Understanding Inequality Across History

The state’s decisive role in the most unequal era ever

{Cross-posted at CounterPunch}

Earlier this month, scholars working at the London School of Economics argued, “It’s time to face up to power in the debate about wealth inequality.” The authors note that of the various ways we could frame the problem of inequality, the framing that has most resonance with people “focuses on the problem of Unfair Influence. That is, it places the emphasis on how those at the top get to write the rules to suit themselves. This includes buying political power and designing an unfair economic system where billionaires end up paying an average effective tax rate of 0.3% tax on their fortunes.”

Twenty-first century political and economic discourse has forgotten an important lesson, that inequality isn’t just about numbers in a vacuum, but also and more importantly the social and political consequences of extreme wealth inequality: permanent (or close) class immobility, political domination, economic exploitation, etc. Current economic data clearly show that wealth concentration today is extraordinarily high, with inequality at least as extreme, if not more, as it was in feudal times. Getting their personal wealth out of land titles alone has given the contemporary ruling class much more powerful ways for concentrating wealth and exerting influence and control.

The rise of worldwide financial markets and much more complex investment vehicles has meant that wealth is more mobile, secure, and able to rapidly grow itself, allowing the ruling class to multiply and deploy capital on a much broader scale, deepening inequality in a way that was impossible under the land-based, agricultural feudal system. Even if the shares of wealth controlled by the ruling class are similar (and indeed the levels seem to be eerily similar), the mechanisms, mobility, legal and regulatory reinforcements, and scale of contemporary wealth and power concentration arguably make today’s inequality more dynamic and broadly influential, more pronounced in its effects and ability to persist.

The state decisively shapes, structures, and privileges capital through legal frameworks, subsidies, regulatory barriers, and crisis management policies. The economic system we have today is structurally embedded within and dependent upon state interventions designed to create and insulate inequalities of power, access, and knowledge and information. The state has not played neutral referee, but proactively organizes and shepherds the conditions for organized capital’s dominance. The state has no desire to be a neutral arbiter, much less a representative of a sovereign people. It is a strategic agent for the reproduction, expansion, and defense of capitalist power and permanent class rule. Its fake neutrality is the disguise for a deep and still ongoing project of maintaining the kinds of systemic inequalities that are necessary for capital’s survival and growth.

A strong claim can be made that the patterns of inequality in feudal societies and today’s state-corporate capitalist systems are more alike than not, even admitting important differences in way of life, economic forms, historical contexts, etc. Through both systems, across centuries, a pattern reveals itself, a startling one showing that a very small group at the top of the pyramid, perhaps one to five percent, have controlled half of all wealth or even more. A concentration of this kind becomes a durable power capable of maintaining hierarchies that run the political, economic, and social worlds. For all of their differences, and they are acknowledged, both systems siphon away the vast majority of the economic surplus to the hands of a privileged few in command of “our” political and economic institutions. Indeed, the overall productiveness of the economic system explodes in this transition, but the structure and the relationships of domination and exploitation persisted.

In spite of momentous historical changes, the fundamental patterns of inequality reemerge across the centuries with remarkable consistency, the patterns of extreme wealth concentration, class immobility, surplus value extraction, special privilege, and ideological systems capable of masking the contradictions. This suite of social traits seems almost constant. And this long tenure means that it has not been difficult for ruling classes to naturalize extreme inequality in the minds of the popular masses. Global capitalism’s unleashing of productive and technological capacity has not seriously challenged these entrenched social hierarchies. Indeed, it has often obscured and deepened them beneath ideological and institutional sophistication.

States and ruling classes have invested heavily in cultivating ways of thinking that legitimate their power and obscure the extremely violent origins of their wealth. Systematic omissions and apologies, sanitizing conquest and exploitation to make a white-written history palatable for white people. We can’t even start moving in the direction of a new way of thinking about politics until we see the fundamental inseparability of state power and capitalist exploitation across history and geography. Domination has been extremely adaptable, embedded not just in coercive force, but in institutional and cultural life, evolving with changing historical circumstances. When clearly exploitative practices become unsustainable (e.g., serfdom, slavery), new forms of control take their place.

The move from feudalism to capitalism underscores how systems of exploitation aren’t static or unitary, but historically contingent and evolving, preserving the underlying logics of wealth extraction and domination. For peasants and workers, the transition from feudal to capitalist economic modes didn’t mean a substantive break in exploitation or the cessation of oppressive class relations. Rather, the noticeable change on the ground was a transformation in how these exploitative relations were organized and enforced. What is discussed only very rarely is the evidence that in terms of intensity, scale, and scope, worker exploitation intensified dramatically in the transition from feudalism to capitalism. There are natural upper limits on base avarice and callousness for one who has to stand in front of the people he’s exploiting, the people whose labor provides his meals. Those limits were frequently “determined by the walls of the stomach of the feudal lord.” The social bonds were real enough that the most excessive abuses were avoided most of the time, made impractical by proximity, customary obligations, and mutual dependencies. Capitalism introduced new layers of symbolic mediation and abstraction, with endless accumulation as the goal and ideal. The personal bonds transcended, the drive for more in the abstract can be separated emotionally and intellectually from the exploitation of the workers. It’s a neat trick. The system makes everything abstract and anonymous, enabling capital accumulation on a massive scale, generating extreme inequalities, and removing moral or community restraints that might have limited this brutality. Chris Harman contrasted this with the new dominance of capital:

Most importantly, there is no limit to the accumulation of wealth. Everything can be turned into money and members of the ruling class can own endless amounts of money. What drives the system forward is not the consumption of the ruling class, but what Marx called self-expansion of capital, the endless pursuit of accumulation for the sake of accumulation.

