Global Inequality: From Class to Location, from Proletarians to Migrants
| Date | 01 May 2012 |
| DOI | http://doi.org/10.1111/j.1758-5899.2012.00170.x |
| Published date | 01 May 2012 |
Global Inequality: From Class to
Location, from Proletarians to
Migrants
Branko Milanovic
1
Research Department, World Bank and School of Public Policy, University of
Maryland at College Park
Abstract
Inequality between world citizens in the mid-19th century was such that at least a half of it could be explained by
income differences between workers and capital owners in individual countries. Real income of workers in most
countries was similar and low. This was the basis on which Marxism built its universal appeal. More than 150 years
later, in the early 21st century, the situation has changed fundamentally: more than 80 per cent of global income
differences is due to large gaps in mean incomes between countries, and unskilled workers¢wages in rich and poor
countries often differ by a factor of 10 to 1. This is the basis on which a new global political issue of migration has
emerged because income differences between countries make individual gains from migration large. The key coming
issue will be how to deal with this new challenge while acknowledging that migration is probably the most powerful
tool for reducing global poverty and inequality.
Policy Implications
•Immigration pressure is intimately related to high income gaps that exist between countries today.
•Aid and immigration are complementary tools to deal with global poverty.
•If recipient countries have trouble dealing with current migration flows, they should realize that the alternative is
to help the growth of countries where most migrants come from. Aid is then seen to be also in rich countries’
own interest.
•Such policies require a multilateral approach because of free rider problems.
1. Global inequality in the mid-19
th
century
In the Spring of 1848, as the pan-European revolution was
nearing its crescendo, Karl Marx and Friedrich Engels
wrote probably the best known political pamphlet of all
time: The Communist Manifesto. When they surveyed the
situation of the world, they persuasively and repeatedly,
insisted on the fact that people in all ‘civilized’ societies
were divided into two large classes: that of the owners of
the means of production (the capitalists), and those that
were selling their labour for living and held no property
(the proletarians). It was an almost self-evident division at
the level of each and every country. Having capital meant
being rich; having only labour power meant being poor.
There were not too many people in between, with mid-
dling levels of income, whether those who owned some
capital and yet had to work with their hands like artisans,
or peasants who toiled their own land. Moreover, even
they—the logic of capitalist development was implaca-
ble—were doomed to extinction or irrelevance, as they
would gradually ‘dissolve’ mostly into proletariat with per-
haps only a few making it to the capitalist class. The divi-
sion into two or three main classes (the third being
landowners, who in Marx and Engels’ view could be assim-
ilated to capitalists) was not, of course, introduced by
Marx and Engels. It has been present in contemporary
political economy, and it hailed back to Adam Smith, and
even to François Quesnay. It was used by David Ricardo in
his Principles, published in 1817, as a key feature, motivat-
ing his entire economic analysis.
So evident seemed the class division in all societies
that Marx and Engels concluded their Manifesto by
Global Policy Volume 3 . Issue 2 . May 2012
Global Policy (2012) 3:2 doi: 10.1111/j.1758-5899.2012.00170.x ª2012 London School of Economics and Political Science and John Wiley & Sons Ltd.
Research Article
125
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