The evolution of economic and political inequality: minding the gap

Abstract

The extent of economic and political inequality, their change over time, and the forces shaping them have profound implications for the sustainability of a society and the well-being of its members. Here we review the evolution of economic and political inequality broadly, though with particular attention to Europe and the USA. We describe legal/institutional, technological and social forces that have shaped this evolution. We highlight the cumulative effects of inequality across generations as channelled through wealth and inheritance but also through other intergenerational connections. We also review the state of research on the effects of inequality on economic growth, health and societal cohesion.

This article is part of the theme issue ‘Evolutionary ecology of inequality’.

1. Introduction

Many important forms of political and economic inequality in human populations reflect differences in individual characteristics, including biological factors and family influences. But large swings in the extent and severity of these forms of inequality, which have become a central concern of public policy in recent times, must be understood through the societal and institutional forces that shape them. For instance, while one's earnings reflect returns to one's abilities, those abilities reflect access to education, training and marketable skill, which reflect social norms and policy. Similarly, formal laws determine explicitly who has a right to vote, but whether that vote has influence or not is determined by governing power structures. Political power affects whether and how market incomes get redistributed through taxes and transfers. Institutions around inheritance determine the intergenerational transmission of resources, which may lead to cumulative effects of inequality over time.

This interplay between individual attributes and the institutional context in which individuals live echoes important themes in the analysis of inequality by evolutionary ecologists. In this literature, wealth can be understood to refer to any resource that can be passed on across generations and that ‘can affect an individual's health, well-being and RS [reproductive success]’ [1, p. 190]. In pastoral and agricultural societies, material wealth (like livestock, tools and land) is centrally important. The fact that the material of wealth can be defended and transferred across generations relatively easily means that inequality is more likely to persist in such societies. In horticultural and hunter–gatherer societies, ‘wealth’ more often takes the form of social relationships and connections, or embodied, physical, skills and attributes, which are less reliably protected and transferred, making inequality less persistent in such societies.

These ‘technological’ differences, however, do not tell the whole story. Intergenerational transmission of wealth depends on institutions and practices adopted by a society, not just on the composition of wealth (whether material, relational or embodied) [2, pp. 686–687]: societies that operate in volatile climatic or other conditions often develop egalitarian institutions and practices, regardless of the composition of their wealth, as insurance against shocks. In more stable contexts, we see fewer ‘insurance’ practices, and inequality is more likely to persist and grow. In either case, the impact of ‘earning ability’ and the feasibility of passing on wealth to one's descendants gets filtered through institutions shaped by the broader context.

In this essay, we review work by social scientists, mainly economists and political scientists, on the forces shaping political and economic inequality, primarily in Europe and North America since the Middle Ages. We discuss the measurement of economic and political inequality, change over time in inequality, and the wider effects of inequality on phenomena like economic growth, social cohesion and political engagement. Like evolutionary ecologists, we acknowledge the interplay between individual attributes and the institutional context. We consider the ways that income and wealth differences affect political influence as well as the ways in which growing inequality may generate political responses that either perpetuate or limit inequality.

2. Measurement

Economists measure inequality on a variety of dimensions, and the form chosen reflects both judgements about what is most salient and limitations in the available evidence. Connecting inequality to very long-run phenomena, like economic development, or tracking the transmission of inequality across multiple generations usually requires relying on broader and more varied measures of status. Clark [3] examines social mobility over hundreds of years, with comparisons across several countries. His measures of status are broad and diverse—presence in lists of high-status occupations like medicine and law, or on rosters of students and alumni of elite institutions, or in elected or appointed office, for instance. While these kinds of broad measures are arguably necessitated by the scale of his project, Clark argues that they also have the virtue of identifying the effects of general ‘social competence’ better than more specific measures of income and wealth would, as these narrower measures are subject to greater influence from short-term shocks.

