A Scholar of Pandemics and Inequality Peers Into America’s Future

If the financial downturn proves to be intractable, “all bets are off,” says scholar Walter Scheidel.

Hamilton Nolan April 8, 2020

Miniature depicting a couple suffering from the blisters of the Black Death, the bubonic plague that swept Europe in the Middle Ages. From the Swiss manuscript the Toggenburg Bible, 1411. Pigment on vellum. (Photo by VCG Wilson/Corbis via Getty Images)

In times of doom and exis­ten­tial pan­ic, there is no one bet­ter to turn to than Wal­ter Schei­del. The Stan­ford pro­fes­sor and schol­ar of social and eco­nom­ic his­to­ry is the author of The Great Lev­el­er, a 2017 book that explored the his­to­ry of inequal­i­ty over thou­sands of years and came to the grim con­clu­sion that only a few things have ever been strong enough to coun­ter­act it. Four dif­fer­ent kinds of vio­lent rup­tures have flat­tened inequal­i­ty,” the book said. Mass mobi­liza­tion war­fare, trans­for­ma­tive rev­o­lu­tion, state fail­ure and lethal pandemics.”

"If there is one lesson we can draw from history, it is: What really matters is the way that this kind of crisis shapes political preferences and decision making."

I spoke to Schei­del about what his­to­ry can tell us about the out­come of our own pandemic.

Hamil­ton Nolan: The Black Death is the clas­sic exam­ple of a ter­ri­ble plague. What hap­pened to inequal­i­ty lev­els dur­ing and after that?

Wal­ter Schei­del: What you have in the Black Death is a very dif­fer­ent dynam­ic from what you have today, because a lot of peo­ple died — maybe a third of the pop­u­la­tion of Europe. Half the pop­u­la­tion of Eng­land. Not all at once, but over the course of sev­er­al gen­er­a­tions, because there were recur­ring waves of the plague. As a result of this, you even­tu­al­ly get a short­age of work­ers, which means that their labor becomes more valu­able. They can charge much high­er wages. Every­thing else is unchanged: There’s a cer­tain amount of land, a cer­tain amount of cap­i­tal. The rich who own the means of pro­duc­tion are less rich, and the work­ers who sell their labor are less poor. And it lasts for 100 or 150 years, until the plague goes away and the pop­u­la­tion comes back.

Hamil­ton: So the increased val­ue of labor doesn’t tend to per­sist after the plague is over?

Wal­ter: No, because it’s a Malthu­sian sce­nario. Once the pop­u­la­tion keeps recov­er­ing, and you go back to the pre-plague pop­u­la­tion, wages go down to where they used to be.

Hamil­ton: Do pan­demics have any oth­er mech­a­nisms that con­tribute to equal­i­ty, oth­er than increas­ing the val­ue of labor?

Wal­ter: Yeah. When this hap­pens, the elites are not hap­py with this. They don’t want to pay high­er wages, and they don’t want to accept low­er rates from peas­ants. So they try to force peo­ple to main­tain the exist­ing arrange­ments, and there is vio­lent resis­tance — peas­ant upris­ings, all kinds of things. There’s push­back by the elites, and some­times they suc­ceed, and some­times they don’t. So it’s not just pop­u­la­tion loss, it’s also polit­i­cal régime types, and the polit­i­cal sys­tem deter­mines what the actu­al out­come is. If you are in Eng­land, feu­dal­ism goes away, and peo­ple enter into free labor con­tracts and they can bar­gain for the best deal. If you’re in Rus­sia, then the nobil­i­ty will rein­tro­duce serf­dom and force peo­ple to work in unfa­vor­able con­di­tions. It depends very much on what the over­all set­up is.

Gen­er­al­ly we see that for late epi­demics, elites learn how to deal with this, so when the plague returns in the 17th cen­tu­ry, we don’t see a com­pa­ra­ble reduc­tion in inequal­i­ty, because by then they had fig­ured out what to do about it.

Hamil­ton: What did the elites learn?

Wal­ter: In terms of wealth con­cen­tra­tion, they fig­ured out how to keep for­tunes from dis­si­pat­ing. When the heirs died, for­tunes were dis­persed. And they cre­at­ed var­i­ous legal arrange­ments, like trusts, to make sure that wealth remains con­cen­trat­ed even in this period.

Hamil­ton: How sus­cep­ti­ble do you think we are today to the same equal­iz­ing mech­a­nisms from the coro­n­avirus pandemic?

Wal­ter: I think the basic dynam­ic doesn’t apply for two rea­sons. The death rate even in the worst sce­nario is going to be an order of mag­ni­tude low­er than it was dur­ing these ear­li­er plagues, and the labor force is par­tic­u­lar­ly pro­tect­ed. And the next gen­er­a­tion, the up-and-com­ing work­force, is par­tic­u­lar­ly pro­tect­ed. So you don’t have a com­pa­ra­ble effect for demo­graph­ic rea­sons, and the econ­o­my is very dif­fer­ent. It’s a ser­vice econ­o­my with very dif­fer­ent dynamics.

