A new study has found that throughout history, the top 1% of income earners have controlled between 10% to more than 40% of their society’s total income.
This research highlights the persistent and significant concentration of wealth in the hands of a small elite.
The study, authored by Branko Milanovic of the City University New York, was published in the journal Explorations in Economic History on May 3, 2024.
Historical Wealth Concentration
From medieval Iraq to pre-conquest Aztec Empire, the study examined the distribution of income across different societies and eras.
The findings show that in some periods, such as medieval Iraq around the year 900, the top 1% controlled over 40% of the total income.
Similarly, the Aztec Empire before the Spanish conquest exhibited an extraordinarily high income concentration, with the top 1% owning more than 40% of the society’s wealth.
Comparative Analysis of Different Societies
The study analyzed income concentration in various societies, providing a comprehensive view of wealth distribution from ancient to modern times.
Here are some key findings:
Pre-Industrial England
In pre-industrial England, spanning from the 13th century to the 19th century, the top 1% consistently held a significant share of the national income.
In 1290, the top 1% owned around 10% of the income, a figure that remained relatively stable until the industrial revolution.
By 1867, the top 1%’s share surged dramatically to over 30%, reflecting the rising economic inequality during the peak of the British Empire.
Byzantine Empire
During the Byzantine Empire around the year 1000, the top 1% controlled approximately 30.6% of the society’s income.
This high level of income concentration indicates a significant disparity between the wealthy elite and the general population, which was typical of many medieval societies.
Colonial Kenya
In colonial Kenya during the late 1920s and 1930s, income inequality was stark, with the top 1% holding more than 30% of the total income.
This high concentration of wealth was primarily among European colonizers who dominated the economic landscape, leaving the indigenous population with a much smaller share of the wealth.
Aztec Empire
The Aztec Empire, just before the Spanish conquest in 1500, displayed one of the highest levels of income concentration in the study.
The top 1% owned an astounding 41.5% of the society’s income, highlighting the extreme wealth disparity in this pre-colonial society.
Ancient Athens and Rome
In ancient Athens around 330 BCE, the top 1% controlled approximately 16.7% of the income, while in the Roman Empire around 14 CE, the top 1% held 16.1% of the wealth.
These figures demonstrate significant wealth concentration even in early democratic and republican societies.
France and the United States
In 18th century France, on the eve of the French Revolution (1788), the top 1% controlled 16.8% of the income.
This concentration of wealth was one of the factors leading to widespread social unrest.
In the United States, from 1774 to 1870, the top 1%’s share of income was relatively stable around 10%, but overall inequality was high due to income disparities among the bottom 99%.
Mexico and Russia
Mexico in the late 19th and early 20th centuries showed high income concentration levels.
In 1895, the top 1% held 13.8% of the income, which increased to 21.4% by 1930 and 20.4% by 1940.
In contrast, European Russia in 1904 had the top 1% controlling 20.4% of the income, highlighting significant wealth disparities in the pre-revolutionary period.
Measuring Wealth Inequality
To measure the extent of wealth inequality, the researchers used several indicators, including the Gini coefficient and the Inequality Extraction Ratio (IER).
These measures help illustrate the disparity between the wealthy elite and the rest of the population.
The Gini coefficient, which measures overall income inequality, showed substantial variation even when the top 1% share remained constant.
This indicates that income disparities among the bottom 99% also played a significant role in overall inequality.
Implications for Modern Societies
The historical data provides valuable insights into the nature of wealth concentration and its persistence over time.
Understanding how the top 1% maintained such high levels of wealth concentration can inform current discussions about economic inequality.
The study suggests that once the income share of the top 1% exceeds a certain threshold (around 25%), the wealth gap between the elite and the rest of the population becomes more pronounced, leading to higher overall inequality.
Conclusion
The research highlights the enduring nature of wealth inequality and the significant share of income controlled by the top 1% throughout history.
This concentration of wealth has profound implications for social and economic structures, both historically and in contemporary societies.
“The study of historical income concentration,” the authors write, “reveals that the persistence of wealth inequality is a fundamental characteristic of human societies.”
Study Details
- Title: “How Rich Were the Rich? An Empirically-Based Taxonomy of Pre-Industrial Bases of Wealth”
- Author: Branko Milanovic
- Publication Date: May 3, 2024
- Journal: Explorations in Economic History
- DOI: 10.1016/j.eeh.2024.101592