Lessons on Inequality from the Eighteenth Century

Economic inequality is a perennial issue. Recent news items have reminded me of this, and of the fact that it has sometimes been justified by appeal to the arguments of eighteenth-century writers, notably Adam Smith. This misconceives what he actually wrote, and ignores the arguments of other eighteenth-century thinkers - such as Jean-Jacques Rousseau - against economic inequality.

Image from Wikimedia Commons.

In advance of last week's budget there was much speculation as to whether Rachel Reeves was going to break Labour's manifesto pledge and raise income tax. Public services are currently struggling and raising the tax paid by those in the additional rate band (who earn over £125,140 of taxable income per year) and in the higher band (those earning £50,271 to £125,140) would have been the most straightforward way of providing a welcome boost to the public finances. Taxing those in the top two bands more heavily would also have served to reduce the growing inequalities in income within our society.

The Labour Market Statistics published by the Office for National Statistics in October reported that the mean average weekly wage (including bonuses) is £733 before tax - equating to an annual pre-tax average salary of around £38,100. Yet, as Forbes Magazine noted, this hides huge inequalities between individuals. The median annual pay of top chief executives was £4.22 million in 2024, while three million UK workers earn the minimum wage (£12.21 for those over 21, £10 for those aged 18-20 and £7.55 for those aged 16-17) (https://www.forbes.com/uk/advisor/business/average-uk-salary-by-age/#overview_of_earnings_in_the_uk); amounting to around £25,000 a year at best.

Image of Elon Musk from Wikimedia Commons.

Another story this month that highlighted the issue of extreme inequalities in income was the announcement on 7th November that Tesla shareholders had approved a record breaking trillion dollar pay package for Elon Musk (already the world's richest man). The package is dependent on the company raising its market value over ten years and hitting various targets, and Musk will be paid in shares, but it is still an obscene amount of money to award to an individual. The Tesla board justified the deal on the grounds that it feared that without that incentive Musk might leave the company and it could not afford to lose him.

The notion that the outrageous salary package offered to Musk is necessary to keep him at Tesla draws on the argument that it is better for companies (and by extension for society) to keep rich people on side because vast inequalities of wealth within a society actually benefit everyone. Drawing on a (skewed) understanding of Adam Smith's thought, the theory of 'trickle-down economics' reassures us that we are all better off as a result of the huge salaries of the rich. Smith's theory of the invisible hand is taken as an excuse to reject state intervention in income distribution on the grounds that it is likely to be counterproductive (https://www.adamsmithworks.org/documents/adam-smith-peter-foster-invisible-hand). Yet, as research by David Hope and Julian Limberg has shown, tax cuts for the rich tend to result in further benefits for them rather than improving the lives of workers or stimulating economic growth (https://eprints.lse.ac.uk/107919/1/Hope_economic_consequences_of_major_tax_cuts_published.pdf).

Street sign from Geneva commemorating Jean-Jacques Rousseau. Image by Rachel Hammersley.

While those who argue that vast inequalities in wealth are good for society sometimes seek eighteenth-century roots for their argument, the counter-argument - that growing inequality has negative rather than positive consequences for society as a whole - was also explored at that time. In his Social Contract Jean-Jacques Rousseau insisted on the need for relative equality within a successful state:

as for wealth, no citizen be so very rich that he can buy another, and none so poor

that he is compelled to sell himself: Which assumes, on the part of the great,

moderation in goods and influence and, on the part of the lowly, moderation in

avarice and covetousness.

In a footnote Rousseau continued:

Do you, then, want to give the State stability? Bring the extremes as close together

as possible; tolerate neither very rich people nor beggars. These two states, which

are naturally inseparable, are equally fatal to the common good; from one come the

abettors of tyranny, and from the other tyrants; it is always between these two that

there is trafficking in public freedom; one buys it, the other sells it. (J. J. Rousseau,

Of the Social Contract, ed. V. Gourevitch. Cambridge: Cambridge University Press,

1997, p. 78).

For Rousseau, then, great inequalities of wealth within a state would encourage tyranny and corruption.

Writing just over thirty years later, the Newcastle-born radical Thomas Spence expressed a similar view. He observed the growing inequalities in British society:

Great landlords, and great farmers, now engross the country and these employ

none but great tradesmen. No little masters to be seen now, no medium; but very

great, and very little; very rich, and very poor. (Thomas Spence, 'A Letter from

Ralph Hodge, to his Cousin Thomas Bull, in The Political Works of Thomas Spence, ed.

