Branko Milanovic on Different Visions of Inequality

Writing a book like that makes you really think brutally about the past. It makes you really think about the current time and also how the future would look at you.

Branko Milanovic

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A full transcript is available at www.democracyparadox.com.

Branko Milanovic is a Research Professor at the City University of New York and a Senior Scholar at the Stone Center on Socio-Economic Inequality. He served as the lead economist in the World Bank’s Research Department for almost 20 years. His most recent book is Visions of Inequality: From the French Revolution to the End of the Cold War.

Key Highlights

• Introduction - 0:31
• Why Economic Inequality - 2:53
• Ideas Before 1820 - 13:26
• Marx and Socialism - 19:52
• Piketty and Modern Thought - 40:17

Key Links

Visions of Inequality: From the French Revolution to the End of the Cold War by Branko Milanovic

globalinequality blog by Branko Milanovic

Follow Branko Milanovic on X @BrankoMilan

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Thomas Piketty on Equality

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Learn more about the Kellogg Institute for International Studies at https://kellogg.nd.edu/

Transcript

In 2013 a book was published in French that changed the way many thought about economic inequality. A year later the English translation was published. It is called Capital in the Twenty-First Century. Part of the reason it was so influential is it brought ideas about inequality back into the public conversation and into serious debates about economic theory.

But Piketty was not the first to think about economic inequality. Many of the greatest minds in economics had quite a bit to say about inequality. Naturally, they each had different insights based on their historical era and focus. Branko Milanovic has written a marvelous book where he has given a history of how our ideas on inequality changed over time through these giants of economic thought.

Branko is a Research Professor at the City University of New York and a Senior Scholar at the Stone Center on Socio-Economic Inequality. He served as the lead economist in the World Bank’s Research Department for almost 20 years. His most recent book is Visions of Inequality: From the French Revolution to the End of the Cold War.

In this conversation we discuss economists as varied as Adam Smith and Karl Marx. But we also show how looking to the past allows us to better understand how we think about inequality in the present. One thing I want to note is the audio is not as good as I’d like it to be. I promise I did my best. But I hope that does not take away from this amazing conversation with economist Branko Milanovic.

Now I want to give a brief thank you to Scott Mainwaring, Michael Coppedge, Anibal Perez Linan, and others for making me feel welcome at Notre Dame and the Kellogg Institute for International Studies this past Thursday. If you’re listening to the podcast and want to reach out to me, please send me an email to jkempf@democracyparadox.com. But for now… Here is my conversation with Branko Milanovic…

jmk

Branko Milanovic, welcome to the Democracy Paradox.

Branko Milanovic

Well, thank you very much, Justin. Thanks a lot for having me.

jmk

Branko, your new book, Visions of Inequality: From the French Revolution to the End of the Cold War, was an absolutely fascinating read. One of the reasons why is it combines two topics that I'm very interested in. I'm always interested in the evolution of different thinkers, whether it's economists, whether it's political thinkers. I love to be able to understand how ideas change over time. But the other one is economic inequality. It's a topic that I think many of us have been drawn to in recent years. It's just one of those topics in economics that noneconomists are oftentimes fascinated by. Why do you think that the idea of economic inequality as a subject has fascinated so many people in a way that other economic problems really don't?

Branko Milanovic

Well, of course, I'm somewhat, how should I say, biased in answering that question because it has fascinated me since I was at college studying economics. Let me tell you first why I was fascinated and then actually I would go a little bit further about why recently it has become a topic that has become, again, very much at the forefront of interest. For me, it combined two aspects that I always found attractive. First of all, I was always very much interested in social issues. Which meant essentially, as the book actually argues as well, really a class structure, a definition of class, its relations, maybe between the elite and the people and so on. So, it's really a rather sociological part.

On the other hand, I studied economics and actually studied in former Yugoslavia, currently Serbia, the mathematical part of economics around statistics and when you study statistics, it's very dry. We actually spent a full year doing things where you'll see no relationship, direct relationship, some relationship to reality, but not too much. But once I started thinking we can really do the distributions because we have been doing distributions all the time. Then I say, okay, let's do distribution of income. That's where my interest really jumped up significantly. I saw the value of combining the two. You have to be very numerical and somewhat mathematical to study income distribution, because it's merely about numbers about what incomes that people receive. How do you put them all together?

