The Rich and the Poor in Modern Europe, 1890-2020: A Historian’s Response to Recent Debates among Economists

By Hartmut Kaelble

As social inequality grows, historical analysis on wealth and income distribution across the 20th century often does not take into account inequality of education, health, housing and chances of social mobility, nor does it differentiate statistical inequality from the realities of peoples’ actual experience. With this broad understanding in mind, in a long look back on the history of social inequality in Europe, The Rich and the Poor in Modern Europe addresses these neglected subjects. It also tackles the commonplace notion that modern capitalism inevitably produces wealth gaps and asks whether the facts and figures we possess also lead to alternate interpretations of examples of mitigated inequality. Covering the 20th century and the beginnings of the 21st century in Europe through wars, and economic crises, through periods of unprecedented economic prosperity and staggering economies, both exacerbating and dampening the problem, acclaimed historian Hartmut Kaelble offers a rigorous response to understanding our present-day challenge of social inequality.

• Language: English
• Publisher: Berghahn Books
• Release date: Apr 14, 2023
• ISBN: 9781800739635

Hartmut Kaelble

Hartmut Kaelble has been Professor Emeritus at Humboldt University in Berlin since 2009. From 1971–1991, he was Professor of Social History at Free University Berlin and from 1991–2008 at Humboldt University.

Book preview

Introduction

It is one of the key experiences of the present that social inequality has become more glaring. This book deals with the many changes that the history of inequality has undergone. There were times when inequalities grew quite sharply, while there were also periods of mitigations. Twentieth-century Europe is seen in this sense as a laboratory of quite divergent developments. The book is critical of the view that in the modern period societal progress and economic prosperity have to be paid for by the persistence of social inequality.¹ However, this book also rejects the dictum that modern capitalism inevitably produces inequality. Instead, it hopes to encourage a closer look at the facts and figures that we possess, even if they are not always complete.

THE STRUCTURE OF THIS BOOK

Each of the four periods covered by this study represent a different development of social inequality. The first two decades before 1914, examined in the first chapter, focus on European industrialization and an unregulated, liberal industrial capitalism. This was the era when social inequalities developed with almost no regulation by the state, and also without the impact of economic crises and major wars. The second chapter deals with the very different epoch of the two world wars and the unprecedented and worst economic crisis of the 1930s. At the center of this chapter are the controversial consequences of world wars and an economic crisis upon social inequality. The question to be investigated is whether wars and economic crises exacerbated or dampened social inequalities, though with enormous costs in countless human lives and the unfolding of abject misery. The third chapter on the 1950s to the 1970s deals with another totally different period in which social inequalities were reduced. This coincided with the years of economic prosperity related to extraordinarily high economic growth and a unique increase in prosperity. This chapter therefore deals with the best imaginable option as far as the development of social inequality is concerned. However, in the 1980s this era came to an end. Consequently, the fourth chapter is devoted to the question of why social inequalities increased in the most recent epoch: did this happen because there occurred a deliberate return to the pre-1914 policies, that is, an unregulated capitalism with its noticeable increase it social inequalities; or was it a set of novel factors, such as globalization or finance capitalism, that were responsible for the abandonment of the mitigation of social equality? In other words, each of these four chapters opens up quite different possibilities for the prevalence of social inequality. Yet, it would be erroneous to believe that one of those four developments could recur today or in the future; although it should be possible to draw some lessons for the present from Europe’s divergent historical experiences.

THE MEANING OF SOCIAL INEQUALITY

The notion of social inequality is meant to signify hierarchical differences with respect to life chances, above all income and wealth, consumption and housing, education and health. But it also refers to perceptions of these hierarchies and the debates that they unleash. What is also very frequently meant by it are differences between large social groups, but also between social milieus as well as between men and women, between ethnic groups and immigrants, on the one hand, and native European populations, on the other.

Turning to the history of social inequality, three central questions must be considered. To begin with, there are the social groups between which social inequality is supposed to exist. However, these social groups are not stable, and they underwent fundamental changes in the twentieth century. Here is an example: whoever compares educational opportunities of the middle classes with those of industrial workers in the late Imperial period with those existing in contemporary Germany, should be aware that the two social milieus underwent a complete change. As far as the Imperial period is concerned, there existed a numerically narrow, though very homogenous and interwoven bourgeoisie that was self-confident and politically influential, comprising between one and two percent of the total population. These groups were juxtaposed with a much larger group of class-conscious industrial workers that was isolated from the rest of society and made up about 30 to 40 percent of the rest of German society. Today we have to consider a heterogeneous stratum of academically educated people comprising at least 30 percent and another roughly 30 percent of manual workers. They are made up of a stratum of men and women without a strong group consciousness, including both native as well as immigrant populations, workers in relatively secure jobs with benefits and poor people. These percentages may illustrate why there is no consensus between which of these groups we should analyze, raising questions of social inequality. Should we continue to focus on the traditional social class milieus, as a minority of scholars continues to advocate? Or should we concentrate on a new variant: groups that, as far as their lifestyles are concerned, are deeply divided into conservative and non-conformist milieus? Or, thirdly, should we turn to totally different social groups, such as religious and ethnic ones; or men, women, and transgender individuals; or, finally, on immigrants and native populations? Yet another research option could focus on the secession from all these groups starting in the 1970s that leads to an investigation of a much more diffuse and complicated social inequality in which individuals are differently positioned depending on the dimension of social inequality.

