ABSTRACT
When economic historians look back on the last fifth of the twentieth century what will stand out above all else will be the dramatic increase in inequality of wealth and income, both within and between countries. During the 1980s and 1990s inequality increased at unprecedented rates within the United States and most other advanced economies, and the gap between rich and poor countries widened sensationally. This spectacular rise in inequality came on the heels of a more measured trend toward greater equality during the previous half century. During the middle part of the twentieth century, social democratic and New Deal reforms in advanced capitalist economies greatly expanded the ranks of their middle classes and thereby reduced wealth and income inequalities inside their economies. At the same time communist governments, for all their faults, reduced internal income and wealth inequalities compared to their capitalist predecessors and made dramatic strides toward closing the gap in GDP per capita between their less developed economies and the more advanced capitalist countries. Finally, after World War II the postcolonial international economy guided by the Bretton Woods system managed to reduce the gap between rich and poor capitalist countries, even if only slightly. Unfortunately, these equalizing trends came screeching to a halt at the beginning of the 1980s, to be replaced by arguably the most dramatic redistribution of wealth and income from poor to rich the world has ever seen, as well as the disappearance of middle classes—scarcely older than a single generation—in large parts of the global economy.
