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Book Reviews Finance & Development, March 2016, Vol. 53, No. 1

Winners and Losers Branko Milanovic

Global Inequality: A New Approach for the Age of Globalization

Harvard University Press, Cambridge, Massachusetts, 2016, 320 pp., $29.95 (cloth).

From assessing inequality in the Byzantine Empire to musing over where people fall on the global distribution of income, Branko Milanovic has made a name for himself as an innovative thinker in this field. Even before Thomas Piketty made it cool, he was using Jane Austen vignettes to explore historical patterns of inequality.­

Milanovic’s new book does not disappoint. He starts by identifying the winners from “high globalization”—the middle classes in emerging Asia and the global super-rich. The big loser is the middle class in the developed world. He notes that as inequality rises within countries, it is falling between countries—showing no real evidence of rising global inequality.­

Some have used this point to dismiss inequality concerns. Milanovic does not. He acknowledges that future trends are unclear. If convergence does continue, within-country inequality may well dominate once again, much as it did in the 19th century, making class more important than location. Milanovic is also well aware that the nation state remains the locus of political deliberation.­

The book’s longest chapter is, therefore, devoted to within-country inequality. He seeks to partially rehabilitate Simon Kuznets from Piketty’s critique by proposing a “grand theory” of inequality—what he calls “Kuznets waves” of alternating increases and decreases in inequality. He traces the first Kuznets wave over the century and a half ending in the 1980s, when the second wave began, jump-started by many of the same factors as the first—technology, globalization, and pro-rich economic policies.­

But this explanation might be a little too tidy. For a start, it is not clear that reducing technical change to two technological revolutions is accurate. Others, for example, have emphasized four to six technological waves since the late 18th century.­

And although he gives an extensive account of the benign and malign forces that reduce inequality, Milanovic is a bit murky on the wave’s turning point. He argues that inequality becomes unsustainable, but doesn’t fall on its own—it leads first to wars, social strife, and revolutions. This is the story he tells about World War I—he actually endorses Lenin’s theory that it was driven endogenously...

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