Walter Scheidel: 'A shock to the established order can deliver change'

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The Austrian historian of the Black Death on how the fallout from coronavirus could be the catalyst for a more equal world

If the affliction of coronavirus has shamed us into anything, it is a vivid appreciation of just how cruelly topsy-turvy our world is. Low-paid healthcare workers, bin collectors, bus drivers and supermarket shelf stackers, not hedge fund managers or venture capitalists, have kept us from falling apart. It has taken actual disaster to expose the deep-seated social injustices and inequalities that we knew, but seemed to have forgotten, are hardwired into our economy. So could the global convulsion caused by the pandemic put us on the path to greater equality?

The Austrian economic historian Walter Scheidel argues that throughout history, from the stone age onwards, pandemic is one of the only four events capable of bringing about greater equality. War, state collapse and revolution are the other three.

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If the affliction of coronavirus has shamed us into anything, it is a vivid appreciation of just how cruelly topsy-turvy our world is. Low-paid healthcare workers, bin collectors, bus drivers and supermarket shelf stackers, not hedge fund managers or venture capitalists, have kept us from falling apart. It has taken actual disaster to expose the deep-seated social injustices and inequalities that we knew, but seemed to have forgotten, are hardwired into our economy. So could the global convulsion caused by the pandemic put us on the path to greater equality?

The Austrian economic historian Walter Scheidel argues that throughout history, from the stone age onwards, pandemic is one of the only four events capable of bringing about greater equality. War, state collapse and revolution are the other three.

In his book The Great Leveler he showed how the Black Death in the 1300s led to the wipeout of a third of Europe’s population and massively reduced inequality by raising the price of labour. More recently, in the 20th century, two catastrophic world wars and the Communist revolution led to a long era of reduced inequality lasting until the early 1980s and giving rise to the modern welfare state, labour unions and progressive taxation.

So could the pandemic of our era, already considered the greatest global crisis since the second world war, turn out to be a great societal leveller?

Scheidel’s short answer is that the longer the pandemic wreaks havoc on the global economy, the greater the potential for radical equalising change. “It depends on how severe the crisis is going to be, how long it’s going to last and how much it’s ultimately going to interrupt supply chains.”

The pandemic has already exposed the limits of the market and highlighted the importance of effective state intervention and strong public healthcare provision. In the future this may well create a tolerance for higher and more progressive taxation. Governments have had to intervene to prop up businesses and jobs in ways that only months ago would have seemed unimaginable. The viability of a universal basic income — a dream for egalitarians worldwide — is once again part of the mainstream debate in many countries.

Pieter Bruegel the Elder’s The Triumph of Death: ‘The Black Death led to the wipeout of a third of Europe’s population.’ Photograph: Baztan Lacasa Jose/Museo Nacional del Prado

The response at EU level also shows a willingness for strong public intervention and an end to the fiscal restraint approach of the last decade — at least, temporarily.

As people start to believe in government intervention again, the post-corona political landscape may well provide fertile soil for reversing a situation where, since 1980, the richest 1% in the UK have tripled their share of household income and the wealth of the European top 1% grew twice as fast as the bottom 50%.

But Scheidel cautions that, while disasters are not uncommon, tectonic shifts are historical anomalies. In other words, it may take a disaster to usher in more equality, but not every disaster does.

“We had very special circumstances for a generation after the second world war, when all the factors were present in the right way — strong growth, low inequality, a strong middle class, expansion of the welfare state, all these things simultaneously. That may be very difficult to replicate,” says Scheidel.

Nobody would want mass death on the scale of the bubonic plague in the 14th century to be the instrument by which we achieve social change. And fortunately mortality rates from coronavirus will be nothing equivalent to those levels. “Every year, 60 million people die of natural causes worldwide. The death toll from corona is probably going to be less, even in the worst case scenario.”

Coronavirus’s transformative potential, Scheidel explains, consists in adding a shock to an already powerful groundswell of anger.

“What I’m very sceptical about is the idea that ideology, or rhetoric, or just political agitation by itself can change things. What you need is essentially a combination of a certain kind of ideas being out there, and then a shock to the established order that allows those ideas to become mainstream.”

Lockdown culture has divided the haves from the have nots in the most tangible ways: while middle- and upper-class urbanites could flee to holiday homes, the lowest paid have been confined to cramped flats or forced to run the gauntlet of public transport to get to their key worker jobs.

And, while white-collar workers complain about the complications of remote working, for a sizeable chunk of the world’s labour force self-isolation means going hungry.