Still, the scholarly discussion and public debate on economic inequality usually focus on these specific measures when the data are available, whether through tax rolls, censuses and social registries, or special surveys. Analyses of income and wealth inequality must be attentive to distinctions between measurement of ‘market outcomes’ and outcomes after taxation and redistribution. They also require some consideration of the time window over which these measures are taken, especially for income, as business cycles and life cycle patterns can create gaps between point-in-time measures and more representative indicators. Finally, some scholars argue that we should consider broader measures even when we have good evidence on income and wealth. For instance, Pope [4] shows that the USA in the twentieth century was marked by declining inequality in health and longevity, educational attainment, and leisure, even as income and wealth inequality worsened. Part of the explanation for this distinction is that broadly rising levels of income across the distribution, in the long run, made rising levels of health, education and leisure more widely available. Because all of these goods arguably have an ‘upper bound’—that is the maximum possible levels of longevity, education and leisure time are limited—inequality on these dimensions declined because there were not increases at the upper end of the distribution that matched increases at lower levels. Income and wealth are not ‘bounded’ in this way, so that increases at the top can outpace increases in the middle and bottom, even if the middle and bottom of the distribution are quickly improving.

Political scientists and political philosophers consider that democratic government, at least in theory, rests on political equality. Political equality can be understood as it relates to both process and substance of democratic government. Questions about procedural democracy tend to focus on questions such as, who should participate in decision-making? How much should each participant's vote count? How many votes are needed to reach a decision? Substantive questions focus on whether and to what degree democracy is embodied in the substance of government policies rather than in the policymaking procedure. Primarily, the substantive focuses on whether government policies guarantee civil liberties (freedom of behaviour, such as freedom of religion and freedom of expression) and civil rights (powers or privileges that government may not arbitrarily deny to individuals, such as protection against discrimination in employment and housing). Democracy is a vague concept with many definitions and measures. However, many would assert, as we do here, that central to democracy is the notion of voice and equality [5, p. 1]:

Voice and equality are central to democratic participation. In a meaningful democracy, the people's voice must be loud and clear: clear so that policymakers understand citizen concerns and loud so that they have an incentive to pay attention to what is said. Since democracy implies not only government responsiveness to citizen interests but equal consideration of the interests of all citizens, democratic participation must also be equal.

(See also [6, p. 15] and [7, p. 110].)

American democracy, and democracies throughout the Western industrialized world and those burgeoning around the globe, vary in the degree to which they demonstrate and protect political equality. Even across time, American democracy has itself become more politically equal. Nevertheless, inequality still abounds.

3. Primary mechanisms

The literature on economic inequality highlights several forces that shape differences in income, wealth and well-being. We can consider these forces in three broad categories: skills and productivity; policy and redistribution; and intergenerational transmission. The inequality of political power is intertwined with economic power but also has its own distinct roots. In some ways, the creation and replication of political inequality is born out of institutional arrangements—laws—that have barred groups of people from participating in politics (Blacks and women in American political history) and thus denied them their equal voice. In other ways, political inequality is individually derived, but individual differences cannot and do not escape time and context and also can be passed from one generation to the next.

Unsurprisingly, economists emphasize differences in ‘skills’ across people in the analysis of the distribution of income. In simple marginalist models of the labour market, competition should drive a worker's compensation toward equality with the value of what the worker produces. In this framework, changes in income inequality over time might be affected by demographic changes (including immigration), as well as changes in education policy, which alter the supply of workers with particular skills, and changes in technology or in product markets, which might affect the demand for particular kinds of workers (on skills, education and technology, see [8]).

Central to this framework, of course, is the assumption that workers can leave a job whenever they are underpaid relative to their productivity. More generally, this framework depends on labour having substantial bargaining power. There is considerable empirical evidence that wages do not track productivity automatically, and that the relationship between pay and productivity depends on the policies and institutions that shape bargaining in the market. Relatedly, incomes at the top may reflect limited competition on the supply side of the labour market—barriers to entry to particular kinds of jobs for instance [9,10]. Labour market regulation, the rules governing organized labour, and more informal institutions shaped by social norms will therefore play a role in determining income inequality.

If we look beyond wages and earned income, institutions like taxation and government transfers of course shape inequality in disposable household income. Countries with similar levels of earned income inequality can as a result end up with markedly different degrees of ‘post-policy’ inequality [11]. Further, the influence of tax policy and of bargaining behaviour may be intertwined and mutually reinforcing. When top marginal tax rates are cut, this creates an incentive for top earners to bargain more vigorously for higher pay, raising both pre-tax and post-tax inequality [12, pp. 9–12]. It is fundamentally important, then, to consider how inequality in political power shapes tax and redistribution policies.

