Monday, May 30, 2016

Entrenched Class Hierarchies


Researchers compared data on Florentine taxpayers in 1427 against tax data in 2011 and found about 900 surnames still present in Florence.
They find strong evidence that socioeconomic status is incredibly persistent. The wealthiest surnames in Florence today belong to families that, in 1429, were members of the shoemakers’ guild — at the 97th percentile of income. Descendants of members of the silk guild and descendants of attorneys — both at the 93rd percentile in 1427 — are among the wealthiest families today....

It’s no surprise that wealth can be inherited or that one’s parents play a large role in determining your social status. Other research has found that descendants of Japan’s samurai – 140 years after the end of the order — remain elites in Japan. The economist Gregory Clark at the University of California, Davis, has written a book “The Son Also Rises” showing how wealth and status can persist for centuries.

The study is discussed by the authors here:
Guglielmo Barone and Sauro Mocetti. 17 May 2016. The study is available here: What’s your (sur)name? Intergenerational mobility over six centuries,
http://voxeu.org/article/what-s-your-surname-intergenerational-mobility-over-six-centuries
The one question that I have concerns the role of banking wealth in Florence. The data provided by the authors describe the top wealth holders of the past as deriving from trade guilds. However, in Florence the Medicis had established themselves as money changers and state bankers by the late 1300s. I wonder why banking wealth is not discussed in the study.

Regardless of this omission, the data provided by the researchers provide strong evidence of entrenched class hierarchies.

Highly stratified and entrenched wealth has the effect of exacerbating systemic risks, as I argue in my book on crisis communication and liberal democracy. Today, wealth is concentrating at nineteenth century levels, deconstructing twentieth-century efforts to build more equitable societies, as illustrated in this passage:



Globally, in 2006, prior to the Great Recession, one percent of the world’s population was believed to control 40 percent of the world’s wealth.[i] The trend toward concentrated wealth is accelerating. At the close of 2015, one percent of the world’s population was believed to control over 50 percent of the world’s wealth.[ii] Likewise, ownership of the world’s largest corporations is highly centralized in a core group of 1318 corporations with interlocking ownerships, according to a revealing network analysis of 43,000 global corporations published in 2011 by Stefania Vitali, James B. Glattfelder, and Stefano Battiston.[iii] Each of the core 1318 corporations was found to have ownership links to two or more other companies, although most are linked to twenty other corporations. The 1318 corporations own through their shares the majority of blue chip and manufacturing companies, controlling 60 percent of global revenues. Further analysis revealed a tightly linked “super entity” of 147 corporations, mainly in finance, with interconnected ownership. Consequently, less than one percent of corporations essentially controlled 40 percent of the entire network. Furthermore, the study found that 734 “top holders of stock accumulate 80% of the control over the value of all TNCs.” The authors conclude: “this means that network control is much more unequally distributed than wealth. In particular, the top ranked actors hold a control ten times bigger than what could be expected based on their wealth.”[iv] Consolidated ownership results in consolidated control over decision-making over important societal issues – such as finance and energy – impacting future generations.
Consolidation of wealth shapes social organization through centralization of decision-making in markets and politics by corporations, powerful government agencies, and international governance organizations. In The Next Catastrophe, sociologist Charles Perrow describes how infrastructural risk is amplified by concentrations of energy (i.e., concentration of hazardous activities and facilities: e.g., concentrations of dangerous substances in single locations), concentrations of populations, and concentrations of political and economic power, which concentrate energy and decision-making, encouraging “over-reach.”[v] Concentrated power tends to self-replicate, seeking to expand its resources and influence, although the means of replication are always shaped by historical, cultural, and economic particularities.




[i] “40% of World's Wealth Owned by 1% of Population,” CBC News, December 5, 2006, accessed January, 3 2012, http://www.cbc.ca/news/business/story/2006/12/05/globalwealth.html; and James Randerson, “World's Richest 1% Own 40% of All Wealth, UN Report Discovers,” The Guardian, December 6, 2006, accessed January 3, 2012, http://www.guardian.co.uk/money/2006/dec/06/business.internationalnews.

[ii] Jon Slater, “Richest 1% Will Own More Than All the Rest by 2016,” Oxfam, January 19, 2015, accessed January 19, 2016, http://www.oxfam.org.uk/blogs/2015/01/richest-1-per-cent-will-own-more-than-all-the-rest-by-2016.

[iii] Stefania Vitali, James Glattfelder, and Stefano Battiston, “The Network of Global Corporate Control,” PLOS One, 6 (2011), accessed December 3, 2011, doi: 10.1371/journal.pone.0025995.

[iv] Vitali, Glattfelder, and Battiston, “The Network of Global,” 36.

[v] Charles Perrow, The Next Catastrophe: Reducing Our Vulnerabilities to Natural, Industrial, and Terrorist Disasters (Princeton, NJ: Princeton University Press, 2007), 1.
 

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