For most of recorded history, extreme inequality was the default condition of human societies. A tiny elite controlled the vast majority of land, wealth, and political power, while the masses lived at or near subsistence levels. This pattern held remarkably consistent across ancient empires, medieval kingdoms, and early modern states.

Yet inequality has not remained static. It has compressed dramatically during certain periods—the aftermath of the Black Death, the World Wars of the twentieth century—only to expand again during long stretches of stability and growth. Understanding why these shifts occurred reveals something fundamental about how economic systems actually work.

The forces that historically reduced inequality were almost never peaceful reforms or gradual progress. They were catastrophic disruptions: mass mortality events, devastating wars, revolutionary upheavals. Conversely, the conditions we typically celebrate—peace, stability, economic growth—have consistently correlated with rising concentration of wealth. This uncomfortable pattern challenges our assumptions about progress and suggests that reducing inequality may require more deliberate structural intervention than most societies have been willing to undertake.

Estimating inequality before modern statistical agencies presents significant methodological challenges. Economic historians have developed increasingly sophisticated techniques to extract distributional information from fragmentary sources: tax records, probate inventories, land surveys, and archaeological evidence of housing quality and burial goods.

The extraction ratio offers one useful metric for pre-modern societies. This measures how much of the economic surplus above bare subsistence levels the elite actually captured. In highly unequal societies like late Roman Egypt or Mughal India, elites extracted 70-80% of all surplus production. The theoretical maximum—leaving everyone else at subsistence—was rarely achieved, but some societies came remarkably close.

Social tables, which estimate the income or wealth of different occupational and status groups, provide another window into historical distribution. Gregory King's famous 1688 table of English society, for instance, allows economists to calculate Gini coefficients comparable to modern measures. Similar reconstructions exist for ancient Rome, medieval Florence, and numerous other societies.

The evidence consistently shows that pre-industrial inequality was extreme by modern standards, with Gini coefficients often exceeding 0.50 and sometimes reaching 0.70 or higher. Interestingly, inequality in pre-modern societies was often constrained not by redistribution but by low overall productivity—there simply wasn't enough surplus for elites to capture more without pushing the population below survival levels. This 'inequality possibility frontier' expanded dramatically with industrialization, enabling both higher average living standards and greater potential concentration.

Takeaway

Historical inequality wasn't hidden from view—it left traces in tax records, inheritance documents, and physical remains that economic historians can now quantify, revealing consistent patterns of extreme concentration across otherwise very different societies.

The most dramatic reductions in inequality throughout history share a common feature: they emerged from destruction rather than construction. The Four Horsemen—mass-mobilization warfare, transformative revolution, state collapse, and lethal pandemics—have been inequality's most reliable enemies.

The Black Death of 1346-1353 killed between one-third and one-half of Europe's population. The immediate economic effect was a dramatic shift in bargaining power from landowners to surviving laborers. Real wages in England roughly doubled over the following century. Land rents collapsed. The rigid social hierarchies of medieval feudalism began their long dissolution, not through moral progress but through demographic catastrophe.

The twentieth century's great compression of inequality followed a similar if less lethal logic. The World Wars destroyed physical capital, wiped out financial assets through inflation and default, and—critically—created political conditions for progressive taxation and labor rights that would have been unthinkable in peacetime. Top marginal tax rates that reached 90% in the United States and similar levels elsewhere weren't primarily ideological choices; they emerged from the fiscal demands of total war and the social solidarity it temporarily created.

Revolutionary upheavals achieved similar compressions through direct expropriation. The French, Russian, and Chinese revolutions all dramatically reduced measured inequality, though often at tremendous human cost and with mixed long-term results. The pattern suggests that existing elites rarely surrender concentrated advantages voluntarily—it typically requires either their physical destruction or the collapse of the institutional frameworks that protected their position.

Takeaway

Inequality has historically declined not through gradual reform but through catastrophic disruption—wars, plagues, and revolutions that destroyed accumulated wealth or shifted bargaining power toward labor.

If catastrophe compresses inequality, its opposite—sustained peace and stability—tends to expand it. This uncomfortable finding emerges repeatedly from historical and contemporary evidence. The mechanisms are structural rather than conspiratorial, embedded in how economic systems accumulate and transmit advantage.

Differential returns to capital drive much of this dynamic. When the rate of return on wealth exceeds the rate of economic growth (Thomas Piketty's famous r > g), those who already own assets pull further ahead of those who depend on labor income. During stable periods, this divergence compounds year after year, decade after decade.

Institutional capture reinforces concentration. Economic elites use their resources to shape rules in their favor: favorable tax treatment, barriers to competition, inheritance protections. These advantages accumulate over time. Medieval European aristocracies, early modern merchant oligarchies, and contemporary billionaire classes all followed similar trajectories of converting economic power into political influence and using that influence to entrench their positions.

The post-1980 increase in inequality across most developed economies illustrates these dynamics. After the exceptional compressions of the mid-twentieth century, inequality began rising as war memories faded, labor movements weakened, and policy frameworks shifted toward market liberalization. The concentration wasn't a policy accident but a structural tendency reasserting itself once the extraordinary conditions that had suppressed it no longer applied. Understanding this pattern doesn't determine policy choices, but it does suggest that maintaining lower inequality requires active, sustained institutional effort against powerful countervailing forces.

Takeaway

Peace and stability, while desirable for many reasons, create conditions where wealth concentrates through compounding returns and institutional capture—making sustained equality an achievement that must be actively maintained rather than a natural equilibrium.

The long history of inequality reveals patterns that challenge comfortable narratives about progress. Extreme concentration has been the historical norm; the relative equality of the mid-twentieth century Western world was the exception, produced by catastrophes no one would wish to repeat.

This doesn't mean high inequality is inevitable or that catastrophe is the only path to change. But it does suggest that reducing inequality requires understanding and deliberately counteracting powerful structural forces—differential returns, institutional capture, and the political economy of redistribution.

The historical record offers no guarantee that peaceful, democratic societies can achieve sustained compression of inequality. But it does provide a clear diagnosis of what must be overcome and a warning about what happens when these dynamics go unchecked.