Now, more recently, I think in the US in particular, the importance of inequality became greater as the result of the financial crisis. I think, after that period, where many people in the middle class realized that their income grew very little, and it was to some extent covered up by the ability to borrow, whereas at the same time the incomes of the very top increased a lot, that I think led to the interest in inequality.

jmk

I've always thought that the idea of economic inequality is so much more personal than other ideas in economics. I mean, when we talk about economic growth, it can feel very abstract. The idea is that the economy as a whole is growing, but it doesn't say much about me and how it's affecting me personally, unless if I'm part of that growth. When we talk about economic inequality, it feels very personal. You're comparing yourself against other people within your country, within your society and you can see the differences on a daily basis rather than something that takes a long time to actually happen.

Branko Milanovic

I agree totally. Actually, I think that if you were to simplify economics, I think it really stands on two pillars which hold the whole structure of economics and interest in economics. The first pillar is growth because without economic growth we don't have much to distribute. We need economic growth to actually make improvements in our way of life to actually have access to more goods and services to actually live a better life. This is important, and actually again, to go to historical writers, like Adam Smith, we realize the importance of economic growth for the lives of ordinary people.

The second pillar is how do we distribute economic growth? Because we could have economic growth of an average magnitude, because growth simply means 3 percent in the US overall. But we don't know whether some gained 300% and others lost 30%. So, the second pillar is the distribution. I think that, as you said, does affect people directly because they compare themselves to others.

jmk

So, your book is more than just another text on inequality. It's actually a study of the history of how we think about inequality. I don't see many economists really doing that. I mean, going back over the history of economic thought, I think of economists as being much more mathematically oriented where they'll put together the equations, test different ideas, but it feels very driven by empirics and very driven by where economics is right now. You're looking at this from a very different approach. I mean, you're looking at this as to how these ideas developed. Why did you decide to take that approach?

Branko Milanovic

It's a very sad development in economics that people have utterly disregarded and forgotten the history. As an Italian historian said, economics is the only social science that doesn't look at its origins and its background. It's a very bizarre social science and the reason why it has happened to be like that was, to be quite honest, because of what was called the physics envy. The belief that economics is a basically natural, quasi-natural science where underlying social conditions don't matter and I will not go into the methodological part. It's not addressed in the book at all, because this is an endless topic and people differ. But I think that's the reason why there are no studies of the history of a part of the discipline.

Now, in my case, of course, as I mentioned, I was interested in inequality for a long time, but I was also very much interested in history of thought. So, before COVID, I was reading things that I've read over the years. For example, I've read Marx for 45 years, so I was rereading, including his correspondence and other things like his journalistic writings. At that time, I cannot tell exactly how it happened because I don't remember, but I had this idea that why don't I, since I basically know already, why don't I write a sketch, a review of the history of the discipline and to a large extent, the topic of inequality was present, but in a different way than compared to today.

I think it gives us a very good realization or a story of how every era, every time, every age has its own way to look at inequality and I think this is one of the virtues of the book is that it basically enables us to see our current concern about inequality in the context of the past.

jmk

One of the ways that you look at each one of these thinkers is you look at three different aspects to how they approach inequality. One includes theory, which makes sense. We want to have theorists to understand a theory of inequality. The second is empirics. They need to actually utilize some kind of data.

That's, as we said, something that most economists look to. So, you're looking at real economists as we kind of go through this. But the third element is narrative. It's something that I never hear economists talk about. So why is a narrative important to explain inequality?

Branko Milanovic

Let me just say, of course, the economists that are discussed in the book really are the top economists in the history of economics. I start with François Quesnay, who was the founder of physiocracy and just preceded Adam Smith. By the way, Adam Smith and Quesnay are the only two economists, the only two persons in my book, who have actually met. Nobody else has met another person. Then, after Smith, David Ricardo. After Ricardo, Karl Marx. After Marx Vilfredo Pareto and the sixth one is Simon Kuznets. Then there was a full chapter about the period between 1960 and 1990 where I don't single out an individual.