Democratic theory suggests that individuals are equipped with and wield equal political power and their preferences are equally represented. However, evidence supports the reality that political power and therefore political representation are not equally distributed among individuals or groups that compose the body politic. Rather, political power is often contained in the hands of the elite (e.g. resourced individuals and resourced pressure groups) [5,13]. This view suggests that democracy is more elitist than pluralist, so that ‘there is a small organized class that rules and a large unorganized one that is ruled’ [14, p. 44]. According to C. Wright Mills, the small, organized class that rules comprises those individuals who dominate key political, military and business institutions [15]. Domhoff [16, p. 115] expands on this point:

In concert with the large banks and corporations in the corporate community, the foundations, think tanks, and policy-discussion groups in the policy-planning network provide the organizational basis for the exercise of power on behalf of the owners of all large income-producing properties.

The link between economic and political inequality may simply reflect the fact that the well-off are better informed and more likely to vote [5,17,18]. It may also reflect direct and personal influence from economic elites on political decision-makers [19]. In either case, individuals who possess political power and influence can use it to enhance wealth accumulation, via tax, inheritance, welfare or labour policies, for example. Individuals who possess wealth, education or privilege by way of some socially privileged category, such as sex, religion or race/ethnicity, also are likely to possess greater political influence [20,21]. Bartels [20] measures senators' overall behaviour and specific roll-call votes on particular issues—the minimum wage, civil rights, government spending and abortion. He finds senators to be more responsive to the opinions of their affluent constituents than constituents of lesser means: ‘Constituents at the 75th percentile of the income distribution have almost three times as much influence on senators’ general voting patterns as those at the 25th percentile, and several times as much influence on specific salient roll-call votes' [20]. A common refrain characterizes the overrepresentation of the preferences of the wealthy, business elites, CEOs and corporate groups over those with less wealth and fewer resources: ‘The flaw in the pluralist heaven is that the heavenly chorus sings with a strong upper-class accent’ [13, p. 35].

Another key force in shaping inequality over time is the intergenerational transmission of economic and social status. When there are strong intergenerational ties in status, advantages may accumulate over time, widening inequality on many dimensions. Bequests, and the social practices that govern inheritance, provide an obvious intergenerational influence on wealth inequality. Social scientists have examined a variety of additional mechanisms behind the intergenerational transmission of status, including genetic factors [22,23]. The influence of parents will operate through other channels as well, including the ability of parents to provide resources for education and skill development among children, but also through less tangible influences of time spent with parents [24]. Periods of dramatic economic change can weaken intergenerational connections in occupation and status: for instance, the USA in the late 1800s was marked by high occupational mobility, and therefore less intergenerational transmission of status, owing to the opening of the West, a high degree of geographical mobility, and the ease of entry into farming. Mobility declined, and intergenerational transmission of status increased, as these processes became less important in the twentieth century [25]. But intergenerational ties in status can persist even through substantial shocks: the sons of large slaveholders in the USA retained their relative wealth status (compared with other Southerners) after the emancipation of the enslaved people [26]. The intergenerational transmission of status has also been found to be quite similar between countries with large differences in economic institutions [27].

Like wealth and earning power, political orientations, political engagement and political attitudes are also heritable by way of political socialization or even genetics [28,29]. They can also be structured and reproduced by institutional arrangements and periodic events such as economic downturns or ‘rally-round-the-flag’ events, such as the assassination attempt of President Reagan [30] and the Persian Gulf War [31].

Political socialization matters for inequality because status and influence, as measured through political efficacy or political engagement, for example, are not equally distributed among citizens. For democratic theorists, if political information, efficacy and engagement are not equally distributed, then what effect does that have on the representativeness of Americans in politics and policy? Are those who participate politically distinct from those who sit on the sidelines of politics? If so, are those distinctions—or inequalities—perpetuated across time? And, if the answer is yes, by what mechanism? Political socialization helps us understand the persistence and change of some of the fundamental political orientations that shape political participation and helps us understand how political inequality continues.

