to Spain, North Africa, and Britain. It developed a body of philosophy, law, and institutional forms that laid the basis of modern liberalism. But as classical civilization unraveled—from a combination of internal dysfunction and external pressure—its territories devolved into political disorder, cultural decline, and economic and demographic stagnation.
While we can put a date to the end of the Roman Empire in the West, the process of cultural decline extended over centuries. The backward trajectory is clear by the sixth or seventh century, in the demise of learning, the rise of religious fanaticism, the decline of cities and the collapse of trade, and Malthusian stagnation: Europe’s population in the year 1000 was about the same as it had been a millennium earlier.6 The formerly vibrant urban middle orders had faded away, and the class of landowning peasants shrank as agricultural land was consolidated into huge estates. Class relations became more rigidly hierarchical, with a hereditary nobility and powerful clerics at the top. These ruling classes often competed and fought among themselves, but they were distinctly privileged in comparison with most of the population, who would endure life as landless serfs. The ideal vision of society was static, and the aim was not to find new fields to plow, not to innovate or grow, but instead to maintain an equilibrium within a largely fixed system.7
In the second millennium, markets and towns began to grow again, craft guilds formed, philosophy and learning quickened. The Third Estate was rising: both rural smallholders and a prospering, literate bourgeoisie in the growing cities. With prosperity came a bigger public voice, and the Catholic Church and the nobility gradually lost power as a consequence. A system based on free markets, liberal values, and a belief in progress evolved in Europe and spread to North America and Oceania.
Like all social structures, the liberal order brought its own injustices. Most shamefully, slavery was revived and extended to newly colonized territories. In addition, the industrial revolution replaced cottage industries with factories and created an impoverished urban proletariat living at the very edge of subsistence. But during the twentieth century, especially after the Second World War, life became measurably better even for most of the working class, and the middle orders continued to grow in prosperity and numbers. Some government action came into play—for example, subsidizing homeownership, building new infrastructure, and permitting labor unions. Linking such policies to the engines of economic growth promoted a mass movement to affluence, the premier achievement of liberal capitalism.
Although liberal capitalism has generated many social, political, and environmental challenges, it has freed hundreds of millions from the widespread servility, entrenched cruelty, and capricious regimes that have dominated most of history. The material conditions of life have improved dramatically, not only in Europe and America but throughout much of the world. In the five hundred years up to around 1700, economic output per capita was flat, which means that a person of median income in 1700 was no better off, economically speaking, than the average person in 1200. By the mid-1800s, particularly in the West, economic output had increased markedly; the growth accelerated after 1940 and spread to the rest of the world.8
Bending the “Arc of History”
Liberal capitalism first fueled Western dominance, and then the economic rise of other countries as well. The economic boom that followed the end of the Second World War and extended to large parts of the world with the collapse of Communism nurtured confidence about the global future. The key to increasing prosperity appeared to be in our hands. Optimistic notions about an “arc of history” bending inexorably to greater prosperity and social justice were embraced on both right and left—for example, by President George W. Bush and by President Barack Obama.9
Beginning in the 1970s, the arc started bending backward in the regions that gave birth to capitalism and modern democracy—Europe, Australia, and North America. Upward mobility for the middle and working classes began to stall, while the fortunes of the upper classes rose dramatically. Economies kept growing, but most of the benefits were harvested by the very rich—the top 1 percent and especially the top 0.1 percent—while the middle classes lost ground.10
In 1945–1973, the top 1 percent in America captured just 4.9 percent of total U.S. income growth, but in the following two decades the richest 1 percent gobbled up the majority of U.S. growth.11 The combined wealth of the richest four hundred Americans now exceeds the total wealth of 185 million of their fellow citizens.12 In European countries, with their socialistic welfare policies, the upper middle class pays very high taxes while the wealthiest find ways to hide their income sufficiently to maintain and even increase their dominance. Surprisingly, in progressiveoriented countries such as Finland, stock ownership is considerably more concentrated among the very richest people than in the United States.
The trend is not only a Western one. In avowedly socialist China, for example, the top 1 percent of the population hold about one-third of the country’s wealth, and roughly 1,300 individuals hold about 20 percent. Since 1978, China’s Gini coefficient, which measures inequality of wealth distribution, has tripled.13 Globally, the ultra-rich are an emergent aristocracy. Fewer than one hundred billionaires together now own as much as half of the world’s assets, the same proportion owned by around four hundred people a little more than five years ago.14
The concentration of wealth is also clear in property ownership. In the United States, the proportion of land owned by the one hundred largest private landowners grew by nearly 50 percent between 2007 and 2017, according to the Land Report. In 2007, this group owned a total of 27 million acres of land, equivalent to the area of Maine and New Hampshire combined; a decade later, the one hundred largest landowners held 40.2 million acres, more than the entire area of New England.15 In much of the American West, billionaires have created vast estates that many fear will make the rest of the local population land-poor.16
Landownership in Europe too is becoming more concentrated in fewer hands. In Great Britain, where land prices have risen dramatically over the past decade, less than 1 percent of the population owns half of all the land. On the continent, farmland is being consolidated into larger holdings, while urban real estate has been falling into the hands of a small number of corporate owners and the mega-wealthy.17
In the United States, long seen as the great land of opportunity, the chance of middle-class earners moving up to the top rungs of the earnings ladder has dropped by approximately 20 percent since the early 1980s.18 Across the thirty-six wealthier countries of the Organization for Economic Cooperation and Development, the richest citizens have taken an ever greater share of national GDP, and the middle class has become smaller. Much of the global middle class is heavily in debt, mainly because of high housing costs, and “looks increasingly like a boat in rocky waters,” suggests the OECD.19 Rates of homeownership are stagnant or plummeting in the high-income world, including the United States, Canada, and Australia.20
Globalization of the economy has served the interests of the upper classes but not the rest. For example, the shift of production to China alone has cost well over a half million manufacturing jobs from Great Britain, once an industrial powerhouse, and an estimated 3.4 million jobs from the United States.21 Economists may point to better aggregate growth and lower prices for consumers, but most people do not live in “the aggregate.” They live in their individual reality, which in many cases has gotten bleaker even as the economy overall has improved.
In a world growing more bifurcated, elite communities are surrounded by urban poor and by small towns that are fading and becoming destitute. Globalization “has revived the citadels of medieval France,” writes Christophe Guilluy, a leftist geographer.22 Like the castle towns of Japan or the walled cities of medieval Italy, a few choice locales are enclaves of privilege, while the less appealing places are inhabited by the newly servile classes.23
The New Power Nexus
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