Adam Smith and the Physiocrats “knew perfectly well where inequality came from. It was simply a fact of life that most land and other natural resources belonged to a small hereditary nobility. In England, some 2% of the population owned most of the land. This nobility, or their ancestors, gained their estates by force, favoritism, or fraud: that is, conquest, gifts from the king, or bribes to magistrates.”
Polly Cleveland in this two part article outlines what later economists thought about future poverty and inequality. Here’s a summary:
- Malthus: Higher wages → higher population → outstriping available resouces/ starvation wages
- Ricardo: Only improved technology and trade can stave off Malthusian catastrophe.
- Marx: Growing inequality→ collapse of the capitalist system → new socialist society→ equality
- George: Economy grows→ landlords amass surplus→ collapse →repeats (sans intervention)
- Clark: Inequality is a result of differences in labor and capital contribution.
- Pareto: Inequality follows natural law, the 80:20 rule (prime example land)→ nothing to fix
- Solow: Richer economies grow slower than poor ones → rising equality
- Piketty: less growth + no change in investment → capital investment exceeds growth → growing inequality
Part 1: http://dollarsandsense.org/blog/2014/07/pikettys-model-inequality-growth-historical-contxt-1.html
Part 2: http://dollarsandsense.org/blog/2014/07/pikettys-model-inequality-growth-historical-context-2.html