Peter Turchin — Economics Can’t Explain Why Inequality Decreases

As a way of concluding, what does it tell us about economics’ capacity to explain the dynamics of inequality? In my opinion, economics is perfectly capable of explaining why inequality increases, but fails to do so for inequality decreases, because they are a result of extra-economic forces. So if we want to understand how historical societies reduced inequality, we need to go beyond economics and bring insights from history, sociology, and anthropology.

And I certainly hope that we can figure out how to reduce inequality without violence.

Translation: There is no market mechanism that acts like an invisible hand spontaneously organizing change naturally that decreases inequality, but there are market mechanisms that increase it, such as economies of scale, concentration of capital, economic rents, etc. When inequality has decreased historically, it has been owing to reasons and factors that are exogenous to economics and market forces.

Takeaway: Piketty has started something, and it is far from finished. Power is on the table, and Marx is not far behind — as Piketty not so subtly suggests in the title of his book. Class structure and power are significant factors that cannot be excluded. That's anthropology and sociology, and a matter of history.

Evonomics
Economics Can’t Explain Why Inequality Decreases
Peter Turchin |Professor of Biology and Anthropology in the University of Connecticut and Vice President of the Evolution Institute