Now, I studied them differently in their historical context, but as I said, I also wanted to develop some kind of a general, let's call it, principle or approach that I believe should inform or should guide studies of inequality. Since studies of inequality are really studies about society and they relate to people, they also have to become understood or understandable by people. I think it's very important to have a narrative. This is one of the points that you mentioned. Obviously, theory and empirics go by themselves to some extent, but narrative is important so that you can, in a very few words… It's not the elevator talk, but maybe close to that. You can actually explain what are, in your opinion, the main forces that determine inequality.

The book clearly goes through that. Is it a legally defined social class system? Is it classes who have different economic classes, who have different access to the amounts of production? Is it slavery versus non-slavery? Is it elite versus non-elite? You have to have some perception. We cannot just study inequality and this is my critique, so blindly just looking at numbers and not looking at the underlying social relations. You have to have a very easy way of telling people what you think are really the key dividers. You have to have, I think, an art.

jmk

So, you just mentioned that you kind of go through six key thinkers within the book. Then you have another chapter that discusses a lot of different thinkers over more recent decades. Of those six, the first three, Quesnay, Adam Smith and to a large extent, Ricardo, fall before the year 1820. That's a year that in a recent article that you published in Foreign Affairs, you mentioned that global inequality really began to take off in that year about 1820. How did that change how those thinkers really thought about inequality since global inequality wasn't as dramatic between nations at that period?

Branko Milanovic

It's an excellent question because you brought together, and I have to say I haven't thought of that before, two strands of my own work. One is in the book and the history of thought an interest in inequality within nations because each of them really started within nations. The second strand is global inequality, which for them was really sort of not a topic simply because the world was not as globalized today as it was then. However, I think it's interesting you brought this up.

To some extent, we take 1820 as the first year for global inequality, because we believe that from that year onwards, at least for the GDP per capita, we have reasonably good data. I have to mention that comes from a project originally done by Angus Maddison, who is one of the top economic historians. He is unfortunately no longer with us, but he was a main founder of that and I have to give him credit for the data he developed that and the project continues. I'm part of that project, by the way. Essentially, his viewed is that after the Napoleonic Wars, which themselves are actually a sort of a mini-globalization, we start actually having the data and can, at least retroactively have an estimate of global inequality.

But for the people in my world, and particularly the first three that you mentioned… It’s actually very interesting, because 1817 was the year where The Principles of Ricardo were published, so it's actually just after the Napoleonic Wars. For all of them, we do national concepts, so inequality within France, inequality within England and Scotland in the case of Adam Smith, and England in the case of Ricardo. However, I have to say, and I will be speaking soon about that more on Adam Smith, Smith's view of the world, like Marx's too, was global. Smith actually had a huge interest in the world. I did the following exercise and I swear that I didn't change anything in the book.

What I did, after reading Smith’s classification and the adjectives that he used for different societies at the level of development. I put them down with several groups from the advanced societies to all the way what he calls barbarian societies. I think there are five. I put them down and then I said, let me look now at Maddison’s numbers that we believe now for the GDP per capita for the societies at that time, which Adam Smith didn't have, because honestly, there were no national accounts. There was no GDP. It's amazingly accurate. So, Adam Smith because or partly because he was the Commissioner of Customs in Scotland had clearly very good appreciation for the relative levels of development. In that sense, he was a globalist.

jmk

Adam Smith is interesting because he touches on so many different aspects of economics and really provides a lot of the foundations for how we think about economics today. But his primary concern is not inequality. What was it like going through a writer like Adam Smith, a writer like David Ricardo, and trying to parse out the different nuggets that talk directly about economic inequality?

Branko Milanovic

You know, what we call general inequality, now we have in mind interpersonal inequality, but for all three, Smith, Ricardo and Marx, interpersonal inequality does not appear as a topic because it is overwhelmed by class inequality or actually what economists call functional inequality between the owners of land, the owners of capital, and the owners of labor power. So, then the discussion of inequality revolves around the distribution of total national income between the three large classes and Ricardo says very explicitly the principal objective is to study the distribution of national income between the three large classes. So, the implication of that, and we could know in maybe modern language, is the following, first, there is an order by which these classes are ranked. You have the landlords, capitalists, workers.

