I actually don’t remember how I came upon World Bank economist Branko Milanovic’s (2010) The Haves and the Have-Nots and decided to buy it, but I’m very glad I did. Despite the cheesy name, Milanovic’s book is a really excellent overview of global inequality with an innovative structure that mirrors the problem at hand. The book contains three essays and 26 vignettes. The essays deal with three aspects of inequality: within-country, between-country, and global (trying to examine the distribution for all individuals in all countries). They are very readable – you could easily assign them to first-year college students – and explain both the history of studies of inequality as well as some of the complexities of measurement and data availability. Each essay is followed by 7-10 vignettes that range from deathly serious to a bit silly, such as the analysis of where Mr. Darcy would have fallen in the income distribution of early 19th century England. Along the way, Milanovic addresses the pressure for migration in the contemporary world, inequality under socialism and capitalism (and how between region inequality was a problem for the USSR, and may yet be a problem for China), and more. The scope is delightfully wide, but Milanovic has pretty historical and sociological sensibilities for an economist which makes the endeavor feel much less imperialistic.
The most interesting and unexpected vignette so far (I’m a bit more than halfway through the book), analyzed within- and between-country inequality in the context of Marx’s writing of Capital and the history of socialist revolution in the early 20th century. Milanovic argues that when Marx was writing, circa 1870, between-country inequality was quite small as compared to within-country inequality. The richest people in the poorest countries were much richer than the poorest people in the richest countries. Workers everywhere (in Europe) had quite comparable incomes. And so it made the claim that the workers of the world all had common interests much easier to make. Much like Malthus, though, Marx had the misfortune of being right about the past and present, but wrong about the near future:
But in an ironic twist of fate, it is precisely around the publication of the first volume of Das Kapital in 1867… that things started to change. A new data series of English real wages produced by Gregory Clark shows that it is around 1867-1870 that real wages began their secular rise that continues (with some small declines from time to time) to this moment. Moreover, it is around the end of the nineteenth and the in the first half of the twentieth centuries that income differences between the rich world of West Europe, North America, and Oceania, and the rest of the world (Africa, Asia, and Latin America) exploded. (110)
By the 1900s, then, it was no longer so true that workers in England and Germany had similar standards of living to workers in Russia, and between-country inequality only got worse over the 20th century. Workers in Germany, in other words, had something to lose other than their chains at the time of the Russian revolution.
Which leads us to the present, and another nice quote from Milanovic. In vignette 2.2, Milanovic shows a graph of income ventiles (groups of 5% of the population) for the USA, Brazil, China, and India (reproduced below).
The graph is a bit awkward to read, but conveys an enormous amount of information, all of which emphasizes the importance of between-country inequality in the present moment. As Milanovic puts it:
In the case of India and the United States, only about 3 percent of the Indian population have incomes higher than the bottom (the very poorest) U.S. percentile. (118)
Interpreting this finding is hard, as it’s based on notoriously fickle purchasing power parity data, and probably masks a lot of non-income forms of inequality, but the story is still striking. All but the tiniest fraction of people in India have less money than all but the absolute poorest Americans. As Milanovic explains in the introduction to the next vignette:
[In] a regression where we have the actual incomes of everybody in the world (of course only in principle, because the data are based on national income surveys)… it turns out that place of birth explains more than 60 percent of the variability in global income. (120)
Social scientists, sociologists included, tend to think about within-country inequality and stratification and focus on big predictors like race, gender, and parent’s socioeconomic status or class. But in a global perspective, nationality dominates all of these variables as a predictor of income. At least, it does in the 21st century. That between-country inequality dominates within-country is not an eternal truth, however, as Milanovic reminds us.