Guido Alfani’s recently published book, As Gods Among Men: A History of the Rich in the West, looks at connections between the past and present through a particular lens: how the richest individuals in Western society accumulated their wealth and the role they played in their communities, whether contributing funds in times of war or skirting their long-perceived responsibilities during the recent pandemic.

Alfani, a professor of economic history at Bocconi University and a Stone Center Affiliated Scholar, has written widely on long-term inequality trends, as well as on topics including the histories of famines and plagues. Despite his frequent exploration of darker subjects, Alfani says the past offers some possibility of hope. In a recent interview with the Stone Center, Alfani discussed how the position of the rich in Western society has changed over the centuries, and the implications for the present and future.

Why did you decide to write a book on the history of the rich and super-rich in the West?

Alfani: I do a lot of work on inequality, and what happens at the top of distribution is very important, because what happens to wealth concentration among the top 5 percent of the distribution tends to shape long-term trends, in terms of overall inequality.

But maybe the most important reason is that nobody has ever done a book on the rich as a category, defined only by their wealth and no other characteristics. I came to realize that there was no book on this topic years ago, when I was working on an article, which was meant to be a very dry and technical article about certain metrics concerning the rich. I wanted to flesh out my numbers with what I could find from the general literature, because I thought surely there must be a sizable literature on the rich.

But I realized that there wasn’t one. There are many popular books and collections of short biographies of rich individuals in certain geographic areas or periods. Some scholarly works focused their attention on class; people were looking at the higher classes, the aristocracy or the bourgeoisie, which is very interesting, but it presents a problem, because it doesn’t allow us easily to ask the question of: “What is the composition of the rich across the ages?” You move from the Middle Ages, when you have the nobility dominating the composition of the rich, to the beginning of the period where there are very wealthy families who make their fortunes in international trade, in finance, and so forth. Today, you again have a shift: finance, in relative terms, has never been as important, and that leads to a change in the composition of the rich.

There was no proper social science book on the rich over the period I wanted to look at, which was the very long run, and with the kind of broad geographic coverage that I wanted to achieve. That made me think about what we might have been missing, by not focusing our attention on the rich.

How has uncovering more about the rich throughout history changed perceptions of the past and the present?

Alfani: Something very important is that we used to believe that inequality growth — of both income and wealth, but surely of income — was a consequence of modern economic growth. What’s now very clear, now that we have the opportunity of looking five, six, even seven centuries in the past, is that inequality growth has been a very long-run trend, as far back as we can measure. We can measure it from the very beginning of the 14th century, a few decades before the Black Death.

Inequality has always been increasing, and this tells us something about its possible connection to economic growth — because economic growth can’t have been the only reason for why inequality was increasing. It was maybe not even the main factor.

And this automatically makes us critical of those views, which I think are a bit optimistic, that tell us that inequality growth is only a negative consequence, or a side effect, of something that is good, which is economic growth. This is, of course, connected to the famous hypothesis put forward by Simon Kuznets, which is now criticized by many, including myself, exactly because it made this strict assumption that inequality growth in the 19th century was the consequence of the Industrial Revolution, and the promise that it would decline. Which didn’t happen. As we know, inequality resumed growing in the 1980s.

But if it’s not economic growth, what we can consider to be the main factor explaining the growth in inequality? Quite a few people, among those of us who look at the long run, focus on political and institutional factors, such as the development of state institutions dominated by restricted and somewhat rapacious political elites, or the rise of the fiscal state.

By focusing our attention on the past, it makes more relevant to look at whether today inequality growth is, in fact, shaped by politics and institutions much more than we used to think — and maybe more than we are happy to think, because this has a number of implications.

Is one of those implications the influence of the rich on politics and government?

Alfani: When we look at the last seven centuries or so, the impression we get is really that inequality grows whenever it can. This is an evidence-based statement. This is what the data tell us, but explaining that is complicated. In recent research, and this is also something I do in the book, people have looked at the establishment of resilient hierarchies of power and coercion. At the top of the wealth distribution, individuals tend to belong to specific and socially cohesive groups that also concentrate political power, and this leads to their ability to continue to grow wealthier and wealthier, compared to all others. And if these hierarchies are resilient, then this can explain the long-run process that we observe. 

This is a pretty negative way of looking at this, and very depressing to me. This is what Walter Scheidel does, for example: he connects the emergence of these hierarchies to the establishment of state institutions, right from the Bronze Age onward, and argues that the progressive strengthening of the state only makes such hierarchies stronger. Scheidel is surely highlighting an important point, but you could also take a little bit different, but related, perspective, which is to look more generally at how institutional frameworks can produce this process. Here, for example, one could look, as I do, at fiscal systems, that is, at the complex of institutions and practices that have to do with taxation. In preindustrial times, fiscal systems were geared to serve the interest of a certain economic elite, which in certain places was also a political elite, but this is not automatic.

I would say that compared to others who focus more on coercion and politics, I personally prefer allowing for concentration of wealth and concentration of political power to be not perfectly overlapping.

You’ve written a lot about two very different periods when inequality declined: the Black Death in the 14th century and the 20th century World Wars. How did each of these periods decrease inequality?

Alfani: The Black Death basically destroyed human capital, which is a very nasty way of saying this, because what the Black Death did was kill people, about half the population of the European continent. That led to a very substantial shortage of labor.

The workers, across society — not only the urban workers but also peasants in the countryside — were able to get better wages, better contracts from landowners. They were also more able to acquire property, because first, their income has increased in real terms, and second, there were a lot of people who had inherited more land than they wanted, and were happy to sell it. This decreases inequality for a pretty long period, fifty to one hundred years, depending on the area.

