Capital in the Twenty-First Century (72 page)

The second condition is that inherited wealth must be extremely concentrated. If inherited
wealth were distributed in the same way as income from labor (with identical levels
for the top decile, top centile, etc., of the hierarchies of both inheritance and
labor income), then Vautrin’s world could never exist: income from labor would always
far outweigh income from inherited wealth (by a factor of at least three),
³³
and the top 1 percent of earned incomes would systematically and mechanically outweigh
the top 1 percent of incomes from inherited capital.
³⁴

In order for the concentration effect to dominate the volume effect, the top centile
of the inheritance hierarchy must by itself claim the lion’s share of inherited wealth.
This was indeed the case in the eighteenth and nineteenth centuries, when the top
centile owned 50–60 percent of total wealth (or as much as 70 percent in Britain or
Belle Époque Paris), which is nearly 10 times greater than the top centile’s share
of earned income (about 6–7 percent, a figure that remained stable over a very long
period of time). This 10:1 ratio between wealth and salary concentrations is enough
to counterbalance the 3:1 volume ratio and explains why an inherited fortune in the
top centile enabled a person to live practically 3 times better than an employment
in the top centile in the patrimonial society of the nineteenth century (see
Figure 11.10
).

This basic arithmetic of rentiers and managers also helps us to understand why the
top centiles of inherited wealth and earned income are almost balanced in France today:
the concentration of wealth is about three times greater than the concentration of
earned income (the top centile owns 20 percent of total wealth, while the top centile
of earners claims 6–7 percent of total wages), so the concentration effect roughly
balances the volume effect. We can also see why heirs were so clearly dominated by
managers during the Trente Glorieuses (the 3:1 concentration effect was too small
to balance the 10:1 mass effect). Apart from these situations, which are the result
of extreme shocks and specific public policies (especially tax policies), however,
the “natural” structure of inequality seems rather to favor a domination of rentiers
over managers. In particular, when growth is low and the return on capital is distinctly
greater than the growth rate, it is almost inevitable (at least in the most plausible
dynamic models) that wealth will become so concentrated that top incomes from capital
will predominate over top incomes from labor by a wide margin.
³⁵

Nineteenth-century novelists obviously did not use the same categories we do to describe
the social structures of their time, but they depicted the same deep structures: those
of a society in which a truly comfortable life required the possession of a large
fortune. It is striking to see how similar the inegalitarian structures, orders of
magnitude, and amounts minutely specified by Balzac and Austen were on both sides
of the English Channel, despite the differences in currency, literary style, and plot.
As noted in
Chapter 2
, monetary markers were extremely stable in the inflation-free world described by
both novelists, so that they were able to specify precisely how large an income (or
fortune) one needed to rise above mediocrity and live with a minimum of elegance.
For both writers, the material and psychological threshold was about 30 times the
average income of the day. Below that level, a Balzacian or Austenian hero found it
difficult to live a dignified life. It was quite possible to cross that threshold
if one was among the wealthiest 1 percent (and even better if one approached the top
0.5 or even 0.1 percent) of French or British society in the nineteenth century. This
was a well-defined and fairly numerous social group—a minority, to be sure, but a
large enough minority to define the structure of society and sustain a novelistic
universe.
³⁶
But it was totally out of reach for anyone content to practice a profession, no matter
how well it paid: the best paid 1 percent of professions did not allow one to come
anywhere near this standard of living (nor did the best paid 0.1 percent).
³⁷

In most of these novels, the financial, social, and psychological setting is established
in the first few pages and occasionally alluded to thereafter, so that the reader
will not forget everything that sets the characters of the novel apart from the rest
of society: the monetary markers that shape their lives, their rivalries, their strategies,
and their hopes. In
Père Goriot,
the old man’s fall from grace is conveyed at once by the fact that he has been obliged
to make do with the filthiest room in the Vauquer boardinghouse and survive on the
skimpiest of meals in order to reduce his annual expenditure to 500 francs (or roughly
the average annual income at the time—abject poverty for Balzac).
³⁸
The old man sacrificed everything for his daughters, each of whom received a dowry
of 500,000 francs, or an annual rent of 25,000 francs, about 50 times the average
income: in Balzac’s novels, this is the basic unit of fortune, the symbol of true
wealth and elegant living. The contrast between the two extremes of society is thus
established at the outset. Nevertheless, Balzac does not forget that between abject
poverty and true wealth all sorts of intermediate situations exist—some more mediocre
than others. The small Rastignac estate near Angoulême yields barely 3,000 francs
a year (or 6 times the average income). For Balzac, this is typical of the moneyless
lesser nobility of the provinces. Eugène’s family can spare only 1,200 francs a year
to pay for his law studies in the capital. In Vautrin’s lecture, the annual salary
of 5,000 francs (or 10 times average income) that young Rastignac could potentially
earn as a royal prosecutor after much effort and with great uncertainty is the very
symbol of mediocrity—proof, if proof were needed, that study leads nowhere. Balzac
depicts a society in which the minimum objective is to obtain 20–30 times the average
income of the day, or even 50 times (as Delphine and Anastasie are able to do thanks
to their dowries), or better yet, 100 times, thanks to the 50,000 francs in annual
rent that Mademoiselle Victorine’s million will earn.

In
César Birotteau,
the audacious perfumer also covets a fortune of a million francs so that he can keep
half for himself and his wife while using the other half as a dowry for his daughter,
which is what he believes it will take for her to marry well and allow his future
son-in-law to purchase the practice of the notary Roguin. His wife, who would prefer
to return to the land, tries to convince him that they can retire on an annual rent
of 2,000 francs and marry their daughter with only 8,000 francs of rent, but César
will not hear of it: he does not want to wind up like his associate, Pillerault, who
retired with just 5,000 francs of rent. To live well, he needs 20–30 times the average
income. With only 5–10 times the average, one barely survives.

