The History of Inequality: Institutions and Citizenship

Throughout history, inequalities have permeated many different societies to different extents. The exclusion of certain groups over the course of centuries and policies that favor the elite more often than not have allowed inequality to persist. Many different policies and factors result in these inequalities, so it can be difficult to narrow down which have the greatest impact, but by examining the history of different programs meant to reduce or perpetuate inequalities, it is clear that the issue of inequalities is one of policy rather than a natural state.
According to de Barros, “The inequality caused by unequal opportunities is viewed by most people as fundamentally unfair” (de Barros, 27). This suggests the difference between inequality of opportunity and inequality of outcome. If there seems to be a positive correlation between these two forms of inequality, then we can claim there is something unfair about the system inherently. Furthermore, “some inequality may be tolerated, like inequality caused by differences in effort and talent, particularly when attempts to reduce it could interfere with other ethical objectives, such as privacy and individual freedom. Equality of opportunity is desirable, equality of outcomes (earnings, income, wealth) not necessarily” (de Barros, 27).
For example, if a child who, because of chance and circumstance, grows up in a poor family and lacks access to a decent education as a result and is subsequently restricted from certain jobs or opportunities because of his or her education level, this becomes a failure of the system to function in the way it was intended. Public education is perhaps the most important service to reduce inequality. Germany was a world leader in public education and its schools were some of the best in the world up until the war. Britain lagged just behind and America was in the process of catching up. “The importance of institutions in economic growth has come to be more fully appreciated in recent years, by both scholars and policymakers. Schools are widely acknowledged as among the most fundamental of such institutions…and limiting access to education has been shown to be an effective barrier to advancement by those affected” (Sokoloff, 5). However, even though public schools have been set up throughout many parts of the world, there remains a gap between students who attend public schools in their neighborhoods (which may vary widely in quality).
Providing a good education should be one of the foundations of a capitalist economy. In addition, various redistributive policies shape equality and inequality. Although America has seen periods of relative equality and relative inequality, over the past 30 to 40 years, large amounts of deregulation and tax cuts have allowed the wealthiest 1%, .1%, .01%, and .001% to gain disproportionately to the rest of America (Bartels, 10). The gains made by the poorest were in fact the lowest over this period (Bartels, 8). The current system is really no better than an oligarchy as it relates to the level of inequality in society. Although the most formal institutions that explicitly promoted inequality (such as slavery in the U.S.) are no longer in place, entire segments of the population lag behind the rest of America in terms of access to beneficial opportunities. In examining a number of historical cases, inequality can be closely tied to a lack of full citizenship. Citizenship implies a mutual relationship. One is a citizen when they are able to actively and freely participate in society and have a voice in a democracy’s governance. However, the term citizenship also suggests that there is a particular set of rights and benefits in addition to the responsibilities.
When full, active citizenship is limited inequality becomes the norm. Perhaps one of the most disturbing facts related to inequality is the idea that in more egalitarian societies, economic growth is greater across the entire spectrum. Throughout modern history, since the democratic revolutions across Europe and in America, a residue of monarchies and oligarchies has remained engrained in society. The elites (this time created through capitalism rather than “divine rule” or relation to royalty) continue to hold on to power and wealth whenever possible. Generally, the elites throughout history have only extended rights, including the vote, to the lower classes in times their power was threatened or to gain political favor with certain groups of society. These inequalities are masked by a system that attempts to project improving equality, while the reality does not support this notion. Social programs to help the lower classes are important in reducing overall inequality. They are provided using tax revenues, often from the rich who can afford the additional cost. These services extend fuller citizenship to the lower classes, who are the primary beneficiaries of these social programs. Historically, many institutions limited entire groups from full participation. As Acemoglu Robinson write, “Our answer is that the elite were forced to extend the franchise because of the threat of revolution. We argue that extending the franchise acted as a commitment to future redistribution and prevented social unrest” (Acemoglu and Robinson, 1168). Slavery is key among those institutions. While slavery was indeed abolished, certain modern day forms of slavery, including wage slavery, exist. This points to the notion that capitalism tends to favor inequality, which is why policies to protect the majority should be such a high priority for a society striving toward equality. Gender discrimination also remains highly present in modern society.