Let us consider voting participation. Scholars have demonstrated the persistent correlation between political participation, more specifically voting, for example, and education. The enduring interpretation of this correlation is that there was some systematic, non-political characteristic that facilitated political participation. The possible factors are many, including race, gender and educational attainment. More broadly, the primary factor seems to be socioeconomic status, so that well-heeled individuals are more likely to participate in politics, as indicated by a host of measures: voting, campaign contributions, community involvement, and involvement in elections [5]. The differences are large and persistent. Overall, in the 2020 presidential election, voter turnout increased as income increased: turnout was 81% for those earning between $100 000 and $149 999 versus 63.6% for those whose income was $30 000–39 999 [32]. Moreover, the problems grow worse when states make the cost of voting more expensive for those who are typically underrepresented at the polls—the poor and racial/ethnic minorities. If the political world is increasingly inhabited by those who have more resources (education, time, money and skill), political decisions will most likely resemble their preferences, rather than those of the politically marginalized, who are also likely to have lower levels of education and likely are poorer and less likely to participate.

Certainly, individuals are shaped by a variety of different mechanisms, from family to institutional arrangements, events and economic precarity. Moreover, these mechanisms can influence society widely or particular sub-groups and populations. Evidence demonstrates that wealthier societies possess different political values and priorities compared with economically precarious ones [33–35]. Likewise, wealthier individuals tend to possess different values, attitudes and behaviours compared with less wealthy individuals [36,37]. Thus, economic circumstances can affect political priorities much like political priorities can affect policy, that in turn shapes wealth and income distribution.

4. The evolution of inequality in the long run

Empirically tracking the evolution of economic inequality and its connection to long-run processes of economic development and political change requires compiling consistent evidence on income, wealth and other metrics for the very distant past and for diverse geographies. Milanovic [38] takes on the task of pushing our analysis of inequality back to the beginning of the Common Era (CE). Much of the evidence he employs comes from archaeological findings, for instance evidence on dwelling sizes, and from ‘social tables’ that combine estimates of average incomes for various social/occupational classes with estimates of the distribution of the population across those classes. Milanovic pools these sources to create lower and upper bound measures of inequality over seven centuries. He finds that inequality peaked in this era around 150 CE, then declined sharply through 300 CE and more gradually to 700 CE. These changes in inequality reflect in part the decentralization of political power as the Roman Empire declined, as central elites lost some of their (often physically dispersed) assets and local authorities gained greater resources [39, pp. 6–8].

Little evidence on the distribution of income and wealth is available for the period from the eighth century to about the fourteenth century, though much more becomes available in the 1300s, including property tax records, which most directly reflect wealth inequality. Alfani [40] finds reduced inequality from the early 1300s to about 1450 and attributes much of this change to the impact of pandemics in this era, including the Black Death. High mortality and the existing inheritance institutions led to the sell-off of land to allow the distribution of its value across multiple heirs. This process lowered land prices and enabled more people to enter into land ownership, the primary form of wealth holding. There is also evidence of reduced income inequality specifically, based on rising wages for unskilled workers in urban areas, reflecting labour shortages due to high morbidity and mortality [39, p. 12]. After the mid-1400s, the re-consolidation of state power led to a return of rising inequality. The particular form of state activity in the era—taxation, often regressive, to support military expenditures that flowed to elites—reinforced the tendency to rising inequality [39, pp. 26–27].

Notably, Alfani argues that the influence of health crises on inequality, central to the story in this era, is shaped by political institutions. By the time of the cholera outbreaks of the 1600s, Europe had gained extensive experience with such crises, and institutions were altered to limit the resulting impacts on wealth and income distribution. For instance, in Italy, new institutional arrangements prevented the fragmentation of inheritance [39, pp. 19–20]. The pandemics in Central and South America following the arrival of Europeans did not have such levelling effects owing of course to slavery and other institutions of forced labour [39, p. 15].