H. T. Dickinson. Newcastle: Avero, 1982, p. 22).

In contrast to the theory of 'trickle-down economics', Spence insisted that a more equal division of property was the way to ensure that all had the necessities of life. Under the heading 'A Lesson for Antigallicans' he reprinted the following extract from a contemporary pamphlet in his journal Pigs' Meat:

Title page of Thomas Spence’s periodical Pigs’ Meat (London, 1793). Copy from the Philip Robinson Library, Newcastle University. Reprinted with kind permission.

if property were divided with any tolerable equality, a man would begin by

providing amply for his support, comfort, and enjoyment; and would only suffer

the surplus to be exchanged for foreign superfluities; nor would he for superfluities

condemn himself to incessant labour. (Thomas Spence, Pigs' Meat. London, 1793, p.

18)

Similarly in an earlier work of his own, in which he imagined an island society where land was owned collectively, Spence has his narrator observe of the island:

instead of anarchy, idleness, poverty, and meanness, the natural consequences I

narrowly thought of a ridiculous levelling scheme, [there is] nothing but order,

industry, wealth, and the most pleasing magnificence. (Thomas Spence, A

Supplement to the History of Robinson Crusoe. Newcastle upon Tyne, 1782, p. )

On what grounds did these thinkers argue that excessive inequality is bad for society? They claimed that as the gap between rich and poor increases, the pursuit of money comes to be valued more than the promotion of the common good. As a result, wealth starts to be viewed as a marker of merit regardless of the means by which that wealth was gained. In the language of the eighteenth century, people start rising to power simply because they are rich rather than because they are virtuous. Looking at the world today, I cannot help feeling that we are well past that point.

For eighteenth-century thinkers, the solution to this problem was easy to understand, though not necessarily straightforward to implement. If excessive inequalities of wealth within society were dangerous to the public as a whole, then it was incumbent on the government to introduce some degree of redistribution of wealth to keep those inequalities in check. This would ensure that the government operated in the public interest.

Image of Spence from the Hedley Papers at the Newcastle Literary and Philosophical Society. Reproduced with kind permission.

Spence took a rather extreme view of what this government intervention should involve. While he did not call for the abolition of moveable property, believing this was a spur to industry, he did insist on the communal ownership of land (organised at the level of the parish). That proposal was ridiculed in his own time and seems even less like a workable solution today. But we do have a ready-made system that is designed to allow the government to redistribute wealth in the interest of the public good and to keep a check on the inequalities of income between the richest and poorest in society. That system is income tax. What a shame Rachel Reeves did not find the courage to pull that lever last week.

Myths Concerning Republicanism 4: Republican Government and Commercial Society

Justin Champion delivering the first annual Christopher Hill memorial lecture at the National Civil War Centre, Newark, November 2018.

This month's blogpost, the latest in a series I have written on the myths surrounding republican government, is dedicated to the memory of the inspirational historian Justin Champion, who died last month, and whose research has fed directly into my thinking on this issue - and so many others.

The recent Covid-19 pandemic has raised important questions regarding the role of the state - particularly in times of crisis. In the UK, government intervention has been crucial in the form of the furloughing scheme and in providing cash injections to support small and medium sized businesses. At the same time, the high death rate in this country and the difficulties faced by the NHS have been blamed on decades of underfunding. On a broader scale it is self-evident that at a time when there is a high demand for Personal Protective Equipment and coronavirus testing kits in countries across the world, a market economy will operate in the interests of the richest and most powerful countries at the expense of poorer ones, bringing increased risks for their citizens and for the world.

This therefore seems a good moment to pay attention to another 'myth' relating to republicanism: that it either has little to say about twenty-first century economic matters or that it offers an unrealistic approach to economics that is antagonistic towards the market - regarding it, in Gerald Gaus's words, as 'inherently unfree and immoral' (quoted in Richard Dagger, 'Neo-republicanism and the civic economy', Politics, Philosophy and Economics 5:2, 2006: 158). In the same vein Gordon Wood, the historian of revolutionary America, has described republicanism as 'essentially anti-capitalistic' (Gordon S. Wood, The Creation of the American Republic, 1776-1787. Chapel Hill, 1969, p. 418). This attitude has led some to conclude that republicanism can have no place in the politics of the twenty-first century.

