From Inequality to Instability

Rising income and wealth inequality in OECD countries during recent decades have attracted much discussion, even anxiety. It is a commonly expressed opinion that growing economic inequality is a major factor explaining the rise of populism and political polarisation, as well as, more generally, increasing socio-political instability—what some have called “polycrisis.” However, analysis of a large historical database on past societies sliding into a crisis, CrisisDB, suggests that growing inequality is not the actual driver of instability; rather, it is a reliable “proxy” for the actual mechanisms that cause crises: popular immiseration and elite overproduction.[i] This finding has major implications for how European societies may be able to surmount the challenges of the polycrisis.

Analysis of the dynamics of large-scale human societies organised as states shows that they all experience recurrent waves of political crisis, such as the one we face today. My research team built a database of hundreds of societies across the past 10,000 years to determine what causes them. We examined dozens of variables, including population numbers, measures of wellbeing, forms of governance, and the frequency with which rulers are overthrown. We found that the precise mix of events that leads to crisis varies, but two drivers of instability loom large. The first is popular immiseration—when the economic well-being of broad swathes of a population decline, resulting in wide-spread feelings of discontent and a loss of legitimacy of state institutions. The second, even more significant, factor is elite overproduction—when a society produces too many wealth-holders and people with advanced degrees, and not enough elite positions to satisfy their ambitions.

These forces have played a key role in the current crisis in the US. In the past several decades, despite overall economic growth, the quality of life for most Americans has declined. The wealthy have become wealthier, while the incomes and wages of the median American family have stagnated. As a result, our social pyramid has become top-heavy. At the same time, the US began overproducing graduates with advanced degrees. More and more people aspiring to positions of power began fighting over a relatively fixed number of spots. The competition among them has corroded the social norms and institutions that govern society.

The US has gone through such crises twice before. The first time ended in civil war. But the second one, which unfolded during the Progressive and New Deal eras, led to a period of unusually broad-based prosperity. Both offer lessons about today’s dysfunction and, more importantly, how to fix it.

Integrative/disintegrative dynamics in Europe were similar. Historians often refer to the 19th century’s instability wave as the Age of Revolutions, which peaked in 1848, but had important aftershocks during the early twentieth century. Europe shared in the post-World War II prosperity, for example, les Trente Glorieuses in France. As in the US, recent decades saw stagnation of economic fortunes of broad segments of European populations, growing feelings of discontent, and increasing socio-political instability. Currently we don’t have a detailed and comprehensive analysis of major European countries, paralleling that in America, but useful proxies, such as income and wealth inequality, indicate that most European countries have stepped on the road to crisis, although they’ve done it later than the US. There is also a substantial degree of variation between different states.

This analysis suggests two conclusions. First, a focus on inequality is somewhat counter-productive. Economic inequality, especially when measured by opaque indicators, such as the Gini Index, is hard to get passionate about. Furthermore, non-specialists are notoriously bad at accurately estimating inequality in their societies. A better approach is to understand what is happening with various dimensions of well-being as they are experienced by people in different age cohorts and socio-economic circumstances.

The second conclusion is that we need to get away from one-dimensional proxies. Thus, it is not enough to note that inequality increased; we need to know what’s happening with the drivers of instability. Immiseration, for example, has many dimensions: economic (income and wealth), biological (e.g. life expectancy), and psychological (subjective feelings of well-being). We need detailed time-series data on all such indicators. Such “social health” monitoring needs to be done separately for each country, because they differ in their institutional configurations, which needs to be taken into account by analysis.  Additionally, there is important variation in how advanced each country is on the road to crisis.

Why is this important? Many European societies are currently embroiled in a “polycrisis”—the interconnected threats to societal stability and function stemming from a changing climate, emergent diseases, and major geopolitical/geoeconomic shocks. Are these stressors driving increasing societal vulnerability to outbreaks of political instability? In particular, why did many European states experience more than a tenfold increase in anti-government demonstrations and violent riots over the past decade?

Proper assessment of social dynamics is one of the most challenging and urgent tasks facing our society. Currently, there is no integrated information resource enabling policymakers and the general public to observe the direction in which society is developing. Why have recent years seen falling standards of living for large segments of people in the industrialised West? Is it the result of declining social cooperation, especially among the elites and increasingly dysfunctional politics? What role does growing economic inequality in these countries play? And perhaps most pressing, what are the chances that rising instability will lead to open, possibly violent conflict? 

Such questions can be addressed by developing a comprehensive information resource on social well-being, a “Social Weather Service”, which would integrate sophisticated data-science methods with advanced social-science theory to monitor micro- and macro-level social dynamics. Ultimately, the goal is not only to accurately track various pressures contributing to political instability, but to use this resource in designing effective policies that would enable our societies to surmount the challenges of the “polycrisis.”

[i] Turchin, P. 2023. End Times: Elites, Counter-Elites, and the Path of Political Disintegration. Penguin Random House, New York.