All limits to citizenship, these categorical inequalities are detrimental to society as a whole. Inequality is breeding further inequality. The current trend is one of increasing inequality. Current levels have not been seen since the gilded age. If full citizenship is freely exercised in practice by all members of society, when combined with several social programs such as social security and public education, the society should equalize (at least to some extent), on its own.
Categorical inequalities play a significant role in the persistence of inequality as well. “Legal institutions matured as caste rights and obligations were written (though not systematically) into laws that maintained distinctions between Spaniards and non-Spaniards, and among non-Spaniards themselves” (Lewis, 16).
Inequalities have emerged both within societies and between nations, historically. That is to say that inequality does not only impact individuals relative to one another within a particular society. Especially in the age of globalization, between-nation inequality is highlighted often in the media, drawing contrasting images between the developed and developing worlds. “Development economists view equality – in opportunities – as an important factor not only from a moral standpoint, but also as part of the development process itself. The World Development Report 2006: Equity and Development suggested two main sets of reasons why equity should matter for policy makers in developing (and developed) countries: (i) unequal opportunity is widely seen as intrinsically unfair, and unfairness bothers people and can lead to social conflict; and (ii) inequality in some particular circumstances (notably but not exclusively inherited wealth) can be economically inefficient” (de Barros, 27).
The poor people in Rio de Janeiro are another strong example of stark inequalities within countries. Brazil is home to some of the highest levels of inequality in the world. According to Fischer, the poor were historically treated essentially as noncitizens, “ensuring that a poverty of rights would help to define modern urban destitution” (Fischer, 1). Additionally, “the incomplete enfranchisement of the urban poor has long been among the central contradictions of Brazilian democracy” (Fischer, 1). This complete exclusion of an entire group in the South American country of Brazil is a good example of how sharp a contrast can be drawn between the elites and the urban poor. Their voice was drowned out by the wealthy and powerful in Rio and inequality has persisted.
As history has progressed, more groups have been included through new institutions and the abolition of old ones. However, it is difficult to tell if this is a truly authentic change, or a calculated risk taken by the elite to further avoid social unrest.
Examining differences in inequality between nations, the more unequal nations tend to have skewed and lower rates of growth. This is harmful to the overall economy of those countries as well. Since inequality, when left unregulated by public policy, furthers inequality it is important for the democratic voice of the people to demand more equality in social programs and basic services.
Beyond a basic equality of opportunity, the question becomes more difficult and people have their own differing opinions on inequality of outcome. However, since it is nearly universally agreed that equality of opportunity is important (in the context of a capitalist system), this issue is less negotiable. This can resemble something more of a meritocracy, but the majority seem to agree that this is the best model the system should resemble.
Institutions have made steps toward increased equality, but plenty of work remains. Karl Marx had a very good point in his critique of capitalism. The worker, even today, is essentially exploited to produce at a low cost to maximize gains by the top. The capitalist system works best when such stark inequalities are not present. However, these inequalities do exist and will likely continue to persist unless significant redistribution is seriously considered as a policy objective.
Through the exclusion of groups and the gradual extension of rights over the course of time, a timeline can be constructed, showing the gradual shift toward equality. However, elite groups still maintain a hold on policies, which often favor them, or at least hurt their interests less. Understanding citizenship and its full definition is also important to understanding inequality throughout history. By realizing that the term implies not only responsibilities, but also rights, allows for public awareness of public goods and the demand for further equality.
Democratization also plays an important role in reducing inequality, since it gives the people a voice. Policy is perhaps the most important driver of change for the issue of inequality. This gives the government a very important role in bringing about change. Equality of opportunity can be fully achieved. Once barriers to equality of opportunity are removed, equality of outcome becomes less of an issue, given the context of the modern capitalist system. The modern American Dream suggests that anyone in America can make a name and a fortune. What happened to the American Dream of the house, family, white picket fence, and a balanced lifestyle without the rampant excesses of modern American culture?