This article traces the evolution of global inequality over the last 300 years, examining the rich-poor divide through the lenses of political economy and structural economic transformations. It explores how capitalism, state policy, colonial institutions, and intellectual discourse have shaped inequality, referencing the contributions of thinkers like Karl Marx, Adam Smith, John Maynard Keynes, Amartya Sen, and Thomas Piketty where relevant.
1. Historical Evolution of Global Inequality (1700–2020)
1700s–1800s: Pre-Industrial and Colonial Inequality
In the pre-industrial era, most of the world lived in conditions of widespread subsistence. While inequality within societies was high due to entrenched hierarchies such as feudalism and slavery, between-country inequality was relatively modest. The Industrial Revolution and colonial expansion altered this equilibrium. Industrial powers accumulated capital, technology, and political dominance, setting the stage for steep between-country inequality.
1800–1950: The Age of Empire and Uneven Development
Industrial capitalism generated massive wealth for Western nations, while colonial economies were oriented toward extraction and resource export. This institutional disparity entrenched global inequality. Political disenfranchisement of workers and women meant that wealth accumulation was largely unchallenged. Karl Marx’s critique of capitalist accumulation during this period highlighted the inherent exploitation and widening class divisions, which were reflected in both industrial cities and colonized territories.
1950–1980: Redistribution in the West, Struggles in the South
Post-WWII economic policy in the West turned toward redistribution. Influenced by Keynesian economics, many governments adopted progressive taxation, labor rights, and welfare programs, reducing domestic inequality. However, decolonized nations in Asia, Africa, and Latin America faced institutional weaknesses and economic dependency. Despite political independence, economic sovereignty remained constrained, reinforcing global disparity.
1980–2020: Neoliberalism and the Re-Concentration of Wealth
The neoliberal turn of the 1980s reversed many gains. Deregulation, privatization, and financial liberalization weakened labor and shifted power toward capital. While some emerging economies, notably China and India, lifted millions out of poverty, the global top 1% amassed extraordinary wealth. Thomas Piketty’s research demonstrated how capital returns often outpace economic growth, leading to a structural rise in inequality. A growing global middle class has not offset the deepening divide between the richest and the poorest.
2. Interpersonal Inequality and Structural Drivers
Viewing the world as a single society, the concentration of income and wealth among the global elite is stark. The top 1% control more than 35% of global wealth, while the bottom 50% share less than 10%. This divide is sustained by mechanisms such as capital inheritance, tax avoidance, and disproportionate access to financial markets and innovation economies. Amartya Sen’s capability approach offers an expanded understanding of poverty, highlighting how lack of access to education, health, and agency perpetuates inequality.
Crucially, inequality is reinforced not merely by economic factors but by systemic political choices. For instance, elite capture of state institutions often blocks redistributive reforms. Mariana Mazzucato’s work draws attention to how public investment in innovation is rarely compensated equitably, allowing private actors to dominate value capture.
3. The Political Economy of Inequality
Inequality is best understood through the lens of political economy—as the outcome of deliberate policy and institutional configurations. Colonial institutions embedded extractive systems that have had long-lasting effects. Post-war welfare states in the West were politically constructed to maintain social peace and avoid revolution, as highlighted by both Keynesian and Marxist interpretations. In contrast, structural adjustment programs in the Global South undermined public services and labor protections.
Today, tax competition, weakened labor rights, and the rise of monopolistic tech firms reflect a concentration of power that parallels 19th-century industrial capitalism. Even as liberal democracies profess equality, their institutional frameworks often serve elite interests, a concern raised by thinkers from Smith to Piketty.
Conclusion
Global inequality has deep historical roots and continues to be shaped by political and institutional forces. While certain periods saw successful redistribution, recent decades have seen a reconcentration of wealth and opportunity. Addressing this challenge requires more than economic growth; it demands a reevaluation of who holds power, how value is created and distributed, and what policies can enable true equity. Insights from historical and contemporary political economy remain crucial in crafting sustainable solutions.
References:
- Smith, A. (1776). The Wealth of Nations.
- Mill, J. S. (1848). Principles of Political Economy.
- Marx, K. (1867). Capital, Volume I.
- Keynes, J. M. (1936). The General Theory of Employment, Interest and Money.
- Sen, A. (1999). Development as Freedom.
- Piketty, T. (2014). Capital in the Twenty-First Century.
- Mazzucato, M. (2013). The Entrepreneurial State.
- Stiglitz, J. (2012). The Price of Inequality.
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