Second, there is practically not much overlap between the classes. In other words, very few workers are better off than the capitalists. Very few capitalists are better off than some landlords. The third important assumption is that every individual has only one source of income from the asset that he or she owns. In other words, we don't have, which I think is interesting because in today's capitalism we do, people who are rich in terms of labor income (You know, you are a CEO or an eye surgeon or a software developer) and also become rich in terms of capital income because you have either saved or inherited and you invest. That was not the assumption that they would make and rightly so.

So, I think there are these 3 distinctions, which in their view insisted and I was really studying basically class analysis of the distribution between land, rent, profits, and wages. So, that's what it really boils down to for them.

jmk

That's fascinating because it really draws Marx back to an older era of economists. It draws a much clearer line from Marx back to Adam Smith and David Ricardo. There's a line in your book where you write, “Socialism, even theoretically, had an ambivalent attitude toward economic equality.” You kind of go on to explain that it's because it didn't focus so much about the inequality between individuals, but focused more on class itself. Can you help explain a little bit more about how that might surprise most listeners?

Branko Milanovic

The link between Marx and Ricardo is more than obvious. Actually, it's interesting when you tell people, for example, that Marx has written more in his notes on Ricardo than the entirety of Ricardo's writings. So, you have more words of Marx writing about Ricardo than what Ricardo wrote during his lifetime. Ricardo was not a very prolific writer because he was basically a trader who got into economics and died, unfortunately, very young. He died when he was 51. But now on inequality, as I said, of course, I discussed Marx within the three categories, the three large classes, as well as Ricardo and Smith. In the case of Marks, actually, the three classes really collapsed into two because he, rightly for the time period, basically says landlords are essentially capitalists for land.

Finally, he says workers versus capitalists. But his view on equality is very interesting because, of course, he was an activist. He worked, obviously, when he was young on The Communist Manifesto, he participated in trade union activities which is actually relevant, especially now when we speak about it. Again, I believe actually now is at the peak compared to the last 40 years. But for Marx, equality and improvement of workers conditions was, of course, necessary and good, but the real objective was the abolition of classes. So that's the real objective. That objective can be, of course, maybe reached by greater class consciousness and activists, but it cannot be superseded or made redundant by that.

In other words, to make it very simple, Marx, of course, was in favor of increased wages and everything else, organization of labor, democratization of the workplace, and all of this. But for him, that was never the ultimate objective. Consequently, he then would take a rather skeptical view, particularly when he did his critique of the Gotha Program, towards what later became the social democratic approach, which basically accepts capitalism, but wants to improve the position of the workers and sees that as the ultimate end.

That was his disagreement with at that time the Social Democratic Party and Engels very clearly says the objective is not equality per se, because once we have socialism, we will still have inequalities. There will be people who are actually smarter than others. People who work harder than the others. There will be people, Engels says, who live in the valleys and there will be people who live on the hills. They will be different. So, really, the objective of equality was never an objective per se. It was a side objective and not really the principle.

jmk

So, in the actual application of communism in countries like the Soviet Union and others, do you think that they were closer to the Marxist view that economic inequality wasn't as important as the abolition of classes or do you think that the application of Marxism required them to focus more on economic inequality because abolishing classes was just so difficult?

Branko Milanovic

So, I have a whole chapter, as you know, about income distribution in socialism. The problem in socialism was the following. Classes were expropriated, so consequently there was no more private capitalist ownership to any significant extent. So really the capitalist class basically ended. Technically speaking, everybody was the employee of the state. So, there are no formal distinctions between people in terms of the way of accessing different means of production, different assets, and there were no legal categories. So, in that sense, it was a formal equality.

