Michael Schneider, Mike Pottenger and John E. King, The Distribution of Wealth: Growing inequality? 2nd edition, Edward Elgar, 2016, xiii + 214 pp, 1 78347 643 5, hbk, £75
The first edition of this book, published in 2004, [1] was entitled simply The Distribution of Wealth. That book recognised that little attention had been paid to the field, and that there was little relevant data available, but that the subject was important ‘because the wellbeing of individuals/households is affected by their wealth independently of their income’ (1st edition, p. 5). The first edition discussed how to measure inequality in the distribution of wealth; contained case studies from a variety of different countries (and found that ‘inequality fell fairly continuously during the first three quarters of the twentieth century, but thereafter either remained relatively constant or increased’ (1st edition, p. 53)); discussed a number of determinants of the distribution of wealth (and found that inequality in the distribution of incomes accounts for only half of the inequality in the distribution of wealth); asked how unequal the distribution of wealth should be on the basis of a variety of views of what society should be like; and discussed ways of changing the distribution of wealth. The author of that first edition, Michael Schneider, explored a variety of methods for reducing wealth inequality – taxation of wealth-holders, taxation of wealth transfers, an increase in communal ownership, and the issuing of shares in mutual funds – and recommended a progressive inheritance tax (p. 100), but cautioned that care would need to be taken over its implementation in order to avoid capital flight.
Second editions can fulfil two purposes. They can update the existing material, and they can pursue additional agendas. This second edition does both. First of all, it updates and extends the existing material (for instance, by updating statistics, and by adding additional case studies); and it shifts the agenda by paying a lot more attention to trends in the distribution of wealth. So, for instance, whereas the first edition contained a chapter on determinants of the distribution of wealth, the second edition contains two chapters, one on the same subject, and another entitled ‘Determinants of changes in the distribution of wealth’ – a chapter focused on Thomas Piketty’s thesis that because income from capital is rising faster than income from labour, wealth inequality will continue to increase and capitalism will become unstable.
In the second edition the chapter ‘How to change the distribution of wealth’ has experienced very little revision. This is a missed opportunity. The new chapter on ‘determinants of changes in the distribution of wealth’ reveals a clear link between growth in wealth inequality and the reducing share of the proceeds of production going to labour: which suggests that the chapter on what to do about increasing wealth inequality ought to have contained a section on how to remedy the income imbalance. An inheritance tax is all very well, and additional communal ownership might be helpful, but a chief driver of accelerating wealth inequality remains to be tackled. To tax wealth transfers, including financial transactions, and distribute the proceeds to a country’s population (an adaptation of the distribution of nationally owned wealth that the authors discuss) would be to tackle increasing wealth inequality in two ways at once: it would directly reduce wealth inequality, and it would ameliorate one of the drivers of wealth inequality. Perhaps in a third edition the authors might be able to add a new section to the seventh chapter along these lines.
Sometimes second editions are published and you wonder why they have been because very little has been changed. This is not the case here. This second edition of The Distribution of Wealth thoroughly updates much of the material, reorganises material where it needed reorganising (particularly in relation to the case studies), and considerably extends the agenda to what really matters: the constant increase in wealth inequality.
The new indexes are a lot better, too.
[1] We reviewed the first edition in the third issue of the Citizen’s Income Newsletter for 2006,