Piketty [41] picks up the long-run path of economic inequality in Europe and North America from the 1800s through the late twentieth century. Much of his analysis focuses on the ‘functional distribution of income’, specifically the share of income flowing to capital and thus to owners of wealth [41, pp. 18–19]. He presents this mainly in the form of the capital/income ratio (K/Y). This ratio will grow as long as the growth rate of capital exceeds the rate of overall income growth. The long-run tendency in Europe and in the USA has been toward rising K/Y ratios and thus rising inequality [41, p. 167]. This tendency is reinforced by the fact that the rate of return to capital is typically greater for those who hold the greatest amounts of capital and who have access to the most lucrative forms of investment [41. pp. 440–441].

The most important periods of reduction in inequality, in Piketty's view, have resulted from shocks to wealth holding, rates of return and income growth. Most notably, the period from the Great Depression through the middle of the twentieth century was marked by sharp declines in the value of property and financial instruments, the destruction of physical capital, reduced saving rates and loss of overseas assets. This era also witnessed policy changes such as rent control and increases in taxation, which reduced the value of real estate and other forms of wealth. By the late 1970s, the K/Y ratio had again begun to rise in many countries. The growing importance of inheritance, as some households were able to accumulate very large stores of assets, contributed to this increased concentration of wealth [41, pp. 394–401]. Piketty expects this tendency toward greater inequality to continue as aggregate income growth slows, unless policy is enacted to counter it.

Piketty & Saez [42] trace out a corroborating pattern of mid-twentieth century compression and later expansion in the income distribution (as opposed to the wealth distribution) in the USA specifically, relying on tax records. They focus on incomes in the top decile as a share of total income. As in the case of wealth and the K/Y ratio, there was a substantial mid-century compression in the income distribution reflecting the impact of policy, including war-era wage controls, as well as the influence of other institutional forces such as the expansion of labour unions [43,44]. Strong labour demand, particularly for less-educated labour, and a rising supply of better-educated labour (owing to the spread of public secondary education) reinforced this narrowing of the income distribution. The undoing of many of these forces—for instance, declining unionization and reduced bargaining power of labour generally—served to widen the income distribution from the mid-1970s on [9]. Technological change, and its interaction with the supply of less-educated and more-educated labour, also contributed to this widening. New technologies that were complementary to educated labour, and a slowing of the increase in the supply of educated labour, caused differentials in income to grow, beginning around the late 1970s [8, p. 101].

Technological change also served to concentrate incomes even among the highly skilled and educated. As Frank & Cook [45] describe, the scale of markets, and the share of those larger markets that can be reached by particular producers, have expanded dramatically owing to reduced transportation costs and broad reduction in tariffs and trade barriers. Improvements in computing and telecommunications enhance the ability of those in professional and business services to reach more dispersed markets. These changes give rise to ‘winner-take-all’ markets in which rewards are concentrated among a small number of top firms and individuals [45, pp. 47–60]. The shift toward very high incomes at the top produces, and is reinforced by, changes in social norms that tolerate, or even celebrate, the extravagant rewards of the ‘winners’ in this process [42, pp. 34–35; 9, p. 375]

These changes in economic inequality over time are shaped by the transmission of wealth, status and earning power across generations. While low mobility may contribute to the persistence of inequality, these connections may run in the opposite direction as well: places and times marked by high-income inequality tend to be places and times in which parental income has a stronger influence on children's incomes. This pattern is often termed the ‘Great Gatsby Curve’. While Corak [46] traces out this pattern in cross-country comparisons, Chetty & Hendren [47] find it in comparisons across counties in the USA. Intuition suggests that moving between ‘rungs’ in an economy will be harder when those rungs are farther apart. Persistent income differences across generations in more unequal places will then lead to persistent differences in the ability to save and to widening wealth differences, which can feed back into further intergenerational immobility. The force of this influence of inequality on mobility will be affected by the policies and institutions shaping opportunity in a society: for instance, while the wealthy will generally invest more in their children's education, this will matter more in societies where public investment in education is limited [46, pp. 96–99].

