Income Inequalities in Perspective

Income and wealth inequalities in most countries – in the West, the former ‘communist’ economies and in the developing world – have been on the rise in the last three decades with some notable exceptions. Inequalities in the 19th century (Figure 1) were much higher than before the Industrial Revolution. Following the rise of workers’ movements in the West and the 1917 Bolshevik revolution, the growth of inequalities of the previous century was reversed for over half a century until the 1980s as the threat of the spread of communism inspired welfarist redistributive reforms, giving capitalism a more human face. Such checks and balances have been greatly weakened in recent decades, even though improved economic performance in many developing countries, including sub-Saharan Africa in the last decade, contributed to some convergence of incomes between rich and poor countries.