I don’t know why, but this phrase (and concept) appears to have almost completely vanished from public conversations about economics. Of course, public conversations about economics are not exactly thick on the ground; but it wasn’t that long ago that the question of who owned how much of the world was actually of interest to the wider community.

I’m not a socialist, or a communist. Equal distribution of wealth is impossible, and undesirable in any case. But wealth does unquestionably equal power, and excessive concentration of power is undesirable too – but not impossible. (In fact, through a process of natural selection, power in any form will tend to act in ways which aggregate more power; which is to say that people with disposable wealth will tend to spend their money in ways which get them more money back, and the richer you are the larger the range of options you have, and/or the more of those options you can use. Additionally, the more power you have, the more likely you can influence the writing of the rules in your favour. The only way to combat this is to actively work against excessive accumulation of wealth, whether by periodically changing the rules by which large fortunes can be amassed and kept, actively redistributing it, or whatever.)

The thing is, the concentration of wealth is not only bad for the vast majority of us who are being squeezed out of prosperity. An egalitarian economy, which still has rich and poor in relative terms, but which ensures that that “vast majority” is doing well enough that we have disposable time and income, is the essential foundation for the kinds of extraordinary explosions of innovation which we’ve seen in the past half-century.

This is for four reasons. First, mass opportunity is essential to generating a large mass of innovative thinkers. It’s a numbers game: if 10% of the population would innovate given the chance, but only 5% have the wealth and spare time to try out their ideas, then you are looking at only getting somewhere between 1/20 and 1/2 the possible innovations, depending on how many more innovators there are per capita in the rich 5% than the societal average.

Second, even if you have the bright ideas, economies of scale indicate that many fewer innovations are financially viable without a mass market to sell into.

Third, where the general community is impoverished, ambient conditions deteriorate even for the wealthy. The people on the street are unhappier, sicker and probably smellier and less attractive. While this is obviously far more of a problem for the poor than it is for the rich, my point is that even the most self-centred rich bastard ends up worse off in a society where most people are not prosperous.

Fourth, and relatedly, as wealth levels diverge, more money has to be diverted from actively improving life (i.e. innovating) into protecting wealth and the wealthy from poor people who (wrongly or otherwise) calculate that the quickest way to get wealth is to take it from those who do. This may not simply be laziness or greed; where the future – or life – of the self or a loved one is on the line in any time-critical way, which is also far more likely in a mostly-impoverished society, the incentives for criminal behaviour rise; and where the victim is drastically better off than the criminal, internal sympathetic restraints (“I wouldn’t like it to be done to me”) are easier to rationalise away with “it’s only property crime, and their need is less than mine”.

There’s also the fact that concentration of wealth, if the trend continues, will ultimately only benefit the super-rich. After all, if the apparatus for extorting wealth out of the moderately prosperous stops working because they aren’t any more, the slightly-more-prosperous will be mined next.

So: if you’re rich, you need to think about whether you’re best served by the continuing trend towards concentration of wealth and power, and possibly entertain the idea that redistribution of wealth – or rules that ensure that wealth is shared equally in the first place, rather than being hoarded for the people who steer the large masses of money we call corporations – is good for you too.

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