5. The wider effects of inequality

At any point in time, highly unequal societies have winners and losers. But does inequality have broader effects on economic, political and social functioning that apply generally, affecting individuals wherever they might be in the inequality spectrum? Some economists have argued that there are positive effects of inequality on growth, at least over a range: some inequality is necessary to create incentives for effort and innovation. By contrast, Sokoloff & Engerman [48] argue that lower levels of wealth and income inequality in North America (relative to Central and South America) produced higher levels of growth. In their view, colonial-era differences in inequality were shaped mainly by initial conditions and factor endowments that gave rise to differences in wealth distribution at a very early stage: For instance, very high returns to scale in sugar and coffee production led to concentrated land ownership in the Caribbean and South America, along with a reliance on slave labour. In northern North America, the dominant crops were not characterized by scale economies, and land ownership was much more dispersed. Policy may have mattered as well: in the Spanish colonies, the granting of land, mining and labour rights to elites reinforced patterns of inequality. The political and social institutions that arose in the context of greater equality in the North—more general suffrage, more widespread access to education—promoted more rapid growth [48]. In a similar vein, Lindert & Williamson, in their review of the history of economic growth in the USA, find little or no evidence for a ‘growth–equity’ tradeoff. Redistributive policy has not markedly slowed growth, at least not in the neighbourhood of the kinds of redistribution that have actually been undertaken in the USA [49, p. 262]. In the more recent period, and in an international context, Alvaredo et al. [12, pp. 11–12] find no correlation between top tax rates and economic growth across countries. That is, while reducing top marginal rates may effectively increase the share of income flowing to the top, economic productivity does not increase as a result (either among those at the top or at the system level).

So inequality may not promote growth in general, and indeed it may slow it. Inequality may also have wider negative impacts, not just for those on the bottom. Wilkinson & Pickett provide evidence suggesting an association between inequality (measured as the ratio of the income of the top quintile to that of the bottom quintile) and a wide variety of social ills, including mental illness, drug use, obesity, infant mortality, homicide and incarceration [50]. What is the mechanism connecting this variety of dysfunctions and the extent of economic inequality? They argue that inequality erodes social trust and social cohesiveness, which can undermine investment in public goods. High levels of inequality also heighten the awareness of relative status and the desire to maintain it, which can lead to greater stress, anxiety and unhealthy behaviours.

Recent analysis by Gould & Hijzen [51] corroborates and adds detail to these themes. Using data from the American National Election Study and the European Social Survey, they examine the association between respondents' expressions of trust in others and the extent of inequality locally (by state in the USA, and by country in Europe). These effects are somewhat mixed, but in general they find that greater inequality locally, especially inequality below the middle of the distribution (for instance, the ratio of income at the median to income at the 10th percentile), is negatively associated with social trust. ‘Residual inequality’—that is, inequality that remains after we control for individual characteristics like education, age and occupation—is most strongly associated with the lack of trust. Because social trust is important for effective negotiation, trade and provision of public goods, this negative impact of inequality on trust provides a pathway from high levels of inequality to lower levels of economic growth, political trust and political participation [52].

We have focused here on general inequality in the distribution of income, wealth, well-being and power—the distance from the top to the bottom in the overall distribution. We have not examined inequality by group identity—between racial, ethnic, immigrant or gender groups, for instance. However, the evolution of the overall distribution of wealth and income will shape the path of inequality across groups. In the USA case, for instance, the reduction in inequality in the mid-twentieth century and the widening income distribution from the 1970s onwards had substantial effects on the path of inequality between African Americans and Whites. Having been denied access to education, skills and training, African Americans gained relative ground when the returns to these attributes declined (in the mid-twentieth century), and lost ground when the returns to these attributes increased and the general distribution widened [53]. These differential impacts of general inequality on particular communities may shape the political rhetoric and policy response to inequality.

There is an extensive literature by political theorists and political scientists about the central role of the middle class for a stable democracy, even as far back as Aristotle [54]. Aristotle, Lipset and subsequent scholars were mostly compelled by a desire to understand the necessary conditions that facilitated transition to and maintenance of newly democratized regimes [55,56]. According to Lipset's [57] modernization theory, there is a strong and linear relationship between socioeconomic development and democratic development. Economic development gives rise to a middle class and the middle class possesses democratic impulses that compel a transition from authoritarianism to democracy [58–61]. As the logic goes, the middle class is motivated by self-interest in order to protect their individual rights and modest private property from upper class and government intrusion [61,62]. Additionally, middle-class individuals are supportive of democracy because they have resources (education, skill, money and time), relative to lower classes, that provide them with the opportunity and ability to participate in politics [63,64].