We find precisely the same orders of magnitude on the other side of the Channel. In
Sense and Sensibility,
the kernel of the plot (financial as well as psychological) is established in the
first ten pages in the appalling dialogue between John Dashwood and his wife, Fanny.
John has just inherited the vast Norland estate, which brings in 4,000 pounds a year,
or more than 100 times the average income of the day (which was barely more than 30
pounds a year in 1800–1810).
³⁹
Norland is the quintessential example of a very large landed estate, the pinnacle
of wealth in Jane Austen’s novels. With 2,000 pounds a year (or more than 60 times
the average income), Colonel Brandon and his Delaford estate are well within expectations
for a great landowner. In other novels we discover that 1,000 pounds a year is quite
sufficient for an Austenian hero. By contrast, 600 pounds a year (20 times average
income) is just enough to leave John Willoughby at the lower limit of a comfortable
existence, and people wonder how the handsome and impetuous young man can live so
large on so little. This is no doubt the reason why he soon abandons Marianne, distraught
and inconsolable, for Miss Grey and her dowry of 50,000 pounds (2,500 pounds in annual
rent, or 80 times average income), which is almost exactly the same size as Mademoiselle
Victorine’s dowry of a million francs under prevailing exchange rates. As in Balzac,
a dowry half that size, such as Delphine’s or Anastasie’s, is perfectly satisfactory.
For example, Miss Morton, the only daughter of Lord Norton, has a capital of 30,000
pounds (1,500 pounds of rent, or 50 times average income), which makes her the ideal
heiress and the quarry of every prospective mother-in-law, starting with Mrs. Ferrars,
who has no difficulty imagining the girl married to her son Edward.
⁴⁰

From the opening pages, John Dashwood’s opulence is contrasted with the comparative
poverty of his half-sisters, Elinor, Marianne, and Margaret, who, along with their
mother, must get by on 500 pounds a year (or 125 pounds apiece, barely four times
the average per capita income), which is woefully inadequate for the girls to find
suitable husbands. Mrs. Jennings, who revels in the social gossip of the Devonshire
countryside, likes to remind them of this during the many balls, courtesy calls, and
musical evenings that fill their days and frequently bring them into contact with
young and attractive suitors, who unfortunately do not always tarry: “The smallness
of your fortune may make him hang back.” As in Balzac’s novels, so too in Jane Austen’s:
only a very modest life is possible with just 5 or 10 times the average income. Incomes
close to or below the average of 30 pounds a year are not even mentioned, moreover:
this, one suspects, is not much above the level of the servants, so there is no point
in talking about it. When Edward Ferrars thinks of becoming a pastor and accepting
the parish of Deliford with its living of 200 pounds a year (between 6 and 7 times
the average), he is nearly taken for a saint. Even though he supplements his living
with the income from the small sum left him by his family as punishment for his mésalliance,
and with the meager income that Elinor brings, the couple will not go very far, and
“they were neither of them quite enough in love to think that three hundred and fifty
pounds a year would supply them with the comforts of life.”
⁴¹
This happy and virtuous outcome should not be allowed to hide the essence of the
matter: by accepting the advice of the odious Fanny and refusing to aid his half-sisters
or to share one iota of his immense fortune, despite the promises he made to his father
on his deathbed, John Dashwood forces Elinor and Marianne to live mediocre and humiliating
lives. Their fate is entirely sealed by the appalling dialogue at the beginning of
the book.

Toward the end of the nineteenth century, the same type of inegalitarian financial
arrangement could also be found in the United States. In
Washington Square,
a novel published by Henry James in 1881 and magnificently translated to the screen
in William Wyler’s film
The Heiress
(1949), the plot revolves entirely around confusion as to the amount of a dowry.
But arithmetic is merciless, and it is best not to make a mistake, as Catherine Sloper
discovers when her fiancé flees on learning that her dowry will bring him only
$
10,000 a year in rent rather than the
$
30,000 he was counting on (or just 20 times the average US income of the time instead
of 60). “You are too ugly,” her tyrannical, extremely rich, widower father tells her,
in a manner reminiscent of Prince Bolkonsky with Princess Marie in
War and Peace.
Men can also find themselves in very fragile positions: in
The Magnificent Ambersons,
Orson Welles shows us the downfall of an arrogant heir, George, who at one point
has enjoyed an annual income of
$
60,000 (120 times the average) before falling victim in the early 1900s to the automobile
revolution and ending up with a job that pays a below-average
$
350 a year.

Interestingly, nineteenth-century novelists were not content simply to describe precisely
the income and wealth hierarchies that existed in their time. They often give a very
concrete and intimate account of how people lived and what different levels of income
meant in terms of the realities of everyday life. Sometimes this went along with a
certain justification of extreme inequality of wealth, in the sense that one can read
between the lines an argument that without such inequality it would have been impossible
for a very small elite to concern themselves with something other than subsistence:
extreme inequality is almost a condition of civilization.

In particular, Jane Austen minutely describes daily life in the early nineteenth century:
she tells us what it cost to eat, to buy furniture and clothing, and to travel about.
And indeed, in the absence of modern technology, everything is very costly and takes
time and above all staff. Servants are needed to gather and prepare food (which cannot
easily be preserved). Clothing costs money: even the most minimal fancy dress might
cost several months’ or even years’ income. Travel was also expensive. It required
horses, carriages, servants to take care of them, feed for the animals, and so on.
The reader is made to see that life would have been objectively quite difficult for
a person with only 3–5 times the average income, because it would then have been necessary
to spend most of one’s time attending to the needs of daily life. If you wanted books
or musical instruments or jewelry or ball gowns, then there was no choice but to have
an income 20–30 times the average of the day.