French economist Thomas Piketty’s 2014 best seller, Capital in the 21st-Century, is a historical study of wealth inequality since the industrial revolution. He demonstrates that an increase in income inequality was inherent to capitalism. The formula was simple, if the rate of growth on income derived from invested assets (stocks, bonds, real estate, etc.) is higher than the gross domestic product (GDP — the rate of growth of the economy), then national wealth will be gradually concentrated in the hands of existing holders of investment assets.
The author’s painstaking statistical analysis was the first of its kind and his work is admired by a broad range of economists. He notes that there are troubling social consequences when inequality reaches a certain level, as it did just before WWI and WWII. He also discovered that the inequality is never corrected by economic growth.
He warns that while inequality had been gradually decreasing and was stable in the period after WWII, in many countries it has steadily increased since about 1980, growing the fastest in the U.S. where it is at the highest level since just before the war.
But Piketty’s study only goes back 200 years. Inspired by his work, Stanford researcher Walter Scheidel examined the same question in light of all human history in The Great Leveler: Violence and the History of Inequality from the Stone Age to the Twenty-First Century. His conclusions were the same:
“…[T]he big equalizing moments in history may not have always had the same cause, but they shared one common root: massive and violent disruptions of the established order.”
He found that these generally take the form of warfare, revolution, or the collapse of the state.
Citing the rising “Gini coefficient” in western countries, (a commonly-used statistical measure of income distribution, see the chart above), British market analyst Albert Edwards puts the blame on the central banks like the Federal Reserve and the European Central Bank. Since the financial crisis of 2008 they have pumped trillions in newly printed money into their respective economies, consequently inflating the values of investment assets and exacerbating wealth inequality. He notes that this has already had political repercussions:
“There is a lot of anger out on the streets, as demonstrated most visibly in recent elections. Even in France where investors feel comforted that a ‘moderate’ has gained (absolute?) power [Macron], it is salutary to remember that the two establishment parties have just been decimated by a man who had never before stood for public office! This is perhaps even more radical than Trump’s anti-establishment victory under the Republican umbrella. The global political situation is incredibly fluid and unpredictable. While a furious electorate has turned its pent up anger on the establishment political parties, the target for their rage is misguided. I am not completely alone in thinking it is the unelected and virtually unaccountable central bankers who are primarily responsible for the poverty of working people and who will be ultimately held to account in the next crisis.” [link]
A recent study by the Boston Consulting Group found that the process of wealth inequality is rapidly accelerating in the U.S., suggesting that it’s gone into “overdrive”. The country is home to seven million millionaires and that figure is expected to rise to over ten million by 2021.
The era of the Grey Wolf, the only era left before the arrival of the Antichrist, is described by St. Hildegard as a time of extreme civil violence resulting from economic disparity. She portrays it as a period of class warfare and revolution (in another chapter she adds that it will include persecution of Christians):
“And the last is like a grey wolf; for those times will have people who plunder each other, robbing the powerful and the fortunate. …And they will divide and conquer the rulers of those realms”*
*Hildegard of Bingen: Scivias, translated by Columba Hart and Jane Bishop. The Abby of Regina Laudis: Benedictine Congregation Regina Laudis of the Strict Observance, Inc. Paulist Press, 1990, Book 3, Vision 11, chapter 6.