However, this is open to serious question. As is the case with many of these modern myths, its roots are to be found deep in history - or perhaps more accurately in historiography. In 1975 the great intellectual historian John Pocock produced a groundbreaking book The Machiavellian Moment, which traced the journey of republican ideas from the ancient world, via Renaissance Italy and early modern England, to their zenith in revolutionary America. Pocock paid particular attention to how those ideas faired in late seventeenth- and early eighteenth-century Britain, highlighting the inevitable tension between the republican emphasis on virtue and the rise of commerce, and presenting republican authors as antagonistic to the new commercial society that was emerging around them. This fed into a wider argument about an incompatibility between liberalism and republicanism that was central to Pocock's book.

The Ponte Vecchio which spans the Arno river in Florence and has been the location for shops since the thirteenth century. Image by Rachel Hammersley.

While the distinction between liberalism and republicanism was challenged from the outset, the notion of republican virtue as inherently at odds with commercial society and a market economy proved more persistent. Nonetheless, recent research has begun to reveal it too to be a false dichotomy.

In a 2001 article Mark Jurdjevic took issue with Pocock's account of Renaissance Italy, arguing that Florentine civic humanism (the underpinning of the republican arguments of that time) was in fact the ideology of an 'ascendant merchant class'. He went on to suggest that commerce and private wealth were not a threat to the republic, but rather were crucial to its survival (Mark Jurdjevic, 'Virtue, Commerce, and the Enduring Florentine Republican Moment: Reintegrating Italy into the Atlantic Republican Debate', Journal of the History of Ideas, 62:4, 2001: 721-43).

The dedicatory letter at the beginning of John Toland’s edition of The Oceana and Other Works of James Harrington (London, 1737), one of the texts cited in Justin Champion’s article. Here Toland celebrates the wealth and riches of London, which he attributes to English liberty, and likens Harrington’s constitution to that of the Bank of England. Copy author’s own.

Jurdjevic's conclusion chimes with the findings of Steve Pincus on seventeenth-century England, which at that time was already experiencing an expansion of trade. Pocock had focused on figures like James Harrington and John Milton who were hostile to commercial culture. Yet, as Pincus shows, there were plenty of supporters of commonwealth government prepared to defend the new commercial society (Steve Pincus, 'Neither Machiavellian Moment nor Possessive Individualism: Commercial Society and the Defenders of the English Commonwealth', The American Historical Review, 103:3, 1998: 705-36). The author of The Grand Concernments of England, for example, declared that 'trade is the very life and spirits of a common-wealth' (Anon., The Grand Concernments of England Ensured... London, 1659, p. 32).

Justin Champion has gone even further, drawing on little known published writings and unpublished manuscripts produced by John Toland and Robert Molesworth to show that these eighteenth-century 'commonwealthsmen' had a more subtle and sophisticated attitude to commerce than they have been given credit for. While they were certainly worried about the corruption that might be introduced by speculation, paper stocks, and credit, they drew an important distinction between schemes in which these mechanisms served only private interests and those that operated for the benefit of the public. While they condemned the former, they accepted that the latter could perform an important function in a well-organised republican state (Justin Champion, '"Mysterious politicks": land, credit and Commonwealth political economy, 1656-1722' in Money and Political Economy in the Enlightenment, ed. Daniel Carey. Oxford: Voltaire Foundation, 2014, pp. 117-62).

Thomas Paine, copy by Auguste Millière after an engraving by William Sharp, after George Romney, c.1876, based on a work of 1792. Reproduced under a creative commons license from the collection of the National Portrait Gallery, NPG 897.

Could that notion of an economy operating in the interests of the public good, rather than in private interests, provide the basis for a republican political economy in the twenty-first century? The political philosopher Richard Dagger certainly thinks so. In a 2006 article he sketched out the key features of a neo-republican economy where the market would be preserved but be directed towards the service of the public good. This would require that certain values be allowed to trump the unfettered operation of the market. Efficiency in the production and distribution of goods and services would certainly be valued, but the interests and well-being of citizens would be deemed more important. For example, there would be constraints on managerial decision-making and institutional guarantees for workers to be able to contest managerial directives. Similarly, the market would be curbed to secure the protection and flourishing of communities, which might mean giving careful consideration to the impact of economic decisions on the environment or on particular groups within society. Dagger also proposes several mechanisms designed to secure greater financial equality and a better redistribution of wealth among citizens. These include a robust inheritance tax, a progressive consumption tax, and a minimum level of financial support for all citizens to help make financial security - and therefore self-government - possible for all, regardless of background. Options for the delivery of this financial support could include a basic income, of the kind advocated recently by the economist Guy Standing, or a basic capital grant, an idea originally proposed by the eighteenth-century revolutionary Thomas Paine in The Rights of Man.