Early corporations (for example, the East India Company) were not normal businesses in the contemporary, everyday meaning, but operated with state-granted monopoly privileges, quasi-governmental powers, and even military authority. They were acting as extensions or agents of imperial states, and carried out conquest, violent resource extraction, and brutal population control. Early corporate power was thus inextricable from colonial violence and imperial expansion; there was no “free market” in sight. The artifices of the capitalist state are often subtle, creating legal, financial, technological, and coercive apparatuses that systematically favor capital in its extraction of surplus from labor and natural resources. Through various forms of forced labor and open resource theft, the modern state transferred extraordinary quantities of wealth from colonized regions and their peoples to the European metropoles.

It’s impossible to know how many trillions of today’s dollars were stolen in the form of labor power, land, and natural resources, but this wealth is the foundation of modern capital’s power. In the history of early capitalist accumulation and imperial conquest, corporate and state power are inseparable. This is unsurprising when we consider that corporate personhood and authority have historically been outgrowths of state sanction and control since ancient Rome and before. The corporate form was long in existence before it was turned to commercial ends. Earlier corporate bodies, for example, the medieval guilds or Roman collegia, were established to facilitate civic, religious, or social goals. The modern commercial corporation is unique in combining state power with the imperatives of capitalist accumulation, institutionalizing the state’s ability to raise huge amounts of capital for large-scale ventures backed by exclusive privileges. If nothing else, this shift in corporate purpose or appropriate use, from serving local community functions to becoming instruments of global capitalist power and imperial expansion, is a remarkable one.

There is nothing natural or inevitable about today’s corporate forms. Even the idea of shareholders’ protection from debt obligations is a state-granted privilege, certainly not a natural feature of markets. Legal personhood and standing for corporations is also of course a government fiction that makes possible perpetual wealth accumulation and political influence. Today’s corporate powerhouses are, no doubt, very different from the East India Company, which minted currency, collected taxes, waged wars, signed treaties, and ruled vast swaths of territory. If few of today’s corporations enjoy this kind or degree of delegated power, their operations are no less dependent on state sponsorship. The forms of dependence have changed, but the structural pattern is the same: large-scale accumulation requires the concentrated power of the state to create, shield, and expand corporate privilege. Today’s corporate giants, though formally private, are in practice extensions of state power, existentially dependent on the state’s legal fictions, fiscal supports, and coercive enforcement; far from embodying a free market, they represent the outcome of centuries of state-corporate symbiosis, in a system where “public” authority is bent toward the reproduction of private wealth and staggering inequality.

The modern corporate form is at the center of a systemic upward flow of capital, making inequality persistent and self-reinforcing today. Many liberal leading lights purport to defend freedom, spontaneous order, fair competition, and equality before the law. But in practice, they frequently defend a system carefully engineered through law, coercion, and conquest to concentrate power in ruling class hands and to secure the endless extraction of surplus from labor and nature. Contrary to our liberal intellectuals, capitalist wealth didn’t simply arise from peaceful, voluntary economic activities or individual hard work, initiative and savings. Capitalism was never a free market system or anything close to one: ultimately, before capitalism’s system of wage labor could stand up, there had to be an extremely violent process of dispossession forcing people off their land. Though it is widely forgotten today, the privatization of common lands and the resulting mass movement to urban centers was not just a major social transformation. It was a social cataclysm.

The scale and resource-intensiveness of modern war demand a new type of polity. Mobilizing and provisioning modern militaries compelled states to innovate in extracting wealth and coordinating large, increasingly complex organizations. Thus emerges the centralized fiscal-military state, a modern government capable of systematized, regular taxation and a large and active bureaucracy. These new state-building imperatives meant partnering with financiers, merchants, and tax-farmers, who in exchange received state privileges and special legal protections and contracts. “The Thirty Years War completed the financial reorganization of western Europe and laid the basis for the rise of the modern nation-state.” Warlords were at the center of political power in the feudal era and this much remains the same today.

The gap in understanding this relationship between the state and capital serves to maintain passive consent to the system by hiding the political dimension of economic power. It allows absurd inequalities to appear natural or inevitable rather than as contingent human arrangements that can and should be challenged and replaced. Today, the state’s role in capitalism remains absolutely central and fundamental. In many ways, it is growing more pronounced, as the embrace of state capitalism becomes more open. The pursuit of meaningful social change and a free society must mean seriously reckoning with the foundational and ongoing role of the state in maintaining capitalist exploitation and inequality.

None of this is to suggest a defense of feudalism, in case that’s not obvious. The real conditions lived by most during these centuries were deeply characterized by extremely exploitative work and persistent poverty. But what makes the comparison important and concerning is the consistent role of governmental authority in creating the conditions for elite dominance in terms of wealth and power. Even with the world-changing social, economic, and technological changes since the advent of modernity, inequalities remain comparable to those present in a system founded upon explicit oppression and hereditary privilege. And, for some reason, we don’t seem to notice or care. This situation seems to shout for a critical reconsideration of widely held assumptions about our ideas of “progress” and “free markets.” It will never be possible to address today’s crisis of inequality before we acknowledge the enduring, fundamental relationship between state power and capitalist wealth, a relationship that calls for a thorough and systematic investigation and response.