In reality, of course, there was inequality in earnings and inequality in the distribution of other produced things, which oftentimes were distributed at your workplace. They were not actually marketed but if you were a good worker, you would actually get better access to better food, a better apartment and so on. But the issue fundamentally or philosophically, the people who believe that Marxist socialism was realized had a very similar argument that libertarians or Hayek made in the context of a capitalist society. They would say, we have actually abolished classes, because there is no private ownership. The background institutions are fully fine and any inequality which exists must be ipso facto a good inequality, because it rewards people who are actually working hard or studying hard.

So, let's not waste our time in studying inequality, because we know that's the correct inequality. It cannot be not correct, because all the institutions are good. You see there what Hayek said, ‘If we have a fully market society, economic justice has no meaning because your income can be made only if you have pleased somebody so that he would have paid you for something.’ So, Hayek said, ‘Why study on equality, because it's really meaningless? It simply says that somebody was more able to actually study better or to do more services. So yes, you can study it, but it has no meaning.’ It's very similar. I want to say that ideologically these people who were against studies of inequality under socialism had a certain point ideologically.

Now, of course, I actually argue that socialism was a class society where the position in the hierarchy determined your income. So, the background institutions, I say, were not correct. Consequently, the study of inequality was okay. But of course, politically, it was repressed. The data were not available, people could not do it freely, and the discussion was not free. But I just want to say that we have to distinguish between an ideological justification which is not totally crazy, from the dictatorship like application to researchers.

jmk

So, I find it fascinating the way that during the 60s, the 70s, the 80s that studies of inequality really dropped off in both capitalist countries and socialist countries for very different reasons. But like you just said, it's got the same argument behind it. I mean, it's really surprising that two diametrically opposed ideologies and ideological societies found similar reasons to be able to avoid the study and avoid understanding inequality for their own different reasons.

Branko Milanovic

Yes, and this is what, of course, in the last chapter, which is the longest chapter and definitely the most controversial, because it comes into the present, and takes a rather negative view of many economists who worked between the 1960s to 1990s. You know, the last big person, as I mentioned, was Kuznets, who, by the way, was involved, like many others are in the book in both of these pillars. He was one of the founders of National Accounts definition of GDP among other things, huge contributor of the Kuznets’ Curve, which basically charts a movement of inequality from a poor society to a rich society. But let me go to the question that you asked me. I think it's actually for many people the most interesting part of the book.

I've already explained in Socialist societies the view was the abolition of classes made standards of equality redundant. In the US in particular, I think ideological competition with the Soviet Union meant that there was a tendency to say we are not a real class society. We are not the society of the 19th century. We are an open society where everybody has the same chance. So, it is a society which allows upward mobility. It is a society where access to capital per se does not matter so much. Then the economics, which often reflects the dominant ideology, has moved neoclassic economics to that approach, which eliminated class or difference in asset position.

So, everybody is an agent. We might have different types of assets, but we behave similarly or identically because we are maximizing our income under the conditions of scarcity. You are Bill Gates. Yes, you are technically behaving the same way that the beggar behaves. The beggar is optimizing where he's going to sit to get the money. Bill Gates is optimizing where he's going to invest another billion. Formally speaking, it's the same. You have abolished the distinction in power. You have abolished the distinction between different types of assets. The assets that bring you money without work and the assets that bring you money only if you work. Then you have created, theoretically, a homogeneous society.

So, you see there, I believe, and actually I hope the reader can see a very strong parallelism between discounting studies of inequality in the Soviet Union and Eastern Europe because the background institutions are really right and discounting the similar status of inequality in the US, because classes don't exist anymore. The neoclassical economics went into that direction. We basically had lots of empirical work in the West in the East not very much. But in the West, a lot of empirical work, but without linking that empirical work to the political issues. So, we've had really huge studies, for example, on whether skilled labor is paid 16 percent or 19 percent or 25 percent more than unskilled. But it had no political salience. So that's what I think actually happened.

