By the 1870s, the system had been running for long enough to produce its first fully visible crisis of concentration. In the United States, the decades after the Civil War delivered the country into the hands of men whose fortunes rivaled national budgets. Andrew Carnegie controlled steel. John D. Rockefeller controlled oil. Cornelius Vanderbilt controlled the railroads that connected everything else. J.P. Morgan controlled the money that made all of it possible. These were not simply wealthy men. They were men whose economic power exceeded the governing capacity of the democratic institutions that were supposed to constrain them. When Morgan personally bailed out the United States Treasury during the gold crisis of 1895 — lending the federal government sixty-two million dollars in gold to prevent a sovereign default — the message was not subtle. The richest man in America had more financial power than the government of the United States. The term that stuck was "robber barons," and it was not applied by their enemies alone. It was recognized, even by many of their contemporaries, as an accurate description of what unchecked accumulation looked like when it reached a certain scale.
In Europe, the concentration was older and quieter but no less extreme. In France, before the Revolution, the top ten percent of the population held approximately ninety percent of national wealth, and the top one percent held roughly fifty to sixty percent. Britain followed a similar pattern. The landed aristocracy and the emerging industrial capitalists between them controlled virtually everything worth controlling, while the workers who actually produced the wealth lived in conditions that Charles Dickens did not have to exaggerate because the reality was already literature-ready.
This was the era Clara Mattei studies most closely — the moment when economics began to present itself as a science rather than a set of political choices. The discipline professionalized. It developed mathematical models. It wrapped itself in the language of natural law and inevitable outcomes. And the effect, whether intended or not, was to shield the system from democratic challenge. If inequality was the result of natural economic forces — supply and demand, marginal productivity, the efficient allocation of capital — then it was not something politics could or should address. It was simply how the world worked. The framing was elegant. It was also a lie. The inequality was not natural. It was the predictable output of a system designed to produce it. But by the time anyone could say that clearly, the economics profession had already established itself as the arbiter of what counted as serious thinking about the economy, and serious thinking, by definition, did not question the foundations.
Workers pushed back. They organized. They unionized. They struck. And they were, with remarkable consistency, suppressed. The Homestead Strike of 1892. The Pullman Strike of 1894. The Ludlow Massacre of 1914, where the Colorado National Guard and company guards attacked a tent colony of striking coal miners and their families, killing at least nineteen people by most accounts, including eleven children. The pattern was not subtle: workers who demanded a share of the wealth they produced were met with private security forces, state militias, and courts that consistently sided with capital. The First Gilded Age was not a failure of the system. It was the system operating without opposition strong enough to slow it down.
And then the world broke.
The period between 1914 and the late 1970s is the only sustained era in capitalism's history when inequality significantly decreased. Economists call it the Great Compression. It deserves its name, and it deserves to be understood precisely, because it is the period most people alive today are nostalgic for — the era of the middle class, of shared prosperity, of the feeling that things were getting better for ordinary people — and the reasons it happened are the opposite of what most people believe.
The Great Compression was not produced by the generosity of capitalists. It was not produced by the invisible hand finding its equilibrium. It was not produced by wise policy gently guiding the market toward fairness. It was produced by catastrophe.
Two world wars destroyed private wealth on a scale that had never been seen before. The physical destruction of European capital — factories, infrastructure, financial assets — wiped out fortunes that had been accumulating for generations. The Great Depression, beginning in 1929, discredited unregulated markets so thoroughly that even the most committed defenders of laissez-faire economics could not maintain the argument with a straight face while banks collapsed, farms failed, and a quarter of the American workforce stood in bread lines. And behind everything — behind every policy concession, every labor law, every progressive tax bracket — stood the threat of communist revolution. The Soviet Union existed. It was industrializing. It was, whatever its internal horrors, demonstrating that an alternative to capitalism was not merely theoretical. The ruling classes of Europe and America looked at what had happened in Russia in 1917 and made a calculation: share some of the wealth, or risk losing all of it.
The concessions were real. Top marginal tax rates in the United States reached ninety-one percent in the 1950s. Franklin Roosevelt had proposed, during the war, capping net income at twenty-five thousand dollars — roughly three hundred and fifty thousand in today's money — arguing that no American citizen should earn more than that while soldiers were dying overseas. Congress did not go that far, but it went far enough. Financial regulation tightened. The Glass-Steagall Act separated commercial banking from speculative investment. Labor unions grew powerful enough to negotiate wages that allowed a single income to support a family, buy a house, send children to college. Social safety nets expanded. Public investment in infrastructure, education, and healthcare created the conditions for broadly shared prosperity.