If Dagger is right then perhaps it would be possible to build on republican arguments of the past to develop an economic system in which the market can be directed towards advancing the public good. The current crisis provides an incentive for us to do so, and perhaps also the opportunity.

Myths Concerning Republicanism 3: Republics Require Virtuous Citizens

The events of the last two weeks have brought to the fore the relationship between the individual and society. The spread of Covid-19, as well as our ability to access food and other basic necessities, depend on whether people behave in their own or the public interest. Moreover, many commentators have noted that this crisis has brought out both the best and worst in people. Though this blogpost was written before the Coronavirus situation in the UK escalated and we were confined to our homes, exploring the role that virtue can and should play in society now seems particularly pertinent.

Those who have written about the history of republicanism tend to agree that two key concepts lie intertwined at its heart: liberty and virtue. Recent scholarship has placed greater emphasis on the former. Particularly influential has been Quentin Skinner's argument that there is a distinctive understanding of liberty popular with past republican thinkers, which insists that freedom requires not just the absence of physical restraint (as the liberal understanding would suggest) but also not being dependent on another person's will. This understanding of liberty as non-dependence is central to Philip Pettit's influential attempt to establish neo-republicanism as an alternative to modern liberalism today. It is no doubt easier for current advocates of republican government to emphasise liberty, which remains a fundamental and respected value in the twenty-first century, than to try to argue in favour of virtue, a value that, aside from aficionados of virtue ethics, brings with it connotations of ancient self-sacrifice and Christian moralising.

Another myth about republican government that potentially amounts to an objection to its revival in the present, then, is that it requires the exercise of an unreasonable degree of virtue on the part of citizens. As with the other myths that have been explored in this blog, there is some justification for this.

Jacques-Louis David, ‘Brutus and the Lictors’ reproduced thanks to the Getty’s Open Content program.

The ancient philosopher Cicero did much to cement the importance of virtue within the republican tradition. In his book De Officiis (On Duties) he took from Plato's Republic two crucial pieces of advice for those taking charge of public affairs: 'first to fix their gaze so firmly on what is beneficial to the citizens that whatever they do, they do with that in mind, forgetful of their own advantage. Secondly, let them care for the whole body of the republic rather than protect one part and neglect the rest' (Cicero, On Duties, ed. M. T. Griffin and E. M. Atkins, Cambridge, 1991, p. 33). Elsewhere in the work he voiced the idea that makes such behaviour seem impossible. Noting that, of the many fellowships that bind humans together, the most precious is the republic, he went on: 'What good man would hesitate to face death on her behalf, if it would do her a service?' (Cicero, On Duties, p. 23). 

This idea that republican virtue requires the subordination of one's private interests to the public good, and that a good republican must be prepared to make immense sacrifices for the good of the whole, was reiterated in the eighteenth century. Perhaps the most powerful reflection of it is to be found in the art work of the French revolutionary painter Jacques-Louis David. His painting Brutus and the Lictors (1789) drew on a famous story from Roman history to explore the central themes of patriotism and the sacrifice of the individual for the good of the state. Lucius Junius Brutus, who had been responsible for expelling the Tarquins from Rome and thereby establishing the republic, discovered that his sons had been acting to restore the monarchy. He prioritised the good of the state over his own family by sentencing his sons to death for treason. While David's picture captures the enormous weight of Brutus's sacrifice, the message is clear that he made the right decision.

This understanding of 'virtue' is still in evidence today in the respect shown to veterans and their families. Moreover it is currently on display among those working in the NHS, care homes, supermarkets, and other essential services who are continuing to attend work despite the risks to their own health. Nevertheless few would welcome the notion, under normal circumstances, that civilian citizens should regularly be expected to put their lives or those of their family on the line for the public good.