The second question relates to the positions that the social sciences have taken on social inequality. Social scientists as well as the readers of their works are not neutral observers. Rather they do research as experts who are actually able to influence the development of social inequality. Moreover, the perspectives that they, as well as historians, have adopted toward this subject have undergone marked changes over the past century. It is no longer the perspective of looking down from the secure upper levels of the bourgeoisie at an unfamiliar phenomenon below within their own society. Rather their changed perspective comes from the middle as today’s scholars, most of whom no longer have tenured positions, experience social inequality very directly at different points in their careers. They also use a different vocabulary. The notion of social inequality that is reflected in their approach was not widely used among the major European languages well into the twentieth century. It was only in the 1970s that it gained wider currency. This means that reflecting one’s own position as a scholar is of great importance today.

Thirdly, there is a key question raised in research on social inequality that concerns the moral tone underlying the notion of social inequality. This is why the adoption of this notion in the title of this book should not be misunderstood. Both the social and the historical sciences tend to start from the assumption that societies that have developed beyond the stage of hunters and gatherers are more complex and cannot function without social hierarchies and that they can obtain necessary contributions from their members. This position is also the starting point of this book. To investigate social inequality does not mean that, beyond the achievement of equality in terms of political and human rights for a particular society’s citizens, it is possible to gain complete social and economic equality. Examining the history of social inequality means rather to discover where the line is to be found in the past as well as today between essential hierarchies, on the one hand, and unnecessary disparities, on the other. It is not easy to identify this line; nor is it uncontroversial. However, comparisons not only within the history of one’s own society, but also at the international level will be of great help. If historically and in our time we encounter well-functioning and free societies that were marked by considerably less inequality, this should lead us to ponder why inequalities in our own society are so much greater and where the causes for this difference lie. In so doing, it is crucial that societies with less inequality always be put into their historical context. If lesser inequality was paid for with political terror, as during the Stalinist period in the Soviet Union or in Mao’s China or if it was the result of Hitler’s devastating wars, we are stuck, simply because the cost by which social equality has been achieved are simply too high and painful.

NOTE

1. See, e.g., Deaton, Angus, The Great Escape: Health, Wealth and the Origins of Inequality (Princeton, 2013).

Chapter 1

Social Inequality before 1914

Unregulated Industrial Capitalism

The period of industrialization in Central Europe from the middle of the nineteenth century to 1914 is of great importance for the history of social inequality as the development of industry was accompanied by the modernization of agriculture, the construction of railroads as a new system of transportation and the use of telegraph and the telephone as the new means of communication. There was also the enormous growth of towns and cities, the expansion of an economic bourgeoisie as well as industrial workers and white-collar employees. Living standards slowly improved, but there was also a massive increase in urban poverty, a consequence of which was that social inequalities changed enormously. By looking at this epoch we can study how industrial capitalism in Europe led to an explosion of social inequalities at a time when there was little regulation of the economy and society by the state. No less important, social inequalities developed without long wars and profound economic crises.

Briefly put, the governments of Europe scarcely intervened in their respective societies, certainly if compared with later decades. Governments had three instruments to mitigate social inequalities: taxation and income policies, the concept of the welfare state, and education; they were certainly familiar with all of them. However, politicians applied these instruments reluctantly and within limits, if they were deployed at all. Europe was spared major wars, and the many wars waged in the colonies did not impact the metropolitan countries in Europe in tangible ways. The only major economic crisis, the Depression of 1873, was comparatively mild and did not lead to a lasting collapse of economic growth, comparable to the 1929 Depression or the financial crisis from 2008 to 2012. Nor can it be said that social inequalities became exacerbated in any tangible way.¹ The kingdom of Saxony represents an amply documented case in point. Between 1874 and 1878 income differences even declined in that part of Germany.² Overall, many Europeans during the interwar years and after World War II remembered this period of industrialization as a period of great