The result was the middle class. Not a natural feature of capitalism. A forced concession, extracted under conditions of existential threat. Piketty's central insight, documented across three centuries of data in Capital in the Twenty-First Century, is precisely this: it took two world wars, a global depression, and the genuine possibility of revolution to make capitalism share. The Great Compression was not evidence that the system works. It was evidence of what it takes to make the system tolerable — and a measure of how extreme the pressure must be before capital yields anything at all.
The pressure eased. Capital regrouped.
Margaret Thatcher came to power in Britain in 1979. Ronald Reagan won the American presidency in 1980. Between them, they launched what is now called the neoliberal counterrevolution — though it would be more accurate to call it the restoration. Mattei's argument, built from the archives of a century of economic policy, is that austerity is not about balancing budgets. It never has been. It is the tool used to reverse the gains of the Great Compression — to restore the class hierarchy that crisis had temporarily disrupted. Every austerity program, every round of deregulation, every tax cut for the wealthy, every attack on organized labor is part of a coherent project: returning the distribution of wealth to its pre-compression shape. The project has been spectacularly successful.
Deregulation of finance dismantled the safeguards that had kept speculative capital in check for forty years. Tax cuts reduced the top marginal rate in the United States from seventy percent to twenty-eight percent under Reagan. Privatization transferred public assets — utilities, transportation, housing, eventually prisons and military operations — into private hands whose obligation was to shareholders, not citizens. Unions were broken. The air traffic controllers' strike of 1981, which Reagan crushed by firing over eleven thousand federal workers, was not just a labor dispute. It was a signal. The era of concession was over.
Thatcher's formulation was blunt and deliberate: "There is no alternative." TINA. Capitalism is the only viable system. Markets are the only efficient allocators of resources. Government is the problem, not the solution. Any policy that constrains capital is an impediment to growth, and growth is the only measure that matters. This was not an observation about economics. It was a command about politics. It told an entire generation that the argument was settled, that questioning the system was not just wrong but pointless, and that the only responsible position was to accept the market's verdict on your life and make the best of it.
The results are not ambiguous. In the United States, the income share captured by the top ten percent rose from thirty-five percent in 1980 to forty-seven percent by the 2020s. In Europe, it rose from twenty-seven to thirty-six percent over the same period. Globally, the poorest fifty percent of the world's population holds just two percent of total wealth. The richest ten percent holds seventy-six percent, of which thirty-eight percent belongs to the top one percent alone (as of 2022, per the World Inequality Report). Since 2020, the richest one percent has captured nearly two-thirds of all new wealth created globally — approximately twenty-six trillion dollars — while the remaining ninety-nine percent received thirty-seven percent. Billionaire fortunes have been increasing by approximately 2.7 billion dollars per day (Oxfam, January 2023).
These are not projections. These are the numbers that the World Inequality Database, Oxfam, and the research teams at the Paris School of Economics have been documenting with increasing precision for two decades. They describe a system that is producing inequality faster than at any point since the First Gilded Age — with one critical difference. In the 1890s, the robber barons operated in a world where organized labor was still rising, where progressive movements were gathering force, where the political possibility of constraint was real and growing. Today, the mechanisms of constraint have been systematically dismantled. The unions are weakened. The tax code has been rewritten. The regulatory agencies have been captured by the industries they are supposed to oversee. And the ideological architecture — the belief that markets are self-correcting, that wealth trickles down, that there is no alternative — remains largely intact despite four decades of evidence to the contrary.
In the United States, CEO-to-worker pay ratios now exceed three hundred to one. Drucker, invoking J.P. Morgan’s name — the man, not the bank — argued that twenty to one was the self-evident maximum ratio between the highest and lowest paid person in an organization; whether Morgan himself ever documented the principle is unrecorded. Drucker would not recognize what that benchmark has become. Piketty warns that we are heading toward what he calls a rentier society — a world in which the wealthiest families are permanent, innovation slows because it threatens the incumbents, and the economy stagnates beneath a class structure that has hardened into something closer to aristocracy than anything the democratic revolutions of the eighteenth century were supposed to have dismantled. And artificial intelligence, which promises to automate not just manual labor but cognitive work — the last refuge of the middle class — threatens to accelerate the concentration further, faster, and with fewer points of intervention than any previous technological revolution.
Look at the timeline and a pattern emerges. It is not complicated. It is not hidden. It repeats with the regularity of a machine, because it is a machine.
Capitalism produces extreme inequality. This is its default state, not a malfunction. Crisis forces correction — wars, depressions, the threat of revolution. Inequality temporarily decreases, through forced concessions, not through capitalist generosity or market self-correction. Then capital regroups. The concessions are reversed. The regulations are dismantled. The taxes are cut. The unions are broken. And the inequality returns, each time a little more extreme, each time with the machinery of accumulation a little more sophisticated, each time with the people inside the system a little less able to see it for what it is.