what are gini coefficients?

Charles Brown CharlesB at CNCL.ci.detroit.mi.us
Mon Aug 21 07:05:33 PDT 2000

>>> rosserjb at jmu.edu 08/18/00 05:03PM >>>

The ratios are not the same. The proportion of wealth owned by the top 5% (and especially the top 1%) in the US has increased quite sharply over the past several decades. When I started teaching, the top 1% owned about 25% of the wealth. Today it is closer to 40%. I think Doug can give a more precise time series on that one, although I think the proportion owned by the top 1% may have slipped slightly recently. I remember seeing something about this in a fairly recent lbo....


CB, Thanks , Barkley.

Is it that the top 5% and 1% never fall below a certain disproportionately high share ? What is the smallest share these top sectors have had in the last 100 years ? This phantom "law of wealth concentration" might accomodate increasing levels of concentration as you describe within a theory of increasing monopoly.


To the extent that there is a universal law, it may arise from probability. Once someone is ahead, it is easy for them to stay ahead, or get ahead further. Takes money to make money, etc. And hard to get out of that bottom layer.


CB: That the type of thing I am thinking of. There's an expression I've heard, "money goes to money, and bullshit goes to bullshit".

By the way, are we talking about the ownership and control of capital wealth in this concentration of wealth ?

Yes, I can see probability playing a role , but within a structure. Probabilitic models can be models for scientific lawly situations. I think some of the gas laws ( Charles' maybe even) works on probability some. What is it, stochastic and the other type of model.


I would note that this aspect of it applies even in socialist societies, where wealth may not be monetary but may consist of access to goods granted to members of the nomenklatura. If you are high up in the hierarchy, it is easier to get still higher up. Kim Jong Il lives much better than most North Koreans as does his inner circle. And it is hard to get into that inner circle, but once one is there, well.... Same for Mao and his inner circle in the PRC, even in the days when the PRC may have had the world's most equal distribution of income, gini coefficient down around 16 or so (and Mao was denouncing Kim Il Sung as a "fat revisionist").

The difference thus is not in whether one has a Pareto distribution or not, but in how flat (or steep) it is, that is, how equal (or unequal) the distribution is. Underlying function is the same, but the exponents are different.


CB: The most even distribution would be that every five percent of the population has five percent of the wealth. I take it that is not a Pareto distribution. At what point of lack of flatness does a Pareto distribution arise ?


There really are and have been big differences between capitalist and socialist economies in income distribution and these differences do (or have) shown up in the data, whether gini coefficients, or decile ratios, or Atkinson indexes or.... The most equal distribution of income in the world today is almost certainly in Slovakia, a formerly socialist state, that has managed to retain its high degree of equality, in contrast to some of the other formerly socialist states like Russia or Ukraine or Georgia. And, there are some capitalist states that have managed to have fairly high degrees of equality, notably the Scandinavian social democracies. One big difference between them and the socialist states is that they have more unequal distributions of wealth.

I am not aware that Pareto ever did any actual empirical estimates of these things, although I stand to be corrected. He dreamed up the function, but did not estimate it.


CB: My bad. I thought it was an empirical generalization


Also, his theory of "circulating elites" did not say that there was only one group always on top, but (at least) two competing groups that would trade off, kind of like the Repugs and Demagogues, with both always a part of the more general elite, but alternating as to who is getting the very best shares of the pie.


CB: Hmmmmmm. I could see the two party system fitting some kind of optimality logic for bourgeois democratic-republican rule.

Too bad this Pareto was a fascist :>)


As for what's up? Just getting ready for a new semester after a long cross-country trip and still trying to finish a book.....


CB: Good on ya. Thanks for sending me copies of your articles.



More information about the lbo-talk mailing list