As we have seen above, though, economic growth, while perhaps enhanced by greater equality and the presence of a vibrant middle class, may not automatically or naturally produce them. Further, rising inequality may make a country vulnerable to oligarchic or populist rather than middle class/democratic tendencies: ‘A society divided between a large impoverished mass and a small favoured elite would result either in oligarchy (dictatorial rule of the small upper stratum) or in tyranny (popularly based dictatorship)’ [57, p. 75]. Norris & Inglehart [65] explicate the causal logic of this phenomenon, given the rise of conservative populism and authoritarianism around the world more recently. This sentiment is a reverberation of Lipset, who suggests that growth of the middle and working classes spurs and nurtures democratic development. The growth of the middle class, as well as the working class, provides moderation in politics because of increased education, decline of deprivation-based conflict, and the cross-pressures of a complex society. As median wages stagnate, and incomes at the top grow rapidly, democracies run the risk of making themselves vulnerable to authoritarian populism. ‘Conservative reactions can manifest themselves as a violent, nativist force directed against the other, fueled by resentment against globalization, migrants, the closure of factories and plants, the blurring of genders, and the intrusion of different languages' [65, p. 47].

As Norris & Inglehart argue, economic security and post-materialism is not equally distributed among individuals in a society. In fact, according to economic grievance theory, ‘the least prosperous citizens in advanced industrialized economies—the ‘losers’ from globalization—provide the strongest support for authoritarian and populist values' [65, p. 132]. More concerning, perhaps, are the serious and profound consequences for democratic stability in terms of damage to democratic civic culture by way of decline in support for democratic principles, decline in satisfaction with democratic performance and decline in social tolerance and trust [65, ch. 12]. Alesina & Perotti [66], using data on 71 countries between 1960 and 1985, show that countries with lower shares of income flowing to the middle class (the third and fourth quintiles of the income distribution) are prone to greater incidence of socio-political instability. This instability—attempted coups, assassinations and the like—then reduces rates of investment, slowing economic growth. The result may be a vicious cycle of political disruption and economic stagnation.

6. Conclusion

We have highlighted here the forces that shape inequality on both economic and political dimensions, and we have briefly reviewed the long-run evolution of inequality (with, admittedly, a focus on the history of Europe and North America). These long-run patterns reflect the factors identified by evolutionary ecologists as central to the shaping of inequality and its transmission for human and non-human populations, including embodied, material and relational wealth. Our review also emphasizes the centrality of institutions and policy in determining the impact of these factors, and the two-way causation in this relationship. Political power reflects the influence of embodied wealth (education and political literacy), material wealth (see again Bartels’ [20] analysis of the influence of the affluent on roll-call votes) and relational wealth (access to people in influential leadership roles). The salience of these forces is then shaped by institutions, laws and norms—laws governing the right to vote, but also regulations relating to campaign finance and access to media. Similarly, economic inequality is shaped by embodied skills, the accumulation of material wealth over time and relational wealth (through the intergenerational transmission of economic status). Institutional and legal forces play a role in determining the importance of these economic forces as well—for instance, the changes in law and practices around collective bargaining, and changes in tax policy, which Levy & Temin [9] argue contributed to rising inequality in the USA in recent decades. While laws and institutions influence economic and political inequality, widening differences in economic and political power can undermine social cohesion, leading to reduced support for the kinds of policies that might offset some of the harmful aspects of inequality. The result may be a vicious cycle producing a large and growing gap between the wealthy and the poor, the powerful and the powerless, which can lead to numerous harmful consequences. The need to mind these gaps, to be attentive to these potential consequences, is an important lesson of this review.

Data accessibility

This article has no additional data.

Authors' contributions

J.E.C.: conceptualization, project administration, writing—original draft, writing—review and editing; T.N.M.: conceptualization, project administration, writing—original draft, writing—review and editing.

Both authors gave final approval for publication and agreed to be held accountable for the work performed herein.

Conflict of interest declaration

We declare we have no competing interests.

Funding

We received no funding for this study.