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The Making of Economic Inequality. A History of Knowledge of Income and Wealth Distribution in Britain after 1945

Felix Römer

Income and wealth inequality is among the most critical political topics of our time. In political debates, statistics about the gap between rich and poor are frequently used as key indicators for social conditions and the direction a society is taking. These statistics shape the ways and the language in which we think and speak of our societies – and how we see other societies. At the same time, they play a prominent role in all political debates that touch on distributional issues such as welfare or tax reform. The Gini coefficient or the figure of the top 1 % are deeply ingrained in our political culture, yet historians have only begun to analyse the origins of these concepts.

The availability of detailed statistics on economic inequality seems to be a given in the modern world, and they suggest mathematical certainty and objectivity. In fact, income and wealth statistics are a rather recent phenomenon with a history – they were produced by government officials, statisticians and academics, based on changing concepts, cultural assumptions and political objectives. It was not until the decades after 1945 that more reliable income and wealth statistics were developed, pioneered by survey projects in the United States and Great Britain.

Studying the transnational history of these statistics helps us to understand their contingent nature, as various countries followed markedly different approaches, depending on the underlying theories, chosen categories and societal self-perceptions. Initiatives towards an international standardisation of income and wealth statistics were launched in the 1960s/70s, but made only slow progress. It was a consequence of the global fixation on national accounting, growth and GDP that economic inequality was marginalised as a statistical and political issue for most of the second half of the twentieth century.

My research at the GHIL explores the transnational history of the measurement of economic inequality from the perspective of the history of knowledge. It analyses the production, circulation, representation, interpretation and application of knowledge about income and wealth distribution. The analysis focuses mainly on Britain, but is interwoven with the global history of endeavours in this field, incorporating case studies from countries such as the US or West Germany and taking into account the role played by the UN, the OECD and other international organisations.

The project traces and contextualises the preoccupation with economic inequality that occurred in waves after 1945, in connection with changing theoretical thinking, notably the shift from functional to personal distribution theory that altered the way of looking at the dividing lines in society. The project explores how the knowledge produced by official statistics was circulated among government agencies and how it was transformed when it was shared with the public and presented in the media. The project places particular emphasis on the evolving modalities of description and graphic representation, which were important factors in the popularisation of knowledge about economic inequality and its influence on existing images of society: while earlier statistics were more difficult to digest, the introduction of the Gini coefficient and analysis by deciles made income statistics more accessible and raised public awareness.

Finally, the project also analyses how knowledge about economic inequality was interpreted and used. During the post-war era, flawed knowledge about the amount of redistribution fuelled narratives of an “income revolution” in the United States and a “great transformation” of society in Britain – the contested history of economic inequality was used as a political argument in debates about the welfare state and became a central part of national self-descriptions. Another line of enquiry is the history of the redistribution analyses that were pioneered by British statisticians from the 1950s. The measurement of distributional effects of public finances and government budgets became a fixture in British politics, whereas in other countries such as the Federal Republic of Germany official statistics failed to provide their citizens with similar analyses. The project will thus highlight not only the impact of knowledge production, but also the significance of non-knowledge in the political process.