If you go back to the three required features that the studies should have, those studies had an empirical part. They had theoretical because they were based on a sort of theory, but that theory itself discounted the importance of income distribution.

jmk

So, I actually disagree with you that the section talking about socialism and capitalism and the drop off of the studies of inequality was the most interesting part of the book. I thought that the chapter on Pareto was the most fascinating chapter in the book because I think he's the most fascinating figure in the book. That chapter went through, not just a sketch of his ideas, but went through a sketch of his personality and some of this biographical information. I think all the chapters did that for each one of your figures. But Pareto is so different from everybody else. Can you just talk a little bit about him and how he came to such different and unique ideas on inequality?

Branko Milanovic

Pareto is probably the most picturesque of the six of them. He's known nowadays because he was the inventor of the first power law. People still use Pareto, for example, in the work that I do. We still use it for the top incomes. But what is interesting about Pareto is Pareto was, first of all, it starts really with his birth. He was born in 1848 in Paris. He was born to an Italian exile who was then in Paris and an interesting detail - 1848, which is such a crucial year, finds in Paris at the same time Tocqueville, who becomes the Minister of Foreign Affairs of France; Pareto, who is just born, a baby; Marx who is 30 years old, and who is actually writing about the reversal of 1848 and who is already engaged in political activity.

So, to give you an idea of the three different ages. Of course, Tocqueville is the oldest of the three. Then Pareto, he goes and studies and he becomes an engineer. He's actually very good mathematically, which then later would help precisely in economics. He briefly tries to have a political career in Italy. He's very, very liberal in the European sense of the term, not the American, but the 19th century European sense, liberal in terms of equality of opportunity, free trade, especially and so on. But then he gets disappointed first because he loses in the elections. He generally starts being - how should I say - of a sour mood. So, he is interested in economics. He replaces Leon Vargas, who was a famous economist, in his chair in Lausanne and he was writing the first book, which is called Les Systèmes Socialistes.

But then his whole thinking about inequality is filtered through this elite versus people and means mathematical inference leads him for the first time to start using physical data, which have then become available in several European cities and countries. He comes to this conclusion that income distribution in all these cases behaves in a sane and predictable way, which he then uses and says here is an empirical rebuttal of Marxism because it says you can change society, but you would just create another elite. This would be a bureaucratic elite, but you will not change income distribution. Instead of capitalists, you will have bureaucrats. But the income distribution in a socialist society would be the same as the income distribution in capitalists as was earlier the case in feudalism.

So, it was interesting that through this work and his interest in numbers, he came to a conclusion that income distribution would not vary, which, by the way, is not correct. But that was his belief at that time. Then he used that for the narrative that I mentioned at the beginning. The narrative is important. He uses that to say, you socialists will not be able to change it. I can prove it because empirically it stays the same.

jmk

It's fascinating how the historical moments that each one of these thinkers lives through definitely shapes how they think about economic inequality. I mean, we can talk about - we did talk about the first few thinkers and how they existed before the big shift in inequality around 1820 with the industrial revolution. Then you have Marx who lives through the revolutions of 1848. Then you have Pareto who's much more conservative and in many ways is living through that backlash and that response to more socialist ideas. Then you have Kuznets, who is living during what many call the Great Conversion where you have a reduction of economic inequality during a period of high economic growth and thinks that economic inequality is going to be reduced over time as the economy continues to change.

Were you surprised at all how those historical moments really changed those economic thinkers or was that something that you took for granted was going to be something that you saw in every book?

Branko Milanovic

The book is a process of discovery. You'll start with certain ideas, but you really discover things as you write. It is one thing to believe that you know something else, but a different thing when you start writing that. Then certain commonalities and certain features really come along. Let me give you, for example, one small example that I found fascinating. My chapter on Marx ends with the data on income distribution on the top that he quotes in the first volume of Capital that come from English and Welsh and Irish sources. That's one of the few instances where he really discusses income distribution data per se and he makes a point how the very top and indeed very top really took a lot of share of total income that is being taxed.

This same data was the same data that 40 years later, Pareto would use to draw this famous Pareto curve, which would separate the line, which would say that income distribution at the top is unchangeable regardless of the social system. So, if Marx had actually done, and Marx was good at mathematics, if he had done the double log transformation of this data, that Pareto, the engineer did, 40 years later, Marx would have discovered the Pareto coefficient. The history of thought is very interesting because you see how we did not see this. In other words, it took an entirely different era, it took Pareto's state of mind and background to see something different in the data than Marx saw before, which of course then leads you to the following conclusion. What is that which we do not see today?

