## Book Review: Thinking about Inequality

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## Bibliographic details
- Authors: ZIA QURESHI
- Published: December 1, 2023

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### Overview
- Title reviewed: Visions of Inequality: From the French Revolution to the End of the Cold War by Branko Milanovic.
- Publication details noted in the review: Belknap Press, Cambridge, MA, 2023, 368 pp., $32.95.
- Review author: ZIA QURESHI, December 2023. ZIA QURESHI is a senior fellow in the Global Economy and Development program at the Brookings Institution.
- Article context: Rising economic inequality in many countries, especially the rich ones, has become a major public policy concern and topic of political debate.

### Historical evolution of economic thought on inequality
- Milanovic chronicles thinking about inequality from the French Revolution to the end of the Cold War, focusing on six influential economists with one chapter devoted to each: François Quesnay, Adam Smith, David Ricardo, Karl Marx, Vilfredo Pareto, and Simon Kuznets.
- Key shifts highlighted:
  - Early focus: social classes and means of production—landowners, capitalists, workers—and the functional distribution of income (rents, profits, wages).
  - Pareto: framed inequality as a social hierarchy of elites versus the rest.
  - Kuznets and later neoclassical economists: shifted analysis toward individuals and interpersonal distribution of income, aided by greater availability of individual income data.
- Milanovic’s characterization: the second half of the 20th century spanning the Cold War was a “long eclipse of inequality studies,” reflecting:
  - Faith of neoclassical economists in markets and market outcomes.
  - Moderation of inequality within Western economies due to rising labor demand, stronger postwar economic growth, improvements in education, and introduction of social welfare programs.
  - Political dynamics: competition between capitalism and communism pushed economics into the service of ruling ideologies.

### Drivers of recent resurgence in inequality
- Milanovic identifies a combination of factors driving the recent rise in inequality:
  - Differential impacts of technological change and globalization across firms and workers.
  - Current institutional and policy settings, including a weakened redistributive role of the state as tax progressivity declined and social programs were squeezed by tighter fiscal constraints.
- Geographical and country examples where inequality has risen:
  - Western economies, especially the United States.
  - Post-Soviet Russia.
  - Major emerging market economies such as China and India.

### Contemporary frontiers of inequality research
- Milanovic’s epilogue reviews advances in the study of inequality:
  - Thomas Piketty’s work stands out for advancing analysis of the role of wealth and nonlabor income in inequality.
  - Broader scope: studies now go beyond a narrow neoclassical market focus to include social and political power structures, and factors such as gender and race.
  - Expansion in measurement: inequality examined in broader dimensions than just monetary income and extending to inequality among global citizens—an area where Milanovic is a pioneer.

### Implications, outlook, and risks
- Divergent trends:
  - Within-country inequality has been rising.
  - Global inequality (the sum of within-country and between-country inequality) has been falling, as developing economies narrow the income gap with rich countries.
- Risks to continued global convergence:
  - Weaker world growth outlook, especially for developing economies.
  - Geopolitical tensions and risk of geoeconomic fragmentation that could threaten trade and investment between countries.
  - Technology-driven changes altering the structure of international comparative advantage.
- Historical caution: Walter Scheidel’s work The Great Leveler is cited to underscore that large and persistent increases in inequality can end badly.

### Assessment and readability
- The reviewer’s evaluation:
  - Visions of Inequality is an important scholarly work and a good read.
  - Milanovic mixes methodical examination of the evolution of economic thought with portraits of economists and the societies and polities of their times.
- Timeliness: Renewed and deeper attention to inequality is deemed timely given contemporary economic and political dynamics.

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_Source: https://www.imf.org/en/publications/fandd/issues/2023/12/book-review-thinking-about-inequality-qureshi_