I want to offer two thoughts in response to this myth. First that if we understand what is required in less extreme terms we can perhaps find some value in grounding our society more firmly in virtue - in a concern for the public good rather than mere private interests. Secondly, that some republican theorists were well aware that expecting human beings willingly to make huge sacrifices for the good of the public was unrealistic. They suggested, instead, that laws and systems of rewards and punishments could be used to create a situation in which people could be motivated by self-interested concerns to behave in a way that benefited the public as a whole. This approach might offer some possibilities for future policy.

To some degree those of us living in countries with a welfare state already accept the principle of sacrificing individual advantages for the good of the whole. The National Health Service in the UK, for example, is premised on the belief that free health care at the point of need is a public good and that individual citizens must sacrifice a portion of their income in order to pay for it. Similarly, here in the UK taxes ensure that free primary and secondary education is available to all children up to the age of 18, and this is paid for by all citizens regardless of whether they themselves have children, or indeed whether they choose to send their children to state schools.

We could extend this idea to other aspects of society. In an article that I linked to in last month's blogpost, George Monbiot argues that the choice we have to make is between 'public luxury for all, or private luxury for some'. He encourages us to imagine a society in which the rich sacrifice their private swimming pools and the middle class their private gym membership, reinvesting that money in high quality public sports facilities that are open to all. A society where a purpose-built public transport system provides swift, efficient, and comfortable travel for everyone, making it rational for individuals to leave their cars at home or abandon them altogether. One in which private gardens of varying sizes are exchanged for vast public parks complete with imaginatively thought out, well constructed, and properly maintained playgrounds that provide opportunities for all children to play and have fun, while in the process improving their health and wellbeing

Portrait of Pieter de la Court by Abraham Lambertsz van den Tempel (1667). Reproduced from Wikimedia Commons.

The problem is how we persuade people to make such sacrifices. We can find some answers by examining republican arguments of the past. While some republicans - particularly those of a strongly religious bent such as John Milton and Algernon Sidney - insisted on the need for genuine virtue on the part of rulers and citizens alike, others - including the Dutch thinkers Johann and Pieter de la Court, the Englishman James Harrington, the Frenchman the Abbé Mably, and the American John Adams - did not have such high expectations of the human capacity for virtue. They accepted that the majority of people would not be willing to make sacrifices for the public good unless it was clearly in their interests to do so. Consequently they argued that laws should be designed so as to direct people towards virtuous behaviour or that other incentives - such as honours and rewards - could be used to induce people to act in the public interest.

Harrington's whole constitutional system was designed with this end in mind. His most famous articulation of the argument was his story of two girls dividing a cake between them. If one girl cuts the cake, but the other gets first choice as to which piece she wants, the first girl will be led by her own self-interest (in this case understood as her desire to get the largest piece of cake) to divide the cake as evenly as she possibly can. Harrington used this as a metaphor for the organisation of legislative power within the state. He insisted on a bicameral legislature and argued that the upper house or senate should make legislative proposals, but the lower house should have the final say as to whether to accept or reject them. By this means the senate would be induced only to propose legislation that was in the public interest, since if they put forward measures in their own interests, the lower house would reject them.

Portrait of Gabriel Bonnet de Mably. Reproduced from Wikimedia Commons.

A different method was proposed by Mably. He insisted that human reason and virtue were too weak to act alone  and that only a small proportion of people in any society would be capable of being led by reason at all times. Yet, he believed that even some of the strongest passions, if carefully orchestrated, could become virtues by being directed towards the public good. Offering rewards for public-spirited behaviour could ensure that ambition or the desire for fame and glory could be channelled towards positive ends. There is a close link between these methods and what modern behavioural scientists call nudge theory.

It would be naïve to think that society could be transformed overnight, but it would also be wrong to think that governments are impotent in these matters. Changes can be made by those courageous enough to do so. On 29 February 2020 the government of Luxembourg introduced free public transport  across the entire country. In addition to seeing public transport as a public good, this is also a move designed to bring an even greater public benefit - that of improving the environment. There is evidence to suggest that this move alone may not be sufficient to encourage car users to make fewer journeys. But when pull factors - such as free public transport - are combined with push factors - an increase in parking fees, congestion charging, and increased fuel taxes - the desired outcome can perhaps be achieved. The pertinent question, then, is not whether citizens are virtuous enough to put the public good before their own private interests, but rather whether politicians are courageous enough to put in place the measures that would induce them to do this.