Five millennia ago, wealth inequality — which had stayed roughly constant for thousands of years — exploded. It has stayed constant, albeit much higher, ever since.
“It’s really amazing,” says SFI Professor Samuel Bowles. “There was a period of a thousand years where wealth inequality doubled across a wide range of societies.”
One factor, Bowles and Bocconi University economic historian Mattia Fochesato write in a paper recently published in the Journal of Economic Literature, was the ox-drawn plow. But while that drove the rise in wealth inequality, the pair argue, it took major political and cultural shifts to sustain higher inequality in the face of egalitarian pressures — including the threat of armed revolt.
For years, many researchers believed that farming itself led to wealth inequality: Farming allows people to store food for the future and to drop out of community sharing as a form of insurance, thus accumulating a kind of wealth. The puzzle is, wealth inequality didn’t take off until at least 5,000 years or so after the dawn of agriculture.
Prior to that time, people did occasionally accumulate material wealth, but the new study presents evidence that these cases were often met with “aggressive egalitarianism,” including in some cases the use of violence to counteract wealth inequality.
What changed this is the ox-drawn plow, an insight first suggested in work by Fochesato, Bowles, and SFI External Professor and Oxford archaeologist Amy Bogaard. That technology “converted the economy from one that was limited by how much labor you could do to one that was driven by how much land or material wealth you could command,” Bowles says. “Think of the ox and plow as a Neolithic robot, displacing labor and enriching their owners.”
In other words, the key factor determining family income shifted from traits that were relatively equally distributed — strength and skill — to material possessions that could be accumulated and passed on to future generations, thus sustaining vast inequalities.
That economic transformation was accompanied by a cultural shift away from aggressive egalitarianism toward individualism and the emergence of the first proto-states. Those proto-states provided public goods but also claimed a monopoly on the use of violence, helping to concentrate power and reinforce the new status quo. “The origin of enduring wealth inequality required both the change in technology and the state” along with cultural changes, Bowles says.
The new study is the result of nearly two decades of work by SFI researchers and their colleagues that brought together insights from economics, archaeology, archaeo-botany, and more.
The study’s insights resonate today. AI and other labor-displacing technologies have the potential to increase inequality again. But whether that comes to pass, Bowles said, is a political question: It depends on whether economic elites can further concentrate their political power and their ownership and control of the new labor-saving technologies.
Read the paper, "The Origins of Enduring Economic Inequality," by Samuel Bowles and Mattia Fochesato in Journal of Economic Literature (December 2024). DOI: 10.1257/jel.20241718