
- decrease of total value of private property relative to national income
- decline of economic inequality (deconcenttation of wealth)
decrease of total value of private property relative to national income
- physical destruction of wealth in war
- policies aimed at reducing value of PP and power of PP owners over rest of society
- low level of private investment and returns
policies aimed at reducing value of PP and power of PP owners over rest of society
expropriation of foreign assets
nationalisation
new forms of industrial power sharing: mixed economy
end of colonialism (slowdown of globalisation)
from sacralisation of PR to possibility of expropriation of wealth only if responding to state interests
low level of private investment and returns
to finance increase in national debt: citizens had to buy shares of debt in return for bonds
gov responded to debt with inflationary monetary policies which decreased the value of debt as well as savings and bonds
decline of economic inequality (deconcenttation of wealth)
decrease in value of private property also coincided with a decline in concentration of wealth
- a decrease in wealth/income ratio affected the rich more: expropriation of foreign assets had a greater effect on large portfolios, Eexpectional and progressive taxes on private capital
exceptional taxes
unlike inflation, ET target the rich: ET on PP to reduce public debt and Foster public investment
progressive tax on income
on total income and inheritance
reduce potential for wealth accumulation by reducing income inequality
WWI as necessary event
OS not interested is redistribution, WWI as necessary event to con scribe mass labor into the army and wealth needed to finance reconstruction
but
- PT were introduced at end of 19th in UK and US
- role played by bolshevik revolution: higher taxes on top incomes as compromise by economic elites to avoid revolution
-WWI itself as a consequence of highly unequal global scenario
rise of fiscal and s0cial state
end of OS => rise of socio-democratic
- rise of fiscal state: change in revenue collection, tax revenues collected from various sources in a mostly progressive way
- rise of social stat: change in revenue expenditure used to increase social spending
conjunction
conjunction of 2 visions of purpose of taxation (reduce inequality and pay state expenses) that made the transformation possible
Expropriation of foreign assets
Expropriation of foreign assets consists in the decision of impeding past obligations to foreign investors to continuate in time.
