LECTURE 17-18: REVOLUTION, REDISTRIBUTION AND SOCIAL REFORMS AFTER WAR

Question 1

how did we measure inequality

Answer 1

wealth not income: capacity to accumulate economic assets more durable in time

Question 2

trends of wealth inequality: first increased over time

Answer 2

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

Question 3

episodes of slowdown linked to negative demographic shocks which might have had temporary redistributive effects

Answer 3

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

Question 4

accelerators of inequality

Answer 4

• colonialism
• industrial revolution

Question 5

industrial revolution

Answer 5

• economic shifts (capitalism), technological changes, agricultural, demographic, commercial, financial, energy

Question 6

spread of IR

Answer 6

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

Question 7

industrialising

Answer 7

creating a new social class that get rich through capital accumulation

Question 8

implications for inequality

Answer 8

before, mainly at societal level. now, worldwide gap between wealthy / productive countries and poor countries.

Question 9

colonialism

Answer 9

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

Question 10

rise of ownership society shift from feudalism 19th

Answer 10

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

Question 11

conseuqneces

Answer 11

domestically: highly unequal societies
internationally: high disparities among regions
richer but more unequal

Question 12

20th end of ownership society

Answer 12

during 1914-1945 series of events brought to collapse of ownership society:
- WWI and II
- Great Depression
- bolshevik revolution: aim to avoid communism

Question 13

what happened

Answer 13

• decrease of total value of private property relative to national income
• decline of economic inequality (deconcenttation of wealth)

Question 14

decrease of total value of private property relative to national income

Answer 14

• 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

Question 15

policies aimed at reducing value of PP and power of PP owners over rest of society

Answer 15

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

Question 16

low level of private investment and returns

Answer 16

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

Question 17

decline of economic inequality (deconcenttation of wealth)

Answer 17

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

Question 18

exceptional taxes

Answer 18

unlike inflation, ET target the rich: ET on PP to reduce public debt and Foster public investment

Question 19

progressive tax on income

Answer 19

on total income and inheritance
reduce potential for wealth accumulation by reducing income inequality

Question 20

WWI as necessary event

Answer 20

OS not interested is redistribution, WWI as necessary event to con scribe mass labor into the army and wealth needed to finance reconstruction

Question 21

but

Answer 21

• 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

Question 22

rise of fiscal and s0cial state

Answer 22

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

Question 23

conjunction

Answer 23

conjunction of 2 visions of purpose of taxation (reduce inequality and pay state expenses) that made the transformation possible

Question 24

Expropriation of foreign assets

Answer 24

Expropriation of foreign assets consists in the decision of impeding past obligations to foreign investors to continuate in time.