With the World Wars, one could make the point that what happened to capital is more important. The wars destroyed physical wealth. In World War II, in particular, you have cities literally razed to the ground. This is what Scheidel calls leveling caused by violence. Then there’s hyperinflation related to the wars, and also in the period between the wars, which tends to level the distribution of financial capital, simply by destroying capital.

But this is not the whole story. There is another aspect that is very important in this period, which is what happened to politics and institutions. This is also the moment — in connection with the needs of a world war, which requires mass mobilization — when it is easier to build a consensus on introducing fiscal reforms, which are more strongly progressive. You have to give back to the people who are sent to the front lines. And these reforms became very, very progressive, in terms of taxation of incomes or on wealth from inheritances. So, it’s not simply destroying wealth, and by destroying wealth, reducing inequality — a means by which no one stands to gain. It’s also redistribution, and rebalancing of opportunities across society.

This time of political institutional reform then continues in many Western countries for a couple of decades after the end of World War II. And that is also important, because this suggests that although there is this very long-run tendency for inequality to grow, in the end, it depends on our institutions, which we create, and we are able to change them.

It’s a matter of choice. We can choose whether we want a more or less equal society. And if we wanted a less unequal one, history tells us that we should first look at our fiscal systems, because they have historically shaped inequality, going back to the preindustrial period — then, the fiscal systems were regressive, so they were producing inequality. But in the case of most, if not all, of the West in the first part of the 20th century, fiscal systems were pushing inequality down.

You recently published an opinion piece in The New York Times about the role of the super-rich in society. How did our expectations of the rich change so dramatically?

Alfani: If we look at this historically, the rich, or at least commoners who became rich, were seen as a problem in the Middle Ages. They were a problem because, if they have so much wealth, by definition they are seen as greedy, and the Kingdom of Heaven will be closed to them. The problem wasn’t with the wealth of the nobility, because that was supposed to correspond to God’s plan for how society was organized.

But from the final part of the Middle Ages, these rich commoners became so abundant, at least in certain places, that they couldn’t be considered only an anomaly. That’s when you start finding, in the discourse about wealth and the rich, a change that in practice finds a specific role for the rich to play, which is, first of all, to help communities in times of crisis. Having amassed private reserves of money, if there’s a war, or a plague or a famine, the community expects that the rich will allow itself to be taxed by paying exceptional contributions and providing loans.

And if you are not willing to do it on your own, the community — through its government institutions, whose exact nature changes according to the place and the time — will force you, constraining you to provide those loans. I would argue that this is a social role that the rich continued to play until the very beginning of 20th century, at least. The participation of the rich in funding war efforts, by means of a variety of war loans during the first part of the 20th century, is something that historically is very important.

There is also another function that the rich perform: they make their city — their place of residence — magnificent. By building their palaces, their charitable institutions, they provide advantages to everybody. Again, they are transforming their private wealth into a public benefit.

Now, the first aspect is something which has changed a lot, if we look at what has happened across the West during the last crisis, from the Great Recession to Covid-19, and arguably until today, as this is still a very troubled period.

There has been a call for the rich to play again this role. In many countries, there have been proposals to ask the richest components of society, the most affluent population, to contribute more, even just for one year or two years. But if you look at what actually has been implemented, it is very limited. And this is a problem, because the rich are no longer playing what has been their main social role for many centuries, although I would argue there is still an expectation for them to do it. If they don’t, they’re reneging on a social contract that is deeply rooted in Western culture.

If there’s still this expectation, how are the rich managing to avoid fulfilling it?

Alfani: One hypothesis is that this is connected to their influence on politics. These proposals didn’t make it through the political system, didn’t become law or regulation. How is that possible? Because another thing that is constant, for much of the history of the West, is that society is very suspicious of the richest individuals who might try to get control over the political system. You find this, for example, in the political debate in the United States at the beginning of the 20th century.

But today we are much more tolerant than our ancestors of super-rich individuals, who either exert an influence on politics, remaining formally outside the political system, or decide to become politicians themselves. As, for example, in Italy and in the United States.

That’s not something that would have been possible in the 1960s. Now there’s this greater acceptance of the rich becoming politicians in top public posts, top public offices, which is also the consequence of an influence exerted by a certain part of society on the rest. In general, the rich, and in particular the super-rich, are the subject of a lot of fascination. They are kind of heroes in today’s world.

Do the super-rich constitute a new global aristocracy?

Alfani: I think it is very possible that something like a global aristocracy is in development right now. Aristocracy, in this context, would mean a group of people who have some internal cohesion, and share certain views, certain objectives, and certain experiences. And who very often have inherited wealth.

There was a very clear pattern before Covid-19 — which changed things, maybe temporarily, because it limited mobility of individuals across different world areas — but before that there was a clear tendency toward an increase in the prevalence of foreigners in elite schools in the United States, in Britain, in many different areas. Sharing that experience, establishing those connections, is something that might be good at an individual level, but also might serve create a super-rich global class.

Is there a particular message that you hope readers will take from your book?

Alfani: We tend to take for granted that the society we experience today has been similar to what we experienced for a long time. This is because, as human beings, we tend to focus on the current and the recent, and we forget things that are not even that remote. History helps us remember the past.

And when we look at history, we come to the realization that society is able to change much more than we usually think. And it is not necessarily true that our current society is the best we’ve ever had.

Maybe there is something in the past, not necessarily in the 14th century but, for example, in the first part of the 20th century, that we should think about and treasure more. Maybe there is something that we might want to reconsider, in terms of more recent developments.

So in that sense, the past gives us reason to hope.

Alfani: I want to be hopeful.

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