You know, I have some data here and I do a certain calculation, but the same data 20 years later, somebody else will see very different things. In the 1960s, we didn't see much gender inequality. We did notice the difference in average wages between men and women, but we didn't think of the institutionalization of that difference. We didn't see that it was actually pervasive. We did not actually look at the distribution of women's wages versus men's wages. We looked rather at the mean. In other words, I think writing a book like that makes you really think brutally about the past. It makes you really think about the current time and also how the future would look at you. Because what we are doing now is we are looking at them, but of course there will be future generations looking at us.

jmk

So, a contemporary writer on inequality that has gotten a lot of press outside of the economics field is Thomas Piketty and his books on economic inequality. You don't single him out in a single chapter the way that you do the earlier thinkers. If somebody was writing this book 50 years from now, is the work of Piketty significant enough that it would be singled out or do you think that his work blends in more with all of the other writers and thinkers that are working on inequality today?

Branko Milanovic

Well, he's actually in the epilogue and he definitely would be the seventh big figure. So, there is no doubt about that in my mind. I've written quite a lot about Piketty. We've known each other for many years. I actually think that he has transformed the status of inequality and if one were to write the book all the way to the present, in my mind there is no doubt that he would be the figure number seven in the book. I wanted this to be more historical. I didn't want to go too much into the current debates. I've written about that elsewhere. Then, of course, I have Piketty and his work in the epilogue. If you look at the three parts that were important, Piketty has a very powerful narrative. This R greater than G is a simplification, but it brings out what is important. It brings together a theory of production and a theory of distribution, which were for a long time.

Practically, not separated, but they were not studied together. Then, obviously, he has a theoretical framework, which is the most famous book, Capital in the Twenty-First Century, and he has lots of empirics.

jmk

So, how do you think the trends are going to shape how future thinkers think about inequality? I mean, Piketty, for instance, doesn't really write about global inequality. He focuses on inequality within nations. Your work has focused on inequality between nations. You're also noting some new trends, some new changes within the way the world even works. How do you think that's going to change the way that future thinkers start to shift their own research and their own insights?

Branko Milanovic

You know, I have to say that I'm not generally very optimistic as a person, but when it comes to the studies of income distribution, I'm quite optimistic. What has happened is really a revolution in many ways, because suddenly many good students, smart students, like 10 or 15 years ago, would never study income distribution. They would study macro. They would study finance, all of that. It was considered… you know, income distribution was all this, you know, rent distribution, social transfer. Honestly, I have to say that actually there was a very strong gender element there. It's like we are tough economists, male. We study finance.

What has changed, not only the topic became much more important, but what they didn't realize there is it was always a very empirical topic by definition, since inequality is about heterogeneity. Heterogeneity means that you need to have the data from you and me and everybody else. So now they feel sufficiently it is a macho topic. So really, they started working very seriously, much more seriously than my generation or others. So that's a very good development. Secondly, there is a much greater awareness of other sort of markers of inequality, dividers or bridges, between different roles. We have introduced a gender. We have reintroduced inequality based on ethnic or racial backgrounds.

In global inequality studies, we have reintroduced inequality based on birth. So, these are all new aspects that I think actually are important and big and we have the data. That's why I'm really optimistic because I think that the combination of the perception that it is really a growing and important area for all the purely self-interested point of view of individuals who want to study and, on the other hand, the social importance of the topic of realization that it's an important topic about ordinary people have now coalesced. So, that's why I'm optimistic for the future.

jmk

Branko, thank you so much for joining me today. I want to mention the book one more time. It's called Visions of Inequality: From the French Revolution to the End of the Cold War. Thank you so much for talking to me today and thank you so much for writing the book.

Branko Milanovic

Well, thank you so much, Justin. I really enjoyed the conversation. I appreciate your going through the book and asking all these difficult questions, but it's always a pleasure. One learns from questions so much. Thank you very much.