While working on a much longer entry about wealth and income inequality, I came upon a question that I couldn’t answer: how did it begin?
Economists like Thomas Piketty note that data is limited even today, but that it gets much more scarce as we go back a couple of centuries. Still, we know wealth and income inequality has existed for hundreds of generations. The earliest known legal code in human history — established by Urukagina about 4,400 years ago in Sumer — included many references to commerce and property, mentioning “rich” and “poor” citizens and attempts to protect the latter from the former. And the later Code of Hammurabi (which still predates the Mosaic law of the Old Testament) references three distinct economic classes: property owners, freed men, and slaves.
In other words, in all ancient writings that mention any socioeconomic factors it appears most human civilizations have been rife with wealth inequality. With the exception of small tribes/nations that basically owned nothing, human groups have always had a small group of rich/powerful individuals and a much larger group of people who own almost nothing yet perform most of the labor.
But beyond written history, we can know with a high degree of certainty that this wasn’t always the case. We can, for example, follow human evolution backward in time to a point when our ancestors were tiny rodent-like critters that barely survived the Cretaceous-Paleogene extinction event about 66 million years ago. They didn’t “own” anything; therefore one of them couldn’t own more than another.
As I thought about this, I realized there is no way to pin down when humans began owning things. The reason, I realized, is that ownership is a concept — not something that can be seen in paleontology or via genetic studies. The fact that scientists discovered stone tools dating back 3.3 million years tells us nothing about whether the people who made those tools considered them “property”. For all we know, the tools were shared without thought of ownership.
That’s a pretty loose timeline: “somewhere between 4,400 years ago and 3.3 million years ago”.
In a more abstract sense, though, I wondered if the concept began earlier. After all, we observe rudimentary examples of the property-concept among non-human animals, usually referred to as territory. Most of us have witnessed this with domestic mammals — cats and dogs — and scientists regularly witness it in the wild. It’s possible that the human concept of property is a natural derivation of this territorial instinct.
Animals mark their “property” (territory) in a variety of ways, and occasionally they battle other groups or individuals over that property. But what you don’t see among non-humans is a select few owning most of the territory while the majority of the species has none — that seems to be a uniquely human trait.
Stipulating that the concept of property/ownership might not be a uniquely human trait, and that it has existed farther back than we know, it seems clear that this concept alone did not result in inequality of wealth and income. Any of us can imagine a hypothetical family/tribe of early humans, each of whom “owns” stuff — skins, stone tools, pouches — and which owns stuff as a group — a cave, or a fertile valley perhaps. But I can’t imagine anyone in that group owning much more than any of the others, because all of them were pretty much limited to what they could carry.
Even once agriculture began and individual humans began marking off plots of land (what we now call real property), there was conceivably enough land for everyone in any particular tribe/group/nation. If the Smith family marked off the prime real estate in a newly discovered fertile area, the Jones family could claim the area right next to them. Each family could only take so much, because the territory then had to be cared for and defended. Also, the claim would end when the original claim-holders died — unless we then invent the concept of inheritance, which we did.
At some point in human pre-history, someone conceived of the notion that “when I die, everything I own will then belong to my offspring”. Today, it seems silly to even discuss it, but it was clearly a powerful turning point in the story of wealth accumulation. Before the idea of inheritance, each newly-formed human had to stake his own claim in the world. Once inheritance had been invented, each person could start with a little something that his parents had already built or accumulated — usually land.
But there still wasn’t much to pass along to heirs. Stone tools chipped and broke. Wooden ones rotted or burned. Leather straps, clothes, and pouches — along with skins and furs — rarely lasted more than a lifetime either. As long as houses were built of sticks and mud, they had to be replaced every generation or so anyway. Only land (real property) really counted in inheritance.
Accumulation of wealth, then, was stuck in rudimentary stages until someone invented money.
Starting with precious metals and stones, humankind had finally found a way to increase wealth beyond a mere few plots of land. Once we figured out how to assign value to chunks of gold and silver, and the value became accepted among a wide swath of humanity, then we could exchange these chunks for goods and services. You could get rich simply by finding a pile of it, or digging it up in the Earth. Or you could carefully save over time, exchanging your work for gold and then spending less than you earned. Anything extra you owned at death could be passed on to heirs.
Someone else — perhaps greedier than those who came up with property, inheritance, and money — thought of the concept of interest. Think of two hypothetical men. One has little-to-nothing and the other has stockpiles of gold. The first man needs a bit of gold; his reasons don’t matter — perhaps he needs to feed children, buy property, or pay a toll. In a just world, the second man would lend him X amount of gold, in exchange for a promise to repay X amount of gold (or equivalent value). But what happened instead is the second man lent X amount of gold in exchange for a promise to pay Y amount of gold. And Y is more than X. He’d just figured out a way to make money simply by having some.
No one can know what the first APR was. But let’s say the lender handed over a pound of gold and the borrower promised to pay him back a pound and a half by a certain time — perhaps “after the harvest”. The lender has just increased his wealth without actually doing anything. If he lends to enough people, and enough of those borrowers are able to pay him back with interest, his wealth grows exponentially over time, and all he has to do is keep a ledger of the transactions.
Perhaps there are other concepts that I’m missing, but so far I’m satisfied with this line of thought, that four distinct concepts in humanity’s ancient origins led to original wealth inequality: (1) ownership/property, (2) inheritance, (3) money, and (4) interest. And — as far as I can tell — all four of those concepts arose in human societies before the dawn of recorded history.
Without the concept of individual ownership, there is no wealth, period. Without inheritance, wealth cannot grow past one lifetime. Without money, inheritance/wealth is limited to plots of land. Without interest, wealth can only grow slowly, over many generations, by slow accumulation. But with all four in place, the luckiest, cleverest, and greediest among us were able to amass amazing fortunes — some of which lasted (and continued to grow) for many centuries.