One of the laws of history is that wealth tends to concentrate upward in the hands of the privileged few, rather than gently trickle down to the households of the many. Over time, this gravitational process ensures that political power remains in the hands of the few, thwarting the stated purposes of democracy. It is the responsibility of the national leadership to ensure that these imbalances do not become too great; unchecked, they will eventually give rise to social unrest.
The French economist Thomas Piketty’s recent book Capital in the Twenty-First Century offers empirical evidence to support this theme. Piketty analyzes a large amount of economic data–including tax returns for vast segments of the population–to support his conclusions. Economic inequality has been increasing dramatically in the past twenty years; after the Great Recession of 2009, it actually accelerated. Wealth and resources are being hoarded at an astounding rate. This situation has been permitted to persist by the policies of Western governments (specifically, the United States) which allow the unfettered concentrations of wealth in the hands of a few.
Current tax laws permit the passing down of vast inheritances from one generation to another, thereby creating hereditary aristocracies; the wealthy are allowed to take advantage of “free speech” laws to contribute uncontrolled amounts to political campaigns, thereby effectively purchasing candidates. Political elections in the United States are now approaching the level of farce, with both parties essentially controlled by the same forces of concentrated wealth.
The pantomime is played out, but the results are already preordained.
A key factor here is something that Piketty notices with regard to investment return and economic growth: when the returns of investments significantly exceed the growth rate of the economy, the rich get more rich, and consolidate their grip on the political process. Laws and policies are then pursued that favor them, rather than the good of the wider public. Pauperization and disenfranchisement follow. He states this principle in this way:
Whenever the rate of return on capital is significantly and durably higher than the growth rate of the economy, it is all but inevitable that inheritance predominates over saving.
And when inheritance predominates over saving, the average person is crushed by the forces of concentrated wealth that stack the political deck in their favor. I have discussed this problem before, using the historical examples of the Gracchi brothers in Republican Rome, and the reforms of Solon, the archon of Athens, as well as the reformist policies of Theodore and Franklin Roosevelt in the United States in the twentieth century. This process has been underway in America for some time. It began in the early 1980s with the policies of Ronald Reagan, but gained unstoppable momentum under the administrations of Clinton and Bush in the 1990s and 2000s, respectively. The actual data supporting this statement is disturbing, but worth a close look.
Enlightened rulers must periodically prevent undue concentrations of wealth and power; failure to do so ensures the collapse of republican institutions, the advent of authoritarianism, and the onset of social upheaval.
Another historical example supporting this idea can be found in the history of the Byzantine Empire in the tenth century. I recently came across this example while reviewing some materials on the early history of the Eastern Empire.
By 900 A.D. it had become clear that the holdings of the landed aristocracy in the Greek empire had become uncomfortably concentrated. Rich landowners called dynatoi controlled vast estates worked by landed serfs called coloni. Some emperors of the era tried to step in and halt this process of concentration.
In the years 927 and 928, there was a severe famine in the Greek east. Peasants were desperate, and many of them were forced to sell their parcels of land at rock-bottom prices simply in order to eat. The emperor Romanus issued an edict in 934 denouncing the practice of taking advantage of rural misfortune in order to increase one’s holdings. Landlords were attacked as being more avaricious “than famine or plague.” Romanus ordered the conveyance of properties bought for less than half of fair market value back to the peasant who had sold them. His edict also permitted any peasant seller to buy back (within three years) a parcel of land he had sold to a landlord, at the original sale price.
These laws reminded me, in some way, to the “redemption statutes” of several American states (i.e., Kansas, Texas, Florida) that allow the owner of a property to buy it back (at the sale price) for a certain period of time after a foreclosure sale. Many of these statutes were put into place during the period of the Depression in the 1930s.
The edict of Romanus was at least an attempt to level the playing field and ensure some modicum of economic justice. By various artifices, the rich were able to evade the spirit of his reforms, but at least it was a step in the right direction. Basil II issued a similar decree in 996. A seller could redeem his land at any time for the price of its sale. His edict also nullified title to lands acquired in violation of Romanus’s earlier edicts. Here, finally was an honest attempt to reduce or prevent the spread of a destructive and destabilizing feudalism.
The Byzantine Empire, although much criticized, was actually much more efficient and organized than it is credited with being. It would not have lasted as long as it did, had it been otherwise. Thus, while Western Europe sank into ignorance, destitution, and feudalism for centuries, the Byzantine East was able to preserve a flourishing economic climate, and resist powerful external attacks from its Islamic neighbors. Commerce and trade flourished, encouraged by the state maintenance of ports, weights and measures, roads, and maritime laws.
The forces of wealth concentration are natural and inevitable, but that does not mean that governments should sit by helplessly as these forces run their course. It is quite plausible–to me at least–that the rise of socially destructive ideologies (feminism, uncontrolled personal license, etc.) is in some way the result of the vast level of economic disparity in Western societies.
Those who control the reins of power advance ideologies that assist them in their quest for more power and control. These effects of this are felt by the masses.
Governments can, and must, keep a close eye on their domains, and ensure the basic concepts of economic justice are not offended by the obscene concentrations of wealth in the hands of an idle and unproductive few.
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