If there is one les­son we can draw from his­to­ry, it is: What real­ly mat­ters is the way that this kind of cri­sis shapes polit­i­cal pref­er­ences and deci­sion mak­ing. In the past, it was a strug­gle between the nobil­i­ty and com­mon­ers. Now, it’s the behav­ior of the elec­torate. Is it going to influ­ence the way that vot­ers respond to cer­tain pol­i­cy pro­pos­als? More pro­gres­sive, or more con­ser­v­a­tive? And that, I think, will be the most impor­tant deter­mi­nant of how this whole thing is going to play out with respect to inequality.

Hamil­ton: Is it safe to say that that effect is gen­er­al­ly rad­i­cal­iz­ing on the electorate?

Wal­ter: Yeah, that’s the very short answer. There seems to be a cor­re­la­tion: The worse a cri­sis is, the greater the poten­tial for some sort of rad­i­cal­iza­tion. The fact that ideas that are now con­sid­ered rad­i­cal may enter the main­stream. An exam­ple might be peo­ple buy­ing more into a Sanders approach to things, or a Green New Deal. Espe­cial­ly in a two par­ty sys­tem, it doesn’t take that much. It’s one or the other.

Hamil­ton: Today’s pan­dem­ic is glob­aldo you have any idea how it might affect dif­fer­ent regions of the world, in terms of inequality?

Wal­ter: The biggest dif­fer­ences might actu­al­ly be with­in the group of rich coun­tries. If you live in Swe­den, not that much is going to change, because they already have a wel­fare state and high tax rates and so on. They may tweak the sys­tem at the mar­gins, but I don’t think there is much room for sub­stan­tive change. Where­as if you’re in the Unit­ed States, or in the Unit­ed King­dom or Aus­tralia, there’s a lot of room for change, in terms of catch­ing up with oth­er West­ern coun­tries, in terms of social­ized health­care, pro­gres­sive tax­a­tion, all the rest of it.

That has been on the agen­da, it’s worth point­ing out, since the last cri­sis. Which was 12 years ago. Before the finan­cial cri­sis, nobody ever talked about inequal­i­ty. Then it entered the main­stream as a top­ic to talk about, and to wor­ry about. Because there was a recov­ery and there was no Depres­sion, the lid was kept on, so to speak. It didn’t have any major polit­i­cal con­se­quences. But if this cri­sis turns out to be more severe, what will hap­pen is that ideas that are already out there — have been out there for the last 12 years — will become more promi­nent and more pop­u­lar. That’s real­ly all it takes for a major shift to occur.

The clos­est anal­o­gy would real­ly be the New Deal. There was the so-called Pro­gres­sive Era,” but not much changed in that era — and then you have the crash, and 25% unem­ploy­ment, and no safe­ty net. And all of a sud­den, peo­ple are very hap­py to vote for some­one who says, I can fix all this,” and then imple­ments, by Amer­i­can stan­dards, very rad­i­cal policies.

Hamil­ton: You’ve stud­ied inequal­i­ty over very long time frames. What’s your his­tor­i­cal per­spec­tive on how bad it is in Amer­i­ca today?

Wal­ter: By some mea­sures, it’s as bad as it was in 1929, in terms of the top 1% income con­cen­tra­tion. Of course, it’s also dif­fer­ent because per capi­ta income was much low­er back then. If you were poor back then, you were real­ly poor, and now you’re less poor, rel­a­tive­ly speak­ing. In that sense, it’s not as bad. But if you just look at the inequal­i­ty met­rics, it’s just as bad as it was back then.

The oth­er com­par­i­son is between the Unit­ed States and oth­er high income coun­tries. The Unit­ed States is not doing well in that respect. Our inequal­i­ty is more like Brazil or Chi­na now, which is not great. That’s not a good role model.

Hamil­ton: What’s your pre­dic­tion for how this pan­dem­ic will affect inequal­i­ty in America?

Wal­ter: Well, you have the short-term effect, which is the rich are less rich than they were. That’s what we saw in 2008, that there was actu­al­ly a bit of a dip, but a rebound with­in a few years. And unless this real­ly turns into a major depres­sion, there will be anoth­er rebound soon­er or later.

For not-well-pro­tect­ed work­ers — ser­vice sec­tor, gig econ­o­my — the effects could be more pro­longed, in terms of lost income, high­er debt. That could be polar­iz­ing. But the real ques­tion is, how is this going to affect longer-term pol­i­cy mak­ing? That is the only fac­tor that has the poten­tial to real­ly change things. And it can break both ways. If you have a rel­a­tive­ly swift recov­ery, or effec­tive treat­ment, or a vac­cine, it’s not that hard to go back to busi­ness as usu­al. Because the estab­lish­ment learned in 2008 what to do. If the finan­cial cri­sis hadn’t hap­pened, we would not have had this very rapid response, in terms of shoring up finan­cial mar­kets, busi­ness­es and so on, because peo­ple wouldn’t have known what to do. Now they do know, because there is an actu­al mod­el. They just take that, do twice as much, and see what hap­pens. If you’re inter­est­ed in pre­serv­ing the sta­tus quo, that helped.

If, on the oth­er hand, this doesn’t hap­pen, and it turns out to be more intractable, and it leads to a pro­longed eco­nom­ic slump, then all bets are off. Every­thing is real­ly up in the air, the way it was in the 30s. 

Hamil­ton Nolan is a labor reporter for In These Times. He has spent the past decade writ­ing about labor and pol­i­tics for Gawk­er, Splin­ter, The Guardian, and else­where. You can reach him at Hamilton@​InTheseTimes.​com.

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