Similarly, as Scheidel points out, the damage done by the closure of schools has been felt unevenly. “We have a billion children around the world who are not going to school … and some are able to be schooled online because the households have proper internet connections and others don’t. That’s a very fundamental inequality. There are a number of these inequalities that have always existed, but we’re becoming very painfully aware of them.”

Will all this awareness spill over into demands for political transformation? “It doesn’t take all that much,” says Scheidel. “All we really need is a certain increase in the percentage of people who support certain policies for those policies to become mainstream. There is now a greater potential for a sufficiently large number of people to say, ‘maybe we should be doing something about this’.”

But there’s an important caveat; much of the coronavirus’s levelling potential will depend on our willingness to suffer significant economic losses in the short and medium term.

The less equal countries face darker choices between carrying on as before and experiencing real change

Since the “end of history” in the 1980s ushered in 40 years of neoliberal deregulation, inequality has generally been seen as an acceptable or even necessary price to pay for prosperity. That changed after the 2008 financial crash ignited the Occupy movement, lifting the veil on the existence of the 1%. Suddenly, inequality went from being a subject studied by a handful of economists to one of the defining issues of the last decade.

Still, the 2008 crash wasn’t the leveller many had hoped it would be. In fact, it produced the largest spike in wealth inequality in postwar history by devastating the one thing low-income people in most western economies depend on most for their wealth: home ownership.

On the same day that coronavirus caused the worst point drop in the history of the Dow Jones, the economist Branko Milanović optimistically tweeted: “My friend @WalterScheidel must feel vindicated. Coronavirus has already shaved off about 1/2 a Gini point of US wealth inequality. And this seems to be only a beginning.”

Milanović was referring to the Gini coefficient, a commonly used measure of inequality that measures income or wealth distribution among a population.

Scheidel sees the newly collapsed assets of billionaires rebounding over the next few years as they did after the 2008 financial crash. “It took a few years, and then the top 1% were back to where they were before the financial crisis. That’s likely to happen again with all the measures taken to shore up corporations and preserve the financial sector.”

Meanwhile, mass unemployment and the loss of income or healthcare will hit the poor hardest, pushing many people into debt, further widening the gap between rich and poor.

But could the coronavirus crash do what the 2008 crash didn’t? Not if there’s a swift recovery but, says Scheidel: “If we’re entering a more long-term depression as a result of Covid-19, I think all kinds of more radical policies will be on the table for the first time in a very long time.”

Much, he thinks, depends on the early discovery of a vaccine. “Then you could say science will save the status quo, because it makes it possible for us to return to business as usual quite swiftly.

But now assume that science fails to do that because the virus is more complicated and can’t be fixed in the short term, then you’ll have a more severe protracted crisis, with greater potential for transformative change.”

That may translate to stronger state intervention, better protections for workers in domestic industries, limits to outsourcing, higher taxation and more robust healthcare systems — if only because it will be impossible to justify the shortages of face masks and other essential equipment that have already cost countless lives.

It will also be difficult to resist the temptation to go back to business as usual. “There will be a strong push to go back to growth to finance the huge deficits that governments have been racking up, so, if anything, growth will be more important than before,” says Scheidel. “At the same time, if the effects of the pandemic polarise societies even more, there will also be stronger agitation for more progressive or distributive policies. It will be very difficult to reconcile those two motivations.”

The real clash of interests, he predicts, will be between those determined to go back to the status quo even at the price of making existing inequality worse and those who want a reset.

“I don’t see enough engagement with the fact that this is going to be a real struggle between countervailing forces that push in different directions. The big question is which one will have the upper hand, in which place, and for how long.”

The most unequal democracies like the US and the UK, where inequality of income is estimated to be among the highest in Europe, could experience the biggest shifts. “The less equal countries face darker choices between carrying on as before and experiencing real change,” says Scheidel. “So, somewhat paradoxically, the potential for actual change is biggest in the less equal countries.”

By contrast, “If you are in China, the shock will not lead to more equalising policies. It will lead to a tightening of control and more business as usual.”

Time will tell if Scheidel can feel the vindication of Milanović’s forecast. As the pandemic devastates the world economy, hitting the poor hardest of all, short-term solutions aimed at restoring “normality” are likely to outweigh lofty visions for a more equal society.

And if he is right that the recipe for equality is prolonged suffering, things may have to get a lot worse before they can get better. For many, it won’t be worth the wait.

Kyrill Hartog is a journalist and the editor-in-chief of Are We Europe magazine


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