Skip to main content
Open Access Publications from the University of California


Cliodynamics bannerUC Riverside

Involvement of a Capitalist Crisis in the 1900-30 Inequality Trend Reversal


This paper proposes a supplemental secular cycle formulation for a modern capitalist society that employs financial, economic, and political metrics in place of population and sociopolitical violence. It makes use of Thomas Piketty’s (2014) hypothesis that excess investment return relative to economic growth causes inequality. In a capitalist society, the investing class can be considered as a proxy for elites. Inequality as measured by the ratio of financial to wage gains over time agrees with other economic measures. Rising inequality led to a reduction in capital productivity (output per person per unit of capital). This created instability in financial markets that generated the 1929 stock market crash. Application of a simplified version of the demographic structural theory to inequality trends shows political stress peaking in 1929. The depression that began with the stock market crash in that year resulted in a devastating political defeat for the ruling party in 1932 which brought in the political coalition that engineered the inequality trend reversal. This series of events can be considered as a modern version of the state collapse and reconstitution that was typically a key feature of premodern secular cycles.

Main Content
For improved accessibility of PDF content, download the file to your device.
Current View